This is anecdotal and it might come across as bitter and tonedeaf as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores. the fact that ANY market is completely detached from whats actually happening to Americans is frustrating.
My job just cut benefits and hours but we're "essential."
Remember those $1200 checks? Im still waiting on mine. Lenders and banks were supposed to start going easy on loans but ive had two emails and a phone call about the loan for my Silverado this month and wouldnt you know, the caller was excited to mention my stimulus check.
A guy who used to be my bartender now couch surfs a few days a week at my place while he looks for work. His mother is getting evicted from an assisted living center in a few days and his girlfriend is sick. She 'works at the Amazon' so she cant take any time off, but hes hoping if he gets a job at the Flying J at the edge of town he can switch places with her and she can take a few days off.
Shops are closing and nobody seems to care. Ive counted 2 furniture stores, a consignment shop, a few barber shops, and half the god damn bars in this town including one that was burned to the ground "mysteriously" over the last two weeks. Someone spray painted a swastika on the late night pizza joint.
So yeah this is a recession but it is so much worse than a lot of people think. No school means poor kids roam the street like packs of feral dogs asking for money for food around here. Half the country is out of work and the best Bloomberg can come up with is "its the start of a recession dont you know!"
> This is anecdotal and it might come across as bitter and tonedeaf as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores. the fact that ANY market is completely detached from whats actually happening to Americans is frustrating.
Thanks for posting this comment. I know it sounds trite, but I’m sending well wishes your way, hoping you and your loved ones make it through this crisis as minimally impacted as possible.
I think you likely see the big picture better than others. The economy is absolutely crushed. That the markets go up must be especially frustrating to those not able to partake in any gains. My take on the market is that it will go up on good or bad news for the moment. Going up on good news is self explanatory, going up on bad news could be related to speculation that the Fed and Congress will pump even more money into the economy —- the wealthy expect to be propped up by the government as they were in the great financial crisis.
My cynical take on this is that the rich expect to get richer, no matter the outcome, and are investing accordingly. My question is how much, if any, social unrest this will lead to.
>My question is how much, if any, social unrest this will lead to.
The only social unrest that has happened so far have been the protests about wanting to lift or ease restrictions on states, and they were widely panned as a bunch of nutjobs. I doubt there will be any "unrest" beyond the protests.
The only social unrest that has happened so far have been the protests about wanting to lift or ease restrictions on states, and they were widely panned as a bunch of nutjobs.
It's easy to look down on people lower on the socioeconomic ladder. They're still human beings. They've been given this raw deal: For the greater good, you will now give up your job for an indefinite period of time, with no prospect of finding like employment elsewhere. You have no choice, and if you refuse, you are a horrible person and in some cases you may face civil and criminal consequences.
Injustice isn't any less unjust, because the recipients are somehow in a group one perceives as deplorable. Principles of justice and human rights are universal. This was MLK's ideological point in the Civil Rights movement.
Adherence to this principle is how I distinguish pseudo-activists who just want power and attention from those who really have justice at heart: Are the principles applied to everyone, or just to whomever it's convenient?
It's tough when your country isn't much of a democracy. A major difference between Scandinavia and the US/Canada/many others is that proportional representation plays a much greater role in the electoral system here.
It's a good thing, when a republic is constructed so that a minority still has a voice. One might perceive them as the "wrong" minority today, in the current context. In the future, they might well be the "correct" minority.
(That said, I think Sweden of all places in the west, have had the best, most sane reaction to the pandemic.)
And do you think that in Sweden of all places, minorities don't have a voice?
They have more of a voice, because they don't have a two party system. If you are American, please check out some European political systems. You'll find that politics in Europe are a lot more nuanced and minorities in general are much, much better represented.
And do you think that in Sweden of all places, minorities don't have a voice?
I don't know if you intended it that way, but the above feels like you're trying to put words in my mouth to that effect. No, I don't think I said that minorities are voiceless in Sweden.
They have more of a voice, because they don't have a two party system.
Right. Again, as Matt Easton says, "Context!" If the US were to go fully democratic, with our two parties, no electoral college, and everything done proportionally, things in the US would suck for constituencies smaller than 50%. Particularly with discourse being what it is in 2020.
However, if you know of a way to do away with the US two party system, I'm all ears.
Also, when I read your comment above, I tend to read it in my head as sounding angry and patronizing. Hopefully, you didn't mean it the way of, "What, you ignorant fool, do you not know...etc...?"
The system as it is sucks for more than 50% of the population, though. With a two-party system, you're either going to have tyranny of the majority, or tyranny of the minority. Neither is good, but the former is preferable.
This is why being gay before 1950 was so great: because the majority of society got its way. That's why there was segregation in many places in the US back then: because the majority of society got its way. It took the Civil Rights movement of the 1960's to get the in-built principles and mechanisms which are there in the US system to protect the minority to really apply. And yes, it was in part the action of the national majority which got that to happen.
The usual reason why people say the majority should get its absolute way, is generally because they are in the group who would come out on top. That's a shortsighted view. Even the majority is human and gets it dead wrong sometimes. This is why certain human rights need to be inviolate. This is why every government needs some sort of mechanism which gives the minority out-sized power. The US just does it in this particular way.
The examples you give are of a kind that give minorities rights that cannot be overridden by voting.
EC and Senate are a very different arrangement - they don't protect any rights as such, they simply give some people more votes than others. Which means that not only those people can then veto majority decisions (even when they don't actually infringe on their rights) - but they can impose legislation that curtails rights of the majority.
As for it being a short-sighted view that majority should generally have its way, well, here's Federalist #22, for one:
"Every idea of proportion and every rule of fair representation conspire to condemn a principle, which gives to Rhode Island an equal weight in the scale of power with Massachusetts, or Connecticut, or New York; and to Delaware an equal voice in the National deliberations with Pennsylvania, or Virginia, or North Carolina. Its operation contradicts the fundamental maxim of republican Government, which requires that the sense of the majority should prevail. Sophistry may reply, that sovereigns are equal, and that a majority of the votes of the States will be a majority of confederated America. But this kind of logical legerdemain will never counteract the plain suggestions of justice and common sense. It may happen that this majority of States is a small minority of the People of America; and two thirds of the People of America could not long be persuaded, upon the credit of artificial distinctions and syllogistic subtleties, to submit their interests to the management and disposal of one third. The larger States would after a while revolt from the idea of receiving the law from the smaller. To acquiesce in such a privation of their due importance in the political scale, would be not merely to be insensible to the love of power, but even to sacrifice the desire of equality. It is neither rational to expect the first, nor just to require the last. The smaller States, considering how peculiarly their safety and welfare depend on Union, ought readily to renounce a pretension, which, if not relinquished, would prove fatal to its duration."
Was Hamilton short-sighted when he wrote this criticism? You can argue that it was originally aimed at the Articles of Confederation, not EC and Senate. But it's clear that this is a rather generic criticism, and it's applicable whenever "larger States ... receiving the law from the smaller" becomes commonplace - which depends on how many states there are, and their relative sizes, which have changed a lot since the original 13 colonies. Looking at the outcomes of the presidential and parliamentary elections in the past 20 years, I'd say that this condition is already fully in force, and so is the warning.
It’s one thing to protect the minority from the majority; it’s another to allow the minority to constantly overrule the majority. At some point the US will come apart because of our current political dynamics.
it’s another to allow the minority to constantly overrule the majority
That's the whole point of protecting the minority. Otherwise, if the majority always wins, and the minority has to be satisfied with the crumbs left by the majority, the minority has effectively zero power. It's like writing an API. You know you're doing it right, when things mostly work, but there's someone, somewhere sorely dissatisfied with not getting their way.
In the words of one fictional British gentleman, "You don't have it. I don't have it. That's detente, comrade!"
Of course. Rights have to be universal, even for people with such desires. Otherwise, whomever has the power to adjudge what others are "actually" thinking have the power to remove people's human rights.
The dynamics where accusation is enough, guilt is assumed, and no proof is needed are often abused to have power over others. If there was ever a time when this should be obvious, it is 2020, present day.
In fact, all of the above is the whole point of the Bill of Rights and the Magna Carta.
"Protects" is not equivalent to "grants the political wishes of". For example, people who want to abolish free speech still have the right to argue for the abolition of free speech.
In the UK there is a lot of payroll being paid by central government, plus there are interest free loans for small businesses.
This is very good on the surface, however, there is a large chunk of wealth going to the rentier class. The rentseekers were encouraged under successive Tory and New Labour governments with schemes such as 'buy to let'. Now they are the only truly protected sector of society. The rich get richer.
Buy to let has been heavily discourages by changes to the tax system and stamp duties in the last few years, so this is an unreasonable characterisation. The previous long-running Labour government did far less to discourage buy to let and other rent seeking activities than recent Conservative governments in the UK.
Yes rent seeking activities are a serious problem and I think there's a consensus forming on this, at least in the UK.
> The rentseekers were encouraged under successive Tory and New Labour governments with schemes such as 'buy to let'. Now they are the only truly protected sector of society. The rich get richer.
There's some truth to this, but I wouldn't say rentseekers are the only truly protected sector of society. My parents put their life savings into buying a block of flats in the 90s. They borrowed from every single person they knew and took out a mortgage against their own home and put most of their subsequent savings into paying off the mortgage sooner.
The last mortage payment is due end of this year and they were looking forward to leaving their full time jobs whilst maintaining their little property 'empire'.
So far this month they've had 3 tenants call asking for rent reductions, 1 totally unable to pay rent and another insisting on a 20% discount because their friend's landlords are offering the same.
Maintaining that block of 10 flats is no picnic. It means you're on call to unblock toilets on bank holidays or clean, paint, draft tenancy agreements and file paperwork on your evenings and weekends.
Of course - owning an appreciating asset means you're better off than someone who doesn't but you're not quite sitting pretty.
That is unfortunate. All business has risk; becoming a property owner is no different. I anecdotally know a few people who bought second homes to rent out, and they're facing a crunch too. I don't see why, though, small-time landlords should be treated different from other small business owners when it comes to society-wide crises like these.
Trump was elected on a populist, "drain the swamp" agenda. The public is notoriously bad at predicting which candidate will help the people, and which will "help out their rich buddies."
I completely agree with you, but... How about don't vote in leaders that only care about helping out their rich buddies then?
Tone deafness in the media and the social and governmental leadership of any country is a key reason why demagogues and sociopaths get into power. This has been the case across time and cultures.
The Scandinavian countries have moved to pay all payrolls to keep people paid during all this madness, instead of just bailing out large debt holders.
Watch Louis Rossman's YouTube coverage of the US programs as a potential recipient/applicant. As a small business owner, he has a front seat to the incompetence of US lawmakers. It's the same kind of thing which smells like grandstanding incompetence, which also afflicted the "banking reforms" post 2008. The laws aren't written by and for people who actually know how things work.
Oh they're definitely written by and for people who actually know how things work. They're written by Congressional aides and advisors who do exactly what they're told by the donors to the politicians. The politicians don't care what's in the bills, they care how the voters will react.
> It's easy to look down on people lower on the socioeconomic ladder. They're still human beings. They've been given this raw deal: For the greater good, you will now give up your job for an indefinite period of time, with no prospect of finding like employment elsewhere. You have no choice, and if you refuse, you are a horrible person and in some cases you may face civil and criminal consequences.
Lots of these people (and a lot of the trumpy, NRA class at large) are bourgeoise, fwiw
Lots of these people (and a lot of the trumpy, NRA class at large) are bourgeoise, fwiw
Well, for one thing, in that subset there are still people getting a raw deal.
For another thing, it's a generally bad thing when people start formulating their political equations or thoughts of who's worthy to be listened to based on group stereotypes. "People like that," is just another form of, "those people," or "them."
I've been on the receiving end of stuff like that all my life, as being one of a few classes of minorities, some of it from people who might be characterized as "the trumpy, NRA class at large."
Ultimately, we're all individuals, and we're all human beings. Beware of people who rail against a group, then have you identify them by outward signs. Be especially wary, when those people start claiming to know the presence of bad thoughts in others, such that they "don't deserve" this or that. Be especially wary when the "don't deserve" starts extending to basic human rights.
In 2020, be triply wary if you are, in effect, being asked to think badly of and ignore the human rights of one particular group -- in the name of justice and human rights.
> It's easy to look down on people lower on the socioeconomic ladder.
That's not who's protesting with assault rifles demanding that their hairdresser show up to work.
People who are "lower on the socioeconomic ladder" are the ones going on strike for PPE, hazard pay and sick leave that the media are dutifully ignoring.
That's not who's protesting with assault rifles demanding that their hairdresser show up to work
Again, it's easy to paint a group as a "type" to justify disregarding their viewpoint. There are opportunists at any large protest. Ultimately, the protest is a collection of individuals, each with their own story.
People who are "lower on the socioeconomic ladder" are the ones going on strike for PPE, hazard pay and sick leave that the media are dutifully ignoring.
Lots is being done to lessen the effect on the lower socioeconomic ladder. My state has a $600/week stipend for all those unemployed. In many cases this is more than they earned while employed. Sort of a temporary "basic income".
So its unevenly applied (not in every state). That's an issue to bring up with your state representative.
> It's easy to look down on people lower on the socioeconomic ladder. They're still human beings. They've been given this raw deal: For the greater good, you will now give up your job for an indefinite period of time, with no prospect of finding like employment elsewhere. You have no choice, and if you refuse, you are a horrible person and in some cases you may face civil and criminal consequences.
The man in front of the protest to ease restrictions in my mid-sized city was a wealthy local real estate magnate.
it does change the tenor and content of those protests.
If people who shouldn't have political power gain it by listening to the neglected, the proper course of action isn't to denigrate the people. Take back that power by listening.
> If people who shouldn't have political power gain it by listening to the neglected, the proper course of action isn't to denigrate the people.
He didn't get it by listening to the neglected. He got it by spending money. The protests in my city, like in most places, were primarily people saying "I want people to work for me!" and not "I want to work!". Also had some confederate flags thrown in, because why not.
> Take back that power by listening.
If I were to listen, I would hear that people don't want to be forced to choose between survival and health.
I would hear that people don't want to be forced to choose between survival and health.
Losing your home, losing the ability to pay for healthcare, perhaps losing custody of your children or losing your already strained marriage -- these are all serious issues which may greatly impact the survival and health of many people.
One thing which tone-deafness is often a symptom of, is that one has lost a bit of the capacity to think of certain others as full, equal in worth, human beings. I know this from first hand experience.
> Losing your home, losing the ability to pay for healthcare, perhaps losing custody of your children or losing your already strained marriage -- these are all serious issues which may greatly impact the survival and health of many people.
Absolutely. And nobody wants to be forced to pick between that, and the very real possibility of getting sick. But if the states just open up, that's the position that they will be in—work and maybe get sick, or not work, and lose your home, the ability to pay for healthcare, perhaps losing custody of your children or losing your already strained marriage.
Keeping the states closed is a popular position.
> One thing which tone-deafness is often a symptom of, is that one has lost a bit of the capacity to think of certain others as full, equal in worth, human beings. I know this from first hand experience.
It's an honest shame that people with your attitude weren't the ones running the protests, instead of people flying the confederate flag and wanting to get their hair done.
Absolutely. And nobody wants to be forced to pick between that, and the very real possibility of getting sick
For a lot of people, this is a choice they make every day, even predating the pandemic.
It's an honest shame that people with your attitude weren't the ones running the protests, instead of people flying the confederate flag and wanting to get their hair done.
It's an honest shame, that politics in 2020 is often about group stereotypes, not fundamental economic reality.
> For a lot of people, this is a choice they make every day, even predating the pandemic.
It is, but I'm not sure where you're going with this—are you implying that the pandemic hasn't drastically affected that decision? Otherwise: what are you saying?
Those protester people were to a large extent rich employers who wanted to start earning on the backs of others again, or benefiting from that work with normal service availability. There isn't a lot of rawness in that deal, only privilege, and their request was one that hurts others to maintain that privilege.
There is no reason to bring that reference in an otherwise non-political discussion.
It's hard to separate socioeconomic differentials from politics. And I specifically use deplorable to call out the political excesses of my own accustomed "tribe."
>And I specifically use deplorable to call out the political excesses of my own accustomed "tribe."
And, either purposely or naively, you're misconstruing the context and scope of a single quote as if you were a part of the other "tribe."
The "basket of deplorables" comment is widely and incorrectly assumed to be an expression of elitist disdain by "the left" for all rural white males, all Trump supporters, or everyone of lower socioeconomic class, when it rather explicitly referred to the - and I'm paraphrasing almost directly from the quote here - "racists, sexists, homophobes, xenophobes, Islamophobes" who took over Trump's base and steered it in an extremist direction. In other words, people who should be considered deplorable.
It may not have been a precisely worded criticism but it was an accurate one.
And, either purposely or naively, you're misconstruing the context and scope of a single quote as if you were a part of the other "tribe."
The "basket of deplorables" comment is widely and incorrectly assumed to be an expression of elitist disdain by "the left" for all rural white males, all Trump supporters, or everyone of lower socioeconomic class, when it rather explicitly referred to the - and I'm paraphrasing almost directly from the quote here - "racists, sexists, homophobes, xenophobes, Islamophobes" who took over Trump's base and steered it in an extremist direction. In other words, people who should be considered deplorable.
It may not have been a precisely worded criticism but it was an accurate one.
Thanks. I have absolutely no reason to reply to any of that.
I know the following from personal experience as a person of color, as a not completely hetero-normative person, and as someone who lived in the on-campus house of an organization that had non-gender specific bathrooms in the 1980's. As I mentioned elsewhere, tone-deafness and lack of self-awareness are often symptoms of someone having lost the ability to view others -- all others -- as fully equal in basic human being status.
Left as an exercise to the reader: Who exactly am I calling out here?
The folks participating in the protest are not at all lower on the socioeconomic latter, but predominately middle class. Black Americans, who tend to be poorer and less secure, support the lockdown at a higher rate than whites or other racial groups [0] (at least in Florida). Whites have the least support for a lockdown, but most still oppose reopening.
Lastly, at least some of the protests were funded by the DeVos family [1].
Fact that US still have to break down so much into racial cohorts in polls is weird. And offer nothing of value other than the generalizations like "who tend to be poorer" that doesn't help the discussion nor analysis. What do you do with this information in this context?
How about breaking down by religion or something else that at least points to what kind of media/message the group is more exposed to? or something that hints at extraneous interests, like homeowners or not. There are so much better ways to break down this data.
> How about breaking down by religion or something else that at least points to what kind of media/message the group is more exposed to?
I'm an American that fits into neither of these groups but nearly everyone I know does, so from my third party perspective I think you might be underestimating how different the sources, messaging, and conversations are between white and black Americans on average. That being said, I think it is still vastly overused in polls, and is perhaps a self-fulfilling prophecy to some degree.
Due to the history of the US, race is highly determinate to culture and socioeconomic status. It's a very good proxy for to cut across all sorts of differences. For example, you mentioned home owners. Guess which race has very few of those?
I would have preferred to see a poll based on income, but race is still a decent proxy for that.
Building up socio-economic status is a straw man point here given how widespread the effects of this downturn are. It could be that parts of the middle class that are protesting may have lost their jobs or businesses and the stimulus checks don’t offset that as much as it would for lower income folks.
It would be much harder to "look down" on the protestors if their protests were backed by sanity. For every sign saying "I need to work to feed my family," you see 20 saying:
* Coronavirus is a hoax!
* Fake nurses!
* 5G cellphones cause coronavirus!
* Impeach Bill Gates!
* Vaccines are poison!
* Social Distancing is Communism!
* Freedom!!
There are reasonable arguments against the temporary shutdown, but the protesters are not part of that reasonable conversation.
For every sign saying "I need to work to feed my family," you see 20 saying...
Ask yourself this: Why is the media playing up those fringer crazies, and not covering the very poignant, socially relevant, and human angle of "I need to work to feed my family"? Then go and look up Manufacturing Consent. Here's how propaganda often happens in the West: Emotional manipulation is better than outright ham-handed Pravda-esque censorship.
BTW, you seem to have watched the same "All Gas No Brakes" YouTube video of the Sacramento protests I did. You name the very same nutcase signs as appeared in the video. There's part of your answer right there: If it bleeds it leads. Nutcase signs are easy to get viral sharing out of. They tick the humor and outrage buttons all at the same time.
Freedom!!
This is a good thing. If someone tries to associate freedom with bad people, it's because they want all the power for their own tribe.
Note this quote from a cousin comment: "People who are 'lower on the socioeconomic ladder' are the ones going on strike for PPE, hazard pay and sick leave that the media are dutifully ignoring." Please, ask yourself why the media are dutifully ignoring certain things.
You realize everything what you say holds true on the opposite side of things, yes?
All of the media coverage I've seen and read played up those protesters as valiant, the suffering workers of the world uniting to stop the government from destroying their career.
Your argument that this is the result of a unified media doesn't exactly work, unless you're referring specifically to media you disagree with.
Your argument that this is the result of a unified media doesn't exactly work
Well, of course not. That's the classic trope of putting the predicate calculus version of "All" into another's mouth. However, depending on where you look, such an approach is quite predominant in the "mainstream." I don't have time to review all media myself, personally.
Complaints of media manipulation and conspiracy are also a longstanding, standard element of the fringe's message. When your message is strong and supportable, you want a camera and microphone pointed at you. When your message doesn't make any sense, then media attention is always painted as mean and biased.
"Freedom"
Every protest in the USA, no matter where it sits on the moral or political spectrums, tries to hitch its wagon to "Freedom" in some way. It's become a word you just paint on a sign when you can't think of something to actually be complaining about.
Do you count it as "unrest" when people just quietly ignore the restrictions without actively protesting? Because I see a lot of that, and more every day. In some rural counties the local Sheriffs have unilaterally decided not to enforce statewide "shelter in place" orders. I'm not justifying that behavior but it will inevitably increase week by week.
How broad is your definition of unrest? If it’s as broad as ignoring laws while being quiet about it, then speeding could technically be seen as “unrest”. As for quietly disobeying the “shelter in place” orders, I don’t see that as unrest, but as I said earlier, depending on how broad your definition is, it could be.
Speaking of meals: US food banks have been reported as having 6 mile long lines and were required by Dept of Agriculture to maintain a 5-6 minute questionnaire (per meal recipient) up until a week ago.
Unemployment rate is underreported because states can't bring applicants onto their rolls fast enough for demand (if the state even accepts the applicant).
Rent payments, Mortgages, credit cards defaults are all growing. Once people exhaust their stopgap measures, the pressure for civil unrest grows quicker.
There's more but I won't flood you. The point I'm trying to make is that things _so far_ are okay, but will get increasingly dicey if people don't have access to food and the necessities for living.
I am sorry to disappoint you but no, things are not starting to get dicey in Italy, at least not yet.
I am italian and value that Guardian report as I value one written in "Novella 2000". Those reported are single episodes and UK journalism is trying to build a case out of nothing as happened other times in the past.
P.S: I live in Rome and here people are still singing.
P.P.S: "Novella 2000" is the unquestionable italian king of trash gossip magazines.
...in the corporate news media. They have never had the full story, and they have less and less of it recently. This knob has been turned too far; it's broken now. TPTB will remember they have other knobs (every other OECD nation is directly supporting citizens' incomes, for example) or the whole machine will catch fire.
it reminds me of how i read somewhere the average citzen in china approves of their government while in the west this is hard to comprehend. think of the furor when google tried to do business there: dont they want the truth, dont they want freedom?? it turns out that actully more importance is placed on values like stability and order. its interesting to see in america the head nodding, that yes, health and safety is #1 above all else, no matter what cost (i dont mean economic cost!) -- i mean not freedom, not choice. anecdotally, it also reminds me of how doctors treated my terminally ill friend. submit yourself to drugs and surguries and live like hell but you will live a few months longer. instead the doctors should have been saying go away, live as best you can while you can! but that sentiment is technically against their duty. technically they were 'treating' her, 'helping' her. anyway this is just to say, a change is happening, a change possibly for the worse, but a change we ourselves are asking for (secure us, keep us safe, keep order... to hell with the truth and freedom, those values are for confederate flag waving 'rednecks')
> My question is how much, if any, social unrest this will lead to.
My question is how many people have absolutely no ties to the stock market? I'm pretty far from any definition of rich, but I still have a 401k, so you're not likely to see me rioting because the S&P 500 is in the green.
All taxpayers (since they will have to make up for shortfalls) and recipients of defined benefit pensions (since they will have to accept reductions in benefits) are also indirectly exposed to changes equity prices.
> All taxpayers (since they will have to make up for shortfalls) and recipients of defined benefit pensions (since they will have to accept reductions in benefits) are also indirectly exposed to changes equity prices.
But that needs to be put in its proper context. Even if you have a small amount of stock or indirectly benefit from stock prices in some way, it'd be stupid if you let that mentally tie yourself to the stock market.
For instance, shortfalls in taxes do not necessarily need to be made up by "all taxpayers." With progressive taxation, they can be made up by some taxpayers (which will likely consist of most HN commentators, since software engineers are relatively wealthy).
> I doubt the political will exists to tax capital gains
A friendly reminder that capital gains is taxed (when it is realized).* I assume that you are actually complaining about closing loopholes that exist for avoiding paying the full rate.
* Obviously this comes with the caveat that the tax code is large with lots of "loopholes" (in quotes because they were mostly intentionally created). Capital gains losses are somehow socialized as tax deductions and the "carried interest loophole" allows certain fund managers to treat capital gains as a different class of income.
Yes, I'm aware that's what he was referring to, but it's not the entirety of the tax burden in the US, and even people who pay nothing in income tax still pay taxes.
This is precisely why a flat tax disproportionally impacts lower income people.
I think it would be interesting to try out a model where _only_ capital assets are taxed. No sales tax, no income tax, no capital gains tax.
It should dampen the effect of the rich getting richer only from rent collecting, while still making sure the market allocates capital to where it provides the most economic value (I.e can be turned into enough revenue to pay the tax in question)
I agree with a wealth tax in principle, but it's not without many difficult implementation challenges. For example, someone's entire net worth could be held in art. How do you accurately gauge its value if it hasn't been sold in two decades?
This doesn't make sense. You're now saying that the government is going to be in charge of inspecting every citizen's property and auctioning it for them?
I'm as liberal as they come, and that just seems ridiculous.
Yes. Perhaps not the government though, what I have in mind is an institution representing the commons and all individuals right to it. So the income from said auctions could not be used for arbitrary government spending but only for the interest of the commons: The ones agreeing to respect the ownership deal by being non-owners of the asset in question. I imagine most of the revenue would just be payed back as a dividend.
Edit: (I do not think of wealth in the form of art though. Imagine most wealth is tied up in capital assets$
It's really more about dividing capital into the kind that is "natural" and limited - land, mineral rights, EM spectrum; some would also say copyright and patents - and the kind that is produced by human labor. It's a bit fuzzy in practice.
Sales tax is almost 11% here. And I'm in a red-leaning purple state, not "Taxachusetts" or anything. Property tax on vehicles. FICA ("it's not a tax!" yeah OK, but it is really)
Well, they do have all the money. Besides, the 19.9% shouldn't complain to the 80%. Rather, they should complain to the 0.1% whose lobbyists write the tax code in the first place. We can be sure they had their reasons to set up this level of progressive taxation rather than some other level.
I don't think it's because top are lotting, more like people at top have bigger leverage. But in all, all people are equally likely to loot if the places were changed.
Monetary policy and globalism. We've got an economy built on debt. We went from a production based economy 40 years ago to a consumption based one. We exported skills. We believed that a service-based economy was sustainable in the long run. We went off the gold standard and embraced an inflationary monetary policy that punished savers. Then we built a retirement system (including state pensions) dependent on yields, which causes retirement funds to chase ever riskier asset classes. We made debt so available for so many things, like education, healthcare, real estate, etc, and we made it so artificially "cheap" that it drove up prices. We never really recovered from the 2008 real estate bubble. The Fed's answer was to buy mortgage-backed securities by the trillions, and bailed out the people responsible without punishing anyone. So we kicked the can down the road and now, this downturn is so massive that we will not be able to escape the deep financial consequences and it is going to take years to overcome this. We have nothing left to borrow against and we're in tens of trillions in debt.
Think about it, a CEO of a big company is more likely to be in social circle of the politicians, judges and regulators.
They are more likely to be sympathetic to their immediate acquaintance who they see every week rather than those poor social economic class people who they have nothing in common with.
Add some dilllusion and descrimination in the mix, like "they are poor because they are lazy" and it becomes easy to make policies which benefit your immediate social circle.
And lot of poor people don't even have time or motivation to analyze those policies and even if someone manages to do that, they don't have enough influence to do anything about it.
You pay people less than their cost of living, demand that the state make up the difference in food stamps and health-care subsidies, and then pocket the difference.
In a society where the bottom 50% have virtually no wealth and are in debt, how much do you think they should pay in taxes and how do you expect them to pay for it?
If someone making 1m/yr pays 1% in taxes and someone making 10k/yr pays 90%, the millionaire is still covering over 50% of the tax burden despite being impacted far less by the taxes on his wealth.
They pay sales tax, social security tax, and they never make anywhere near as much in wages as the value of what they produce, which is the biggest tax of all but since it’s a hidden, implicit tax, you can’t see it.
Sure, but without the bottom 50% the top 20% would not be able to make nearly as much money as they do.
Progressive taxation is aware of the exploitive nature of capitalism. Just because people are being exploited doesn't mean they don't contribute, much to the contrary.
I never said it was a good thing, its merely a statistic.
> opportunity is very limited and unequally distributed
Sorry, I don't subscribe to this idea.
I came from a blue collar family. Both parents work long hours to provide for our family. I was working when I was 12. I didn't own anything of value through HS or college. I worked several jobs to pay my way through college. I have lived a big chunk of my life below the poverty line. I didn't graduate in four years like most of my friends, but I was still able to get myself out of college, get a job and have been able to build a career out of almost nothing.
"Shouting into a void of ignorance". Such prose from a person who probably was gifted a nice comfy life, trying to tell the guy who had to bust his ass for everything he has that I'm ignorant? Now that's something.
Feel to take more of my fake internet points away, I don't care.
>I came from a blue collar family. Both parents work long hours to provide for our family. I was working when I was 12. I didn't own anything of value through HS or college. I worked several jobs to pay my way through college. I have lived a big chunk of my life below the poverty line. I didn't graduate in four years like most of my friends, but I was still able to get myself out of college, get a job and have been able to build a career out of almost nothing.
That's completely anecdotal, but I experienced nearly the same. I agree with the above poster that opportunity is limited and unequally distributed, and I would say you and I experienced a good bit of luck....not to minimize your struggles.
> I never said it was a good thing, its merely a statistic.
You’re correct, you didn’t. You did, however, post it as a response to a statistic that highlighted inequality in stock ownership. That response could only be interpreted as justifying that inequality because the upper class pays the majority of taxes, while the lower effectively contributes nothing. Yet you fail to realize that the lower class suffers a much larger overall tax burden relative to percentage of income.
This is why you were downvoted, but not by me. In fact, this is my first comment on an internet discussion ever. I’m not trying to take away your “internet points”.
> Sorry, I don't subscribe to this idea.
You’re entitled to your opinion, but it doesn’t make it true. You suffer from survivorship bias. There’s plenty of sound research that dispels the narrative of abundant economic mobility. Notice I didn’t say there is no opportunity, but limited and unequally distributed.
To your final point, I apologize if I came off as snarky. I am a first generation, ESL immigrant. My life, while relatively comfy by global standards, has been anything but by US standards. I hope you’ll forgive my pointed prose, and realize that being hardworking and ignorant are not mutually exclusive. There are many things I’m ignorant to, and when it’s pointed out, I try not to be personally offended. Instead, I approach it as a learning opportunity.
Ignorance is offensive when it is willful and deliberate.
Sharing anecdotes about pulling yourself up by your bootstraps doesn't change the fact that the biggest predictors of your life outcomes are your parents incomes and your zip code.
The history of America is the wealthy allowing just enough blue collar folk to make it big, so that the bootstrap narrative keeps propogating. The "I did it, others can too" is the fuel that keeps the facade of social mobility alive and strong.
Only one remark: "tell the guy ... that I'm ignorant"
You can have a wealth of first-hand experience but that doesn't mean it translates to opportunities or behaviors of groups. So yes, you can be ignorant.
As someone else pointed out, class mobility is extremely low and income inequality is extremely high in the US. For your situation, the plural of anecdote isn't data.
From one person who was born into poverty to another, I'll gladly call you ignorant because my version of your story involved me taking out a loan against my personal health in order to take a risk that either could've put me above water or doomed me.
I'm missing a lot of my teeth but it got me out of poverty. Do you think that was a good trade? Do you think it's a good thing that people have to make such decisions to survive?
I think this is the crux of what drives me mad with these personal anecdotes of struggle. Is this the best we can do as a society, that a few poor people, through work and luck, can become less poor? What's the point of these stories, beyond just sharing one's personal experience? That the society we've got here is the best we can do?
because that drive to pull ones self up is what built the US into what it is today. without that drive what is the point of being more than what you are today? the struggle to be something more is literally the driving factor behind all of existence. the opportunity is out there for most people if they look hard enough. that said there are definitely some who need societal help to pull them out of a rut but it is most definitely not even close to a majority.
like others in this thread, i too came from a family living below the poverty line yet somehow turned that into a career despite not even having a degree. opportunity to me seems plentiful
What built the US into what it is today was its incredible amount of untapped resources, followed by military dominance and tapping into other countries' resources. Keeping people impoverished was (and is) not necessary for that.
Where exactly are you getting “keeping people impoverished” from? Is the assumption they will try and fail? What is forcing them to fail and therefor stay impoverished? The entire point is to move from having nothing to having something. Either you’re born into it, or someone who’s already earned it gives it to you.
I’m not going to bother with the other part of your comment as your clearly biased but I’ll assume you’re not insinuating that things magically happen without hard work, that just sounds silly.
The idea of the 401k is such an amazing hustle for the wealthy.
* Middle-class Americans consistently pump money into the stock market generically (not information trading), raising the value of all your stocks over time.
* Now you have a gun to their head to support policies that pump up the value of your stocks even more.
* Also, when shit hits the fan, they can't easily cash out, but you can. Both on a mega-scale (recession), and individual stocks (when companies tank, you sell first, and 401k index or diversified funds take a hit).
I'm not an expert in this stuff but it smells from miles away.
Just a pedantic note - I have most of my 401K money in Certificates of Deposit, so you do not have to pump the market.
However (thanks, Federal Reserve!), you get punished with interest rates below inflation, so people, increasingly desperate to protect their savings from inflation, put their money in risky investments (not just the stock market, also overpriced real-estate, etc).
If you research the history, you discover that the 401k was designed for the C-suite, not ordinary workers. Some calculating Wall Streeter(s) somewhere decided that it's a reasonable retirement vehicle for ordinary shlubs. It is not.
See this:
https://www.pbs.org/wgbh/frontline/article/teresa-ghilarducc...
> The idea of the 401k is such an amazing hustle for the wealthy.
You make a very interesting point!
I wonder what a "reverse 401k" program would look like (e.g. box the wealthy into aligning their actions with the interests poor/middle class while only marginally benefiting themselves).
I wonder what a "reverse 401k" program would look like (e.g. box the wealthy into aligning their actions with the interests poor/middle class while only marginally benefiting themselves).
Pensions? Those also don't seem to work all that well.
About half of households own no stock at all. It's a safe bet a good portion of the other half have little enough that "the market's up!" isn't very meaningful for them.
What does what you have in your 401k matter if your house and car are being repossessed? I suppose you could pull it all out at penalties and with a bunch of taxes, but that's going to be work, and assumes you have enough in there to make it worthwhile.
The larger penalty would still probably be the taxes, which I assume aren't waved, and again assume there's enough in there to make it worthwhile. I know for myself, even though I've been diligently saving for my relatively short career, I don't think there is.
You are going to pay those taxes anyway when you retire. 401k is only beneficial if you expect to pay lower tax rate when you finally retire. Unless you expect the federal tax rates to go significantly down across the board, withdrawing from 401k when you have no other income is actually a great idea, or it would be without the 10% penalty.
However, you typically can borrow money from your 401k, and pay no penalty, which makes it a good option if you need temporary liquidity.
And considering how early this pandemic hit in the year, if you were laid off in March you didn't even make 25% of your salary yet. That means your taxes are likely to be quite low for the year, so this is actually a good time to withdraw money from a 401k and take the tax hit.
If I ever have a full year gap between jobs (like some kind of a long sabbatical), I'm going to be doing a lot of Traditional to Roth converting, for exactly this reason.
There is in fact a special exemption this year to the 10% tax penalty for taking money out of retirement accounts for COVID-19 related purposes. But make sure your specific account offers that exemption before withdrawing anything.
Most people will not want social unrest. Social unrest leads to chaos and unpredictability.
A better alternative is the less sexy but more productive political action obviously with buy in from the power brokers.
Unrest is what happens in Venezuela or Yemen, etc. it doesn’t always have to be like that as those are extreme; never the less unrest is a medicine that is in most instances worse than the disease.
> A better alternative is the less sexy but more productive political action obviously with buy in from the power brokers.
That's the first thing that will be tried, but to be truly successful the "buy in" needs to happen equally as much from the people that are on the verge of picking up pitchforks. It also needs to be an authentic political action. Unfortunately our politics in the USA has gone into profound dysfunction. Something ugly is going to happen, I think. I don't know when, but it's been on the way for quite some time. That guy in the oval office is just a symptom of a really deep problem.
> Unrest is what happens in Venezuela or Yemen, etc
Not necessarily!
There are a number of really bad things that precede unrest, usually a collapse of systems that people rely on. The folks in Venezuela didn't want unrest either, but when your currency becomes worthless within a span of a couple years... bad things are going to happen.
Yes, this exactly. These problems are absolutely possible to solve through political action. But our leaders have had ample opportunities, spread out over more than a decade, to do so. And they've sent a clear signal that they simply won't.
Actually I believe they sent a clear message that they want problems to get even worse. It is not even keeping the status quo at same level, at the face of this pandemic almost all world governments decisively pursued enriching the 1%.
I only hope more people woke up to this fact and form a critical mass but I doubt it.
How nice of the governments to help businesses afford to eat instead of people.
There is no reason assistance to people has to go through business. The reason governments do that is because leaders own equity in the current hierarchy and definitely don’t want to disturb that by giving the lower classes leverage to demand better terms.
Do you not understand that if there are not jobs to go back to there will be no eating tomorrow either? If businesses start to go under, and this cascades as it usually does, we could be seeing serious recession, or even economic failure? What do we do about food then? Also what happened to the economic stimulus checks and unemployment system? The systems are definitely taxed but that only shows you how big we’re getting hit atm.
Except "gainful employment" has been quietly eroded year after year with things like institutionalizing contract work/gig economy/worship of hustle/eroding worker's rights to organize and bargain with employers...
The businesses don't disappear because the doors close for a few months. People will still have their colleagues’ contact information to be able to re hire and start again.
I’d wager those businesses are already classified as essential and kept operating. And if not, that can be a separate issue the government can tackle, but there’s no need for it to be conflated with the issue of keeping people fed and housed.
just like keeping people fed shouldn’t be conflated with keeping businesses operating and solvent. your logic cuts both ways and businesses shouldn’t have been brought up by the grandparent in the first place
By buying up junk bonds the government props up irresponsible, mismanaged companies, which possibly spent money on stock buybacks and bonuses for executives, instead of product/service development.
The way to go is to protect workers during transition from one job to another by providing them with decent unemployment benefits, training, etc., not bail out lousy executives over and over.
When people die, they're dead. When businesses die, their assets are sold to better businesses and their former employees are hired by better businesses.
I swear I have yet to meet a capitalist who actually believes in "capitalism"...
I see that motion as the status quo. The velocity, maybe even the acceleration, towards enriching the 1% is the status quo. This is how things will continue to go if people leave the system alone, pandemic or not.
Not "nothing less", but just less to lose than to gain. People are willing to gamble on a roll of the dice when the upside is larger than the downside.
Russia had a lot of political unrest back in the 90s, when it was at the bottom of its descent. It elected extremist parties to parliament - commies had the majority for how long? - and street politics was also... messy at times. I remember growing up in that period, and back then it would have been entirely unsurprising to wake up one day to see ballet on TV where news are supposed to be.
So I wouldn't call it a good example of being okay. It made it through that political unrest without blowing up as a whole (but with plenty of local crises, like Chechnya)... but it was not smooth sailing at all.
Not even 3 decades ago all it took was a jury verdict for anarchy and looting to sweep across LA, requiring the national guard to put down the unrest. People were breaking into stores to steal diapers. What will be the breaking point this time around?
This intentionally ignores 100 years of oppression and institutional racism that was the actual powder keg. The verdict was just the striking of the tinder.
The exploding inequality and continuous safety net collapse in the united states could very well be a similar powder keg waiting for a match.
Exactly. That powder keg never went away after Rodney King. It's always been here, institutional racism exists to this day. Systemic inequality can only be tolerated so long, and patience runs thin when money runs out.
We’ve had those flare ups before. Watts riots, early 1900s labor riots and repression.
They’ve had them in France, they’ve had them elsewhere. That’s a kind of unrest but not the kind I think we’re talking about.
I think what we’re talking about is the kind that results in overturning of the power structure. I don’t think we’re near that. I think 99.9% of the people do not want that outside of people on the extreme left and extreme right, interestingly for quite different reasons.
Unrest is what happens in Venezuela or Yemen, etc.
As Thucydides wrote, the tyranny that the Athenian empire imposed on others it finally imposed on itself. "Unrest" in Latin America is caused by USA's off-the-leash unsupervised services. Venezuela's government is taking better care of its citizens than our government is taking of us, in this current health emergency. This despite the crippling sanctions and attempted coups d'état we've perpetrated against them. Don't believe the war media; I recommend The Grayzone. [0]
Although, of course, for the last year or so not even the war media attempts to defend what we're doing in Yemen.
>Venezuela's government is taking better care of its citizens than our government is taking of us, in this current health emergency.
I've seen nothing to corroborate this.
>Don't believe the war media; I recommend The Grayzone.
Here's a video from last year of Grayzone founder Max Blumenthal cheerfully receiving honors from Venezuelan President Nicolás Maduro, who has ruled that country by violence and decree since 2015:
Venezuela is the watched pot: it should have boiled by now! Venezuelans haven't violently overthrown Maduro because they mostly consent to the results of two somewhat-democratic elections. He lets his supposed "rival" Juan Guaido prance about the country unmolested so all Venezuelans can laugh at the impotence of CIA. With continued sanctions and the price of oil at long-time lows, "natural" pressure on Maduro should be running hot. Instead, that same low price obliterates CIA's theoretical incentive to install a subservient petrostate. They've redeployed their ratfuckers to Nicaragua.
If a USA president had been subject to massive bias from nearly every news media corporation, he might be tempted to honor an independent news outlet that attempted to report with objectivity. Oh, wait... that actually happened this year, at the "State of the Union" speech.
When we fall into the trap of running to wikipedia every time we're confused by world events, we can't be surprised that the war media continues to lead us around by the nose. If we step back and see the pattern, we begin to discount every story that leads us closer to yet another stupid war. Every day this month, it has been obvious to non-Americans how deficient our system is. Every other nation on earth has responded more reasonably and more effectively to this virus. Venezuela is among those nations.
>A better alternative is the less sexy but more productive political action obviously with buy in from the power brokers.
This has been tried for many years with little result. People in my social circles have grown fed-up and tired with the U.S. political system, especially those who supported Bernie Sanders in 2016 only to watch entrenched power-brokers deny him the candidacy. Some allege similar interference in 2020 (see podcast with former Bernie staffers):
>unrest is a medicine that is in most instances worse than the disease.
Millions of increasingly desperate and frustrated Americans may not be able to agree with you. People are never purely rational actors, and beat-down emotional people are among the least rational. The LA Riot's immediate outcome was arguably worse than its proximate cause, but nevertheless people rioted.
Very few rich people will actually get any richer. Most of them are heavily invested in stocks, which have plummeted, or owned or work for businesses which are being crushed. There are very, very few places to hide from what's going on.
One possible exception, and it's quite a small group really, may have had a lot of money in cash and bonds. They may be able to do quite well by buying or investing in businesses at relatively low prices and earn gains during the recovery. This is _not_ a bad thing. The economy desperately needs fresh investment to re-grow businesses, re-hire employees, pay salaries, rebuild supply chains. That takes a lot of capital investment.
I suppose another way would be to confiscate all their wealth and give it to the government to invest, but who do you trust to do that most efficiently and to the best economic effect. Government bureaucrats, or businesspeople with track records of investing in and growing businesses?
So on the business side now is not at all the time to bet on Socialism. We can't afford it at the best of times, let alone the worst. On the other hand, this crisis has starkly exposed the weaknesses of naked market capitalism. It's pretty obvious already that the European model of social democracy with single payer health systems and a robust social safety net has proved far better able to cope with this crisis. It's a system specifically designed to help people suffering hardships, and now it's doing exactly that on a massive scale. I think this comes out of the European experience in the two world wars. Existential crises in which all of society pulled together because we flat out had no other choice. We were all in it together. Now we're all in this together.
I suspect this will lead to similar realisations in the US. If big companies hit by disaster deserve bailing out for the common good to save jobs and economic resources, why are individuals hit by adverse circumstances any less deserving at a personal scale? If it's reasonable to help a business hit by a health crisis, why is it unreasonable to help a family? I'm no socialist, check another post on this discussion where I defend Conservatism here in the UK, but recognising that as a society we have obligations to each other isn't socialism, for me it's just pragmatism.
Rich people will get poorer in the part of their wealth that is largely virtual anyway - stocks and other investments, the value of which is so far removed from the real world by now, it's all just make-believe. The actual physical assets that provide them with improved quality of life will be just fine, for long enough that all those virtual losses become gains.
But the poor and the middle class will be hit - are being hit already - at those physical assets. So their quality of life plummets directly and immediately.
Very few rich people will actually get any richer, but that doesn't mean that yellow journalists and political activists won't be able to convince the general public that they did by carefully starting their measurements at around the time the stock market was it its lowest, e.g.: https://www.theguardian.com/commentisfree/2020/apr/24/billio...
for investors there is no gain so far, definitely worse than those who did not or could not invest. I think most if not all of "us" are still under deep water, my 401K became 201K a few weeks ago, now it's about 301K, so as a matter of fact, this is a loss year for people who saved to invest, worse than those who did not invest.
> My question is how much, if any, social unrest this will lead to.
There is deep rot at the heart of the American system, and something is going to have to give. The economy has been broken for the lower 50% for a long time now. This course is unsustainable.
I try not to get explicitly political on here, but Bernie Sanders was, as far as I can see, our last shot at reversing the trend from within the current system. He is the only person on Capitol Hill with the motivation to make the real changes that desperately need making. Joe Biden will just pretend the problem doesn't exist for another four years. Trump, as a leader, is just an agent of chaos with no ideals and no plan. I can't totally blame people for taking a chance on that over the continued, slow march of rot.
I think we're going to start seeing escalating social unrest until something breaks. All we can hope for is that something breaks sooner rather than later, and that we get whatever new deal needs making before things get too bad.
Does anyone else remember Occupy Wall Street here in the US? Millions camping out in parks demanding change and support. But they were unable to rally, organize, create any lasting impact on the elites and wealthier strata of society. The middle and top looked down on the bottom as an annoyance. They were literally removed by riot police, and the movement died. Unsurprisingly, the number of homeless people increased drastically in that same period (financial crisis) and how have many municipalities responded? Laws against sleeping on benches. There was literally a tent city under Las Vegas, but the decision makers in this society are so far removed it just doesn’t matter. Until the bread runs out, we are not in a real “end of the world” crisis as you describe it. Americans are apathetic, just wealthy enough not to starve, have deeply ingrained individualism that makes them resistant to anything resembling support or handouts, and don’t understand what’s happening - that is to say, the rich are getting so rich their families will never be poor again, and the doors to that class are closing. There’s more support now for ideas like a basic income, universal healthcare, etc. but the fundamentals of the system are so ponderously difficult to change...a very interesting situation.
My conspiracy theory is that because the stole 700billion with the bank bailouts and that resulted in OWS, which was quashed pretty quickly - and resulted in no consequences for those that stole that.
They have ossued the “stay inside orders” whole the now steal four trillion dollars so there wont be another OWS at scale.
It wasn't too long ago that Los Angeles was burning on national TV, and people had to post on roofs with rifles due to the police refusing to get involved with the situation beyond protecting the wealthiest zip codes. It only stopped when the national guard deployed armored vehicles.
People think the U.S. is removed from this sort of thing. It's not. If you push the working class to a breaking point, they will break into stores to steal diapers if they have to.
I mostly agree with what you're saying, but disagree about Bernie. Many of his biggest policies are still just trying to cover the rot with a coat of paint. Healthcare too expensive? Just have the government cover the bill. College too expensive? Same thing. Workers not paid enough? Raise the minimum wage. All very blunt, simplistic reactions, that ignore the complexities of the real world. Getting rid of the rot requires looking at the roots of the problems. If something is 10x more expensive today than it was a few decades ago, just agreeing to pay the 10x price is not a good solution. You need to figure out and address the underlying causes.
I am still hopeful for our future, maybe foolishly, but I am. If there is a silver lining of Covid-19, maybe it will highlight some of the insane bureaucracy and regulatory capture that are strangling our institutions in the US and lead to improvements. Don't get me wrong, we also need some progressive policies targeted at helping those who are struggling most, but those policies will only be effective if we also recognize and address the underlying cost disease issues. Just look at progressive havens like San Francisco to see how much money can be burned on well-intentioned ideas without achieving any results, if you refuse to acknowledge the underlying causes.
IMO, 4 year university degrees in the USA in their current state are basically a scam
We're promising kids that if they study hard in school they'll be elevated to the middle/upper class by their degree, but in reality most of those degrees are almost completely worthless for building a career.
People are graduating with 4 year degrees in business, math, assorted liberal arts, and then they're saddled with 6 figures of debt and not any more appealing to companies than someone with a year of experience in a desk job
Another problem: So many people are getting pushed into getting 4 year degrees now that they're now a requirement for many jobs that don't even need them. Sure, a CS degree will help if you're building some Google-scale backend code, but you really don't need one to tinker with a small web storefront's layout bugs
Bernie isn't trying to solve a problem, more correct it. Why fault the people for trying to correct a problem that's more to their advantage when hospitals, to this day, still haven't tried to correct the problem of expenses. One shouldn't have to forego their home to pay for small surgical procedures. When people try to correct these things we get replies like yours saying you shouldn't correct them but leave them to the system to correct them. We have to realize the "system" won't inherently do these things, we the people as part of the system have to take measures to look out for ourselves also because the system won't do it for us.
"Bernie Sanders was, as far as I can see, our last shot at reversing the trend from within the current system"
If anything, Bernie Sanders was our first, worst shot at structural economic change. In fact, every candidate on stage during those Democratic debates was running far, far to the economic left of Barack Obama, John Kerry, Al Gore or either Clinton. With some historical perspective, you might see that the tides have turned in favor of the types of changes you are calling for, not against as so many people seem to pretend.
There's truth here, but - and this is getting into subjective territory - it's my belief that none of the other candidates came by those platforms through conviction. I think they measured what voters wanted to hear, measured what kind of brand they could sell for themselves, found the intersection, and constructed a campaign around it.
Now, that doesn't completely invalidate the point! There's a genuine "economy" of votes around "I take a stance for X, you give me votes, I continue to take that stance, you continue to give me votes", which can function even in the midst of cynicism. But it's much less reliable or efficient when that's the case; when the politician, as a person, doesn't base their platform in their genuine beliefs. In fact I think the prevalence of this mentality is one of the major causes of our current situation.
There's almost nobody left among our politicians who has any real conviction. I think John McCain did. And call me naive, but I believe Bernie Sanders is authentic when he's talking about these topics. He's been doing so since the seventies. Career-politicians who do nothing but appease voters might do an okay job at running the show, but they will never truly change the system that got them elected.
In practice, none of them would actually have implemented it, except the only one with a history of going against party and lobby. Barack Obama ran far to the left of Barack Obama, but ended up compromising with Republicans for some absurd reason as he held both the house and senate, to the degree where he passed Mitt Romney's proposal while dragging his feet.
None of them except for Bernie Sanders was willing to recognize the system as fundamentally broken. Biden and Clinton and indubitably their Democrat sosies would openly profess to the elite that nothing would change.
"none of them would actually have implemented it, except the only one with a history of going against party and lobby"
Why would the person with few allies and hostile relations with various power players be the one who could "actually" implement anything? Barack Obama had a senate majority that Bernie would have killed for in his hypothetical first term, but Obama still couldn't get his own party to even consider a public option. Things have changed compared to them, but not so much that any 51-seat senate majority could pass anything close to what Bernie calls for. It's beyond unrealistic to pretend otherwise.
Because the presidency is vastly more powerful than what you think. Obama could have pulled an FDR, or a Trump, and shifted the party very hard, but didn't. It's quite simple: you go to your opponent, you tell him that if he doesn't follow the whip you will use your vast reach to get him primaried, threaten to modify the rules of the DNC, hell, drum up support for a general strike. Threaten to slash the military budget, threaten to cancel a defence program, or to stop shale oil subsidies, play politics. But for some reason, from FDR onwards, no one plays politics except to concede towards the right. Literally no one in power. The platform of the Democratic Party has become "Let's be Republican-lite in order to win those elusive moderate independent" that for some reason seem to shift more and more towards the right for every single election cycle for the last 40 years, almost as if they were illusory or weren't as ideologically unmovable as asserted.
And it's total bullshit that the Democratic Party wouldn't consider a public option. The Republican Party was considering a public option.
You're saying that even with a Senate majority, Obama couldn't get his own party to consider public option, while also arguing that through candidates that are "far to the left" of Obama (except Bernie Sanders apparently), we can achieve the kind of structural economic change that people who support Bernie Sanders want. Seems a bit contradictory to me.
Did Trump have to compromise with the left wing of the Republican Party? Did Biden have to compromise with the left wing of the Democratic Party? No, because of the implicit threat of being primaried, or for the party to be shifted. Which Obama did not even threaten, but all others presidents did (towards the right).
He also openly compomised in the name of "bipartisanship" multiple times despite it being uneeded.
The only thing that comes close to a left wing part of the Republican Party is Sue Collins, who is always very sorry and disappointed but eventually toes the party line.
Compared to Trump, roughly half of the Republican party is to his left by varying magnitudes. Obamacare, for example, was originally a Republican proposal.
But yes, the entire Republican party line eventually toes the party line. Same for the Democratic party, as long as the party line strengthens the class interests of the elite.
I didn't believe even Sanders would do that. That's why I supported Gabbard. She wasn't as strong on the economics, but I actually believed she would try to rein in the military-industrial complex, which is an indisputable blight upon humanity and which Sanders never discusses.
Tech people will be hit much harder by this than they think. The STEM world is largely in denial because ultimately SV grew because of the last major recession. That won't be happening this time.
Startups are having massive layoffs right now, and each week bring companies further and further down the chain lay people off. I strongly suspect we'll see more major layoffs next week.
Most big tech companies are driven by either consumer spending and advertising. Before 2008 at lot of these companies still had not capture their full market share, so even in a recession there was room for growth. Now profits in these companies are based on market dominance. Even the big names will likely take a hit as the severity of this recession starts to take hold.
Finally in the Bay Area there's the looming problem that huge amounts of everything is paid for in RSUs (restricted stock units). The more ridiculous those total compensation packages may seem to outsiders the more they are built up from RSUs. In theory you should just live off base salary and RSU are the (very thick) icing on the cake, but this is unrealistic in SV. This stock part of the compensation goes a long way to paying for the insane housing in that region. Stocks drop and instantly Bay area income does to.
Tech will be effected, but a combination of naiveté and denial
make conversations here seem like tech is safe.
100% agree. The housing market in the bay area will go down even more. The last year changes in tax rules such as lower deduction for mortgage interest and municipal taxes had already weakened the market. With RSUs going down, even less people will be able to buy housing, driving the price down. I think my house lost 8% in the last year, pre-COVID19. Sucks for me as a home owner, but I really believed the housing market was over-inflated. If we have layoffs, in FAANGs, I suspect a lot of folks will not be able to pay there mortgage.
> With RSUs going down, even less people will be able to buy housing, driving the price down.
If we use the SP500 as a benchmark for RSU valuation, in 2020 those regressed, at their lows for the year, to mid 2017. They are currently at September of last year. In the past year, SP500 is up a quarter percent. I don't think tech workers were doomed in 2019, and nobody was buying a house on the assumption that RSUs would appreciate at 50 percent per annum.
> If we have layoffs, in FAANGs, I suspect a lot of folks will not be able to pay their mortgage.
Indeed million dollar mortgages are high stakes. If foreclosures actually become an issue I imagine the politicians will step in to bail someone out. Maybe the lenders, but probably homeowners directly since they vote. It's entirely possible we see a democratic congress throw out the SALT limits from the tax reforms.
I wouldn't count on it. The mortgage market is divided between conventional and jumbo loans[1]. Any bail outs will likely focus on conventional mortgages. The current administration seems to relish in screwing over blue states, and the house of representatives has a long list of negotiating priorities. They might be able to negotiate the SALT limits, but I don't see jumbo loan bail outs making the cut.
The problem with a lot of startups is that they aren't making a profit when everything is going fine, let alone during a world wide pandemic, sometimes for years.
I see it as a wake up call for tech. It will suck for many people but in the long run it might be positive for the industry.
Funding doesn’t matter much if your customer base either doesn’t exist anymore (eg b2b sass companies trying to build a foothold via other startups) or has drastically shrunk (b2c companies targeting consumers with reduced buying power).
I also feel pretty strongly that many companies have been hoarding engineers/etc. because they've been so flush with cash from places like SoftBank and because there has been no expectation of making a profit for the last 10 years. Then they make them work on a VPs pet-projects with not much business value and those will be reviewed fairly soon.
>"The STEM world is largely in denial because ultimately SV grew because of the last major recession. That won't be happening this time."
Says who? Are you really claiming knowledge of what the future portends?
If you are certain of the future-- you would make a bit bet. Have you bet money on it? I doubt it. If you truly thought this was the case, you'd have purchased some options ;)
>Finally in the Bay Area there's the looming problem that huge amounts of everything is paid for in RSUs (restricted stock units).
The FED and Treasury have "united" in some sense, and we have unlimited (trillions) QE flowing into equities. So unless the FED stops the money printing party, I'm not so confident this will happen.
> Lenders and banks were supposed to start going easy on loans but ive had two emails and a phone call about the loan for my Silverado this month and wouldnt you know, the caller was excited to mention my stimulus check.
Don't settle for this. My niece had her car repossessed 3 weeks ago. They said for $18k cash she could have it. We told them to pound sand. She's borrowing cars and getting rides, but next week she'll have a decent car, and I'm going to record a lien on it with the county so nobody can take it if things get worse and she has to declare bankruptcy.
Make them an offer: for $1000 cash, you'll park it in the driveway, unlocked, with the keys in the visor on any day they want to schedule. You're going to buy it back at the auction for 1/3 of what you owe. Or they can work with you, politely. If they take your car, they're just as screwed as you - possibly more so. The used car market is a bloodbath and they all know it's going to be far, far worse in 6 months.
The rich get richer because they know how to take advantage of situations like this. As a diesel tech, you almost certainly have the knowledge to nurse an old beater along and take advantage of your lenders weakness. Please do it.
This is such horrid advice. She will have to declare bankruptcy to discharge the auto loan and 18k debt may not be sufficient to guarantee she can. Worse, that 18k will now have fees added to it for the repossession and late payments. The chance of getting the car back through auction are near nil for many reasons, from that auctions do not necessarily take place in the same locale to it can be months before the car gets to that point as the paper work has to work through the system, a system sufficiently hampered by the CV19
Now we don't know the full extent of the original poster's loan issues but the best bet is to try to arrange payment changes with the lien holder. Never ever advise anyone to walk away, that is the worst thing you can ever do.
The worst advice hardly, you’re exaggerating. Your credit will take a hit for 7 years, which is definitely a long time but the worst of it is you will pay more up front in deposits and pay high interest rates from loans. I’ve walked away from more than $18k during the last crisis and here I am today with a great credit score and am looking at buying a house potentially soon (or at least was pre COVID). The worst thing you can do is to continue paying on something you know you’ll lose anyway, causing even more financial problems for yourself.
It makes sense if the car tends to last 350k+ miles and has only been gently used. There are at least a few models that have pretty consistently been getting up to that or higher before major repair is needed since 2010 or so. I will say I think quality hybrids (again, gently used) are worth more than a lot of their counterparts on this point.
Gently used at 100k seems like a strong ask. I commute two hours a day and get around ~20k miles a year. The car would be five years old at the point of 100k. Quicker than that and the person that owned it drove the crap out of it. Plastic and trim is squeaking, stains, scratches, etc. I dont personally care about any of that but I expect it to be reflected heavily in the price.
Then you look at the asking prices for larger SUVs with 200k+ miles and its even crazier.
My first car was 10 years old when I got it, model year 1986. I did maintenance myself with the help of my father - oil, brakes, rotors, that kind of thing. It was 5 more years before it needed real work (bad alternator, bad fuel pump) and another 3ish years before major failure. A couple grand kept it on the road. After I sold it I still saw it around town for a number of years.
My point is, cars last far, far longer than we generally assume if you take reasonable care of them!
Those SUVs were expensive new as well. If you head over to the new car lot, it's not hard to spend $60k on an SUV, even a domestic one with a Chevy|Ford|Jeep badge.
These are the kinds of vehicles that everyone wants to drive (along with trucks) and 72/84 month loans have been common for a while now (even for lightly used cars). So that sets price floor for trade-ins, since people can only roll over so much negative equity. Then you have to factor in that car sales in 2009-2012 were 50-60% of what they were in 2019.
So, demand is high, and supply is low. It makes sense that used SUVs are expensive. Once you start looking at less desirable models, like coupes and sedans, then prices drop considerably.
It's possible if you're like my friend whose job was to drive all around Europe hauling specialised parts for construction equipment, sometimes doing 2k km in a single day.
I think he did 60k km (37.5k miles) during the first year, but you couldn't tell that from the shape the car was in, since he cared for both the exterior and interior.
The only thing that showed any visible signs of aging were the windshield wipers - he had so much on his plate that he couldn't squeeze out a few minutes to refresh them.
Depends where you live and how much you drive. While the situation is much much better than it used to be, cars in places like the Northeast still tend to start getting serious rust damage after 10 years or so.
That is definitely true. The salt-rust issue should play a huge role in resale value. I grew up in an area with this situation, and I knew a lot of people who would only buy used cars sourced from southern states because of it.
You're not giving them free money, you're getting them to pay you a lot more in total over many years by selling them a much more expensive vehicle up front. Instead of, say, $20k over 3 years, they can get $40k+ over 7 years for selling a product that doesn't remotely cost them twice as much to build. It's more profit for them.
These 0% 7 year loans are not coming from banks. They're coming from the car companies. They're a sales tool.
The dealerships are making their money with various add-on packages now, to try to bump up the sale price. It isn't even in your favour to offer cash in most cases.
That should only change the asking price, not the actual sales price. Its not like the dealers are going to eat the loss. They just roll what they might lose into the new loan.
I dont have access to the actual sale prices at auction to know what the true worth of these cars is though. I would guess half of the retail asking price?
Car manufactures favor margins over moving metal. They've learned that long loan terms don't reduce sales, as most people define affordable to be, they can afford the monthly payment.
And since manufactures own the lending arm, and the sales arm, they enjoy higher margins, plus more in interest payments. Not everyone is going to qualify for that 0% interest. Plus, it keeps dealers happy because they can squeeze in bullshit fees to pad the sale price.
Americans have bought the idea that everything in the US is so cheap, hook line and sinker, and don't question it. As an American living abroad I hear it all the time. Then I actually put up prices and pretty much everything is cheaper but labor where I am. Everything you need - cars, transport, healthcare, education, good quality fresh food - are usually pretty expensive these days in the US. More niche stuff like hobby equipment yes can be cheaper in the US due to market size.
I'm guessing this had largely to do with the recession?
People weren't buying new cars and so the supply for used cars dropped (I remember dealers calling me begging me to sell my Ford Edge) but the demand increased exponentially because it made more sense to buy a used car, then to get a new one.
This is turn increased the price to many models and in some cases, a lot. Hybrids and electrics shot through the roof because people were trying to save money on gas. More reliable models from Honda, Toyota and Subaru also went way up in value.
Low end car flipper here, it really depends on what slice of the used car market you're talking about. Think about what kind of people buy what vehicles, the kind of money they have and where the supply of those vehicles comes from and it all makes sense IMO.
Used cars are an immensely diverse range of "products". You've got $500 Aveos that Jimbo or Manuel will have no regrets hauling an I-beam on the roof of, you've got $25k 25yo 4Runners that 25yo software engineers with six figures of salary and minimal expensive responsibilities will talk themselves into paying asking price for because it's what they grew up getting dragged around in.
The market for anything new enough to get a loan on is always inflated, obviously, that's what easy financing does.
For the last 4yr or so the bottom the the market, non-japanese compacts and subcompacts with 15k+, 90s junk that needs work, Altimas in perfect condition but with a time bomb CVT and 80k on them, etc, unfashionable midsize SUVs from the '00s was just fine. You could pick up running, driving, has one or two known mechanical issues that need to be addressed 10-25yo vehicles for $1500 all day long, non-running for even less.
The market for low mile, low flair, A to B commuting and family hauling vehicles in good cosmetic condition that people who think "good schools" means "no poors" and worry about what their neighbors think of their lawn buy for their kids to go to college in or slightly less well off kids have to buy for themselves after college were what was inflated, like 5k+ for a Japanese crossover from '01 with 250k on it inflated. These vehicles have become less and less common because the white collar upper middle class crowd that keeps things nice but changes cars decently regularly has been leasing more and more.
If you were wiling to clean the ever living crap out of a kid-stained interior or get some cosmetic body damage fixed (or just ignore it and live with the ugliness), or (get your pearls ready folks), <gasp>, drive a domestic that isn't a pickup, you could get cars of the same, age miles and mechanical condition for $1500-$3000 instead of $4k on up. These vehicles are plentiful because the middle class has been buying them CPO off lease and using the piss out of them hauling around their families, commuting a ton of miles, etc, etc and then ditching them for another one when they feel they are too old/beat. This is the niche I specialize in and I think these vehicles are a great value.
Basically the stuff that white collar professionals feel is the bare minimum of what they or their kids can drive without looking below their class has been ludicrously overpriced because (surprise, surprise) those people have a decent chunk of change to throw around and supply has been dwindling.
OP's niece takes on the liability as the owner (ie she hits someone and causes harm her insurance doesn't cover), but OP retains legal claim against the property, preventing someone else from obtaining it through a legal judgement or similar proceedings.
Right, if it gets taken away it gets given to me as the senior lien holder. For best legal protection, I should loan her money with some nominal interest rate.
A distant family member did this on the house of one of their kids, and it saved them from losing it in a foreclosure. The other lender was so angry with them for refusing to release their lien; but they couldn't legally force them to do it.
How does this work with an asset the size of a house? Does having as little as say $5,000 in the house when the the other lender has $200,000 in give you this power to stop foreclosure?
Maybe not stop it, but make it a really big pain. They'll need you to sign off on court filings, etc. If you're obstinate, you can certainly encourage them to "deal with this house later".
Yes. There might be a state where someone holding a lien on a house can prevent a first mortgage holder from foreclosing, but I'd certainly recommend someone talking to an attorney before trying this.
This would only work in an "easy money" period, during which loan originators are eager to ignore lending standards on second mortgages. Such periods will come around again, though.
Any creditor you can’t pay who goes through the trouble of getting a judgement against you. This could be a credit card company, a healthcare provider, anyone you owe money to but can’t afford to pay.
It doesn't. Bankruptcy courts and courts in general are pretty wise to the idea of "debts" and dubious last minute transfers to family members, close relatives, and so on. This guy is definitely not the first person to think of the idea.
Correct. You can't magically draft a senior lien. Unless it's a house in an HOA in a super lien state. Or you're the government and taxes are owed. So there are some instances where a senior lien can be recorded later, but an outstanding auto-loan - not that I'm aware of.
Skirting what's owed, playing games with manufactured leverage, getting repossessed - these are all the factors that cause people with lower credit scores to pay a lot more for their loans.
This might be a dumb question, but wouldn't whoever sold the car/provided financing have the lien on the title? Wouldn't sale/financing be contingent on no other liens on the car/property?
> No school means poor kids roam the street like packs of feral dogs asking for money for food around here.
I think this is possibly the single biggest long term problem we're going to face as a result of all this. Economic recessions will come and go. But missing 5/8ths of a school year is going to be absolutely devastating for this generation of kids. They will be left permanently behind without a serious concerted effort by every school district to make up for lost time. The bar (which is already dismally low) will have to be lowered further for them to graduate, and how/when will it ever be raised back again?
When I was in third grade, we spent half the second semester learning about different kinds of whales. This is material I forgot pretty much as soon as it was over. When I graduated high school, my mom and I went through all my old elementary school material to see what we'd like to keep for sentimental value and what we're okay with throwing out to make room in the garage, and we were just overwhelmed by the sheer massive volume of paper that came out of that whale unit.
There is so much redundancy in elementary school education that you can take out a large chunk of it and still teach the same amount of information. School could be way, way denser than it is. Hell, even in high school, a full year would cover the same amount of material as a single semester of one of my college classes, and my college classes only met 3 times a week (for the same exact class length as my high school classes; or fewer than 3 times a week for longer class length).
High school: 45-50ish hours per week of class time and homework, waking up at 7:00 every friggin' morning to rush out the door, stuck in a building with little exposure to sunlight for hours on end. Work often assigned one day and due the very next.
College: 25-30 hours per week of class time and homework, walks outdoors between classes, long, leisurely breaks throughout the day. Usually at most 3 early wake-up days a week, and often zero. Work almost never due the very next day. It was like a goddamn vacation, after high school.
(granted I attended a low-ranked university and I gather it's not that easy everywhere, but we were still covering material much faster and with far higher expectations for work than in high school, yet it was way the hell easier just because the conditions were more humane and there was far less wasted time—on the flip side, my high school wasn't in any way prestigious or notable either, yet still demanded all that time)
> we spent half the second semester learning about different kinds of whales.
The point of most of that is not to teach you about whales (though whales are cool). It's to teach you:
* How to read and process written material.
* How to organize your thoughts and write grammatically correct sentences.
* The moral value that science is useful and nature is important to preserve.
It's the same reason they still teach cursive. Cursive matters fuck-all, but training fine motor skills in general is very useful and cursive is just a semi-arbitrary means to that end.
Conversely, when I was in 6th grade, I begged and pleaded with my parents to try a new distance learning pilot program our state was doing. They allowed me to do it for 7th grade, and the lack of oversight and discipline led to me being a complete year behind in mathematics when I went back to regular school for the 8th grade. I never recovered, and ended up dropping out 2 years later.
Sure there is redundancy in elementary education. But middle and high school kids missing out on a year of math can be fatal. Smart determined kids can make it up. But the vast majority will be completely lost.
Missing any math in any year is a disaster. There is a real continuity in math teaching starting from addition through high school. I've seen so many people who gave up early on, and they have _no hope_ of making it up later on.
And it continues beyond. I tutored in a graduate business program. And math was absolutely the stumbling block for the students I was tutoring. It was all pretty simple stuff. Graphs for economics, solving equations, very simple differentials to find maxima or minima (didn't really need to understand calculus because these were such simple cases), etc. They were pretty much all totally lost.
It was really frustrating for everyone. I just wasn't in a position to basically teach them a few years of high school math from zero foundation.
And you'll see the same pattern in pretty much any of the books written over the years about the challenges the author faced in the first year of their MBA program.
The thing is, you can 100% learn the gap if some is missed. The problem comes when the gap isn't filled at all and then the prerequisites for future material aren't there. I don't think that will be the case with the current situation.
I took a bunch of communication college classes while I was in high school. High school and K-12 are essentially glorifies day care and much less about the education. I was learning a lot faster with the condensed college classes than the high school classes which dragged on for the whole year.
Elementary school is not just about learning academic stuff but about personality development as well. Unless a child is very gifted, it will also get bored extremely fast.
Middle and high school is for everybody and college/University is for the smart 50% (or whatever).
It's natural that you cover more in less time in college/university because students that go there are already smarter than most.
If you try to apply the same standards to high school, you will push the dropout rate into 60 or more.
>The bar (which is already dismally low) will have to be lowered further for them to graduate, and how/when will it ever be raised back again?
You don't have to lower the bar. There are other options. There is no fundamental law of physics that says a generation has to graduate at age X, so we -- the society -- should be perfectly able to delay that process for a year, instead of lowering the bar.
That said, there's something deeply wrong either with the society as a whole or with the HN audience if you read "poor kids roam the street like packs of feral dogs asking for money for food" and you say that the biggest long term problem is the lowering of the bar because kids skipped school.
The longer you delay graduation past the age of legal majority, the more students will drop out and [attempt to] enter the workforce.
Not every kid is willing and able to live with their current parent or guardian after they are legally able to either move out on their own or be evicted.
It's not a law of physics, but there are a lot of pitiable kids out there who have never even caught a whiff of good fortune in their lives, and the US lacks the social sensitivity to make them feel secure enough to add another year of high school to their pile of problems.
> It's not a law of physics, but there are a lot of pitiable kids out there who have never even caught a whiff of good fortune in their lives, and the US lacks the social sensitivity to make them feel secure enough to add another year of high school to their pile of problems.
Yes, that's why there are "poor kids roaming the street like packs of feral dogs" in the first place, in one of the wealthiest countries in the world. That's the big problem.
So let's not pretend that lowering the bar is what's going to make those kids catch a whiff of good fortune. The US system grinds people like that into dirt and that won't change with a single decision, be that decision to add a school year or to lower the bar.
I am not advocating lowering any bars. I'm just saying that those kids are as screwed now as they have ever been, and that this particular misfortune will not play in their favor in the future, as employers, government, and nongovernment institutions will be just as unsympathetic then as they are now.
A sufficient proportion of the US is willing to let those kids fall by the wayside, rather than do whatever can be done to boost them over this hurdle. It won't be adding another school year, and it won't be lowering the bar. It might be by providing housing, food, and petty spending allowance for over-18 kids still attempting to finish their high-school diploma.
Sorry, I misinterpreted your reply. My comment was a reply to a comment about lowering the bar and I thought you were arguing that same point.
>I'm just saying that those kids are as screwed now as they have ever been, and that this particular misfortune will not play in their favor in the future, as employers, government, and nongovernment institutions will be just as unsympathetic then as they are now.
Please, let's not assume things we don't know about each other. Whether I've known kids like that is something you have no idea about, along with where I've lived, who I've gone to school with, etc.
I missed pretty much the same amount of school during SARS in Hong Kong in 2003. This was before any sort of remote learning was possible, I didn’t do school work for pretty much a whole semester. I didn’t feel that this held me back at all, however there were a few key differences in my end:
- I was in 4th grade where school was less rigorous
- I went to a private international school
- While my parents were busy working, I still had a stable home environment to count on
If you went to a private intl school, I imagine the tuition wasn't cheap. That right there is the difference. When you're paying big bucks, your parents will want to do everything to make sure you don't fall behind. I assume with that kind of education you also went on to complete a university degree of some kind.
Contrast that to the public high school system in the US, where resources are lacking, and students may not even have the tools at home to follow through with remote learning, let alone hope to go to college, which is still 5 figures a year minimum.
Speaking from personal experience, if you did decently well academically in high school, you can get upwards of 16K a year in grants alone (Pell Grant ~6K, State Grant ~5K, University Grant ~5K) if your situation is documented poor based on your parent's and your tax returns.
My state school (UT Austin) charges tuition of about $5.5k/semester if you take >= 12 hours of classes a semester.
Of course, I realize this advice only applies to those who are demonstrably poor and perform decently academically. But college is (better than) free if you fall in this category.
The problem comes with families who aren't "poor" but aren't rich enough to afford spending an extra $20k/year ($11.k for UT Austin plus $10k for living expenses) for four years, for each kid. If you have three kids it's like buying an extra house, which isn't that affordable for most families.
I expect it's a bigger problem for high schoolers in general--especially seniors if it ends up meaning some students don't graduate and just drop out.
If I think back to my grade school experience, I was admittedly a pretty good student but I can't really imagine any single semester being all that critical. (And, in fact, I ended up skipping 8th grade.)
There was some discussion of aspects of this yesterday and there have been a few articles. The general consensus is that kids who have good home environments and have at least some interest in learning will mostly do fine. Some may even do better than normal.
But kids in poor home situations who were already barely scraping by--if that--will basically lose the year and everything that implies. In some areas, double-digit percentages of students have basically gone incommunicado from their schools.
Yeah, that's what really sucks about this pandemic compared to more physical natural disasters. Since the pandemic hurts people directly and not material things, it effectively increases inequality. Those living at the margins are hit hardest while those will lots of money and capital see most of that stay preserved.
If any school district cares, all the kids will essentially end up repeating a grade. This is not the end of the world. If anything, it might improve student achievement. (Students who are born right after the cutoff for a particular elementary school class, in aggregate, outperform the ones born just before, the youngest in the class.)
Outside of college-bound seniors — a special case — the main price is their time, same as anyone else, and their caregivers' time.
1) there's no way parents will be OK with this, and
2) the count of districts ready to have a 7.7% student headcount increase in one year (you're doing this for 13 grades at once, plus have another coming in) on top of whatever growth they already expected approaches zero. I mean, hell, think of what that would do to the teacher labor market alone if even 10% of districts all did that, putting aside things like building space and bussing.
You don't understand how urban school districts work if you think you can just get a grade to "repeat itself." Kids will drop out once they're 18 like flies.
To make matters even worse, the jobs those kids would get to offset a lack of schooling won't be available now.
I don't know if they'll be roaming the streets (the police in America are pretty unforgiving), but I can certainly say they will have it worse than ~2001 and ~2008 graduates.
Students attend school for 13 years. Let's say they miss out on 5/8 of a year because of this (I think the number is closer to 1/3, but it's not a big difference). So, instead of getting 100% of a "dismally low" education, they're only getting 95.2%. That hardly seems like a devastating loss to me, either from a knowledge or economic perspective.
I don't know if the US is the same as other countries.. but in the UK your birthdate defines how much schooling you get.
I'm a summer child so my first year of school consisted of a two week introduction and then the summer holiday.
My best friend at school and all of the higher performing kids (except me) were born in the first half of the year so had an extra 6 months of schooling.
Not in the early 1980s at least. You're put in a school year based on birthday, the school year starting in September. You then started at school on your 5th birthday.
It may be different nowadays; it would make way more sense to have everyone start in September. I live in The Netherlands and here kids start as soon as they turn 4. They then spend two-three years in the young kids class depending on maturity.
You should rethink that. It's the poverty that these kids and everybody else will be subjected to that will have a much larger impact. If every one of these kids were sitting at home in a financially secure household, I guarantee you they'd all be fine.
> But missing 5/8ths of a school year is going to be absolutely devastating for this generation of kids
If only there was a way we could give them access to the entirety of the world's knowledge, a million lifetimes of recorded video, and the world's best teachers for near zero incremental cost, right in their homes. If only.
We're gonna flub this one because "Netflix and chill" is the best this tech generation can muster in the face of the worst crisis in recent history.
Squandered.
I weep almost every day because our entire communications infrastructure and online experience has been tailored for our own. goddamn. greed.
Yes I'm sure many did not plan on having a snap year. Though it does seem to be the case. Looked cool in the movies, real life - not so much.
Let alone the whole financial impact upon university students whose lifelong debts they build up in education fees, will also entail the everyday costs of living as well. Most of which work summer to pay for that and now, had a real kick upon that. Now that whole aspect hasn't even been touched up and does seem to be one that needs addressing. Heck, i'm sure some parents will be impacted equally. After all if a child is effectively held back a year, then equally government support should for that child equally be extended a year beyond the normal age cut-off's.
Though I'm 50+ and no children, I'm mindful that the impact has much minutia.
May I ask you a question though - when you do get back to school after this `snap`, will your drive for learning and making the most of the class's be more, or the same as it was without this pause? I ask as I suspect many student will be more focused and keener to learn after this break as for many if you deny somebody something or remove it - they tend to appreciate what they are missing more - something we all do in many respects.
> But missing 5/8ths of a school year is going to be absolutely devastating for this generation of kids.
It's not. The amount of learning that happens in a typical school year is not very high. The world can skip an entire year of school, and the educational cost it will pay will not be very high.
The cost of missing a year of childcare, that school provides, on the other hand, is pretty massive.
This sounds like 1970s' movies depicting groups of teenage and younger kids roaming the streets throughout the night after all the community centers, arcades, and malls [i.e. any communal source of entertainment] closed. Midnight skateboarding in abandoned lots, drunk 11-year-olds, graffiti, sneaking out the window as a matter of course ... parents having no idea where their children go at night [remember "Do you know where your children are?"? Forgive a "wrong decade" but the point stands] ...
Of course this is all "crazed cinema depicting crazed societal horror", but are we truly expecting a return to such times and activities?
For primary school, it's a lot more about the child care than it is about the education. At that age the most important thing is safety and enrichment, something provided equally well (well, probably better) by unschooling. Something all my neighbors seem to be doing right now.
We could come out of this with a generation of kids that have learned better how to play and how to let boredom cultivate creativity. Depends a lot on the home situation though.
It’ll also discriminate on educational and monetary lines. Highly educated households are better prepared to self educate, both in terms of experience and available resources. While they probably won’t do as well as teachers did, they’ll do better than less educated households, conferring a competitive advantage.
Schools are not going to repeat for everyone, if only because it would be monumentally unfair (and counterproductive) to force students who learned the required curriculum to repeat a grade. But if you just give everyone a pass and throw students into the next grade who basically skipped a semester, that's not going to play out well either.
ADDED: What I suspect happens is that most schools bend over backwards to pass everyone they feel they possibly can and adjust lesson plans when schools come back to recognize that many students didn't really learn much the previous semester.
There is very little that students can't study at home given at least some parental support. However, it's pretty clear that a significant number of students have basically given up on the school year.
Some of them have essential workers as parents and are left unsupervised during the day.
Some have parents ill equipped to assist them with school work those parents never completed themselves. (Hell, I went to college, and my kids' math work is a challenge.)
Some have no access to internet.
I saw an article the other day (I'm unfortunately having trouble Googling it up) that said some school districts have 15-20% students they still haven't managed to connect to teachers yet.
My son's school started remote classes this week. More than a third are missing in action. Naturally it is the third that benefited the most from the structure and support of school.
TL/DR - Students in poverty lose more ground when not in school than other students. Having an extra three months at home will exacerbate this.
In the US we have a school system where the children are off from school for about ten weeks in the summer. Educators have tested the children at the beginning of the school year and at the end of the school year to study the effect of this.
Students with decent to above average socioeconomic factors tested at about the same level from the end of the year to the beginning of the next.
Students with poor socioeconomic factors tested measurably worse at the beginning of the next school year compared to the end of the previous year.
They also looked at the delta from the beginning of the school year to the end of the school year. There was no significant difference in outcomes when socioeconomic status was taken into account.
Lets be honest. Many people just aren't cut out to teach many subjects, and a lot of people just didn't pass many high school subjects, let alone have a good enough understanding to teach them
I have several kids at home, all at different elementary grade levels and it’s not at all easy to keep them on track, motivated, and actually learning something while trying to get work done myself. The kids have been cooped up and its hard to keep the kids from bickering. Schools are not helping. They are giving assignments but telling kids things won’t be graded or are optional, etc... so kids don’t want to do some things. We have to undo that and push them to do it.
Given how competitive our society has become I am terrified that we will get behind.
I wonder why we have collectively decided to make society so competitive. We have more technology and resources at our disposal than ever before. We could make things easier on ourselves not harder. What’s the point? (I don’t believe all the competition and thrashing about is improving performance. Did stack ranking improve performance at Microsoft?)
English & Language Arts, including writing. Even for competent parents, unless you fully understand the curriculum and know how to teach it, providing direct instruction or enabling self-teaching in these areas is FAR harder than for math & science ... until you get into lab sciences where access to materials becomes problematic.
What you're saying matches up with the reports I've been seeing.
I think a lot of HN readers are simply unable to believe such a thing can occur; the recessions of the past thirty years were mild compared to what's happening right now. Personally, I'm absolutely terrified.
What bothers me more than anything else is the unpredictability of it all. We don't know how this thing will pan out. There is way too much conflicting data about it. Will it burn out and mutate into less lethal strains? Will we get it in the waves? Will it be a seasonal thing we have to live with? Will there be a cure or better, a vaccine? Or will it be like the common cold with no vaccine?.
We don't know. And without that knowledge, you can't plan for the future. I wouldn't want to invest money into any business right now. Who knows what shape we will be in in 12 months time?
COVID thankfully is less likely to mutate than other types of viruses, so once COVID-19 is gone, it will most likely stay gone. However, gone here meaning world wide.
How much the world can safely open up businesses is directly correlated to testing. Eg, it's easy for schools to open up when they require testing every day for every student when they come in. On the other extreme, it's hard for schools to open up when there is no testing being done.
A second and even third wave is highly likely without proper testing. It will take longer for a vaccine to be created than we can shelter in place, unless we get very lucky.
The alternative is a country does not shelter in place, and it builds up herd immunity. A lot of people will die. It's not the ideal option.
At the end of the day it comes down to tests. The more we have the more the economy can open up.
This is anecdotal and it might come across as bitter and tonedeaf as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores. the fact that ANY market is completely detached from whats actually happening to Americans is frustrating
This is something I see from coverage of "lock-down protesters." There's a concentration of imagery, so bad associations can be made, pandering to those with left-leaning viewpoints. The underlying message is, "see, we don't have to pay any attention to the ravings of these crazy deplorables."
Such patterns were also at play in the media coverage of minorities in the 1900's and early 20th century. They're just being used by a different set of people with different directional vectors.
What you have to remember, is that a lot of people have been given this "deal:"
How about you have a period of unplanned, involuntary unemployment with little prospect of finding alternative employment in your areas of expertise? Okay, thanks, bye!
It's even worse because the lockdowns hurt young people economically for the sake of the health of the elderly. The lockdowns are financed by debt which will be paid by the young. The young are also probably much poorer and browner than the elderly.
Right! Also, the lockdowns benefit well-heeled professionals who can work from home while not straining their safety nets. On the other hand, lots of working class and lower middle class people are very strained!
If the country feels rudderless and without leadership, it is.
The top is, well, obviously, useless.
State leadership is all doing different things, which is, in some ways, a good thing, but I don't hear much in a concrete way about what the plan is to address this all over the next 12-18 months. We hear a lot about when we'll "open things back up" or phased re-openings, but nothing whatsoever about a strategy -- THESE are the tests we'll use, THIS antibody test to let people work THOSE jobs, THIS kind of contact tracing.
I'm not quite sure if the states are hoping the federal government will come out with some unifying strategy/process/materials/procedures at some point, or what, but it sure ain't happening.
The back-to-work strategy will most likely be led by large businesses. They have resources, they will decide what strategies they want to follow, and they're all working on that now.
And really, no one can argue with them on that. A governor or president can order businesses closed, they can lift that order, but they can't force businesses to go back to work before the business leaders and customers are ready to.
What governments need to do is clarify the new rules of the road for businesses. For example companies that used to be heavily restricted on how they can use health information are now going to need to test all their employees, make decisions based on those test results, provide protective medical equipment, etc.
> I'm not quite sure if the states are hoping the federal government will come out with some unifying strategy/process/materials/procedures at some point, or what, but it sure ain't happening.
They're not - most of the megaregions are forming interstate compacts to coordinate medium to long term strategy. Colorado and Nevada just joined the Western States Pact which CA/OR/WA started a few weeks ago around the same time the East Coast created their own. I think the Great Lakes states have one as well.
A lot of people care. Many of those who care believe that the situation we're in right now is caused (or at least greatly exacerbated) by incompetent leadership at the national level, but unfortunately that view is not shared by a substantial fraction of the American people, and against that kind of headwind there is only so much we can do.
On top of that, an even greater fraction of people who believe that the administration is incompetent, believe the correct solution to that predicament is to vote the opposite party come election time. It’s as if change in the election system isn’t even an option.
You have to pick your battles. Changing the election system is really hard. There are legitimate policy disagreements one can have with the Democrats, but one thing you cannot say about them is that they are brazenly corrupt and hostile to facts. Donald Trump is both. He is proud of these things. He thinks they're features, not bugs, and about 40% of American voters seem to agree. As long as that remains the case, nothing else matters. Policy is moot when the country is run by a personality cult.
This is true, but it's important to note that it applies to Republicans generally. Trump isn't special. He is the results of decades of Republican policy and is supported by Republicans even to this day.
Certainly Democrats are just as corrupt and hostile to facts as Republicans (the set of denied facts will be different of course). Only a partisan would claim otherwise.
Of course. Many large cities have been run exclusively by Democrats for decades and are notoriously corrupt, for example Chicago and Illinois more generally.
The facts that are denied will be those that run counter to the prevailing sacred cows of whatever movement it is. One that especially irks me on the Democratic side of the fence is denying that the minimum wage has a cost in jobs, despite near universal belief from economists that this is the case.
Yes, you're right. Sorry, I was reading your comment while waiting in line at the grocery store and I was not focused.
But that is one example. You said many large cities have been run exclusively by Democrats for decades and are notoriously corrupt. One is not many. AFAICT Chicago and Illinois are the exception rather than the rule among Democratically controlled cities and states.
Also, Democrats don't exhibit pride in their corruption the way Trump does. When Democratic corruption is exposed, Democrats seem to be, for the most part, ashamed of it. It's not just Trump's corruption that is problematic, it's the way he wears is proudly as if it were a badge of honor. When Rod Blagojevich tried to sell Obama's Senate seat, he was put in prison. And then he was pardoned by (of course) Donald Trump!
Also, your (one) example deals only with corruption. I cited two problems, the second being denial of facts. Do you dispute that?
Not to step into your discussion with the other guy but examples are so numerous that I know of three more off the top of my head. The Most Expensive Mile of Subway Track on Earth , Mohammed Nuru's Penthouse, Leland Yee and Shrimp Boy.
First occurrence of the string "corrupt" in that article:
“Is it rigged? Yes,” said Charles G. Moerdler, who has served on the M.T.A. board since 2010. “I don’t think it’s corrupt..."
> Mohammed Nuru's Penthouse, Leland Yee and Shrimp Boy
OK, I'll concede those two. But both of those examples are from one city (San Francisco), so now at best we're up to two cities. That's not a "large number" in my book. Also, the Nuru example seems pretty petty (yeah, he built himself a nicer office than he should have. That hardly seems comparable to me to the President of the United States proposing to hold the G7 summit at a property that he personally owns.) And both Nuru and Yee were ultimately disgraced. Yee is still in prison.
At the level of Nuru and Yee, there are literally tens of thousands of Democratic officials of similar rank througout the country. Two examples of corruption, one of them petty, and both of them ultimately disgraced, hardly seems like a pattern to me.
By way of very stark contrast, the entire Republican party is covering up for Donald Trump.
And none of this speaks to the other problem I cited: denial of facts.
Someone on Twitter described the stock market as a graph of rich people feelings and, facetious as that is, I wonder if there's truth to it. A market driven partly by emotion could mean a stock hysteresis where the market's long-term reaction lags behind the economic reality like you describe. The recent headline "16 million people just got laid off but U.S. stocks had their best week in 45 years" is the most mind-shatteringly insane headline I've ever seen.
The other thing to remember is that nobody actually loses anything when stock prices go down. Everyone still owns the same stocks, in the aggregate, and no actual material property is lost. Just the valuation changes. To insist that valuations cannot be allowed to go down as a matter of government policy is totally bonkers.
> Everyone still owns the same stocks, in the aggregate, and no actual material property is lost. Just the valuation changes.
But the valuation is the number that actually matters, not the number of stocks you own. You can't buy food with stocks, you have to exchange them for money first. If the price of stocks goes down then you own less real value.
Right but just as the total number of outstanding stocks remains the same, so does the total number of outstanding dollars. Both the total stocks and the total dollars remain unchanged, they just changed hands. For every loser of money, there is also a winner. Just because you paid too much does not mean that the federal government should come running to bail you out. In the aggregate, nothing is created or destroyed except for illusions.
It might help to remember that a recession is economic decline over a period of time, so a steep decline over a very short period is not considered a recession. As we move into a longer period of time (in the past, the rule was two quarters, but that doesn't seem to be a "rule" of the definition anymore), it starts to officially be considered a recession.
So it's not that it was being dismissed as not significant before this but, rather, it hadn't been going on long enough yet to officially be called a recession.
He seemed to be expressing frustration with the fact that the news are just starting to say "we're entering a recession" when it's been hitting a lot of the country hard for quite some time; that the news outlets were dismissing the huge impact it's already having. I was saying that the news outlets weren't dismissing it. Rather, given the time periods are extending, it is now moving from "major economic downturn" to "recession", where the later is the former over a period of time.
The specific point being made was "don't get frustrated that they are downplaying the economic impacts based on the terms they are using; because that's how the terms are defined. It's not a judgement call".
Also they are competing for market share with companies on the stock exchange. The sad truth is a shutdown like this is terrible for small businesses that are going to die, but great for large corporations that can weather the short term pain.
But many people invest in commercial real estate directly or indirectly, and all those travel/retail industry companies were advertising customers for google/fb, and their unemployed workers are customers for Apple and Amazon who now have no money.
That the stock market doesn't reflect main street yet after the biggest stimulus in history is perhaps unsurprising but also a little worrying.
You also have to consider that the stock market will probably represent a larger portion of the economy after all this, so while there may be less overall pie, if the companies on the index increase their percent of the pie, it may balance out.
Every furniture store around here has been "going out of business" for the last 20 years. At least that's what I've gathered from their "everything must go", "50% off" fluorescent signs.
plus in some areas the unemployment payments have been a disincentive for some to return to work. there have been stories in the news that for many it is more than would earn normally; however most seem to skip over that taxes are not deducted from all benefits and some are taxable so we might get a lot of heart ache come beginning of next year
There is a good free e-book that can shed a bit of light on the mechanics of why markets can rally when the real economy seems to be in deep recession.
Basically when money printer goes brrr then prices of financial assets tend to go up. The unfair bit about this is that these kind of assets are mostly owned by the rich, which makes the wealth gap even bigger.
someone who is not in a STEM job and cant see the bigger picture very well
The bigger picture is not any more visible from a STEM job. I haven't left the house aside for a jog in at least a month, and I work from my kitchen. I am living in a smaller bubble than ever, the only thing I'm missing is a hamster wheel. Wait, no, there's already a treadmill in the basement.
I hope online shopping is helping the shipping industries limp along, if only a little.
I'm sorry, your situation sounds terrible, and this is hard on a lot of people. I truly feel for you and everyone impacted. Speaking from personal experience, not even STEM people are immune from the economic impacts of the pandemic.
1) Have you tried the IRS website to check the status of your payment? My status finally flipped from "GO F YOURSELF" to "Please give us your bank information"
between 2011 and 2016 I went on a bunch of motorcycle trips around the western states. It was really depressing and heartbreaking to see so many closed businesses and obviously economically depressed towns when we were supposedly having a economic recovery. You could see that the situation outside the coastal bubbles was pretty bad.
Over time the more tourist-serving towns seemed to recover.
I am pessimistic that we're heading for the same situation again. The companies that the stock market cares about will recover, we will all go on pretending that things are back to normal. Meanwhile there will again be large swaths of the population in dire straits.
It still surprises me that America has such a culture of leasing cars they can't afford for hundreds, if not thousands of dollars a month.
Here in the UK if you said you were going to buy a car, most people would instantly assume you mean second hand. There's not much of a culture of buying or leasing new cars here, and even less of leasing cars that you really can't afford (outside of petrolheads anyway)
I think there's two confounding factors there, in the US parking is usually plentiful and right out front (or visible), so you're always seen in the vehicle you pull up in. It can be a part of your identity, both for yourself, and socially.
Americans also spend a lot of time in their cars, I went from a short commute to a long commute (1 hour each way), and found I got almost exponentially more critical of my car the longer the commute.
Suddenly the practical vehicle I didn't mind driving 15 minutes, was an eyesore to look at after an hour, and the NVH (noise, vibration, harshness) wears on you exponentially with time.
I started browsing cars to buy that would have been borderline financial suicide for how much I made, just because of how important the comfort and aesthetics became to me.
Couple this with their tendency towards financing things, and how cheap automotive related expenses are in the US, and it's the perfect storm.
I ended up changing jobs to one 10 minutes from my house, and it's downtown so parking is just done at various pay lots a few blocks from my office so nobody ever sees what I drive, and suddenly what I drive is irrelevant again, I was back to being content with my 15 year old Camry.
That's an interesting thought, but what part of that requires you to buy a new car? Car technology moves notoriously slowly, and the comfort and features of a new car compared to a 3 year old car at 2/3rd the price is negligible. (outside of the move to electric cars anyway)
Heh, when I learned to drive in the USA I got a Honda Fit (I'm 6'4"). The plan was to drive it for a year and switch to a car more appropriate for a high-flying' techie, like a BMW X5.
I found out after test driving BMWs and Audis I don't see much difference between those cars and the Fit other than some bogus identity around it. It's just driving. I've taken many 6-12 hour long non-stop trips in the Fit (e.g. SF to Seattle where I only left the car once to pump gas, the 2nd time I had to get gas was in Oregon; many trips to Eastern Sierras from SF, etc.) and I think it's fine.
So while I agree if someone says they are buying a “new car” it just could mean “new to them” I do think a lot of people do lease. I see a lot of young people with new BMWs etc, probably paying with money that they will regret not having put into their pension in years to come. Or maybe I should have lived a little bit more at their age.
I don't get how that isn't basically just a lease?
Except that the buyer gets something that looks like a call option that sounds like it's nearly guaranteed to be below expected (normal, maybe not in rough times) value?
Mainly because I've never seen a lease where the dealer doesn't ask you if you want to buy it.
As an American it surprises me. I'm in the top 13% in terms of income/household and I've never bought or leased a new car in my life. It's well known (at least to people I know) that if you want to save money you buy used, ideally with cash, although you can sometimes save a little money with financing if you get lucky.
The issue seems to be in previous generations cars were more of a status symbol for many (as well as being generally more affordable), so lots of people were raised with that expectation. So they buy/lease flashy overpriced German maintenance money-pits and scoff at used Toyotas because they're boring.
That or they're just trying to put on a veneer of financial success as part of their "hustle".
The other aspect is a lot of older luxury cars were also very well built, and older economy cars were some real bare-bones shitboxes.
My father enjoyed driving his Mercedes, so I figured I ought to enjoy a German luxury car as well. I expected to pay a certain premium on parts, and obviously for premium fuel and synthetic oil, but that I'd get a much more solid feeling car in return.
The problem is, the Mercedes he drove were from the 80s and 90s, so parts markup aside, they were basically Toyota reliable.
The German car I bought was from the mid-2000s, and nowhere near as well built or reliable as a 90s Mercedes, even in present day.
I'd even owned a 1986 Mercedes that was still reliable in 2010, I'd also owned a 1992 Mercedes that was also reliable, and continued to be so after I sold it to a friend who drove it for all of university (2010-2015).
But it was the 7 year old one that basically fell apart despite me buying one with full dealership service history, then sinking endless money in making sure all the repairs were done properly with OEM parts, on top of my religious maintenance as I'd believed German cars were only problematic due to neglectful owners.
Or people just enjoy having a car that they like? If you can afford it and you spend a lot of your time in your car, why not get one that you enjoy driving?
It's the "if you can afford it" part that's at issue here. Sure if you have the money do whatever you want, but lots of people are leasing/financing cars because they can technically "afford" to spend 1/4 of their take-home salary on a monthly payment when they could never dream of buying the car outright even with years of savings.
They're living at their means instead of within their means, let alone beneath their means. So the moment any financial difficulty comes their way they're screwed. It's especially irrational if it's just for extra enjoyment beyond necessary comfort. Someone who takes out a personal loan to buy all the blu-rays he wants would be called financially irresponsible, yet it seems perfectly reasonable to some to pay hundreds of dollars a month extra for that BMW or Range Rover.
I'll say for a long time I was the same way, until I bought a Prius.
A little while after I bought it, prices actually went up over what I purchased it for, and I was getting letters from Toyota dealerships offering to buy it back from me above my cost.
It's declined in value since then, but still runs well (knock on wood).
This isn't saying used cars aren't worth it -- they definitely are -- but for certain scenarios I think the choice is maybe more complicated than I thought for a long time.
Well, in 2009 my Dad's also had the same experience with the dealer who wanted to give him $5k more than he paid for his year old Silverado - I think it was due to the overall market undergoing massive inflation (not reported as "core inflation") due to QE and other stimulus efforts.
I doubt the same would happen now with an economy halted.
Similar here and I leased a car once. Never again. Always used. There was a poster higher up the thread who flips cars that knows what they are talking about. You don't have to be at that level but just some common sense and research gets you a solid, clean used vehicle that you can depend on for years if you don't care about any ego shit and you take care of it. This and houses are our biggest impediments to real wealth as North Americans. We dump so much of our earned wealth that could be used to save and invest in our futures instead padding the pockets of car salesmen and banks.
Plenty of people must be buying new cars in the UK - the average age of cars is only 8 years, and if you buy a used car it will be a UK model.
That’s quite different to somewhere like New Zealand, where the average age is twice that and almost nobody buys a brand new car - instead most cars are imported second hand from overseas.
This is very eye opening, thanks. Yes, in the US, the implication is the opposite: "I bought a car" is taken to mean brand new.
I guess part of it is that it's a very car oriented culture, but the other part is that people value owning a new shiny thing over financial cautiousness.
I suspect this has to do more with social circles than country. Obviously there are more people buying new cars, or else there wouldn't be any used cars for anyone to buy. I think the same is largely true in the US -- lots of people would never buy a brand new car, but there's also many people who would only buy a car brand new. The break down is probably 30/70 or 40/60.
I couldn't say for certain, but I feel like people in the UK run cars much longer than Americans as they don't do as many miles. It's not uncommon to see cars in the UK around 15-20 years old (often not older as there was a trade-in scheme years back)
The rule of thumb in the UK is a car gets about 10k miles per year and "modern" cars tend to last about 150-200k miles before they're not worth the repair costs.
For example, my car is a 2005 Focus which I recognise is older than most cars on the road, but costs me a couple hundred quid in maintenance each year and I have no intention in upgrading until it becomes uneconomical
So, how is it that people employed in essential businesses have not become rich in this pandemic? After all they are in high, crucial demand and could/should command better wages than programmers at this time. Sure, some of those raises would increase the price of goods, but that would be offset by hefty UBI checks to everyone. How is it that people who endanger their lives working in supermarkets don't get raises, but developers (whose contribution to the pandemic was "lets make another surveillance toy") get to work from home and still get their full paychecks? I'm sure someone will find a great excuse why it's wrong to think that and some other economicky argument. But something feels wrong about it.
Hope better days for you man, but those other jobs in leisure sector will not recover for a long time unfortunately. Do you think that they can somehow use the itnernet to keep businesses alive?
Lack of strong unions is one contributing factor. Companies have all the power, and this situation is giving them even more power. No one dares risking losing their job in these conditions when so many others are already out of work and would take any paying job without complaint.
That would only really happen where workers are actually getting compensation commensurate with the value of their work. That hasn't been true for years (if ever) in the US.
Also essential doesn't really mean their more in demand now than before in all industries. Mechanics for example are essential and still at work but cars if anything will be needing less maintenance now than before because so many people are out of work and not driving anywhere for vacations.
Additionally the places where there is simply an increased demand and need are a lot of 2 types of job 1) warehouse workers or 2) manufacturing. Warehouse workers don't have that strong of a bargaining position because places like Amazon are already used to constant turnover, surge by up to 200k a year already, and only really need warm relatively able bodied people of which there are loads right now that'd love a job. Manufacturing people are in a slightly better position as it's harder to just throw bodies at it but factories have limited ability to ramp up. Grocery store workers are kind of (1) employees where it's very easy to replace workers so it's tough for ununioned employees to demand hazard pay or raises because it's very easy to find replacements, especially so now when there's so many other service industry jobs that are out of work right now.
Because essential doesn't mean hard to replace or highly skilled. It sucks and I wouldn't want to do their job but enough people are willing to at that wage.
With 22 million out of work, it's easily to replace an "essential" meat packer. It's far harder to replace an engineer or doctor even if they aren't essential
That's why white collar workers make so much money in the first place...
You probably know this, but worth saying just in case: you should look into unemployment assistance. I believe that the CARES Act applies in case of reduced employment, and the $600/wk benefit is always given in full.
Assuming the state’s computer systems and unemployment department personnel can handle it. Which they obviously can’t since millions and millions of people have requested unemployment assistance but are met with error messages and busy signals on the phone, and don’t have the money they need.
I don’t want anyone to have to put themselves at risk of catching covid in order to survive. And, the survival of working class people has to be placed above the convenience of upper middle class people who want a haircut or to go to fuddruckers.
At the same time, working class people are the ones who will suffer first and most from an economic downturn. So if they want businesses reopened, you can hardly blame them.
I think we need ubi, right now. Can’t think of any other solution.
>> No school means poor kids roam the street like packs of feral dogs asking for money for food around here.
In a lot of areas, schools are still open to serve breakfast and lunch to kids, school buses are dropping off food, and in states like mine, half the families are getting extra cash for food right now. Families will receive $193.80 total for March and April for each eligible K-12 student, and another $182.40 total for May and June.
Thank you for sharing your experience. That's tough.. I can only wish you the best of luck, surviving and thriving.
Having tasted some of the bitter existence out there, it felt needlessly cruel. In a land of abundance, there's really no reasonable explanation for anybody going hungry, being without shelter, live in dilapidated conditions, fear one's neighbors, fall into irrecoverable debt for healthcare, or any of the million ways that poverty ruins people.
I've been down and out in the U.S., where whole neighborhoods were struggling. It's enough to drive one crazy. Much respect to those able to rise above (or just hang on) and still manage to keep their spirits up.
Mass media and journalism often feel way out of touch with the day-to-day realities on the streets. Much of the time they're in the business of shaping the public narrative, rather than giving people a voice or reporting the truth.
Normally economic indicators are signals of what is to come. However with the sudden current crisis it's the other way around. Everybody already knows millions of people are without a job and the situation is very bad. This is not an economic crisis, this is a health crisis with economic consequences.
Unfortunately, business failure is part of a laissez faire economic philosophy (i.e. let things take their own, natural course without interference). It's also part of life-- the cycle of creative destruction.
Some businesses will fail (for whatever reason). New ones will step in to fill the void-- perhaps very similar ones, or ones somewhat similar to those they replace.
I think of it as economic evolution.
The world outside of those businesses has evolved-- if those businesses and their management are not simultaneously evolving, then they risk being left behind.
I think the covid-19 situation has exposed weaknesses in the economy, which will be shored up-- but not without painful economic corrections.
"No one seems to care" Eh, the reality is that the owners, families, and adjacent/partner/affiliate companies may care.
Other people care-- about other things which are higher priorities from them (things which you may not be aware of).
Ultimately, those businesses may have failed in part because their owners/management didn't care enough to evolve their skills and offerings to what is in demand in the economy (outside of the impact from covid, of course).
To be honest, if you really want to understand economics, you might not be trained to the degree necessary-- i.e. diesel mechanic does not equal knowledgeable economist. So, you are allowed to have an opinion, but others like myself might remind you that it is not a qualified economic opinion, but rather the opinion of a mechanic.
For example-- Do you take investment or other economics advice from your local mechanic? Do you think others would? I certainly wouldn't. As such, if I were a mechanic, I would not have confidence in my assessments of economic situations-- instead I would read the thoughts of those who I am confident are knowledgeable on the topic.
Assertions are easy to make. Valid assertions depend on knowledge, experience, data, perspective, etc.
And this post is why I get so infuriated when I see all the blue-checkmarks on Twitter, calling people who want to go back to work "Selfish, stupid, idiot, etc".
People don't want lockdown to stop because they need to go to their hairdresser, or because they need to go hangout at the pub, or whatever idiotic reason these privilege a-holes put in their tweets. People want to get back to work, because they need money, to have a roof above their head. To feed their kids.
Edit: Just to clarify because I see a lot of misunderstanding in the replies: I am not advocating to end the lockdown. I am criticizing the tone deaf, patronizing, rude, caricatural comments attacking people who want to end it to get their paycheck back.
The essential motivation for people to want to feed their families/pay bills is completely logical, but it's important to keep in perspective that the virus doesn't care about any of these things. We don't need to look too far back in history to see that ending isolation in a pandemic too early can have huge consequences (much bigger than an economic slowdown/unemployment).
This is not the fault of the citizens. This is the fault of government who did not provide enough economic assistance, creating the desperation you're witnessing. This was unnecessary; other governments provided the support their citizens needed (the UK, for example).
Either pay people a decent wage to stay home to flatten the curve, or accept the death rate resulting from people who need to eat and have shelter having to go to their jobs.
I am against ending the lockdown early as well and disagree in no uncertain terms with those who are trying to minimize the pandemic. However, I don't think it's unreasonable to start wondering whether the economic and political damage may ultimately outweigh the lives saved. If anyone thinks populism spawning extremists and getting them into public office was bad now, imagine the tsunami of public anger and populism that will occur caused by immense (even, dare I say it, pandemic) unemployment and poverty, which is where we're headed full steam. When things get tough, people shift into a "me first" mentality that is incompatible with the philosophies of many HNers.
The economic damage at least was always going to happen. It's a direct consequence of the pandemic itself (and people's natural fear-based reactions to isolate themselves to reduce their risk).
It's not like you can relax social distancing and have the economy do well, especially not when the death toll really starts ramping up and people fear for their lives every time they leave home. There isn't any choice available in which there isn't a bad recession.
I live in NYC but currently reside in rural upstate NY. We have very few cases up here and it's impossible to NOT socially distance because that the way of life up here.
As of last week, Cuomo is applying the same rules in NYC to all of NY state, which is ridiculous. My family friend has a furniture factory up here that employs 220 people with a backlog of $2M+ pieces worth of furniture. All of his employees were socially distancing before and everyone had an N95 because of what they were building. Cuomo shut down the state and this guys business is about to go under (competition is legally opening up in Ohio and other states) because he's weekly payroll is 125 and at some point he doesn't want to risk $500-1MM of his own money out of pocket to weather the storm. That is 220 jobs that do not need to disappear.
The same rules that apply to NYC should apply to other areas. Some of these problems were are seeing are policy problems.
I don't have an opinion one way or the other on your friend's situation. It definitely sucks, and you may well be right that it's unduly harmful to their situation. But don't underestimate this disease. Even upstate New York isn't immune, take a look at this interactive map[1]. Almost all counties in upstate New York are north of 50 confirmed cases per 100,000 people, and all of those are neighboring counties with hundreds of confirmed cases. Given our rate of testing is abysmal, it's very likely there are several times that many actual cases in each county. Drastic action is absolutely needed, even in your county.
This is an awkward and difficult situation. If we underreact, we will have hundreds of thousands or millions more deaths (not joblessness, actual dead people) than we could have if we reacted appropriately. I think that's worse than the alternative of a massive recession, but I definitely sympathize with people who are most affected, like your friend and his employees. It's tough; there's no clear right answer; mistakes will be made. We just need to do the best with the information we have, and trust the experts to do the same. I'm sorry :(
My impression from living up here for a month or so is that most people are taking it seriously, though some are not. I do not think people are going to stay inside as soon as the spring weather arrives.
I do agree mistakes will be made, but i also think there there are leaders on both sides of the political aisle that should resign at this point for errors they have made.
It's not clear how bad things would actually be without the lockdown. There is a continuum, and I'm sure there is a much happier medium than what we currently have.
My question then is what half-measures would be preferred here that would've still flattened the curve? When you're in the middle of a pandemic, I think it makes sense to err on the side of doing too much to stem the tide versus burning time and energy trying to feather the dial to get that needle perfectly balanced between physical and economic health. Perhaps more bluntly put, I'd rather people be alive and on unemployment than gainfully employed and dead. (And yes, there's a whole other discussion to be had about the efficiency or lack therof of getting money out to people. We could and should do a lot better.)
To take the logical extreme, if we were to avoid all possible immediate threat to life, no one should leave the house, let alone drive to work. Obviously, our society would immediately collapse, and many millions would die. So we have to balance possible immediate threats against likely longer term consequences. Something we do not seem to be doing very well in the case of covid-19.
I'm confused, do you actually think the mortality rate of a down economy will be anywhere near that of a pandemic? Let me know if I'm misinterpreting you here but it sure seems like this is what you're arguing.
> lostapathy: If said "down economy" led to a long-term depression or a year or two of lost crops due to any number of possible disruptions, we could easily see more death (both directly and due to social unrest, suicide, etc).
History doesn't bear this out. The Great Depression resulted in an uptick in suicide, yes, but a decline in practically every other cause of mortality.
> yters: Yes, I do think we could have a more reasonable approach that will result in less aggregate deaths than our current approach.
You could look at any societal attempt to deal with a large scale threat and say "well that could've been done better", but as I said in my other comment, perfection takes time, and, with time of the essence, I think we were smart to move forward with an imperfect but obviously impactful solution rather than burn time and lives trying to find some mythical perfect balance.
If said "down economy" led to a long-term depression or a year or two of lost crops due to any number of possible disruptions, we could easily see more death (both directly and due to social unrest, suicide, etc).
We can print more money right. Money isn't real. Death and this virus are.
How about we just take care of those who need taking care of during this disaster. How about we put all national efforts to keep the lights on, providing safe housing and keeping the food supply chains intact.
Instead we are worried about corporate quarterly profits and when the Ruby Tuesday can reopen, because somehow serving burgers for $3/hr plus tips is going to secure that person's financial situation.
We can print more money, but we cannot print the things the money will buy. When the factories shut their doors and busineses small and large collapse and the food supply chain implodes, you can't eat money or shelter from the rain under money - and all that turning the printing presses up will do is to make it clear to everyone just how unreal money actually is. We know from other countries that's really hard to undo.
This isn't the Black Death. People aren't dying in numbers that would affect the overall workforce size. It's more like an unusually bad flu epidemic - the main differences being that the deaths are more biased away from people who aren't working anyway, and that we don't shut down the planet over the flu. There might be good reasons to lock down heavily, but that's not one of them.
> Instead we are worried about corporate quarterly profits and when the Ruby Tuesday can reopen, because somehow serving burgers for $3/hr plus tips is going to secure that person's financial situation.
Man, fuck off. This is so god damn entitled. Writing off someone's income as negligible because it's already in the realm of poverty anyway is so callous. Taking care of people's needs is hard. You can't just hand wave it with band-aid money. No matter how much money you allocate, people, especially the poor, are going to suffer if their livelihoods are destroyed. And it's even worse for people in poor countries that depend on exporting to the US for money for things like food. I don't give a shit about Ruby Tuesday's bottom line. I care that Ruby Tuesday's being closed means long term economic harm. The real world is complicated. The existing system is horribly far from perfect. But keeping it turned off is going to make things so much worse. Asserting that people who recognize this are thinking only of the corporate profits is incredibly disingenuous. We have printed astonishing amounts of money to ease this situation. It's not a viable solution.
My local restaurants are down to: McDonalds, Burger King, and Panera Bread. Everything else is shuttered. It will take years to recover from this, and in many locations, just won't, as wealth concentrates further into fewer areas.
In many parts of the world, what the original comment describes is simply a normal day; the only reason Americans typically do better than that is our strong economy. We know what economies without strong quarterly profits and Ruby Tuesday look like, and they don't support the modern American standard of living.
We value neverending growth because it represents an increase in the amount and quality of goods and services people want. Most people I've seen talk about valuing human capital over neverending growth tend to believe everyone should live as well as the American middle class - I agree with that, but we won't be able to make it happen without more economic growth.
Most people who don't have money don't want to go back to work. They feel like the have to go back to work even though it's a terrible idea, because the rest of the country is refusing to support them while they can't.
The biggest contributor to this economic downturn is the pandemic. Demand and market valuations plummeted in February, long before any stay-at-home orders.
On the flip-side, putting all businesses in this situation means most of us are in the same situation; and every market/industry needs to work together to get out of this crisis.
If no one can pay their mortgage, loan holders HAVE to make exceptions.
That shared spirit of sacrifice isn't a reason to institute lock down orders, but my opinion is that it will allow us to lesson the economic damage long term.
Why do they have to make exceptions? Absent a government mandate there is no requirement and, unfortunately, the mortgage is secured by the underlying property.
I fully expect, and you should too, foreclosures to skyrocket and people to be on the street. The banking sector is not in the business of shares sacrifice and the US government isn’t in the business of letting the banks collapse.
This lockdown will kill people. Let’s not be blind to that fact out of some sense of moral righteousness or some hope of humanity being found by faceless corporations.
If you paid attention during the last recession while foreclosures did skyrocket, those people did not end up out on the street. Many found other places to live or just stayed in that house until someone forced them to leave. Some people stayed in a house without paying a mortgage for years.
If it goes that direction again I see even more people just staying without paying anything. The banks don't have the resources to force everyone out and no one wants to buy that many properties in a lot of areas.
Because those who write the rules are going to use the massive number of foreclosures to buy up property dirt cheap like they did in '08 and beyond.
It's a feature, not a bug. We're seeing one of the largest transfers of wealth from the poor to the wealthy ever and it's only getting worse. The cruelty is the point.
Oh also don't forget the number of people who are, or will shortly be, underwater with their car payments too. That's another ticking time bomb.
I guess I don't understand why more people aren't asking for a solution that allows them to sustain themselves and their families and also doesn't elevate the risk of spreading COVID-19. I don't get how "end the lockdown and let a bunch of people get sick" or "possibly starve homeless in the streets" became the only two possible options, and I don't get how anyone becomes a staunch advocate for either.
I understand their thinking because not working is causing a massive amount of collateral damage, but the virus doesn't care about any of that. If everyone goes back to normal too early, this all just starts over, and folks are forced to be inside even longer, there's just no way around it.
This is wrong. We are not forced to be inside because of the virus. It would have been totally possible to have this pandemic going on with zero lockdowns, which would have probably led to worse health effects, and less-bad economic effects.
It's a pet peeve of mine when people claim that we must lock down or that the virus is forcing us to do this or that, as opposed to it being a political choice based on tradeoffs.
In fact, I predict that after things open up, they will not shut back down, no matter how bad the second wave of the outbreak gets. People simply won't accept it.
It’s a false choice between the economy and people’s lives.
The problem is that while labor economy was shut down, the financial system was not, so that rents and debts had to flow out of people that could not generate income, and the government has been ignoring the issue with nominal support.
Not freezing debts/rents across the entire economy is how this whole thing spins into a depression
If you're a renter you live in a home that a landlord built or paid someone else to build. And if people stop paying rent then they stop paying people to build. Construction workers lose their jobs and our housing problems are made worse.
And don't have any illusions about the rich losing here. Most units are owned by small time landlords who will be wiped out by a rent freeze. Those units will be gobbled up on the cheap by rich people that can borrow money at cheap rates.
> And if people stop paying rent then they stop paying people to build. Construction workers lose their jobs and our housing problems are made worse.
So what? They've already stopped paying people to build. Construction workers have lost their jobs already. While having to keep paying their rent, or mortgage.
This is a temporary disruption, and needs temporary, stop-gap measures to stop the bleeding. Nobody's advocating to stop all rents forever.
> And don't have any illusions about the rich losing here. Most units are owned by small time landlords who will be wiped out by a rent freeze.
1. No, they aren't. Most units are owned by real estate companies.
2. Couple it with a mortgage freeze, and none of them will be wiped out. You can, in fact, kick this can up the hill until it hits the capital markets...
The “lockdown” is a Fabian strategy; one of the goals is to preserve our ability to stage an economic comeback after the health crisis has been resolved. In the near term, the economy is toast no matter what we do (short of a well oiled contact tracing and isolating machine).
Even if widespread shelter-in-place orders were not in effect, if the virus spread through a lot of the people in a town, you can bet that people wouldn't be going out as usual. Nobody* will be eating at restaurants if they hear dozens of people in town got sick while eating out and died because local hospitals are over capacity.
I don't think that's true. The mindset I've consistently seen is that people do agree with the dichotomy, and are just willing to sacrifice the economy because they don't think it's very important. How many times has the line been trotted out that we can't sacrifice human lives for the sake of the economy?
First of all, that number is clearly exaggerated. No current evidence supports the claim that a million people in the USA dying of covid is remotely plausible.
Now to the substance of your argument: this has little to do with capitalism. If most people are not working for a long period of time, in any society, even a non-capitalist one, then that society will rapidly become dramatically materially poorer.
We make choices to improve material conditions at possibly increased health risks all the time. Longevity is not the only metric for overall quality of life.
I would happily accept some increased risk of my own death for the lockdown to be over. Correctly navigating the tradeoff requires figuring out how much increased risk of death is acceptable, not asserting that it’s zero.
It's not just Covid. If the hospitals are overwhelmed, that car accident you get into means you might not be able to get medical care, causing a small issue to become deadly. You may not be able to get treated for a heart attack.
Further, we are seeing people still testing positive and having health problems over a month after first symptoms. If your entire supply chain is taken out, essential or not, you can end up with larger problems than when you started. If you think it's a problem that the meat packing plant has to close after a single case, wait until 75% of the plant is symptomatic.
Finally, the solution is to have enough tests and contact tracing so that people can confidently open up, knowing that we can stop the rate of transmission. This shutdown should be used to prepare for a way we can safely reopen, a la South Korea.
Without a lockdown, most of the country will eventually be infected. NYC currently has 21000 excess deaths, so extrapolating that to the rest of the country would mean 21000*328M / 10M = 690,000 excess deaths. That's assuming that nobody else in NYC is going to die of Covid 19, even after lifting the lockdown, so this is an extremely conservative projection, and it's already close to 1M deaths.
What's implausible about this? Is Covid 19 less lethal outside NYC? Can R remain below 1 anywhere in the country, without a lockdown?
Lots of current evidence supports the claim. COVID is clearly more contagious than the flu, and herd immunity (without a vaccine) will require between 60-70% of the population to become infected. That's 229M people. COVID is also more fatal than the flu. Its IFR is roughly 1%. So 1% of 229M is 2.3M fatalities, and roughly 20M additional hospitalizations.
If you believe the IFR is lower, say .5% (still over 5x the flu), then you still have the same number of hospitalizations, but just 1.15M fatalities.
If you believe the IFR is the same as the flu (0.1%), then you'll still have 20M hospitalizations and 230K fatalities.
Say we're really lucky, and the IFR is the same as the flu, and we find a therapeutic drug to help treat it, dropping the IFR to half of the flu (0.05%), you have 114800 fatalities, but still the 20M hospitalizations.
The math is just brutal. What will the impact be of 20M hospitalizations, to say nothing of the deaths?
80-90% of people who catch this disease would survive without treatment. If America won't support people who might die of starvation when stuck at home, then the individually smartest response becomes to take their chance with the virus.
I don't need to explain what a 10-20% death rate would do to society, however.
There's also some very concerning long-term effects for those who have recovered. There's a trend of seeing lung-scarring or other things that I'm sure will come up again int 10 or 15 years. Imagine that happening to a large portion of society.
Even recovered people who feel fine can have chronic issues due to the virus. Young, healthy people may come away with serious lung issues without realizing it[1].
Keep in mind death is not the only negative outcome of this. My wife's uncle is relatively young (50s), completely healthy, gainfully employed, and has contracted Covid. He's been in the hospital for over a month, has been on a ventilator for weeks, is currently off but has been in and out of the ICU, his lung has collapsed, he can't feed himself, he can't walk, and he's currently re-learning how to swallow. If he makes it out of the hospital (that's a question mark right now), he's not going to be able to support himself. He won't be able to walk without getting winded so he will need a wheel chair, which will prevent him from doing the job he had before he went in. His experience, which has a decidedly negative economic impact and which is not uncommon for those who have needed to be hospitalized by covid, is completely missing from the "covid only impacts old people who were unproductive and probably would have died anyway" narrative.
This is absolutely true and this would get a lot worse if people decide to end the lockdown early. If one needs money to feed their family now, the chance of them either passing or being incapacitated are not to be taken lightly.
I had hoped the government would freeze all the mortgages, bills and offered real assistance to people in need. The stimulus check for the hoi polloi is a joke. I personally don't need it, why did I get it? I know I could donate it to the poor but that's not the point I'm trying to make. That stimulus seems to be a way of saying "but we already helped you".
I'm sorry to hear that. I'm not arguing that covid only impacts old people, I'm saying 4 things (in general, maybe not the one particular quote above):
a ) covid won't destroy society in any case
b ) we cannot endure a lockdown until the disease is eradicated or a vaccine is produced
c ) a lockdown ended before the disease is eradicated or a vaccine is produced will just lead to a second wave of the disease
d ) the economic burden of the lockdown will increase exponentially as more businesses run dry
I don't want your uncle to be sick. But I'd rather your uncle get sick than have you, your wife, and your uncle lose your jobs; and then have your uncle get sick anyway.
You're getting downvotes but it's true. There are other considerations that are completely being ignored by the ivory tower types. It's shocking to some, but jobs are how people afford to live their lives (buy food, pay rent, pay tax which funds government, etc).
I'm more concerned about social and political unrest that often results from mass unemployment, people losing their homes, not enough to eat, etc than losing people to the virus (which still stucks). 22 million unemployed and growing is enough to swing elections in dark directions...
If 20% die but 8 out of 10 are very old and sick, then globally 4% die who are healthy or not very old.
4% of an (healthy not very old) population dying still means overall the economy would contract by 4% (because product/service demand is down 4%), which would still be the greatest recession in the last 8 decades.
Your comment ("not much") is thus completely false.
Sure, but the idea that this virus kills 20% of all people is stupid. You just made that number up. We don't have much we can do to treat this disease. Nobody believes it would ever go that high. If somehow it does, even more than 80% will be old and sick.
4% of a population dying also does not mean the economy contracts by 4%. You just... made that up too.
Lastly, you've assumed that a 4% annualized economy contraction from one month in a quarter means that we'll see 4% by just keeping this going. That's... wrong. The negative impact of lockdowns will compound. I don't give a shit if the economy shrinks by 4%. It's absolutely fine if we have a bit of a shitty economic time. Prolonged wide scale poverty for millions of people is an entirely different beast.
«kills 20% of all people is stupid. You just made that number up»
I did not claim that. I just took this percentage from the hypothetical situation you used to build an argument (you yourself said if 10-20% die then it wouldn't mean much to the economy.)
«4% of a population dying also does not mean the economy contracts by 4%.»
Yes it does. Basic economics. With everything being equal, the size of an economy is linearly proportional to the number of persons. A population half the size of another one will buy half the number of cars, half the food, will spend half on entertainment, etc. So if 4% of average individuals die worldwide, consumption (thus the economy worldwide) is down 4%. Like I said, it's basic economics.
«Lastly, you've assumed that a 4% annualized economy contraction from one month in a quarter means that we'll see 4% by just keeping this going»
No I don't assume that. Read again what I wrote. I am only talking about the impact of a certain percentage dying, not about the impact of the lockdown.
You sound like Dennis from Always Sunny talking about how girls need to sleep with him if they're alone on a boat because of the implication of what would happen if they refuse, but denying that he actually said anything threatening.
> "I don't need to explain what a 10-20% death rate would do to society, however."
Yes, you didn't claim anything. But the implication is clear. When I responded I assumed you meant 20% CFR.
> Yes it does. Basic economics. With everything being equal, the size of an economy is linearly proportional to the number of persons.
I don't know what else I can say other than this is a dumb statement that you just made up.
* It's not a basic tenant of economics
* All things aren't equal, ever
* It's not a linear relationship, nor even always positively correlated over time depending on context
And lastly if you actually believe your math, then its clear that for any realistic death rate the economic impact is negligible.
Note that you are confusing me with another user (Filligree) who started the thread and initially threw these "10-20%" figures. Personally I do not believe 10-20% of the world population will die.
«I don't know what else I can say other than this is a dumb statement»
Not dumb. It's a good approximation, especially because post-pandemic times (after people have regained their jobs, which might take months/years) will be identical to pre-pandemic times with the ONLY difference being that a certain percentage of Americans will have died prematurely. That percentage will directly translate to an economic loss.
Look, the fact your post (https://news.ycombinator.com/item?id=23019875) was severely downvoted indicates most HN users disagree with you. I tried to take the time to explain to you why. You don't get it. I don't have any more energy to spend on this discussion.
You're right, that was another user, rendering most of this moot. I got 3 downvotes, and I don't particularly care if three people disagree with me. Similar opinions expressed elsewhere have gotten more upvotes. Shitty appeal to the people fallacy.
> Not dumb. It's a good approximation, especially because post-pandemic times (after people have regained their jobs, which might take months/years) will be identical to pre-pandemic times with the ONLY difference being that a certain percentage of Americans will have died prematurely. That percentage will directly translate to an economic loss.
This is simply not true. The world does not click back to the state it was with fewer people. Millions of people are now unemployed. Thousands of companies will no longer exist. The lockdown is killing small businesses disproportionately fast and that gap is going to be filled by larger businesses. Larger businesses have fewer local employees. The wealth gap is going to be greatly exacerbated, and this will affect everyone. Supply chains will change, inflation will change, consumer spending habits will change. The economy is going to feel different, and in a large part driven by how long everything takes to restart. x% of people dead meaning x% worse economy is just an irrelevant, naive comment.
I don't really care to debate this further either because... it's not interesting
> If everyone goes back to normal too early, this all just starts over, and folks are forced to be inside even longer, there's just no way around it.
This whole thing just starts over if we EVER go back to normal unless a vaccine is invented. Herd immunity is impossible to achieve during an effective lockdown. It's not like we're any closer to being able to safely resume activities than one month ago. A highly infectious disease with asymptomatic carriers cannot be eradicated.
I hate people saying generic statements like "we have to stay inside until its safe" with no reason to believe its getting safer.
> This whole thing just starts over if we EVER go back to normal unless a vaccine is invented.
We can get to normal faster if effective pharmacological treatments come out from the ongoing trials. If we can treat it, or at least prevent it from being severe, it is not a problem of public health anymore.
Technically true, just as hopeless for any practical time scale. The economic problems of being on lockdown will compound over time. We cannot wait until we have treatments or a vaccine.
blaming "Blue Checkmarks" for the fact that people are being victimized by capitalism during a pandemic makes me sick to my stomach. What a hopeless year this has been.
People victimized by capitalism (and I totally agree that this is the current situation btw) don't need to be called names or selfish, or idiots, by people who are not victimized.
I'm blaming privileged people for lecturing and gaslighting people who are not as privileged.
It seems like no one is understanding your point... yes, it's an absolutely terrible idea for people to go back to work right now, but if it's literally between that and going hungry (because you know your government won't do shit to help you), then it's no surprise that some people will want to go back to work out of sheer necessity. In fact I'd be shocked if most of these Silicon Valley tools would come to any different conclusion if they were actually in the same boat.
Care to explain? Last time I checked, it was governments (monopoly of force) who issued stay at home and quarantine orders.
The US economy in not capitalist despite the popular belief; it's mixed. The current pain would not be as bad right now if it were not for the artificial asset bubbles that were created by Keynesians via cheap money in response to the last recession...
The last response is the cause of our current predicament, but the dynamic has already been continued creating the next big crunch - the first thing the government did in response to this crisis was to lower interest rates, and the second thing was to subsidize six trillion dollars of corporate debt at the fake rates rather than letting the market correct itself.
Sure, the problem isn't actually capitalism per se, but rather the rent treadmill fostered by extreme concentrations of capital. Our economy is strongly centrally planned via artificially low interest rates, with the overt goal of making everyone work full time - essentially by eroding labor's bargaining power versus capital.
If someone's latent paradigm causes them to see this dynamic as endemic to late stage capitalism, nitpicking with no true Scotsman isn't terribly useful unless you have a plan to keep the people who control large capital accumulations from continuing to influence monetary policy to their benefit. Putting aside terminology, your gripes would likely have more in common than not.
Iowa has received a lot of flak for refusing to go into full shelter in place. When I read threads like this, I am thankful for the governor having the backbone to keep a large part of the economy up and functional.
My brother, though his situation is not so dire, has given me similar anecdotes, many of those from his friends group. He lives in a small college town in rural southeastern Ohio. Many of his friends, though, who are being hit very hard right now are all over Ohio... Columbus, Cincinnati, Akron, Dayton.
> His mother is getting evicted from an assisted living center in a few days and his girlfriend is sick.
That's awful. I know some localities have "paused" evictions and payment "holidays," but there's been a lot of unevenness. Frankly, I think there should have been a national to that effect, so there'd have been uniformity and no gaps.
STEM jobs are starting to feel the pain too. They also make their money by selling to other companies and people who are hurting. The Behemoths are doing alright but there are so many business areas of software that are about to crash into the rocks fairly soon because their customer base has disappeared.
"Except for the field organizers of strikes, who were pretty tough monkeys and devoted, most of the so-called Communists I met were middle-class, middle-aged people playing a game of dreams. I remember a woman in easy circumstances saying to another even more affluent: 'After the revolution even we will have more, won't we, dear?' Then there was another lover of proletarians who used to raise hell with Sunday picknickers on her property.
"I guess the trouble was that we didn't have any self-admitted proletarians. Everyone was a temporarily embarrassed capitalist. Maybe the Communists so closely questioned by the investigation committees were a danger to America, but the ones I knew — at least they claimed to be Communists — couldn't have disrupted a Sunday-school picnic. Besides they were too busy fighting among themselves."
Literally no one anywhere wants central planning, no one wants America to be anything like Venezuela, these are fevered fantasies of uninformed minds, so feel free to put these lines to bed permanently.
"Essential business" designations are central planning, and I've seen reasonably influential people argue that we could keep them going indefinitely if we had to.
Examples of central planning do not imply a centrally planned economy, just as examples of free markets do not imply a free market economy. Every nation on earth has a mixed economic system (except maybe North Korea?) so let's not waste any more time denying that fact.
While not influential per se, it feels like every response to "people need work / pay" is "the govt can save us, get back in your house moron." The only way that anyone talks about it working is the govt taking over and suspending this or that, paying for this other thing, a few trillion here and there. They are all saying "centrally planned economy" without saying it.
No, you are saying "centrally planned economy" on their behalf. They are calling for extreme but temporary emergency measures to handle what may be the greatest economic crisis of our lifetimes.
Are you seriously confusing support for these measures with support for ending the market system in the United States? Can you see what a fantastical stretch that is?
The GND with its extensive use of private contractors is basically neoliberal like our current DoD. It is structured almost exactly the same as DoD and with a vague never-ending mission would likely take as much resources to fight an enemy that may honestly always exist. A better policy would be focused upon global trade policies to globally incentivize all countries to choose cleaner infrastructure. This sobering reality is one I certainly found refreshing from the Yang climate worldview than the climate alarmist view that civilization ends if we don't go carbon neutral in 8 years aggressively pushing the GND as a gold standard policy.
Let's just look at one (expensive) idea proposed in the GND:
>Upgrading all existing buildings and building new ones so that they achieve maximum energy efficiency, water efficiency, safety, affordability, comfort, and durability.
How is a directive to upgrade all existing buildings, anything but central planning of an entire industry?
That sounds awfully like a nod towards developers and REITs that you'd get property tax breaks and/or credits if you hit LEED certification levels.
What is the problem with that? It's already a thing, just not nationally. You get that pro-jobs angle for contractors, provide a stop-gap when new construction slows servicing existing owners looking to reduce costs.
You're reading the proposals with an ... impractical eye.
Canadian here. Supply management is probably great for many producers. They participate in legal cartels engaged in mandated price-fixing, so this can protect their bottom line. For consumers it keeps prices high on things like dairy (even with the CAD in rough shape, I could still find cheaper cheese just across the border, in the US; pre-covid, mind you).
Most major countries have some kind of scheme in place to fix agriculture prices. In the case of the US there are subsidies that everyone pays, via taxes.
I agree with everything in that link, but it's not a case for socialism. That's because Canada isn't particularly socialist, despite what both right-wing and left-wing Americans claim.
Canada was not founded by religious extremists and evangelical Christianity has no hold here. That's probably the biggest difference and it accounts for a lot, I'd say.
Canada was home to a large number of devout Catholics and Protestants, and has had many important internal conflicts between the two. Read up on Louis Riel for a good introduction.
What we lacked was homogeneity in the religious extremism; thanks to an early balance between French and English settlers there was never long a period when Catholic or Protestant were dominating.
We also enjoyed being the home to English loyalist refugees during the American war of independence... And the destination of the underground railroad.
If you read up the comment thread from my reply, we're talking about socialism, not democratic socialism. So Canada is irrelevant as an example (which was my initial albeit snarky point).
I suspect the downvotes are due to a lack of critical engagement. Even the Holodomor link offers a litany of reasons that aren't just "socialism," and we've been interfering in Venezuela for decades, not limited to: harsh sanctions, coup attempts, cutting off access to foreign markets, blocking access to its own funds stored outside the country, and so on. In addition to all the hoarding of food and medicine inside the country. There's a lot going on, and "third world oil country with US-unfriendly foreign and domestic policy in a region dominated by US interference" certainly also hurts countries that don't have "socialism" to blame. https://en.wikipedia.org/wiki/Shortages_in_Venezuela
Regarding US government incompetence in benefits: Not everywhere has distributing benefits been so inefficient (see: Denmark or Germany, among others). It's almost like a decades-long program of cutting funding and introducing tons of red tape undermines public confidence in social spending. I'm sure that's unintentional!
Are they though? In order to have socialism, you have to give more money and power to the state. Money and Power in state hands can go in dark directions "for the common good". The culture must be ready for it (like the Danes and Fins but unlike the Russians or Americans); it's really important.
Culture matters. The Nords are more oriented towards social harmony, are culturally homogeneous, have high transparency, low rates of corruption. This means everyone's one the same page more-or-less.
Vs the large diverse cultures of the US (where I'm from) and Russia (where I now live). After living in Russia, it's no surprise that socialism did not work here. Forcing socialism onto cultures when they're not mature enough won't work. Even worse, it leads/would lead to massive oppression and corruption.
It seems to me that the culture is largely forced down or forced to shape on us from the top, especially in the US. The elites, the billionaires and the wealth owners don't want much harmony because they can squeeze the lower layers at their benefit. The current culture appears to have something to do with this but in fact it's a side effect of this increasingly growing gap between the rich and the poor.
Your first paragraph makes a thesis that is not easily falsified by anecdote (both capitalist British Raj India and communist Stalinist Russia had large famines).
However I agree that US food production is already highly centralized, at least where big ag is concerned, with the characteristic that profits fill private pockets while losses are subsidized by the people at large.
In Scandinavia we've had some sort of pragmatic market socialism, not much central planning but reasonable redistribution in various ways. Seems to work fairly well, although large parts of it has been (and is being) dismantled by the liberals (those are the right here, not the left).
Carl Bildt (former Prime Minister of Sweeden) said "Bernie Sanders was lucky to be able to get to the Soviet Union in 1988 and praise all its stunning socialist achievements before the entire system and empire collapsed under the weight of its own spectacular failures." [0]
Lars Løkke Rasmussen (former Prime Minister of Denmark) said "I know that some people in the US associate the Nordic model with some sort of socialism. Therefore I would like to make one thing clear. Denmark is far from a socialist planned economy. Denmark is a market economy" [1]
Seems like they both reject the idea of them being socialist countries. They are both non-socialist countries that have market economies. They just happen to have a larger welfare state than a lot of countries. Having a large welfare state has nothing to do with socialism though.
Yes, both Carl Bildt and Lars Løkke are liberals and part of dismantling/developing our system into less socialist or "social" if you prefer.
We certainly don't have central planning, and if that was inherent in the word socialism I guess Lars Løkke wouldn't have had to say "far from a socialist planned economy". It is far from that.
It is also, as I see it, increasingly far from a social(ist) system, but we did use to have more of that, and in my opinion (not alone here) it was better.
I am fairly well educated and have had a good salary when I was working (voluntarily not working right now because I have lots of money and prefer to do other things), but like many others around here I prefer that my money gets spent having a functional society to having more pocket money to buy luxury items.
And I know that from a Liberal/libertarian pov I don't have the right to decide that for others, but from my point of view that kind of exaggerated individualism is dysfunctional and individuals don't exist any more or less than groups. We need both rights and pragmatic optimisation of general wellbeing. Everybody is better off when there is less poverty and misery around.
Seriously though, Scandinavia is proof that you can have a free market and social programs at the same time and have it work well. It's when bureaucrats get their fingers into planning the economy when things end up very poorly.
Wait, are you saying that the terms "right/left" are used opposite compared to the US (meaning that the Scandinavian right prefers socialism), or that the term "liberal" is used opposite compared to the US (meaning that Scandinavian liberals oppose socialism)?
"Liberalism is a political and moral philosophy based on liberty, consent of the governed and equality before the law.[1][2][3] Liberals espouse a wide array of views depending on their understanding of these principles, but they generally support free markets, free trade, limited government, individual rights (including civil rights and human rights), capitalism, democracy, secularism, gender equality, racial equality, internationalism, freedom of speech, freedom of the press and freedom of religion."
In the US, the overton window is so far right that liberals are considered left of moderates. But liberals are not leftists, i.e. people who would support socialism. It's like
left --------------------- liberals --- moderates ---- right
Liberals and Christian Democrats are center-right, Social-Democrats and Greens center-left. Those are the main power blocks in quite a few European countries.
And US liberals and European liberals have quite different ideas about taxes, immigration, climate change, law and order. Europeans would not call Biden or Warren liberals. (Who would Europeans call a liberal? Maybe Paul Ryan, or Bloomberg).
The word "liberal" in the US is used in a way unlike anywhere else. Classic liberalism, as the term is used everywhere else, is embodied by publications like eg The Economist.
> No school means poor kids roam the streets like packs of feral dogs asking for money for food around here.
You don’t think that describing poor kids who cannot go to school and likely cannot afford to eat on their own as packs of feral dogs is problematic at all?
I found that part odd. Describing children of poor people as packs of feral dogs is similar to me as to describing children of black people as pack of feral dogs. The only conclusion I can make out is that either people did not interpret it as a negative description of poor people, or that looking down at poor people is more acceptable than in my own culture.
I would be very interested to hear from someone who find the current phrase acceptable but not if the comment had written "black" rather than the word "poor".
And all that because of a virus that has a fatality rate about between .2 and .5% which mainly targets people who are already on the verge of death to begin with.
We need to begin opening our country back up and implementing more targeted lockdowns and isolations for the most vulnerable.
Not only will this bring us to herd immunity faster, we will have a huge pool of recovered people available to donate plasma antibodies to those suffering from the virus.
Taking the recent deluge of antibody test data that's been released in the last few weeks from around the world indicating infection rates are far higher than official numbers indicate and the growing threat of economic misery for tens of millions, this is the best way forward.
The difficulty here is that the lockdowns are almost entirely self-inflicted, not the result of directives from the government. So even if the government proclaims "back to normal everyone!" very little will change in reality.
Though, if "go back to work!" also means the unemployment assistance and stimulus payments stop, it could get more exciting.
Or, instead of taking the lives of those who cling to it, we could enact sensible policies to re-engage the capital squandered by the richest in our society. "But that would be tantamount to thievery!" you say. Perhaps, but that seems better than murder.
Current estimate is that you need around 70% of the population infected to get herd immunity. 0.5% fatality rate * 70% of the population is >1 million deaths in the US alone.
It is clearly not, otherwise that 4.8% would be a much bigger number. Hyperbole doesn't help here.
No one claims things are good. A global pandemic is a disaster any way you cut it. We're all affected, some much more than others, and we all have to help. But there's no magic wand we can wave where we all go back to work, either.
Even "essential" industries are affected. Very few people want to go to a crowded restaurant or theater right now, lockdown rules or no. Almost no one wants to travel on an airplane. That's just not coming back until we get the disease under control, and releasing lockdowns pushes that date farther into the future.
Remember the disease is disruptive all by itself. We have something like 25% of the nation's pork butchering capacity off line right now, not due to lockdowns (obviously they were "essential") but due to actual outbreaks. And that's what we should expect everywhere we permit commerce: random, uncontained, very disruptive outbreaks.
There's no magic. This sucks. But we have to work together to fix it, and harping about only one side of the problem hurts and doesn't help.
> It is clearly not, otherwise that 4.8% would be a much bigger number. Hyperbole doesn't help here.
Uh buddy, you know the first quarter is January, Feb, March right? The country was in shutdown mode for maybe half of March at most. Extrapolate that out to the full quarter (ie multiply 5% by 6) and you get a 30% drop. And on top of that, in March many businesses were still trying to partially pay or at least remain in business on paper. That's all done, plus now we start getting secondary effects.
The Administration's mismanaging of this situation is one of the single most costly screw ups in our country's history.
The Market does not scale directly off unemployment numbers. Depending on how the GDP is being calculated here, it could be over-valuing certain fields and that would bias the shrinkage in one direction or another - for example, the tech industry is more likely to be able to work from home, so those businesses are still mostly operating, and tech is also a high-profit-low-cost industry that isn't as dependent on having supply chain stuff (like factories and warehouses) as other industries are.
High unemployment in tech or finance would potentially drop GDP much more than high unemployment in low-income fields would, even though low-income workers are often VERY important - nurses on the front lines right now don't bring in big money, neither do people staffing grocery stores or fulfillment warehouses.
What, concretely, does this mean, especially if creditors are pressuring people to return to work to keep up with their payments, and returning to work is a public and personal health hazard?
I understand that the economy and the market are different but I'm so confused. The S&P is up ~12% this month, despite massive unemployment, a shrinking economy, and serious long-term questions about the outlook.
Is most of the 12% just market speculation that the virus issue will pass without a long-term earnings hit?
1. People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year.
2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies.
3. The market is always very forward looking. It is essentially betting that things are as bad as they'll get. I don't know if I personally necessarily agree, but if you look at countries starting to open up it's not an unreasonable bet.
4. Government policy, both current and expected future.
I want to add emphasis on (2). The effects are not spread out uniformly across all businesses. The hard hit businesses including restaurants, bars, and hair and nail salons have seen almost all of their business evaporate. You're not going to find the corner nail salon in the S&P 500.
Absolutely. There will be some of those effects for sure, and they'll be pretty big. They will nonetheless be nothing compared to the small business owners that have bills to pay but no money coming in. Microsoft, on the other hand, is facing more of a blip.
These four main points all point towards a looming consolidation in the hardest hit industries. As many companies go bust their assets will be auctioned for pennies and purchased by the big names in those industries, or new competitors diversifying their portfolios into an industry they otherwise couldn't afford to compete in or break into.
I'm not without hope, but I fear we're going to see a lot of otherwise great businesses (breweries, bakers, barbers, spas, bars, restaurants, etc) go under and not get replaced by businesses of the same caliber anytime soon. If my barber closes I'll keep cutting my own hair. Same with my favorite local bakeries, restaurants, breweries, etc. I certainly won't start eating Applebee's microwave dinners and sugarritas just because they're the only joint in town.
I've diverted a significant portion of my savings due to this pandemic towards my retirement, but that actually has a small deleterious effect on my local economy as it is not strongly exposed to greater market forces as I'm reducing the volatility of money in my locus. I'm sure that I am not be the only one making choices like this.
No but you do find banks, chemical manufacturers, car dealerships, etc. the people employed by the corner nail salon buy goods, indirectly driving the economy.
The economy's response to "a large segment of the population has no money to buy things" seems to be selling more stuff and more expensive stuff to those who do. The economy is essentially trying to cut many people out of it entirely.
(and yes, I know 'the economy' isn't some sentient monolith)
yep. The assumption is they'll be able to borrow more cheaply and easily than ever before and will be able to buy up [assets of] more cashflow-constrained businesses in related markets relatively cheaply.
A related assumption is also that government bonds will be a less attractive alternative place for investors to park their money.
The S&P is where it was in October last year, there, it just erased the massive gain in Q1 this year. No serious recession is priced in really.
And the only thing that can explain where the stocks are now is that the Fed has pushed 2 trillions of liquidity into the market in matter of weeks, which is just unprecendented (the previous QE were much more gradual) and that lifted all asset classes.
But at one point stock prices will need to get back in line with earnings. I don't really hear anyone talking about v-shaped recovery anymore.
That's not entirely true, the composition of the S&P500 has pretty dramatically changed in the last few months[1].
If you look at the linked chart most sectors are down — energy is -50%, consumer discretionary is -27%, financials are -22%. However, a few sectors are up — healthcare is +5%, consumer staples +6.5%, information technology is +8.5%.
So with shelter-in-place and quarantine, it makes sense that the world's demand for oil and travel is at all time lows, and the stock prices reflect this. Instead, the demand is now almost entirely online, on the internet. Nearly every IT sector company is surging.
Even real-estate is down, as expected (fewer moves happening, less commercial leasing), but it appears to have a high variance[2]. Why is that? There are actually a few real estate companies on the S&P that are doing really well: $SBAC (operates wireless infrastructure), $EQIX (specializes in datacenters), $AMT (wireless and broadcast communications infrastructure), and $CCI (shared communications infrastructure).
So, many sectors of the economy are down, as are most companies. The current pandemic has pushed more capital to businesses which operate online. So the reason why the market cap of the S&P500 hasn't changed dramatically is because the distribution of the money underlying it has. The S&P500 is a capitalization-weighted index.
> But at one point stock prices will need to get back in line with earnings. I don't really hear anyone talking about v-shaped recovery anymore.
This week a lot of tech companies are reporting their earnings. Alphabet announced a 13% increase in revenue. If other tech, communication infrastructure, consumer staples, and personal health companies report similar earnings, then this whole thesis will be validated: the S&P500's current market value can largely be attributed to a flight-to-quality, where the "quality" is pandemic-proof stocks.
> So the reason why the market cap of the S&P500 hasn't changed dramatically is because the distribution of the money underlying it has. The S&P500 is a capitalization-weighted index.
That's super interesting and makes a lot of sense. However, could you elaborate a bit further? Suppose we have an S&P 5, if the top 5 companies remain the same, but they on average do worse, we'd see the S&P 5 go down. You seem to imply, if I understand correctly, that the S&P 5 is not down as much because 1 company did really well and stayed, 4 that did poorly left and got replaced by 4 companies that did really well, too. Thereby the S&P 5 changed its composition.
And that makes some sense. However, that would mean that if you had an all-world or all-us stock indexes, which did not exclude any companies dropping out of a top 100 or top 500 or whatever, would have to see a large drop.
And I'm not really seeing that. These stock indices track roughly the same shapes as the S&P500, with perhaps few percentage off, but nothing substantial.
> Suppose we have an S&P 5, if the top 5 companies remain the same, but they on average do worse, we'd see the S&P 5 go down. You seem to imply, if I understand correctly, that the S&P 5 is not down as much because 1 company did really well and stayed, 4 that did poorly left and got replaced by 4 companies that did really well, too. Thereby the S&P 5 changed its composition.
No that's not what's happening. Think of S&P 500 index as a basket of stocks. What does that basket look like? If I buy one "unit" of this basket, does it include 500 shares of stock, across the 500 companies? NO. The distribution of the basket is weighted, and it's weighted by market capitalization. So if all stocks were worth the same, you would have a unit amount of every single stock. But if, say, 5 companies do really well and 5 companies do really poorly, 1 "unit" of the S&P500 basket will actually include more of the "really well" stocks, and less of the "really poorly" stocks. The capital is automatically reallocated based on the market capitalization. Because of this, the market value of the S&P500 has stayed relatively stable.
> And that makes some sense. However, that would mean that if you had an all-world or all-us stock indexes, which did not exclude any companies dropping out of a top 100 or top 500 or whatever, would have to see a large drop.
Again, that's only true if this index is naive enough to not apply any sort of weighting. Most indexes in the world are weighted indexes, in fact we are generally instructed that indexes that do not apply any sort of weighting are bad indexes.
> 1. People keep saying about the market being up recently
So, down 10% from the previous bubble.
> 2. S&P is heavily weighted towards the strongest companies
Good point. Dow is also up almost as much though.
> 3. The market is always very forward looking.
I may be cynical, but I see perhaps 2 to 3 years to regain the jobs we are losing, to see the employment rate return to earlier levels. That's years of depressed spending, and all the other woes of society from high unemployment.
So the market is looking to, what, 2025 or something?
> So the market is looking to, what, 2025 or something?
Sure. People are basically betting that stock prices are cheap right now, and if they hold onto them for a few years they'll be back to where they were.
Look at the 2008 recession. If you bought then you'd be doing very well.
They're basically betting that the worst has already been priced-in. In a sense, they're probably betting that we won't get a totally calamitous re-opening of the shutdown, or a totally calamitous fall and winter next year. But, in any case, most people adhere to the idea that stock prices always go up eventually, and therefore they buy accordingly.
I think the only thing the market has going for it, is that everything else is worse.
Interest rates are negative or near zero, so bonds have the risk of losing value as interest rates rise, as the Fed needs to fight inflation. They also have no real upside, since interest rates are so low.
The Fed has agreed to print unlimited money to prop up businesses that basically don't exist, so having a bunch of cash is not safe, since the Fed is printing so much more of it.
So grossly overvalued stocks may be the best thing now.
> So the market is looking to, what, 2025 or something?
Well, another point not mentioned is, where else are you going to park your money? Interest rates globally are basically <= 0, real estate may be a dicey proposition for many years to come, bond yields are garbage, so... stock market. And considering so many companies are selling at a discount (regardless of whether or not you think that’s the case), dumping money in the stock market is a pretty good bet right now.
Normal investors lack the ability to invest in real estate the same way that wealthy investors do. It's nearly impossible for you and I to invest in a new office complex or similar. So normal investors are stuck with the housing (usually in a single market), existing small commercial, or REITs. Houses are fickle and gains are mostly due to luck (or volume). In my experience, yields on affordable commercial RE are not that far off from broader market yields.
Also, in the near-term (~1 years), you may see dramatically falling home prices as people lose their jobs and the supply of buyers dries up, and you may have difficulty collecting on rent with all the rent strikes going on and tenants who do not have the ability to pay.
Long-term these problems should work themselves out and real estate (particularly in hot coastal metros) should start going up again, but 2020-21 is going to be rough.
You can't even just spend it on crack and hookers. I wonder how many people's net worth is actually going up during the lockdown just because of reduced expenditure.
Who cares if it takes 3 or 4 years to recover if retirement is 20+ years away? Everyone knows you should buy at the bottom of a recession and people are betting that we've already bottommed out. And even if we haven't, stocks have been so cheap that it doesn't matter that much if we miss the absolute rock bottom. I'm up 60% for this month.
It also helps that some of the worst hit sectors like restaurants aren't generally represented in the stock market.
And as always the stock market isn't anywhere near a holistic view of the economy, it just gets over used because it's a convenient constantly updating number that can get slapped beside any news cast or announcement.
I was responding specifically to this comment that says "look at the Dow Jones instead of the S&P" to make a point that it's the same issue. I agree with parent overall in that I'm surprised the market is holding up as well as it is.
You're spot on. The companies you listed plus others are going to come out of this leaner, with fewer competitors, and a whole set of new people forced to learn how to use them. Great news for those companies.
I would also add a #4 to your list that people often miss. There is risk and there is uncertainty (think unknown unknowns). The market hates uncertainty because it is so hard to price. Risk though can be priced. This is often why the market will go up with numbers that look really bad when they come in. They are no longer uncertain.
This is very much what most people don't understand. The primary driver of market stress is uncertainty. Once that is gone and the bad news has been digested, that's it. If lagging indicators further confirm the bad news, that's almost irrelevant because there is no new information content there. Most traders are not stupid, they know the economy is going to tank. The information that there is going to be a recession is already known and pricd in. The question at this point is how much is it going to tank? If it tanks more than expected, or 2nd/3rd order effects materialize (e.g. solvency issues, deleveraging, etc...) then prices will fall more. At this point I'd also like to stress that what you personally expect is not neccessarily what the market expectation is. The market is never wrong in this sence, it is just a consensus of opinions. Opinions are by definition subjective. When new information arrives, the opinions change.
In a mathematical sense, the relationship isn't as much between the absolute level of the economy and prices, it is the tendency of the economy and the prices. You should look at the first (maybe second?) differentials.
Furthermore, values like GDP are inherently lagging. They show data that has happened months ago. There's almost no new information content in that number. Yes the number is bad, but everyone knew it's going to be bad. It sounds like (judging by the market action) that it wasn't worse than consensus.
Now, all the above is viewed through a lens of efficient markets. Reality is again more complex. As it has been pointed out, the price is not just driven by expectations about the economy or stocks, it is very much driven by central bank and government action. Easy money distorts prices. When Tesla which makes a puny 400k cars a year and has just about stopped being loss making is priced higher than VW which makes >6 million cars a year and made $17 billion, something is off. Let's put that into context, Tesla shares have priced in decades of non-stop geometric (20% YoY) sales growth to justify the _present_day_ valuation.
Don't think for a moment that traders don't know this. It's absolutely a game of musical chairs and they know it. Everyone, and I repeat, even the most boring, backwater pension fund board knows that this is a bubble. Everyone is participating and hopes that when the music stops, they'll have already made some safe haven stockpile to weather the storm.
The downside for those companies will be the regulators at DOJ. I have no doubt they will survive this pandemic in even better shape than before. The question then is if the government will work to break them up.
Obvious examples would be splitting YouTube from Google, splitting Instagram and WhatsApp from Facebook and forcing Amazon to pick a side (own the marketplace or be a seller).
It is no harder to inflate the dollar than any other currency. Print enough of them, and the their price will go down. It's no different from any other commodity.
The Fed balance sheet is kind of irrelevant. What that number means is the quantity of reserves in the system. Only the money that is spend in the real economy has inflationary effects. One more steep is necessary for that money to have real effect and that doesn't happen automatically in a depression.
If you increase the reserves, you are forcing the interest rate down, so you are making credit more cheaper (until it arrives zero and can't go further down).
For inflation to appear you need borrowers to who the banks think is good business to lend, and that spend that borrowed money in the economy. That it's not going to happen in a depression, when nobody wants to invest and the banks are scared to lend.
What is necessary is a decisive fiscal policy. That would increase the central bank balance sheet also, but what would cause some inflation would be the spending in the economy, not the number in the balance sheet.
It's definitely much harder to inflate the dollar than any other currency. If there's massive demand for the dollar, that's a huge deflationary effect on the dollar, which counteracts the inflationary effect. In times of crisis, everyone wants to be in the global reserve currency.
That's true, but "much harder" != "impossible". If you print enough dollars, there will come a point at which it will stop being the world's reserve currency. The only way to find out where that point is is to actually cross it. That will be a very painful experiment to conduct. If we ever get to that point, the world will learn the meaning of the word "hysteresis".
No one knows what's the limit of "enough dollars". It's not infinite but it's very possible that enough money can be printed to provide ubi to the lowest rung of the society ad infinitum
There is no question that this could be done. In fact, I think that this is a fairly reasonable policy. It effectively amounts to a flat tax on wealth to fund UBI. Personally I would prefer a progressive tax to "flatten the curve" more at the top, but I'd settle for an inflation-based UBI.
But that is NOT what is happening at the moment. What is happening at the moment is almost the exact opposite: money is being injected mostly at the top in order to prop up asset values, with a little bit coming in to the bottom via the $1200 relief checks, and the middle via PPP.
That's right. Trickle down economy is not ideal. It was a worthy experiment and it has failed. It's best to give MMT a shot and provide UBI to the lower rung of the society.
Well, stocks at the moment. The real value of U.S. stocks has not risen 20% in one month. What has really happened is that the U.S. dollar has lost 20% of its value relative to stocks. Inflation takes a long time to work its way into the economy at large, and it is possible that it won't happen. We managed to avoid it after 2008, but back then we had some very competent people running the show. I'm less sanguine about that this time around. My reading of the tea leaves is that the Trump administration will prop up stock prices by whatever means necessary because they believe (probably correctly) that many people will vote according to the bottom line of their 401ks.
But it is simply not possible to keep pumping currency into a shrinking economy without producing inflation. Sooner or later the law of supply and demand will catch up with you. The only question is whether it will happen before or after November.
That's because the economy has grown more or less apace with the money supply (or, more accurately, because the Fed has controlled the growth of the money supply to keep pace with the economy). Now we are pumping cash into a shrinking economy. You can't do that for very long without producing inflation.
Doubt it. Money velocity has been steadily dropping since the mid-90s. Take a look at this chart from the St. Louis Fed:
https://fred.stlouisfed.org/series/M2V
My guess is that it will be absolutely crushed when Covid-19 finally shows up in the chart.
This is a good point. CPI is very good at missing the classes of products that have seen massive price increases: housing, education, and other large assets.
Using rents and imputed rents and not home values is the correct way to include housing prices. When you buy a house you are not only paying for a place to live, you are also speculating on a financial asset. The CPI doesn't measure investment prices (eg. it doesn't include stock values) so to isolate the true cost of housing as a separate metric from the speculative value of the investment, it looks at imputed rent instead.
> 2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies.
I thought I'd look up the performance of various indexes for the past month (as of the time I looked them up):
* S&P 500: +15.2%
* Dow Jones Industrial Average: +14.1%
* Nasdaq Composite Index: +17.9%
* Russell 2000: +21.7%
* Russel 3000: +16.0%
* Wilshire 5000: +16.3%
I then looked at the YTD, and didn't bother comparing them because they all essentially looked identical to one another.
Note that the DJIA and NDQ are mostly contained within the S&P are they are highly correllated. Weighting aside (I'm not actually sure what differencs their might be), the S&P is contained in R3k and W5000, but not R2k.
So no, I don't think the idea that Apple and Facebook are doing well (thus keeping hte S&P numbers inflated) holds weight. In fact, the Russell 2000 does not include the top 1000 companies (like the Russell 3000) and shows the highest return for the past month.
Rather, it seems like all of these indices are correlated. It reminds me of the Hillary Clinton autoregression of prediction markets during the 2016 election: immune to new information.
> So no, I don't think the idea that Apple and Facebook are doing well (thus keeping hte S&P numbers inflated) holds weight.
The easiest, and best, comparison for this is to look at the S&P 500 vs an S&P 500 equal weighted index (where all stocks are weighted equality, instead of weighted based on market cap). Over 3 months (i.e. just before the market peaked) the equal weighted index is down almost 15%, while the market cap weighted index is down just over 10%. This is clear evidence the larger companies are significantly outperforming the smaller ones.
The market incorporates news quickly, such as that there is a pandemic and it is going to have bad effects. Then it essentially forgets about it. I suspect most of the 12% is a response to government actions to control the pandemic and to the recent news that it is coming under control. You will see another drop if relaxing controls leads to another covid spike, and when economic effects appear on corporate financial reports, and when long term job losses are reported. Those are perfectly foreseeable, but in the meantime the market will likely go up as the memory of why they went down in the first place fades.
We'll see. Facebook might do poorly in Q2, but Alphabet does way more than advertising now: it does cloud infrastructure (GCP) and productivity (Google Apps for Business), both of which have experienced sharp gains in this pandemic.
We'll see if the lion's share of the pandemic closures happened in Q2? That's an objective fact. We started feeling it in March but the vast majority of action happened in April.
No, we'll see the degree to which Alphabet is exposed to the pandemic closures — which as you said, objectively happened.
A key detail from the Alphabet earnings: there appeared to be different performance trajectories for the brand and direct response components of their advertising. Direct response continued to have substantial year-on-year growth throughout the entire quarter — can be explained by brands now directly reaching people at home under quarantine. Brand advertising growth accelerated in the first 2 months of the quarter, but began to experience a headwind in mid-March. Snap's earnings call appeared to include the same observation, from Evan Spiegel: "In the short-term, we are shifting sales resources and pulling forward some investments in direct response to better serve the advertisers who are trying to reach our audience during this time…".
Additionally, Alphabet obviously also makes its money through Google Cloud Platform, whose compute usage will continue to pick up as more and more people consume online content at home. The net argument is that, even in Q2, Alphabet might come out looking stable because it is not as exposed to the downsides of COVID as, say, Twitter or Facebook.
Perhaps, we'll see. The market is purely speculative, and reflects where investors believe things are going.
At the moment, the stock prices of health care are up +5%, consumer staples +6.5%, and information technology +8.5%. Energy is down -50%, consumer discretionary -27%, and financials -22%. Due to this, the composition of the S&P500 has dramatically changed, most of its underlying capital is now in higher priced assets in the former list, rather than the lower priced assets in the latter list. Because the S&P500 is a capitalization-weighted index, the total market value reflects this.
Honestly this is all just a giant advertisement for investing in index funds.
4. Investors are driven by quarterly results. Q1 earnings are all being released right now by major companies, and since the pandemic only really hit in March, they're reporting pretty good results and investors are reacting as they always do.
This is despite the economic slow down as B2C companies losing 20-100% of their customers and B2B companies lose their B2C customers who no longer have income.
I agree and there is one other thing. Interest rates are 0 you can try to sit on cash but with the increase in money into the system, that is a loser long term. The Fed is buying things to keep prices up. There are trillions that have to go somewhere. Asset prices continue to propped up and people and funds are chasing returns.
On #2: No one is helped except perhaps medical supply companies. Folks are mistaking the durability of these companies in the face of SIP orders (due to their ability to function under WFH conditions).
"Sales of monitors increased by 73 percent compared to last year, PCs were up 53 percent, printers were up by 61 percent, and microphones were up by a massive 147 percent. Chromebook sales are also reportedly seeing triple-digit sales increases, which makes sense given how popular they are in classrooms.
Underpinning all this tech is a 70 percent increase in the sale of networking equipment. Although not detailed in Baker’s tweets, we’ve also seen a shortage of webcams, leading to skyrocketing prices."
It does look like some businesses besides medical equipment manufacturers have benefited. I'd be shocked if other things like sewing machines haven't seen huge growth in sales, also.
Panic buy? Monitors? More like the role of these devices is changing in people's lives. I'd wager that more people are going to be spending more time at home for quite some time, and that even for the people who won't, they'll start to be more sensitive to the shortcomings of their electronics after spending way more time using them than the would have had there been more things to do outside of the house.
> People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year.
It's also at the same level as one year ago. The economic situation, and outlook, is surely worse than one year ago? What has improved is the Fed inclination to make it true that stonks can only go up.
It is a bet on the continued support of the market by the Fed.
If you're interested in preserving purchasing power 15 years from now, would you rather hold dollars or things today?
As a value investor, all of my theses were blown out of the water by the unprecedented Fed intervention. It is an environment in which the fundamentals are uncertain. I'm standing pat and waiting for things to make sense before moving again.
The trailing (!) S&P P/E is greater than 20 right now. The Fed is supporting prices above their historical mean/median of 15. It makes zero sense, from a financial standpoint, unless the market is pricing in substantial inflation.
> The trailing (!) S&P P/E is greater than 20 right now. The Fed is supporting prices above their historical mean/median of 15. It makes zero sense, from a financial standpoint, unless the market is pricing in substantial inflation.
No, it's just pricing in low returns across all asset classes (to simplify, low interest rates) - assets are priced by excess returns not absolute.
There's nothing unreasonable about a P/E over historical norms if you think interest rates will continue to stay well below historical norms.
It is paradoxical that a sputtering economy can make equities worth more cheeseburgers, rather than fewer, but I see the logic. At some point, given the choice between a low-yielding equity and a cheeseburger, I'd rather have the cheeseburger.
Exactly. The thing people may also forget who have a long time horizon is that this is actually a bad thing. Returns are likely historically low going forward which is bad for your future retirement.
>> Returns are likely historically low going forward which is bad for your future retirement.
For sure. People are not factoring in the long-term interest rate here - they should look at the risk-free T-bill rates in the 1980s and how equities performed against them, and what we're looking at as well.
1. P/e does not mean much without context. Certainly not what the value of a company should be.
2. Fed helped and did what they are supposed to, which is good for everyone.
3. Market is forward looking and it should be, otherwise it would be dumb. In other words corona will pass, it is not the end of the world and if stocks went too deep, potential earnings from stocks within 5-10 years down the line would be huge, so anyone looking at that timeframe would be buying at discount.
High p/e does not mean things are overvalued. It means whoever buys into market estimates strong future potential. Now knowing that you can start to argue whether they are over or under estimating.
I felt like the biggest dolt that I didn't sell my stocks en masse a couple of weeks before the plunge, when it was already obvious C19 was going to be a big deal. I reasoned "The Fed will just inflate the currency to maintain stock prices anyway, so why would I want to go long on the dollar?"
Now a month later, my initial instincts don't seem so wrong anymore: My portfolio is doing fine... All I missed out on was a bunch of theoretical day trading gains.
(Too bad the things that really matter, like my friends that run local businesses, and everyone's mental health, haven't fared as well)
There was also biflation in the market, as many people have somewhat alluded to - tech stocks and specific sectors have exploded while others have collapsed. There has been a significant redistribution of alpha even if the total losses came in under what they expected.
It's studying for the test. It's too common to see a stock index as the stock market as the economy, buy they're all distinct things. Ideally an index _should_ represent that market, but when an economy becomes massively centrally planned by an overreaching fed, it's too easy to prop up those in the index to make the "economy" look strong. Ultimately, purchasing power, people's ability to save, liquidity of assets, etc were pretty bad before this recession. Those are the things we should actually care about - maximizing utility.
It's especially galling because the people pushing for these nigh-Stalinist levels of fed intervention and central planning (look how much support oddly favoured industries like manufacturing and coal get) are also posturing as champions of the Free Market. It's like we can't make any progress because nobody in charge is willing to argue in good faith.
If the dollar gets less valuable due to the government printing cash (or buying bonds or issuing loans they are expected to later write off), then things denominated in dollars increase, even if the real value remains unchanged.
It's hard to tell if the dollar is weakening, because most other currencies are in the exact same position.
Yes in fact the only thing you wouldn't want to hold is dollars; you'd want to hold things that will earn more dollars in the future (an inflation hedge), such as equities. Then you'd only care about FX rates (to the extent you are purchasing internationally), and I don't see any indication the FX futures market is moving against the dollar.
So 5 years out, the expected inflation is .37 - (-.418) = .788%; pretty low. In other words, the market doesn't expect all this money printing to translate into general inflation (as measured by the CPI).
Personally I would be dollar-cost averaging into equities.
I don't think they're strictly saying holding dollars is bad right now, just that it could be if inflation became a thing, which is not happening because as said by someone else, almost all other currencies are in the same boat. Plus everything is based on the dollar in the world economy. To answer your question though, if we were in a place where keeping cash was becoming a problem, that's where assets come in like stocks, bonds, real estate.
The S&P is a reflection of where traders are betting things will go. It is not a reflection of the economic reality at that moment in time. It's also down 10% YTD which is fairly substantial.
More important than anything though is that the market right now is absolutely rigged. It's not just irrational and forward looking, it is completely rigged. Central banks all over the world are directly propping up the market up. The market has never been more of a ponzi scheme for the rich than this exact moment in time.
The S&P crashed 35% before going up again, and is still significantly lower than it's high a few months ago. So I think it is more that the virus is not as bad as we thought a month ago (which seems to be true - projections in the US and Canada have gotten significantly better over the last month). The market does not go up or down when we get bad or good news, it goes up or down when we get news that is better or worse than expected.
Also, the S&P 500 is made up of mostly large companies, many of which could benefit long term from the virus. Sure in the short term there will be a revenue hit, but in the long term if their smaller competitors can't survive that hit and they can, they will become more dominant in the future. As far as I know, small business indexes have not recovered much.
The virus's effect on the US economy is significantly worse than it was estimated to be a month ago. Back then the thought was that we'd be fully operational in a few weeks. Now there's increasing evidence that we may be economically degraded for months or years.
It seems to me that the stock market or GDP are very bad measures for the economy. Maybe we should look more at average purchasing power or something like that which actually has real meaning for the regular citizen. The stock market seems to have turned into its own system that’s detached from the experience of most citizens.
Metrics like that would be a lot more directly meaningful, but the problem is they're impossible to measure. How would you find out what the average purchasing power is on a day-to-day basis?
I think they are. Plenty of people talk about the wealth gap and such. There's just no single number to condense the "average people ought to be able to get a lot of stuff" intuition.
Stock market is essentially a sentiment graph. There's no need for it to be linked to any underlying useful metric - it's entirely likely people are investing in stocks simply because all other investments are worse.
Obviously sentiment is a factor, but there are a million analysts with very complicated and dense spreadsheets trying to include every single detail to come up with their forecasts. It's nut just instinct.
No, I'm saying that eventually the value of a company is based on actual economic reality and not sentiment. Companies are either profitable or not. They either grow or not. In the end, share prices are based on these things, not just the whims of investors.
The stock market is not trading in baseball cards.
It's mostly companies that do well in any market or have a habit of surviving massive market disruptions. Sort by founded date. Almost all of them are 2000 or older.
To add to this: even within the S&P-500, the better ones seem to do much better than the average ones, so the NASDAQ-100 outperforms the S&P-500.
As an investor: Very happy with my "QQQ" (NASDAQ-100 ETF) investment, but my more diverse retirement portfolio is nowhere near as good. I have recently been buying hard hit stocks that I think will survive over the long term: Disney, Marriott..
As an employee: well, the trick is to remain employed.
QQQ was a good growth bet, but so is pure AMZN. 50% of QQQ is FAAAMIN (Facebook, Amazon, Apple, Alphabet, Microsoft, Intel, Netflix, with Cisco right below but they dont fit the acronym.)
Investing in Amazon is almost as profitable as a 3x leveraged parity risk bet on QQQ. I get what you are saying, "buy when people are fearful", but do you really think it will be more profitable than betting on the top 6 tech stocks?
Yeah, this is purely fear- people overshoot on the way down, you can profit. I made some easy money in 2008 on certain banks that were obviously not going to fail. The bet is that things return to some sort of normal. I would not normally buy these stocks, they have nowhere near the growth potential as the tech stocks.
I guess I don't believe in the statistical basis of the risk calculations (bell curve is an invalid model for sure for stocks), so only one stock is way riskier than you would think and tech only is already exposing you to some kinds of systemic risk.
The wealth bubble is still alive and well. Mass layoffs of low-wage workers don't change that very much, and the wealth bubble drives demand for investment vehicles as a class of goods. As long as it keeps inflating, the price of investment vehicles will keep going up, which includes the stock market. And as long as you expect it to keep inflating, you should expect the stock market to keep going up, unless there's a mass exodus into some other type of investment.
This may also help explain why many people are terrified of the wealthy getting less wealthy: it'll cause a massive market correction as the demand for investment vehicles decreases to a more reasonable level.
Well, that's a 12% increase following a huge drop. So the market is still 15% or so under its February peak.
A significant number of S&P 500 investors (roughly 40%) hold their investments in retirement accounts. These people are not going to sell unless forced to because they lost their jobs. If you're looking for a huge drop in the S&P 500, then keep an eye out on laws that allow for penalty-free withdraws from retirement accounts and reports that Americas are taking money out of their retirement accounts to live.
Also, there are plenty of people betting on the market going down.
> So the market is still 15% or so under its February peak.
The S&P 500 was up 29% last year. It's now back to the level of October last year - when there was no pandemic or economic crisis. So you could say that the market is remarkably blasé about the current situation.
The CARES act waived penalties for up to $100k in withdraws from an eligable retirement account, and lets you pay off the taxes on that ratably over the next 3 years, assuming you don't contribute them back to the plan, which you can do at any time during those 3 years.
AFAIK stocks are up due to the announcements that the lock downs will be ending. However, the surge seems rather short sighted: you can coax stores into reopening, but you can’t force people to go out and shop in them like they used to.
You will get 100 different answers. I like the argument that inflation is actually high, but our outsourcing of goods that make up the consumer inflation algorithm to cheaper countries makes it seem like inflation is low, but goods that can't be outsourced (education, housing, startup unicorns, financial assets like stocks) were eating the excess inflation that had no other place to go.
So the real value of stocks is lower when adjusted for true inflation, but everyone claims inflation is minuscule / nonexistent so we can pretend that printing trillions of dollars and handing it to banks is having no effect.
Can't post this enough these days. TLDR is that the stock market is forward looking. It goes up or down based on whether conditions are better or worse than EXPECTED. If reality is in line with expectations then nothing happens. If it's better than expected stocks go up, if it's worse than expected stocks go down. The current shitty economy has already been priced in as far as can be known.
Related to this is that the current circumstances are different from, say, 2008, which was a sort of internal collapse. A lot of this is external, regulation-driven. Not saying it's not a bad situation, or all government shutdowns of the economy, but there is a big element of it.
A lot of businesses are cutting back because people can't go out and do what they'd normally do legally. So when governments start easing restrictions, people [stockholders] are probably more optimistic because the situation seems more tractable. It's a lot more predictable than 2008 when people were talking about the collapse of fundamental financial institutions and systems involved in monetary supply because of their underlying structural composition.
I do think there's some disconnects in interpreting the stock market, but it seems to me investors are just seeing restrictions being eased, daily COVID case counts on a downward trajectory, etc. They're reinvesting in markets they see a path of recovery in, early.
What's less certain to me is if in say, July, this all gets worse again with overrun hospitals, etc. in a second wave. Then markets might really take a nosedive.
The last time the S&P price was at today's level, it was October 2019. The market is essentially saying that the forward-looking expectations of the companies in the S&P today are similar to what they were in October 2019. I'm not an expert here -- who knows, maybe they're right -- but I find that judgement very hard to take seriously.
I agree, but the bet seems to be (in so far as anyone can judge what the market is thinking) that the multi-trillion economic stimulus combined with other credit lines corporations are taking out will do their job on a macroeconomic scale despite anecdotal stories about it being inadequate for individuals. I don't think that's the case, but I don't have any data to say it's unreasonable.
Plus there is the expectation that once a vaccine is developed/distributed it'll be the roaring 2020s as everything recovers fully, which I largely agree with. So if you're looking at record profits less than 2 years out, makes for a pretty rosy outlook.
That of course is assuming there aren't any particularly economically devastating effects from the oil price wars/demand drop, educational lapses, hurricanes/wild fires on top of corona-virus leading to a renewed spike during evacuations, and any other manner of things that can go wrong. That's where I'm generally making the opposite bet, there's just too many unknowns and plausible disasters that can happen, and if even one of them comes true things get a lot worse quickly. But that's pure speculation/conservatism on my part.
The S&P500 is an index of some of the best performing companies in the US. Their performance isn't completely correlated with the broader market. Additionally, this damage to the economy is not permanent, most companies in that index will survive and continue to / return to paying dividends for a long time going into the future.
The top percent have spent the last fifty years severing worker productivity from worker compensation. In doing so they have made the stock market less and less related to the status of the average American. Only the two wealthiest people I know cared at all when the initial covid panic dropped the market by thirty percent.
Remember that in late March and early April, it was completely unknown when the economy would restart, with many people floating the idea of maintaining lockdowns for 18 months. It makes sense that the market is up from that low now that people in many areas are getting back to work.
Not sure how widespread this is, but my company is doing fine, business is up, yet due to COVID-19, is delaying raises and retirement contributions. Companies have a good excuse for layoffs and for not increasing salary.
The market ostensibly has a much longer view of things.
The word 'recession' is essentially meaningless without knowing the impetus for it.
The 'outsourcing of Jobs to China' is a huge, permanent, secular shift that may affect stocks one way or another, but the 'coronavirus' is something I think business believes we will recover from quickly - for the most part.
Tim Cooke told Trump he thinks it will be a 'v-shaped recovery'.
But remember that this recession was 'self imposed' in the sense that we ordered businesses to shut down. We can open them again just as quickly. Obviously that won't the entirely the case but I think this is the sentiment.
When a new CEO takes over a business, he might 'write off' a bunch of crap. Even though the company loses money that quarter, analysts see it as a 'positive sign' because the company is getting rid of dead weight on their balance sheet.
So like a 'one time charge' type thing.
I think markets are seeing corona as a 'one time charge'.
How many people do you know who are going to buy the latest iPhone this year or next? I can tell you that among my acquaintances, that number is vastly lower than it was if I asked the same question in February. And that's assuming that everything with the virus goes as well as possible, which it isn't.
The number of people who say they're going to is vastly lower, certainly. But I don't think that people's attitudes during a mandatory stay at home order are reflective of what we'll actually do once it's clear the worst is behind us.
My point is that many of these people are enduring real financial hardship. Many have already lost jobs or taken major pay cuts. The ones who haven't lost them are afraid of it, and diverting more money into savings and away from discretionary purchases. I assume the people I know are probably more white-collar and in relatively safer jobs than the general population, which (looking only at today's unemployment numbers) is bleeding badly.
This isn't about what people want to do. It's about what they will be able to afford to do.
Yes, but by this time next year they might not only be buying a the same rate as previously, but they might also even be buying a little more than usual.
Point being, the markets are seing corona as a 'flash crash' that will take some time, maybe 18 months to re-adjust, but it won't really hold things back long run.
If someone hits a vaccine the markets will go on a tear.
This month has been pretty good news for the economy. Vaccines entering trials, states passing the peak of infection, potential positive news with treatments, large amounts of government intervention indicating that the government and the fed are very focused on putting a floor on the economy, bernie sanders suspending his campaign, lowering how much influence he can have on the democratic platform, and so on and so forth. All things the market likes.
also, even if there is a decrease in earnings, interest rates are also lower, making stocks more attractive.
The market is still down from overall highs. We're not as far down as we were since we don't think it's going to be as bad anymore as we had feared. For 500 large cap stocks listed on US stock exchanges, perhaps about 12% better.
Also, in any recession situation, there's very high volatility. The days with highest stock gains tend to occur right before and during recessions. Even if there's a net downward trend, we'd expect things to be swinging all over the place as people keep overcompensating to the daily news
The market is a Keynesian contest. Prices are not based on some imaginary formula of GDP or profits. It’s based on sentiment, and thinking what other ppl feel about the market.
You wouldn’t bet the economy will be normal by the end of the year but you might bet others think it might.
?? What is the purpose in comparing metrics about our economy recessing based on production of goods vs a market for pieces of company ownership. They are not and never have been the same and there is no law they must follow the same trend
This is the most optimistic market participants (bulls) buying at low prices and creating momentum that others follow.
Waiting for them at higher prices are the pessimists (bears) ready to sell into the rally.
Since there really hasn't been a capitulation, where everyone who would ever sell actually sold, it's likely the bears are still in control. I think some people are mistaking the extreme volatility as capitulation.
> Since there really hasn't been a capitulation, where everyone who would ever sell actually sold, it's likely the bears are still in control.
I have heard this before, but I am having trouble feeling this. How do you determine capitulation? We had several days where trading was halted for a time due to steep losses, and 3/16 was the second biggest percentage loss in history (for the Dow at least).
If that isn't capitulation, what is? Hitting the 20% circuit breaker a few days in a row? Only in 1987 has the market fallen more than 20% in a day.
One reason I think the market is rising is because "everyone who would ever sell actually sold". Therefore, only the eternal optimists are left; the pessimists are sitting this one out.
Here’s why I don’t think it was capitulation. Check out google trends for “how to trade stocks” or a variation thereof. There was massive retail interest in buying the big dip, people aren’t interested in buying when capitulation has happened.
Perhaps the Fed intervened early enough to prevent a retest of the bottom, but I wouldn’t count on it.
It's pretty insane that the S&P500 is higher than it was during October last year, hell even something like 7% higher than it was last year May. There was a post on reddit joking about a guy going into a coma last year after having purchased a share of an S&P500 ETF, waking up today and hearing the news of a global pandemic, people were told to quarantine at home for more than a month, a quarter million people died, more deaths in the US than 20 years in the Vietnam war, unemployment at 20%. But when he looks at his stock account, it's in the green.
It feels like this is trickle-down economics again. Bail-out large companies by issuing cheap money, stock markets stay pumped, big companies don't go bankrupt, and hope employees don't get fired, and give each individual about 1 week of average income in the US as a little boost.
Meanwhile, 20% of people have last their jobs, the $1200 hasn't arrived or was already spent.
I know this is bad math but just as an estimation:
Fed balance sheet increased about $2T, and Congress spent $2.2T so far with more to come. That's at least 20% of GDP ($20T). Optimistic forecast is that the economy shrinks like 30% of GDP, so that's a 10% net reduction in NOMINAL spending/earnings.
SPX is down like 15% from it's previous high. The market seems to expect things to return to normal next year, which is probably short-sighted, but it's a market.
The real value of any company is down because it's producing less, but the nominal price of the company is inflated by the government spending. So the price of SPX is is not insane (if optimistic), given the government's actions. No comment on whether the actions themselves are sane.
Exactly. In 12 months from now stocks may even be worth the roughly same dollars they are today, but the surge in money supply means more dollars chasing the same amount of stock anyway.
The S&P/Gold Spot charts will be the interesting ones to watch over the next few years. While S&P shows consistent 6-7% returns historically, that's valued against the dollar. When you chart it against gold the returns are closer to 3-4%, and there are periods where S&P goes down in value against gold for years at a time.
This could also just be a 'bull-trap', and the major stock indices could collapse soon. There was a major bull-trap at the beginning of the great depression.
I know, this is just terrible. The rich insulated themselves from any risk and in case of calamities like they double up. I don't know what we're on to next.
NB this is for the first quarter of 2020, which had hardly any impact from Covid-19 - lockdowns mostly happened late March and the start of April.
So the second quarter will be a better reflection of the impact of shutdowns and changes in consumer behaviour/travel, but we won't see figures for that for a while.
Almost more worrying, 20% of the value of the S&P 500 is now concentrated in the top 5 tech stocks, which are vulnerable in these conditions (advertising spend is dropping dramatically and unemployment is rising).
While you’re right that Q2 will be worse than Q1, don’t underestimate how early the pain started. Restaurant bookings on OpenTable began dropping in early March, before the lockdowns began. By 3/16 OpenTable has bookings down 50%, before most municipalities had lockdown orders in place.
And that’s not even including the drop in travel and supply chain difficulties, which started earlier still.
Large scale government lockdowns may have started in late March. By the beginning of March, corporations, local governments, and people were starting their own lockdowns. I had a 3 day business trip in early March. I wasn't sure if it was going to be cancelled because of the virus. Both flights weren't even half full. Security lines were either almost or entirely non-existent. In Philly, traffic was significantly less and far fewer people in restaurants than previous visits. Before I got home, local schools were already starting close. From my point of view, everything started at the end of February or very beginning of March.
Vulnerable, yes but the google earnings from yesterday show even in advertising, there seems to be a temporary floor.
Entirely possible the floor is a temporary illusion and falls out over next 3mo, but the market is betting that won’t happen (I don’t know why, I’m not an expert on ads)
Yes, it could conceivably go either way at present, and I guess the market is being optimistic, but most countries are locking down for months, not weeks, and there may unfortunately be a second wave for some.
Do bear in mind those google results were for a quarter which was pretty much untouched outside China.
I don't think US companies felt much pain, certainly it was nothing compared to being forced to shut for months, or having most of their customers forced to shut/stay at home.
So I still think there's a huge disconnect between market perception of what's going on and what's actually going on. Last month I was saying "don't treat this is a temporary dip". Many have never known anything other than a bull market. The S&P 500 has rallied some ~20% since then (after a >30% fall mind you) so I've had a couple of people point to this like I'm wrong.
The perception many seem to have is that everything is going to go back to normal in a month. But some businesses and jobs are just... gone. This will absolutely impact demand and this will be much slower to recover.
I was also surprised to learn that S&P 500 earning shave been flat since 2014 while the market has gone gangbusters. That had to come crashing back to Earth eventually.
Also, some things like social distancing are here for the long term. I've already gotten emails from airlines saying they won't be filling certain seats on the plane. It's probably going to be a lot nicer to fly in coach, which I guess many will enjoy, except it's going to have to get more expensive. Less passengers, same plane, higher price per passenger. It's just simple math.
And who's going to be traveling anyway? Business travel (the lifeblood of most airlines) is going to take a long time to recover.
The economy just doesn't shrink 5% and everything is back to normal the next month. People who think so are hopelessly naive or just plain delusional. And that GDP contraction isn't going to end here.
> I was also surprised to learn that S&P 500 earning shave been flat since 2014 while the market has gone gangbusters. That had to come crashing back to Earth eventually
I was also surprised recently to learn how flat earnings have been. The stock prices going gangbusters can be explained (at least partly) by earnings per share going up due to stock buybacks. If you go look, most companies have significantly fewer shares outstanding than they did in 2014.
Not when you factor in that shutdowns didn't really start until the very end of the quarter. According to Wikipedia[1], earliest state stay-at-home order was March 19 in California and 19 states either waited until April or never issued a stay-at-home order.
It wasn't just large government shutdowns. It was local governments taking action, people traveling less, businesses cancelling/denying trips, people eating out less, etc. All of that started weeks before the large scale shutdowns.
Let's assume that 2 weeks of Q1 were significantly impacted. Let's make the very poor assumption that it scales linearly. That would imply that in Q2, we'll have about a -7% GDP, -28% annualized.
I wish I could say I disagree, but to be perfectly honest, I was fully expecting a recession last year. As someone may have already mentioned though, between FED basically keeping the market afloat, stimulus working its way through the economy and dollar still riding as a safe haven, it is not that surprising that US economy did not crash, while a good chunk of population is at home and out of commission.
The thing that worries me is that by attempting to prolong it as long as we are, we are basically setting up a stage for a greater depression. We already saw 'sell everything' panic in March.
If Thanos snapped his finger and disappeared the oldest 10% of the population, ~33 million people, I'd wager that would do far less economic damage than keeping everyone on lockdown for 365 days. The rate of the economy shrinking is going to get worse and worse as more companies go out of business.
I wish we could not communicate in bumper stickers. I did not argue this in any way, but you jumped to a conclusion and I am not certain what that conclusion is based on.
I do not want to make trite comments about how US economy is not the same as S&P500, but I will point that those losses were largely gained back for now. The US economy is still going ( and that is despite lockdown ). Hell, government could declare no business is essential and it would still go on in the form of black market.
Because keeping it afloat indefinitely creates a fake value that does not correspond to real situation on the ground. That reality will eventually burst the bubble and because the bubble appears to encompass just about every asset class, it will hurt everyone.
Not really. They happen when whoever holds power gets weak and there is discontent simultaneously. As long as you are strong, the gap can be arbitrary large.
Many dictators have been deposed not because they were weak, but because their subjects grew tired of lies and life under their rule.
Gadaffi, Sisi, Ceaușescu, Romanovs were not weak by any objective measure, they were happy to suppress dissent and kill their subjects and still had a functioning security apparatus when deposed, ordinary citizens just refused to cooperate. If almost the entire civilian population refuses to cooperate, regimes cannot function.
One year ago, if you had asked me what would happen if we printed $4T+ (that's 20% of GDP for perspective) out of thin air and injected it into the economy, I would've told you massive hyperinflation and immediate collapse of the dollar.
Instead, we see the US Dollar Index strengthening over the last 6 months [1]. The dominance of the United States as a global hegemonic superpower truly cannot be overstated; I'm in awe. We can literally print trillions of dollars worth of fiat and people around the world will give us real assets for it. Not only that, they will give us real assets at better rates than before we ramped up the printing presses. Makes me feel pretty good about the future, to be completely honest.
Bear in mind every other country in the world is also practicing competitive devaluation (hence USD relatively unchanged), and the unrest over global inflation post the 2008 binge of QE led to wars and revolutions across North Africa and the middle east.
This policy does cause real suffering, and some would argue never really normalised the economy or led to growth for most of the economy.
Bear in mind every other country in the world is also practicing competitive devaluation (hence USD relatively unchanged), and the unrest over global inflation post the 2008 binge of QE led to wars and revolutions across North Africa and the middle east.
I'd love to read about the thesis/explanation you just outlined. Do you have a link or two on the specific topic of competitive devaluation v inflationary challenges and the global conflicts?
Printing money hasn't caused inflation since world war 1 and that's because the demand for USD is virtually unlimited.
As long as the money printed comes back to the government as taxes, it's not an issue. Else it becomes a deficit.
This was already theorized by modern money mechanics and this incident is proving it right
QE has led to inflation, but it's lead to the good kind of inflation: increases in stock and real estate prices; and not to the bad kind: increases in food and energy prices (for the USA, at least). A side-effect of QE is the decrease in bond yields, pushing capital into stocks and real estate, which furthers the goal of propping up asset prices.
I am worried that QE will eventually lead to a collapse in yields across the entire economy. QE is great at maintaining or increasing the price of assets, but unless the productivity underlying the asset continues to grow, then yields will continue a trend towards 0. It doesn't help that the people who benefit the most from QE, are also the those who never need to liquidate their assets. These investors are perfectly happy to watch the paper value of their assets explode while yields remain the same.
eventually we will see a de-dollarization (there is a good book out with this name, which I recommend).
The thing that is really helping the USA now is that even countries that have been diligently working for de-dollarization do not want it to happen all at once. They want to slowly ease out of using the dollar for the reserve currency. I think that this may give us another decade of “owning” the reserve currency - that said, my friends correctly accuse me of over optimism, and I may be wrong about this.
Not from trying to pay for both the Great Society and the Vietnam War, and so inflating the money supply?
You're mighty free with making blanket statements about what did and didn't cause inflation. Some actual data would make your statements much more persuasive. So far, you have given us no reason to think that you actually know anything about the causes of inflation.
Nearly half (2.25%) of the decline was in healthcare. "Elective" procedures on hold played a large role in that and conventional wisdom would suggest that this $ would get pulled forward into Q2. I don't think it's that simple as we have had major job losses and with healthcare being tied to employment, you may not see the rebound in this that you would think.
There's a mistaken belief on WSB and elsewhere that bad news should make stocks go down. Stocks go up when the market thinks they'll be more valuable in the future, that's all there is to it. The cash will flow into the assets that provide the greatest returns, and right now that's stocks.
Since treasuries provide almost no return, and corporate bonds are at high risk of default, the money will move into stocks because 1) the US government is hellbent on making sure big companies don't fail and 2) the Federal Reserve is prepared to buy unlimited treasuries and mortgage backed securities at any price.
If corporate bonds (debt) are at high risk of default, why would there be investment in those same companies' equity which is even higher risk?
The fact that treasuries are providing no return tells you that most money is invested there "safely".
The problem of course is that the USG should be making sure small companies don't fail, because that's the actual driver of the economy both for employment and consumption.
Bonds and stocks move differently. The market has already re-priced the stocks of these companies to account for the risk of default on their debts.
The US government has also signaled that they will bail out these debts, so the companies themselves (and thus, their stock) will probably be fine even if they stop paying their debts.
This isn’t a typical recession and cannot be compared to anything in the past. The economy has been effectively put on pause. So the dynamics of the duration and recovery will be totally different than anything we’ve seen in the past. I’m optimistic about a much quicker recovery than the last one.
It depends on how much toxic debt accumulates during the pause - that is historically a large factor in causing recessions.
We have 20%+ of the workforce losing their income (many who are living paycheck to paycheck) as well as many B2C businesses closing, so we're accumulating debt that will never be paid off.
Look, I think the pause was necessary. But economies don't come with pause buttons. We had to do something that nobody has ever done before, and the second- and third-order effects are going to include some surprises.
I'm hopeful that you're right, that we can have a quick and relatively clean recovery, back to (mostly) where we were. But I'm also nervous that it won't work...
Since there are 12 months in a year, a first approximation is that each month contributes 8.3% to the GDP.
Even in lockdown the economy is not fully stopped, though, and we can expect a rebound after the lockdown is lifted, but the lockdown will impact more than a single month.
All in all, I think that it is probably a reasonable ballpark figure for 2020 as whole.
Recessions are kind of like forest fires from what I see.
They are destructive, painful, cause loss of property, kill things and generally are undesirable. But (to an extent) they are also necessary.
In the Western US fire used to be a regular occurrence. Natives would start fires, lighting would start fires, they would burn until they ran out of fuel and burn out. But this kept forests healthy. There used to be more bigger stronger pine trees and less undergrowth. Somewhere along the line it was decided fire was bad and we were going to set up fire towers and stop fires with maximum effort.
Which was all good, until it doesn't work and we simply can't because there is too much built up fuel and the fire rages out of control completely destroying the forest. The previous fires, while more regular, were smaller because the amount of fuel never accumulated to the levels it does with modern fire suppression methods.
In this analogy we've somehow decided that we are going to stop people from experiencing economic pain at all costs. This is humanistic. And we want things to keep growing and we don't want to see destruction. But what happens is a lot of trash builds up. Malinvestment. Corruption. Paper profits over actual production. Unlimited credit spent on consumer items. No personal savings. No problem, firemen Uncle Sam and the Federal Reserve are here to save the day! And no one can argue with this happening because who wants to see anyone get burned through no fault of their own?
But (just to torture the analogy) what I suspect will eventually happen is enough malinvestment, corruption and lack of responsible behavior will build up they won't be able to put the fire out. No one will. And it will burn the system flat to the ground instead of just clearing out a little brush and giving space to strong trees.
This isn't to suggest the government shouldn't help in this case. It's an unusual situation obviously. Just allowing little fires to burn prevents big fires later. Everything can't be free to everyone all the time. Reality doesn't work that way unfortunately. Failing to behave ethically, productively and responsibly, failing to save and to prepare for rough times, trying to consume and grow unsustainable without regard to risk can't be forever consequence free. That's not a moral statement, just a practical one.
Not to spoil your fine analogy, but as you probably know forestry services and farmers have engaged in controlled burns[1] for quite some time as part of sound wildlife conservation methods.
In keeping with your analogy, what may be wrong with current economic governance is the lack of letting a recession run its course and, for example, letting big banks who gambled too much fail instead of propping them up.
The revolving door between, say, Goldman Sachs and the Dept of Treasury has something to do with this, I think.
Being in a recession is a weird thing to detect. From Wikipedia:
> In the United States, it is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.
So it's not a recession unless it lasts for a while. So when the markets suddenly go down, it's not known if a recession is happening, until it's been ongoing. Since we've already been in lockdown for more of Q2 than Q1, its reasonable to expect that we're in a recession. But it's not official yet.
The NBER Business Cycle Dating committee explains their criteria and explains why "the two quarter rule" the financial press always talks about is not what they use.
"The committee's procedure for identifying turning points differs from the two-quarter rule in a number of ways. First, we do not identify economic activity solely with real GDP and real GDI, but use a range of other indicators as well. Second, we place considerable emphasis on monthly indicators in arriving at a monthly chronology. Third, we consider the depth of the decline in economic activity. Recall that our definition includes the phrase, "a significant decline in activity." Fourth, in examining the behavior of domestic production, we consider not only the conventional product-side GDP estimates, but also the conceptually equivalent income-side GDI estimates. The differences between these two sets of estimates were particularly evident in the recessions of 2001 and 2007-2009."
The NBER definition is what gets used in the US by every single government department and academic.
> The Committee does not have a fixed definition of economic activity. It examines and compares the behavior of various measures of broad activity: real GDP measured on the product and income sides, economy-wide employment, and real income. The Committee also may consider indicators that do not cover the entire economy, such as real sales and the Federal Reserve's index of industrial production (IP). The Committee's use of these indicators in conjunction with the broad measures recognizes the issue of double-counting of sectors included in both those indicators and the broad measures. Still, a well-defined peak or trough in real sales or IP might help to determine the overall peak or trough dates, particularly if the economy-wide indicators are in conflict or do not have well-defined peaks or troughs.
The GDP approach is a lot more concrete. The NBER's approach is more nuanced due to evaluating more factors, but is also more hand-wavy.
What has happened over the past few decades has been with companies:
1) A shift to JIT stock control and resource management
2) Shift towards paying dividends over building up reserves for rainy days
3) Valuing of companies with more weight upon public perception and perceived prospects over tangible assets on the books.
With many other factors that all, whilst small, add up to a market with companies driven by a way of working that is more volatile towards any unknown changes as less prepared by design to handle any rainy days periods.
This is also not just a company thing, but a personal thing with the shift in mentality to buy now pay later over save now, buy later. Mostly driven by low interest rates, which have been kept low as a way to manage currency value as a way to manage inflation. That along with any crash saw people with high interest rates as much larger and quicker to drive an economic crash with debts. Though mostly, to drive consumer spending so GDP looks good and the perception helps that countries credit rating. Making them able to borrow more for even less. Consumers with no incentive to save, buy more, borrow more, everything looks nice.
But of course there is more to it than that, but the whole drive towards lower interest rates has over the decades bestowed a culture more included to think short-term and deal with the long-term later and enjoy the sun. This has permeated in many forms and creates what I would call a false economy.
So after the moore's law of interest rates started to hit a limit as they could not shrink any lower, they invented QE, which worked and helped avoid reality of things catching up with the markets for many a time. But then even that can only go so far, so the new tool - negative interest rates.
This of course, all tricks to help balance the books and keep the whole financial system rolling ahead without it taking a reality audit and adjusting down instead of being over valued due to perception of constant growth.
But with a big rainy day that is global, things in any market would take a hit, how much of that depends as many companies will die, but how many of them will be due to the way they operate and not the `market snap`(sorry Marvel, I'm using it) we are experiencing.
If anything, whilst many jobs will be lost, more attention to local sourcing will be given and that will create not only jobs, but more stable jobs. At least to until the fashion of outsourcing comes back and we end up with Detroit mark2.
Also be new opportunities/jobs - certainly be a boom for many internet companies. Also see alas another nail in many a high street and with that, things will change, how much of that does transpire is unsure for certain. But certainly see more things local produced instead of imported, with that production has been slowly clustering globally and in some area's has become centered. So insourcing may well become a word used more than outsourcing when it comes to production and materials resources.
About the only thing I do know for sure, even after this - people will use more soap than before.
That's like saying you should remove your leg when you get an infected cut because we know it'll turn into gangrene.
It's profitable to be an economic doomsayer, which is why every single week for the past 8 years someone has said that we're going to have a recession or depression. That doesn't make them right.
Until everyone in the supply chain from mining to customers have free movement, which means 80% or more of the world have some sort of immunity (Either from opening everything up or vaccines) our economy will be depressed.
This will be many many quarters from now.
Even if today China said don't care that would be 6 months at least. And they are only part of the supply chain.
The supply chain already has free movement. Every country's border closures have exempted international trade, and almost all stay-at-home orders consider mining and such to be essential businesses.
Isn't covid-19 the #1 cause of death in NYC right now? And not, like, starvation?
Saying the cure is worse than the disease shows a frightening lack of both empathy and objective reasoning. I don't want to construct a strawman, but I worry that what "reopen" people are really saying is "I don't care if X% of the US population dies - as long as I'm not one of them - if it means I can try to go back to normal."
And try is the key word there. I would argue the main thing keeping people at home is not stay-at-home orders, but fear. Correctly-calibrated, sensible fear of getting a disease that has better odds of killing you than lots of other sources of risk in modern life.
I think it's frightening that people like you are missing the bigger point here: X% of the population was going to die anyways, and these numbers are getting skewed out of proportion. Triggering a major recession will cause more deaths and despair over the long term. Start thinking for yourselves rather than believing everything you hear.
Hospitals are now FINANCIALLY INCENTIVIZED to lump as many patients as possible into the "Covid" column. Look at the stats on the sudden drop in historical "Other" column deaths in comparison to the "Covid" column (for this year)...they basically align perfectly....which tells you that hospitals are flagging people who were going to die anyways as "Covid" related.
> Look at the stats on the sudden drop in historical "Other" column deaths in comparison to the "Covid" column (for this year)...they basically align perfectly.
There is no drop in "other" column deaths. The excess all-cause mortality rate is actually substantially higher than the number of diagnosed Covid deaths [1].
There are certain commenters on various social media sites posting CDC all-cause mortality charts showing a "drop" in recent all-cause deaths, except that's purely an artifact of the reporting lag (deaths take a couple weeks to show up in the stats so if you try to look up the number of deaths that happened within the past 1-2 weeks you will get an undercount). It sounds like you have been duped by one of those people.
In case that sounds outlandish, the supposed numbers according to USA Today:[1]
"Jensen said, “Hospital administrators might well want to see COVID-19 attached to a discharge summary or a death certificate. Why? Because if it’s a straightforward, garden-variety pneumonia that a person is admitted to the hospital for – if they’re Medicare – typically, the diagnosis-related group lump sum payment would be $5,000. But if it’s COVID-19 pneumonia, then it’s $13,000, and if that COVID-19 pneumonia patient ends up on a ventilator, it goes up to $39,000.”"
The economic collapse also brings death. The 2009 recession saw a huge spike in suicides, and this does not account for the deaths of the poorer parts of the world whose citizens are one paycheck away from starvation.
The death rate is actually far lower than we initially thought, we can see this from all the antibody tests coming out. 1/5 of NYC is now estimated to have already contacted the disease.
Your argument is absolutely a strawman. You are not making your argument in good faith and assume that people just want to let people die so they are not inconvenienced.
You should read the real arguments people who want to open actually make. Here are few examples that show that it may actually be better for (some) people to go back to work.
1. People die from suicide, drug use and alcoholism all of which increase quite a bit when there are economic issues. Its not clear if more people will die from this or any increases that could come from reopening. Somebody dying form suicide isn't better or worse than dying from corona virus.
2. Even if people do not die from the above they quite possibly will have a lower life expectancy from having depression, using drugs and alcoholism so people will die sooner. If 10 people die 1 year earlier (from drugs, alcohol, etc) is it worse than 1 person dying 10 years earlier (from virus)? It is a toss up and up to debate. This is of course assuming that somebody wouldn't get the virus and die in quarantine but they would if they were not in quarantine. This is not a sure thing. The person is still going out to the grocery store and could get the virus there. Obviously quarantine is not stopping everybody from getting it.
3. If somebody has the antibodies it appears like they will not get reinfected (at least until there are enough mutations so probably this season). If those with the antibodies go back to work there would be no increase in deaths. In fact it would quite possibly lower the number of deaths.
4. As far as I know there are no vaccines for any corona viruses. That could mean that this virus won't have a vaccine. The only way to stop it may be to build up herd immunity. This means we need people to get infected. Why not let the people who are least likely to die when they get it go back to work.
In the US alone, hundreds of thousands of people die a premature death due to obesity.
In fact, obesity is so bad in most first world countries, people are calling it an obesity pandemic (sounds familiar).
Does that mean the government should force McDonald's to serve healthier foods? And force McDonald's to stop using all the shitty ingredients and chemicals they put in their food?
Or maybe the government should regulate Coca Cola, which is infused with so many chemicals that it is a proven toilet cleaner?
Hundreds of thousands of people a year die from obesity, because of these food corporations taking advantage of human taste buds and making these terribly unhealthy foods which taste great and provides an overwhelming amount of calories.
If the government makes it illegal for people to consume over a certain amount of calories or forcibly regulate certain fast food or junk food companies to make better food, I'm sure they can save hundreds of thousands of lives from an early death to obesity.
Another example - hundreds of thousands of people die from vehicular accidents per year in the US. Should the government quarantine all cars? After all, if we don't have cars, there would be no deaths from car accidents.
Fact of the matter is, the government can regulate many things in an attempt to save lives, but there are many consequences, especially on the topic of individual freedom.
Me personally, it's not about saving the economy per se, it is more about having the freedom to choose what I want to do. I want to be able to eat like shit, I want to be able to drive, I want to be able to run my business when there is a somewhat dangerous virus running around.
"Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety." - Ben Franklin
Sorry but if all you can think of when there's an incredibly contagious virus for which there are few treatments and no cure is "BUT WHAT ABOUT MEEEEEEE?????" then I know all I need to know.
They're saying they want the CHOICE to be theirs, not the governments.
There's a fundamental difference between the underlying freedom that facilitates a choice to exist and the topic/behaviors relating to the choice itself.
Maybe not in a traditional sense, but certainly there are strong social pressures to eat similar things to those around you. Advertising can strongly affect your food choices. Smoking is also not contagious in the sense that it doesn’t immediately give you cancer: it takes years, often decades. Yet we’ve decided to outlaw it in many public places.
Ultimately decisions about diet are made by yourself and affect nobody else (unless maybe you're feeding dependents). Smoking is prohibited in public areas for the same reason that businesses are shuttered now; it subjects others who do not have a choice to a situation that is quite frankly dangerous.
We "let" people die all the time due to unhealthy choices, many of them being economically convenient. Do you have similar outrage over having a lower life expectancy than any other comparable western nation?
We've been in a recession for a while now, and a global one too. The IMF and other such organizations have been saying it for over a month now. Why has the US been trying to deny it for so long?
Given that that Jan and Feb seemed largely fine, the rate of decline in March was probably around 3x the quarter's headline figure -- call it -15%, give or take.
April was much worse, without a doubt. Anything between a -25% and -50% GDP decline seems possible for April.
Annualized numbers can always be a bit misleading, but applying them to individual months starts to get silly. What's the annualized GDP decline of weekends?
Of course. 4x to anualize a quarter. To guesstimate for just one month, we need 12x, i.e., multiply by another 3x. And of course, all this ignores compounding, seasonality, etc. The point I was tying to make -- and evidently, I did a poor job at articulating it -- is that the annualized rate of GDP change for the quarter understates the economic shock in the month of March. And April is likely worse than March.
With Coronavirus it is just as likely that the economy is going to rebound once the worst of the virus passes. People stopped buying stuff but rest assured, they will make up for it when they finally can.
A LOT of people lost jobs, a lot of business will be bankrupt.
When things recover, a lot of people will be sinking money into late rent payments and credit card bills, not spending.
A lot of people cleared off their credit cards of anything not critical. Will I go back to the gym? Maybe. Will I turn back on Amazon Prime or half the other subscriptions I cancelled? Nope. Will I eat out as much now that I've had a month and a half of eating healthy at home. Probably not.
I wish I ate healthier during this period of time... Unfortunately I'm finding it impossible to order a grocery delivery right now (I use Walmart). So I just end up ordering Uber Eats twice a day.
I cringe when I think about how much money I'm spending on food and how unhealthy I'm eating. But I can't stop, I'm addicted to food delivery wtf.
People stopped buying stuff but rest assured, they will make up for it when they finally can.
Apart from the people who were laid off, or spent their savings because they had no income, or lost their businesses because they couldn't pay their debts, or ... well, it's a long list.
People who think the world is just on pause and everything will bounce back to normal in a few months need to look outside of their filter bubbles.
Me too but that would be back to almost normal very quickly if the spread of the virus stopped. The hard work of stopping the spread is taking too long and is wasting the pain that we are causing.
How do you make up for the 2 months you decided not to eat out and cooked home instead? I live in Boston, and some of my favorite restaurants are already closed, and the huge liqueur store next to my house closed this week. It's not possible to make up for things like this, they're gonna be replaced by larger food chains once virus passes. But it's not true to say virus didn't hurt our economy permanently, of course, one can argue in 6 months time the degree in which we're hurt might be minor.
I never said businesses will come back from grave. But people will want to get out once this passes. I'm personally sick of staying at home, I am going to try to make better use of my time. Somebody will get that business anyway.
I am also putting off repairing my car until after all this passes. Yes, car repair shops may be at loss now because I decided not to do business with them, but my car is still broken and I will probably have to pay premium to get my favorite mechanic to take a look.
This is "economy" we are talking about. It is an average over a lot of individual cases. It does not care that a lot of companies will die if the ones that survive get more business.
I think folks are underestimating how long this will go on. At least until the end of the year, minimum. There is absolutely nowhere near the amount of testing being done in the USA due to incompetence, that is needed to allow folks to feel safe, or to safely allow bars / concert venues or other large gatherings to happen. Massive amounts of businesses are never coming back from that.
We're a massively long way from that, plus the contrarian ignorance embedded in GOP politics now that are allowing / half demanding their cities open back up for business are going to all but ensure the USA has the biggest death / infection / economic hit of all of the countries in the world.
shelter in place is besides the point. People are not gonna go to bars and behave like nothing is happening if their loved ones are sick and getting killed. I'm 22 yo, healthy, no comorbid condition, but I for sure will not be as active as I was before COVID. I'll definitely go out, but I doubt I'll be going to concerts. I doubt I'll eat out every day. It'll definitely have some impact on the economy.
The issue with the broader economy is the number of professional organizations that are now doing layoffs, on a broad scale those jobs are slower to come back then the retail and service industry jobs that were initially lost. Those people won't be spending money as a result, and there will be further slowdown.
I used to think that too. The buildings and are still there, and the workers can come back easily enough. Unlike, say, a hurricane, we should be able to just start things up.
However, I think two factors make that unlikely now. One is the inadequate, spotty government intervention. They should have strongly pressured banks and landlords to just extend mortgages and defer or suspend rent. They should have encouraged utilities and other large, stable suppliers to stretch bills. And then they should have paid workers to mostly stay the fuck home.
The other is inadequate, spotty government response to the virus. When you look at SF and Seattle vs NYC, it's pretty obvious that strong, early government intervention can make a huge difference. And when you look at S Korea vs the US, it's even clearer. If we'd had good test-and-trace capacity ready, or if we'd locked down while quickly developing it, we'd be done with things by now. But governmental half-assing of this means that we're looking at a much larger impact than is necessary.
I think the first failure means that both businesses and consumer spending will be slow to recover once the crisis is past. And I think the second failure means it's going to be a much larger crisis. So I'm now expecting a much more significant reaction than I was 6 weeks ago.
I agree with this. The failure to contain the spread is the problem and the government wasting all this time means we could have had much better containment by now.
If global lockdowns were only for around 1 month, the world would probably bounce back with minimal impact.
If as looks likely they trail on for months, the second order effects will mean that unemployment and misery spread from industries like travel to every other industry (for example no airlines means no advertising on travel, which means Google takes a huge hit on profits Q2, which means they freeze acquisitions, which means funds are reluctant to invest in startups as there are no exits, which means startups in every industry stop advertising, which means Google suffers more).
So recovery may not be quick unfortunately, even well after Coronavirus is mostly over.
That is an optimistic outlook and I hope you are right.
But I bet you are wrong. The destruction of the energy industry will last into 2021 and that alone will drag the economy down. There are also 26 million people who have been out of work and some non-zero percentage of those people won't be able to find work when or if the national economy is full reopened. Then there is the phenomenon of people retracting from spending after big financial events.
...and people are going to be scared for a long time, probably until there is a vaccine. I saw Reuters poll yesterday that indicated 40-60% of people would not go to the movies, a concert, sporting event, conference, or other large gathering until there was a vaccine. To expect that there won't be a trickle down impact from people retreating into their homes is... optimistic.
...but I hope you're right. The pessimists (me) dominate the headlines but the optimists are right more often.
I am pessimistic with regards to virus but optimistic with regards to economy.
I think people underestimate how difficult it is going to be to fight the virus. I think it is pretty much too late now. Only early and very decisive moves would have been able to stop it, the way China did, but it is way past that point.
But, I think we underestimate how people can learn to live the new normal. There will be people hit very profoundly, but overwhelming majority will adjust. We have maybe stopped spending for a bit fearing the worst, but now it seems we already reached the worst and so people are going to learn and resume their lives.
The whole market relies on consumer confidence and nothing else.
If the future is bleak, they won't have confidence, and cuts their spending, which reinforces the prophecy.
There's no way out of this loop except by massive government intervention. The great depression only ended because of WWII. Now, hopefully we don't go to war this time, maybe try going back to moon?
My job just cut benefits and hours but we're "essential." Remember those $1200 checks? Im still waiting on mine. Lenders and banks were supposed to start going easy on loans but ive had two emails and a phone call about the loan for my Silverado this month and wouldnt you know, the caller was excited to mention my stimulus check.
A guy who used to be my bartender now couch surfs a few days a week at my place while he looks for work. His mother is getting evicted from an assisted living center in a few days and his girlfriend is sick. She 'works at the Amazon' so she cant take any time off, but hes hoping if he gets a job at the Flying J at the edge of town he can switch places with her and she can take a few days off.
Shops are closing and nobody seems to care. Ive counted 2 furniture stores, a consignment shop, a few barber shops, and half the god damn bars in this town including one that was burned to the ground "mysteriously" over the last two weeks. Someone spray painted a swastika on the late night pizza joint.
So yeah this is a recession but it is so much worse than a lot of people think. No school means poor kids roam the street like packs of feral dogs asking for money for food around here. Half the country is out of work and the best Bloomberg can come up with is "its the start of a recession dont you know!"