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Whether or not it will be worse than 2008 will depend if the economic weakness trickles up to the banks. Or rather, will the government & central banks just bail out mortgage-granting banks to infinity?
How long can banks last when 30 million people are unable to pay their mortgages?
The 2008 crisis caused 6.3 million foreclosures between 2006 and 2016. Look at what damage that did.
Many are in denial, and let's be honest most Americans are clueless and very self involved. They don't pay attention, don't question anything, and as we see don't put anything aside in regards to savings. And it's not because they're all living paycheck to paycheck...they live beyond their means.
Everyone for the most part has been inside, believing the "we're all in this together" nonsense. Once the dust settles and they start to see the reality and it impacts them directly the rude awakening will hit them right in the face.
Your mention of your drive downtown was an excellent comment. Restaurants and small businesses for the most part are done.
I live in LA, store windows in the San Fernando Valley on Ventura Blvd which has some high end stores put plywood over their windows weeks ago.....I wonder why, nervous about the civil unrest due to people losing their jobs, not being able to get through to unemployment, apply and 4 weeks later no check.
The boarding of windows is happening in other major cities, again I wonder why. They're worried about civil unrest.
It took the US 12 years to make a full recovery from the GD, it wasn't until 1941 when the US entered WW2.
Anyone who thinks you just bounce back from this is clueless as to how economics work, and should try educating themselves, they certainly have the time now to do so.
What's different now vs the Depression is that we have a more activist Fed and Congress instead of a "do nothing for 3 years and let the market correct itself" approach. The Fed is doing pretty well for injecting liquidity and supporting businesses through their lending facilities.
But you're generally right a full recovery will be years. Congress has not spent enough money to fully stimulate and prevent the maximum amount of job losses. Republicans are concerned about the debt now so it'll be hard to pass any package that contains much more stimulus. Little do people know - this will cause the current recession to be worse. Hang onto your horses. This is what happens when you have philosophical nut-heads running the government and don't understand economics.
This virus which does exist, but has been made out to be much worse than it is. It is the excuse that will be given for the economic collapse. Both parties are to blame, but they will use the virus as the excuse.
Think about it, you don't close down like this over something that 98% of the people who get it make a full recovery, and that for the most part the ones that don't are due to age, obesity, and preexisting conditions. It doesn't make sense, but it does if you want to blame it for an economy that has been like a house of cards for many years.
I have to say you pretty much nailed the situation.
With Morningstar I believe its in their best interest to keep a positive spin on the economy. So I really do not put much weight into their analysis.
I live in LA, store windows in the San Fernando Valley on Ventura Blvd which has some high end stores put plywood over their windows weeks ago.....I wonder why, nervous about the civil unrest due to people losing their jobs, not being able to get through to unemployment, apply and 4 weeks later no check.
I think it's more they're worried about general theft when no one's around to keep an eye on things. I've seen a decent number of temporarily closed businesses here put up their hurricane panels. They're pretty straightforward to take off when the viral storm seems to be ready to pass- just be careful because the edges on some of them can be quite sharp.
I think a recession is inevitable.. whether it'll be more like 2001 (mild), 1990 (moderate), or 2008 (severe) remains to be seen. But many seem to be leaning more towards the 2008 camp.
Lol, we are in a depression right this second, it's not "inevitable" or "coming". If you think the stock market reflects literally anything based on reality, you aren't paying too much attention. 30 million have become unemployed under this thing in the matter of a couple months, millions more every day. Thousands of small businesses going out of business. The gov't has already jumped to emergency measures to help things out. The stock market going up does NOT MEAN the economy is doing well. This should be obvious after this past month.
And 2008? This easily has potential to SURPASS the early 1930's. 2008 looks like Candyland compared to this.
And everything that has happened, this is most certainly the very beginning.
Do you really think there will be fewer restaurants and 'small businesses' around in, say, July 2021?
This vague claim that any business that fails this summer leaves some permanent void in a local economy and employment is... mystifying.
July 2021?
They won't be here in July 2020.
Many can't even qualify or get the small business loans. If you do get one in order to avoid having to pay it back one of the qualifications is you must hire back all the staff you had to let go. Now that sounds great, people get their jobs and everything is just the way it was right?
Wrong, I live in CA so for example if they allow restaurants to reopen they have to cut back on seating capacity up to 50%, I don't need to tell you this, but this will mean you need less staff. Well there goes being off the hook for the loan, in addition your business will suffer and you may end up closing. Can't survive on take out alone.
Most of these businesses are already gone for good. They can't survive paying rent on buildings that sit unoccupied.
I don't think you're getting that whether you frequent small businesses or don't or don't really care if they shut their doors forever. Well it is the American taxpayer who will be footing the bill for all the millions now on UE benefits and having to apply for food stamps.
Don't know about you but I would rather see people working than be on the dole, and most who get laid off feel the same. It's like a death in a way when you lose a job through no fault of your own.
I guess with some Americans until it's right in their face they don't get it.
Now we get to see what a Great Depression is really like, and people have a lot less civility now than they had back in the 30s.
Did I miss it, or did Morningstar omit the effects of a collapse in the oil patch?
Going forward, a huge factor affecting future growth is whether the shock of CV-19 will have an effect on economic behavior. One theory behind the sluggish Japanese economy since the collapse in the 80's, is that the individuals and companies dramatically changed their behavior after the collapse and began a long process of self-imposed austerity.
It seems unlikely Americans or American companies could be so disciplined. However, if I found myself out of work, unable to get unemployment in a timely fashion, and having drained my savings, I'd likely be thinking "Never Again." I'd be doing a lot more saving in the future. Ditto for small employers that now find themselves on the brink of bankruptcy.
Lol, we are in a depression right this second, it's not "inevitable" or "coming". If you think the stock market reflects literally anything based on reality, you aren't paying too much attention. 30 million have become unemployed under this thing in the matter of a couple months, millions more every day. Thousands of small businesses going out of business. The gov't has already jumped to emergency measures to help things out. The stock market going up does NOT MEAN the economy is doing well. This should be obvious after this past month.
And 2008? This easily has potential to SURPASS the early 1930's. 2008 looks like Candyland compared to this.
And everything that has happened, this is most certainly the very beginning.
I think this has the potential to be the most devastating economic crisis in history. And really, that's the only way this debt fueled hyper-bubble can end. In a devastating economic crisis. Postponing that crash will only make it all the more devastating when it does happen.
We have an unsustainable global economic model based on infinite growth and infinite debt expansion in a finite realm. We reached the limits of growth decades ago, which is why we've had to add more and more debt to fuel GDP growth. In the US, there is now $3.60 of debt for every $1.00 of GDP. Does that seem sustainable?
The system was designed to fail. It must implode, and no amount of worthless debt pumped into it will prevent that from happening. Postpone, perhaps, but not prevent. And as I said before, postponing only amplifies the collapse.
Last edited by Taggerung; 04-30-2020 at 10:49 PM..
Lol, we are in a depression right this second, it's not "inevitable" or "coming". If you think the stock market reflects literally anything based on reality, you aren't paying too much attention. 30 million have become unemployed under this thing in the matter of a couple months, millions more every day. Thousands of small businesses going out of business. The gov't has already jumped to emergency measures to help things out. The stock market going up does NOT MEAN the economy is doing well. This should be obvious after this past month.
And 2008? This easily has potential to SURPASS the early 1930's. 2008 looks like Candyland compared to this.
And everything that has happened, this is most certainly the very beginning.
Well said and spot on.
I think many are in denial, others have no understanding of how the economy works. There were many snarky comments by some posters when some of us mentioned we're going to see UE rates at 20% or more a few weeks back, well look what happened. It's not about I told you so, it's about pay attention and use some critical thinking skills.
Add in people have been in their homes watching the "We're all in this together" nonsense and how you can order a new car online and they will bring it you to your house(who would want to test drive a car without buying it but that's a minor issue). Pushing isn't it great to never leave your house, we can bring everything you need to you.....sigh.
So when the lockdown lifts everything will be just fine. The reality will hit when they see it first hand, all the empty stores, and the anger that is building.
I would compare it to a death, the first stage is always denial, you can't believe it happened.
I think this has the potential to be the most devastating economic crisis in history. And really, that's the only way this debt fueled hyper-bubble can end. In a devastating economic crisis. Postponing that crash will only make it all the more devastating when it does happen.
We have an unsustainable global economic model based on infinite growth and infinite debt expansion in a finite realm. We reached the limits of growth decades ago, which is why we've had to add more and more debt to fuel GDP growth. In the US, there is now $3.60 for every $1.00 of GDP. Does that seem sustainable?
The system was designed to fail. It must implode, and no amount of worthless debt pumped into it will prevent that from happening. Postpone, perhaps, but not prevent. And as I said before, postponing only amplifies the collapse.
Exactly, and this virus which has been made out to be much worse than it is, was the scapegoat so the powers that be don't take direct blame.
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