The Economics Thread

[adexkola]

It's easy to model deaths in the short term from the virus.

Very hard to predict exactly what the damage done will be long term, so hard for politicians to know what to do. Long term damage could well be worse than the virus.

Pure negligence for politicians to not get experts in who can at least baseline long term impacts.

I don't expect the public to take a long term perspective but if that same expectation is held of politicians then we are fecked

 

[Drifter]

Global Economy Crashes on Mass Coronavirus Business Shutdowns

https://www.msn.com/en-gb/money/new...tdowns/ar-BB11Dle5?li=AA54rU&ocid=mailsignout

 

[berbatrick]

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[adexkola]

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Let it rot and take it over anyways (to protect the thousands of subcontractors and millions of employees)

 

[ROFLUTION]

Without financial help from the government Norwegian airlines will go bankrupt in two weeks, says their CEO. Interesting to see what businesses the governments find vital to keep superficially alive. One could argue that it's critical infrastructure.

 

[Edgar Allan Pillow]

Is anyone looking at the trade-off between the level of social distancing being done, and the economic ramifications down the line?

Trump is....in a "Cure cannot be worse than the virus" kinda way.

 

[VorZakone]

Without financial help from the government Norwegian airlines will go bankrupt in two weeks, says their CEO. Interesting to see what businesses the governments find vital to keep superficially alive. One could argue that it's critical infrastructure.

Aren't Norway sitting on a $1 trillion fund?

 

[Revan]

Without financial help from the government Norwegian airlines will go bankrupt in two weeks, says their CEO. Interesting to see what businesses the governments find vital to keep superficially alive. One could argue that it's critical infrastructure.

It would be awesome if the airlines go bankrupt. The cnuts spent all their money on buying back stocks, so the investors (and the executives) get rich. Maybe they should start creating new stocks and sell them to build some cash before they start asking for the government's help.

 

[sun_tzu]

Without financial help from the government Norwegian airlines will go bankrupt in two weeks, says their CEO. Interesting to see what businesses the governments find vital to keep superficially alive. One could argue that it's critical infrastructure.

Even if airlines go bust I guess in a few weeks somebody just buys the planes from the administrators ... Sticks a new logo on the side and gets some flight slot contracts

Is anybody that bothered what logo is on their fkying pressurised metal tube

 

[ROFLUTION]

Aren't Norway sitting on a $1 trillion fund?

You mean the norwegian state? Yes.. Norwegian crown has crashed badly last couple of weeks, due to their dependence on oil.

Compared to Denmarks crown it has gone down by like 17-18% in 1 year. In 4 years it has gone down 25%

 

[ROFLUTION]

Being a bit of an economic rookie myself gotta ask this question for the people in here who believes it could get worse than 2008 and another great depression:

How long would it take to recover and get out of this believed depression/recession? In different scenarios if governments help out companies vs not helping out or just moderately helping out?

What timeframe do you think we're looking at before we see the economies rising and stock-markets go up long term again?

 

[ClaytonBlackmoorLeftPeg]

Being a bit of an economic rookie myself gotta ask this question for the people in here who believes it could get worse than 2008 and another great depression:

How long would it take to recover and get out of this believed depression/recession? In different scenarios if governments help out companies vs not helping out or just moderately helping out?

What timeframe do you think we're looking at before we see the economies rising and stock-markets go up long term again?

economists have successfully predicted 9 out of the last 3 recessions . we are in unchartered waters. There will be people in a years time telling us how they were able to predict what was going to happen, but for every one of them, there are 20 others who made different predictions.

we just don’t know what’s going to happen.

 

[adexkola]

Trump is....in a "Cure cannot be worse than the virus" kinda way.

He's a moron

 

[ROFLUTION]

economists have successfully predicted 9 out of the last 3 recessions . we are in unchartered waters. There will be people in a years time telling us how they were able to predict what was going to happen, but for every one of them, there are 20 others who made different predictions.

we just don’t know what’s going to happen.

Cheers. If you were in control of all the monitary and political instances around the World - What would your way of dealing with it all be?

 

[ClaytonBlackmoorLeftPeg]

Cheers. If you were in control of all the monitary and political instances around the World - What would your way of dealing with it all be?

Clearly very little movement on interest rates.

banks are at least I’m a good position, certainly compared to 2008. Whilst there is a squeeze on liquidity, there’s no reason that won’t return once we start spending again. We may see QE, but at the moment everyone will be hoarding cash, so no point until we can spend.

the packages that the UK government have put forward is astonishing, they need to fill in the self employment gap, but once that’s done it is very comprehensive.

I think we then need to wait. There is not a lot else that we can and should be doing.

there could be some real positives that come from this. Reduced carbon emissions, prosperous wildlife, stopping the devastation of the rain forests in Brazil (I assume
That’s on hold). If firms can be more productive by working flexibly and with employees as home, we have a chance of increasing productivity, which is how you grow the economy

once countries can be productive again we will need to review.

In terms of the long term, I don’t think you can make any predictions until we know the likely impact of this. Best case life returns to relative normality in a couple of months and we start rolling out a vaccination. Worst case we have restrictions on movement (in some form) for the same couple of years - which destroys most of the service industry.

 

[MTF]

Even if airlines go bust I guess in a few weeks somebody just buys the planes from the administrators ... Sticks a new logo on the side and gets some flight slot contracts

Is anybody that bothered what logo is on their fkying pressurised metal tube

Right, I guess operational standards (which ensure safety), training, scheduling, certification, they just make up as they go and we hope for the best? It's not like turning around a restaurant. The existing companies through their people, organization and documentation, know how to safely operate thousands of flights a day. I wouldn't be looking forward to turn that over to just anyone, even if they're going to hire all the personnel from the same pool of people that currently do the jobs, because I think the organization in itself counts for something.

 

[adexkola]

Right, I guess operational standards (which ensure safety), training, scheduling, certification, they just make up as they go and we hope for the best? It's not like turning around a restaurant. The existing companies through their people, organization and documentation, know how to safely operate thousands of flights a day. I wouldn't be looking forward to turn that over to just anyone, even if they're going to hire all the personnel from the same pool of people that currently do the jobs, because I think the organization in itself counts for something.

Thank goodness for the FAA that still sets regulations for aircraft and airline oversight

And if these companies are too important to fail then maybe we need to ramp up the oversight on them so that they stay buoyant in times like this, partly because they didn't splunk all their earnings from premier economy on stock buybacks

 

[Dr. Dwayne]

Obviously COVID-19 is the big story but the price of gas has dropped by 50 cents a litre here in a couple of weeks. Remarkable stuff.

 

[Yik]

It would be awesome if the airlines go bankrupt. The cnuts spent all their money on buying back stocks, so the investors (and the executives) get rich. Maybe they should start creating new stocks and sell them to build some cash before they start asking for the government's help.

I think a lot of airlines going bust and air travel being reduced in general is going to be great for the environment. I'm a firm believer that a lot of business travel is completely unnecessary and could easily be cut down. The fact a lot of businesses have just replaced business travel with Webex/Zoom meetings in the past few weeks is ample proof of this. Also I would like to see this inane habit of people taking weekend trips by air come to an end. Lesser airlines in the business should mean higher air travel fares which would be a good thing.

I appreciate that the tourism industry is going to be massively impacted however, a more sustainable pattern of tourism has to be developed both for the environment's sake and also to avoid overcrowding of tourists.

We should have a world in which less airplanes fly, and people aren't willy nilly flying thousands of miles.

 

[adexkola]

I think a lot of airlines going bust and air travel being reduced in general is going to be great for the environment. I'm a firm believer that a lot of business travel is completely unnecessary and could easily be cut down. The fact a lot of businesses have just replaced business travel with Webex/Zoom meetings in the past few weeks is ample proof of this. Also I would like to see this inane habit of people taking weekend trips by air come to an end. Lesser airlines in the business should mean higher air travel fares which would be a good thing.

I appreciate that the tourism industry is going to be massively impacted however, a more sustainable pattern of tourism has to be developed both for the environment's sake and also to avoid overcrowding of tourists.

We should have a world in which less airplanes fly, and people aren't willy nilly flying thousands of miles.

Steady on now.

 

[Yik]

Steady on now.

Why must other people have fun?

Seriously though, I mean to say that its an environmental disaster to have 20 somethings travel every few weeks only to get plastered in some random European city and jet back.

And like I said, a lot of locals in places like Barcelona would appreciate this as well.

 

[adexkola]

Why must other people have fun?

Seriously though, I mean to say that its an environmental disaster to have 20 somethings travel every few weeks only to get plastered in some random European city and jet back.

And like I said, a lot of locals in places like Barcelona would appreciate this as well.

Selfish reasons aside you make a lot of good points.

Airbnb is reeling as well; travel restrictions have cut off their income, and a lot of people who are leveraged in real estate letting out to Airbnb are on the brink. Good for cities and renters and people looking to buy to live.

 

[Yik]

Selfish reasons aside you make a lot of good points.

Airbnb is reeling as well; travel restrictions have cut off their income, and a lot of people who are leveraged in real estate letting out to Airbnb are on the brink. Good for cities and renters and people looking to buy to live.

I would think Airbnb (the company) should weather the storm. Their major costs are marketing and tech/admin/localising. They'll just cut back on marketing and get through this spell. From what I understand of their business they can scale back their operations and still be profitable unlike say Uber/Snapchat.

But yeah a lot of average Airbnb users are screwed definitely. Too early to say whether it will make a massive impact on renters and people looking to buy but hopefully it does.

 

[Organic Potatoes]

Why must other people have fun?

Seriously though, I mean to say that its an environmental disaster to have 20 somethings travel every few weeks only to get plastered in some random European city and jet back.

And like I said, a lot of locals in places like Barcelona would appreciate this as well.

I wouldn’t hold my breath on substantial environmental benefits off the back of this crisis. History has shown when fuel prices are low like they are now, people don’t just behave as normal and pocket those savings.

They drive more, take more cheap flights, and buy bigger cars.

 

[adexkola]

https://www.cnn.com/2020/03/26/economy/unemployment-benefits-coronavirus/index.html

Unemployment claims soared to 3.3 million last week, most in history

US numbers only.

 

[Drifter]

‘We have entered a recession’: IMF chief offers warns of economic ‘sudden stop’ worldwide

The coronavirus pandemic has driven the global economy into a downturn that will require massive funding to help developing nations, IMF chief Kristalina Georgieva said Friday.

“It is clear that we have entered a recession” that will be worse than in 2009 following the global financial crisis, she said in an online press briefing.

With the worldwide economic “sudden stop,” Georgieva said the fund’s estimate “for the overall financial needs of emerging markets is $2.5 trillion.”

But she warned that estimate “is on the lower end.”

Governments in emerging markets, which have suffered an exodus of capital of more than $83 billion in recent weeks, can cover much of that, but “clearly the domestic resources are insufficient” and many already have high debt loads.

Over 80 countries, mostly of low incomes, have already have requested emergency aid from the International Monetary Fund, she said.

“We do know that their own reserves and domestic resources will not be sufficient,” Georgieva said, adding that the fund is aiming to beef up its response “to do more, do it better, do it faster than ever before.”

She also welcomed the $2.2 trillion economic package approved by the US Senate, saying “it is absolutely necessary to cushion the world’s largest economy against an abrupt drop the economic activities.”

The US package also is important because it accelerated Washington’s $78 billion contribution to the IMF’s lending capacity. The fund membership in January approved a plan to double one of its funding baskets — the New Arrangements to Borrow — to about $500 billion.

“The U.S. decision to speed up approval of its substantial new contributions to the IMF is a powerful message to the international community and helps solidify the IMF’s (overall) US$1 trillion lending capacity,” Georgieva said in a statement after the House of Representatives approved the massive rescue package.

President Donald Trump signed the measure into law Friday evening.

It provides direct cash payments to Americans, a huge expansion of unemployment benefits, and grants and loans to businesses to help them weather the economic shutdown.

The IMF chief spoke to reporters following a virtual meeting with the Washington-based lender’s steering committee, when she also requested an increase in the fund’s fast-deploying emergency facilities from their current level of around $50 billion.

 

[Luke1995]

Could the economy be more affected now than in the great depressions of 1929 and 2008 ?

 

[Adisa]

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[Drifter]

Goes to show how fake the talk of a strong economy was.

 

[Fosu-Mens]

Could the economy be more affected now than in the great depressions of 1929 and 2008 ?

Depends. Due to the extreme globalization ingrained in many of the biggest supply chains, in many cases, it can have a failure behaviour like a house of cards. If one Country falls(lockdown, regulations etc) in the supply chain, like in a major supplier like China or in industrial areas, the repercussions are widespread and can be economically catastrophic.

Another important factor regarding the supply chain, that holds some level of importance both at a global and national level, is that the people working in a supply chain can spread the virus. "Critical jobs" revolving around packaging and movement of parts/goods can spread the disease between and within areas that are locked down. Imagine if a delivery guy is contained and delivers 100 packages in a small city or moves between a clean and contaminated city.

 

[Luke1995]

Depends. Due to the extreme globalization ingrained in many of the biggest supply chains, in many cases, it can have a failure behaviour like a house of cards. If one Country falls(lockdown, regulations etc) in the supply chain, like in a major supplier like China or in industrial areas, the repercussions are widespread and can be economically catastrophic.

Another important factor regarding the supply chain, that holds some level of importance both at a global and national level, is that the people working in a supply chain can spread the virus. "Critical jobs" revolving around packaging and movement of parts/goods can spread the disease between and within areas that are locked down. Imagine if a delivery guy is contained and delivers 100 packages in a small city or moves between a clean and contaminated city.

Given the world's current state, most of the lower developed countries (Who are not rich like the USA, China, the european giants...) will not have the structure to produce and delivery all the food and other stuff for a long time.

And yeah, literally any food we eat or object we touch could have the virus, it's crazy. My knowledge of economy is very low, but i'm assuming what happened in Greece and Venezuela will start happening in more places.

The big companies like Mcdonalds, Walmart, Coca-Cola will most likely survive, but the smaller ones, the people who produce food in the fields and used to sell it...

 

[Atze-Peng]

Depends. Due to the extreme globalization ingrained in many of the biggest supply chains, in many cases, it can have a failure behaviour like a house of cards. If one Country falls(lockdown, regulations etc) in the supply chain, like in a major supplier like China or in industrial areas, the repercussions are widespread and can be economically catastrophic.

Another important factor regarding the supply chain, that holds some level of importance both at a global and national level, is that the people working in a supply chain can spread the virus. "Critical jobs" revolving around packaging and movement of parts/goods can spread the disease between and within areas that are locked down. Imagine if a delivery guy is contained and delivers 100 packages in a small city or moves between a clean and contaminated city.

This pretty much. It was always a matter of time until the dependancy will cause a chain-reaction. This virus might be what will cause this. Globalisation has always benefitted the international big companies, but not the small people. There is no reason why countries should outsource labour that they can do nationally. Of course here in Europe we can't grow Mangos and such. Also there are other environmental limitations including natural ressources. But beside that every nation should've been self-sustainable beyond these at all times. We aren't anymore. And if this chain-reaction really comes to play then I would actually predict it being worse than the great depression 90 years ago.

Let's hope we somehow avoid this, but I am rather pessimistic about this one to be honest.

 

[Drifter]

Economist who hoped for ‘V-shaped’ recovery now predicting a prolonged downturn even worse than the Great Recession

https://www.rawstory.com/2020/04/ec...downturn-even-worse-than-the-great-recession/

 

[Sweet Square]

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[Fosu-Mens]

This pretty much. It was always a matter of time until the dependancy will cause a chain-reaction. This virus might be what will cause this. Globalisation has always benefitted the international big companies, but not the small people. There is no reason why countries should outsource labour that they can do nationally. Of course here in Europe we can't grow Mangos and such. Also there are other environmental limitations including natural ressources. But beside that every nation should've been self-sustainable beyond these at all times. We aren't anymore. And if this chain-reaction really comes to play then I would actually predict it being worse than the great depression 90 years ago.

Let's hope we somehow avoid this, but I am rather pessimistic about this one to be honest.

Short-termism and extreme dependency is a recipe for an economic system easily affected by external elements i.e. Corona Virus.

The measures most Countries have taken to combat the virus is some variation of a lockdown, and this is what will hurt the global and the different national economies the most. If the economies are getting even worse, will this cause some governments (USA?) to think f*ck the people, lift the lockdown restrictions and just let people get infected and die? I mean, is there a threshold where the "health" of the economy trumps the health of the populous?

 

[Atze-Peng]

Short-termism and extreme dependency is a recipe for an economic system easily affected by external elements i.e. Corona Virus.

The measures most Countries have taken to combat the virus is some variation of a lockdown, and this is what will hurt the global and the different national economies the most. If the economies are getting even worse, will this cause some governments (USA?) to think f*ck the people, lift the lockdown restrictions and just let people get infected and die? I mean, is there a threshold where the "health" of the economy trumps the health of the populous?

Which is why I said that nations should be self-reliant as good as they can. Obviously there are certain environmental limitations from vegetation to natural ressources. But beyond that there is no reason not to do it other than profitting global businesses - at the expense of being volatile to unexpected events (as well as other negative side-effects). And before someone twists my words: It obviously doesn't mean to isolate oneself from other nations 'duh.

And I do expect countries to eventually loosen up the lockdowns, because politicians are now - thanks to at least 2 decades of poor decisionmaking prior - in a position where they can only lose. They loosen up the lockdown and just accept a higher deathtoll or they let the economy tank hard to a point it is beyond repair. The third alternative is always using these lockdowns to push for massive authoritarianism - which is also something to keep in mind and be careful of.
The current plan seems to be to just devalue all the additional depts that are being made currently. Aka "controlled" inflation and through that decreasing the depts we are taking now to try to stay afloat. The same thing we did in 2008 (and we never should've done that to be honest since it just delayed the inevitable to the future and kept piling things up worse and worse)
Either way, I think we might already be past the point where the ripple effect is inevitable and we end up seeing a major recession - not that "little" one like in 2008, but more in the realm of 1930. There has been so much stuff going on badly over the past 2-3 decades that brought us into a position where everything is extremely shaky to begin with. And as a stroke of divine irony this virus comes in right at a point where many economists already expected a major recession to come by to begin with - just to amplify beyond that.

Based of the potential of such a horrible recession, there surely is a case to be made to saving the economy being more important than decreasing the viruses deathtoll, because a complete economic collapse may possibly create an even bigger deathtoll. So yes, there definitely is a threshold - the question is just where it is. If our politicians were smart, they would have invested as much as they could into building up temporary labour to create goggles, masks and gloves to bring people back into work under the condition of having to wear those (can't make it a condition, if you don't have enough) and next back into a normal social life. And they would have started preparing for that possibility back in January when they were getting first news about how bad it might be. Obviously they didn't. Apparently Austria is planning to do that now, but it still begs the question, if they have enough material to demand that and if it's too late to really make an impact.

In addition we have countries like Netherlands and Sweden - and to an extent the UK - who just winged this, closed their eyes and prayed they somehow gonna dodge the worst. To be fair to the UK, they did have false models during the period of their first decision-making, but I am not sure it would have made a difference if they had more serious models.
Spain sorta did the same - except that Spain did it in purpose to not lose out on their touristic events in early spring and all the decisionmakers should be held responsible infront of the European court to be honest.
Not to mention most african countries being incapable of doing anything, because we helicopter-parented them for decades so they didn't build up their own proper infrastructure for such things as they simply relied on our help and are now breaking apart without that help.
We also have most south american countries going from bad to worse - especially Ecuador.
All the muslim countries aren't doing much better either, because cumin oil, camel piss and praying will keep Corona way - with several Imams claiming how it is Allahs divine punishment for the non-believing Kafirs. Which is especially dangerous, if you understand how the islamic system with Imams in their religion works. And the gulf countries such as Qatar and Saudis are breaking apart as well, because they have no other income than business-travel/tourism and oil. Thanks to the oil-price-war with Russia both are collapsing and the moment these countries have used up their savings (which I am sure they do have quite a bit), they will go back into the stone-age, because they have absolutely nothing else.
And that's ignoring east asian nations and the fraudulent numbers of China - which I already critised 3 weeks ago here. I explained why I do not buy their numbers. I did say to a friend I assume it's at least more by a factor of 10. Recently The WashingtonPost (Might be a different outlet, but I think it was them) that their research leads them to think Wuhan alone has a deathtoll of over 40.000. Imagine China just being unable to catch up on their production. The entire world is producing their stuff there - which is already questionable to have your stuff produced in a country that is so ignorant to anything we consider human values and ethics - and if they can't catch up anymore, its over and out.



So yeah, I think countries gonna loosen up the restrictions soon, because they have to in order to avoid a complete collapse and they will take the potential risk of higher deathtolls - aka that threshold you mentioned. Just that I personally think we are already past the point of return and the ripple effect already started - it will just take a few months (my prediction is that by autumn it will show how bad things are going to become). And it's being extra bad, because no country can self-sustain. If nations were self-sustainable, the worst case scenario of a major recession and potential economic collapse wouldn't be half as bad, because we could still produce the essentials on our own. We can't. So if this worst case scenario ever comes to be - even if it isn't this time around - it's gonna be worse because of globalisation and the connected dependancy.

So lads, we had a good run. 30 years without any major wars and conflicts. Time to face some legit hardships.

 

[WPMUFC]

“When you look at, this is a lie that’s been purported by Wall Street. When a company fails, it does not fire employees it goes through a packaged bankruptcy . The people who have the pensions inside the companies, the employees of these companies end up owning more of the company. The people that get wiped out are the speculators hat own the unsecured tranches or the folks that own the equity. And by the way, those are the rules of the game. That’s right. These are the people that purport to be the most sophisticated investors in the world. They deserve to get wiped out.”

“Just be clear, like, who are we talking about,” Palihapitiya shot back. “A hedge fund that serves a bunch of billionaire family offices? Who cares? Let them get wiped out, who cares? They don’t get to summer in the Hamptons? Who cares!”

“On Main Street today, people are getting wiped out. And right now, rich CEOs are not, boards that had horrible governance are not, people are. Six million people saying I don’t know how I’m going to make my own expenses for the next few week, days, months. And so it’s happening today to individual Americans what we have done is disproportionately protect poor performing CEO companies and boards. You have to wash these people out.”

https://www.mediaite.com/news/ventu...ont-deserve-a-bailout-let-them-get-wiped-out/

Venture Capital absolutely breaking the mind of a wall-street mouth piece. Propping up bad companies is just like breathing for these folks, its a natural reflex. Why should the tax payer continue to bailout these companies if the state has no stake? Why give them money after years of buybacks and poor governance?

 

[Drifter]

IMF: Global economy will suffer worst year since Depression.

 

[berbatrick]

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[adexkola]

https://www.mediaite.com/news/ventu...ont-deserve-a-bailout-let-them-get-wiped-out/

Venture Capital absolutely breaking the mind of a wall-street mouth piece. Propping up bad companies is just like breathing for these folks, its a natural reflex. Why should the tax payer continue to bailout these companies if the state has no stake? Why give them money after years of buybacks and poor governance?

Yeah so one of the byproducts of a stock buyback is burning through cash on hand, taking on more debt, or both. And it's usually initiated by greedy shareholders who want to inflate the value of their shares. But holding more debt increases the likelihood of a bankruptcy.

From what I understand about a bankruptcy is there is a hierarchy established by the court. Owed wages and taxes are high up. After that debt holders come next. Shareholders come dead last... And usually walk away with nothing. And that's how it should be if some of these companies go down... Unless a buyout comes with the government taking significant equity.