Economics

[Dotini]

"Peace" has never really been a hall mark of American conservatism & Trump has offered an odd twist on Republicans' traditional bellicose stance.

Objection, your honor!
- Before WWII there was a very strong urge among conservatives to resist going to fight in Europe. It took Pearl Harbor for that.
- Democrat Truman got us into Korea, Republican Ike got us out.
- Dems Kennedy and Johnson got us into Viet Nam, Republican Nixon got us out.
- Republican Reagan got us out of the Cold War with the USSR.

 

[UKMikey]

^The Vietnam war may have had something to do with Ike as well if I'm reading the results of this study correctly and they're to be believed.

https://www.nytimes.com/1971/07/05/...er-decisions-undercut-the-geneva-accords.html

 

[Biggles]

Objection, your honor!
- Before WWII there was a very strong urge among conservatives to resist going to fight in Europe. It took Pearl Harbor for that.
- Democrat Truman got us into Korea, Republican Ike got us out.
- Dems Kennedy and Johnson got us into Viet Nam, Republican Nixon got us out.
- Republican Reagan got us out of the Cold War with the USSR.

That's simplistic to the point of being nonsensical.

Goldwater? He was so bellicose he frightened even members of his own party. He was all for nuking the Vietnamese.

Nixon? Yeah, he was a regular peacenik.

Running for the Democratic nomination in 1968 were three unambiguous opponents of the Vietnam War: Bobby Kennedy, Eugene McCarthy & George McGovern.

Reagan? Invaded Grenada. "Got us out of the Cold War"? Actually he involved the US in a whole range of plots & covert action all around the world including laying the groundwork for decades of conflict in Afghanistan. Supported death squads in Central America. Bombed Libya.

Bush Sr? The Gulf War.

Bush Jr? The Iraq War.

No doubt there's been a consistent impetus for foreign interventions on the part of Republicans & Democrats over the decades since the end on WWII, but most left of centre Democrats have always been opposed to war.

 

[Eunos_Cosmo]

Objection, your honor!
- Before WWII there was a very strong urge among conservatives to resist going to fight in Europe. It took Pearl Harbor for that.
- Democrat Truman got us into Korea, Republican Ike got us out.
- Dems Kennedy and Johnson got us into Viet Nam, Republican Nixon got us out.
- Republican Reagan got us out of the Cold War with the USSR.

All of these things were literally before my lifetime (well the ultimate resolution of the cold war clocked in a few months after I was born...), forgive me for associating Republican politics with stupid warmongering...it's all I've known.

 

[Dotini]

All of these things were literally before my lifetime (well the ultimate resolution of the cold war clocked in a few months after I was born...), forgive me for associating Republican politics with stupid warmongering...it's all I've known.

When the Senator Henry Jackson (D-WA) neocons left him for the Republicans was when the rot set in.

 

[Joey D]

"Peace" has never really been a hall mark of American conservatism & Trump has offered an odd twist on Republicans' traditional bellicose stance.

Peace isn't really a hallmark of either American conservatives or liberals, both sides just love bombing and getting involved in god knows what. I think it has more to do with people who end up being politicians really enjoy waving a big stick and using it. Some are more into than others, but we've pretty much been in conflict continuously since WWII.

 

[mustafur]

The markets going up after a 2 trillion stimulus is all you need to know about how irrational it is, there is no known time frame that this issue is going to be solved and with the world at a stop, 2 trillion isn't going to do jack.

I personally see unemployment numbers of around 30-40% hitting my country if this lasts another 3 months(and we are getting closer to winter), Australia's economy alone would need that kind of number to just get working again, given our immense private and corporate debt which far exceeds our GDP and isn't being paid reliably At the moment.

 

[Biggles]

The markets going up after a 2 trillion stimulus is all you need to know about how irrational it is, there is no known time frame that this issue is going to be solved and with the world at a stop, 2 trillion isn't going to do jack.

I personally see unemployment numbers of around 30-40% hitting my country if this lasts another 3 months(and we are getting closer to winter), Australia's economy alone would need that kind of number to just get working again, given our immense private and corporate debt which far exceeds our GDP and isn't being paid reliably At the moment.

I would genuinely like to know where the money is coming from? If governments can just wave a magic wand & conjure up trillions of dollars at will, then why are we bothering to work at all?

I'm surprised at the current bounce in the markets. It would seem to me that a quarter with dramatically lowered economic activity & the prospect of another quarter of likely downward pressure from the consequences (even assuming we do actually manage to out a lid on the spread of the virus) would lead to lower valuations.

 

[Tired Tyres]

I would genuinely like to know where the money is coming from? If governments can just wave a magic wand & conjure up trillions of dollars at will, then why are we bothering to work at all?

I'm surprised at the current bounce in the markets. It would seem to me that a quarter with dramatically lowered economic activity & the prospect of another quarter of likely downward pressure from the consequences (even assuming we do actually manage to out a lid on the spread of the virus) would lead to lower valuations.

A printing press. It is a very dangerous thing to do. There will be consequences.

 

[Crash]

I'm surprised at the current bounce in the markets. It would seem to me that a quarter with dramatically lowered economic activity & the prospect of another quarter of likely downward pressure from the consequences (even assuming we do actually manage to out a lid on the spread of the virus) would lead to lower valuations.

Markets historically bounce some in the midst of a large downturn (dead cat bounce), it bounced into a bull trap in 1929 also before the next leg down. This was a violent bounce, but I wouldn't say we've bottomed, there's still a lot of unknown.

An interesting comparison graph that I saw online from a few days ago. Past performance does not necessarily indicate future results. Take this comparison as you will.

 

[ROAD_DOGG33J]

We don't know the longer-term effects, but I would guess this will affect more than 1-2 quarters. It will probably stabilize and then the financial results will start coming out.

Some are saying that the coronavirus is already priced into the market, but we don't know the full effects yet.

 

[Outspacer]

Markets historically bounce some in the midst of a large downturn (dead cat bounce), it bounced into a bull trap in 1929 also before the next leg down. This was a violent bounce, but I wouldn't say we've bottomed, there's still a lot of unknown.

An interesting comparison graph that I saw online from a few days ago. Past performance does not necessarily indicate future results. Take this comparison as you will.

TBH I don't like zoomed in graphs like that because context is everything. I'd say the differences between what surrounds these downturns is far more marked than the similarites.

1929 was preceded by an incredible upward surge, such that 50% of the fall could've been viewed as a modest correction! And indeed that's about where it ended up not very long after, lingering thereabouts for more than a decade.

2008 was a slow-motion will-they won't-they until Lehman said they would, almost a year into that comparison graph. QE started, interest rates bottomed (we thought!), "and. here. we. go.". One of the last pieces of this I think was the UK's actions the beginning of March 2009 so by then these measures were being taken on both sides of the Atlantic. Anyway, the right hand edge of that comparison graph is also March 2009, the deepest point. By the end of 2010 it was back to late-2006 levels (and more than doubled since)...

If there's one thing for sure it's that QE creates unnatural markets, and this time the tap has been opened far quicker. Perhaps too soon? Even assuming stocks prices recover it will look different to the 2009 recovery, just down to that timing difference. It's easy to say "if QE buy else sell" as that is what plenty of people will be thinking.

Looking for similarities, the decade long run-ups to the 1929 and 2019 highs do have a fair bit in common. Without QE now the Dow could well have taken a similar path, say, down to ~9000 before recovering back to ~19000 (just on a 'matching the graphs' basis, nothing more). But IMO it didn't (and won't) get anywhere near that low because of the expectation of yet more QE.

“If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn't. And contrary wise, what is, it wouldn't be. And what it wouldn't be, it would. You see?”

Back in the real world there are huge unknowns. Shale's future is looking shaky. Brexit isn't over. Although now we have some idea of what we're dealing with in COVID it could leave a much larger scar than feared, on individuals, on businesses and on geopolitics even if it's 'beaten' relatively quickly.

With our over-leveraged economies, what it would be, it can't.

DYOR and all that, keep well, and STAY INDOORS!

 

[Biggles]

The economic pundits are all over the place (as usual) on this. The alternative viewpoints:

1) This is a temporary setback in a generally healthy economy. Once the virus is brought under control - which will be either in 2 -3 weeks or 4-5 weeks, the economy will roar back to life posted by the most extreme QE/low interest rates in history. So no growth for Q1, strongly negative growth in Q2 & then strong growth starting in Q3. The stock market anticipates the economy my several months, the market is over-sold, the bear is done & a new bull is beginning. V shaped recovery.

2) The effects of the coronavirus have been consistently under-estimated. It may take 8-10 weeks for the initial wave of infections to be brought fully under control in the US. Even then there will be recurring outbreaks which will have a continuing negative impact on the economy. The closed businesses, bankruptcies & lost wages will continue to be a drag on the economy into Q3 & Q4 & the recovery will be gradual. The markets have not yet fully absorbed the implications & this & another big drop is coming before the market stabilizes at a new bottom. The recovery will be U-shaped.

I lean more towards scenario 2. It seems to me that here has been a historically long bull market. The valuations of the Dow/S&P have only dropped to levels above where they were when Trump was inaugurated, which is to say after a very long run up. It would seem reasonable to discount the last 2,000 to 3,000 point rise in the market as evidence of irrational exuberance. So 10- 20% of the present drop could be considered a normal market correction. Add on top of that the effects of the coronavirus lockdowns, it doesn't feel to me that the losses so far fully reflect the negatives.

But what do I know.

 

[mustafur]

I cant see how this is temporary, with jobs lost and purchasing power decreased the recovery can't be anywhere close to the drop.

You could have the government spend trillions on projects for jobs and such which may help but then you have to remember the Debt Trap countries like the US are currently in.

The 3 options that the US has:

1. Print money to get out of the problem and put it towards infustructure or something that can give a big amount of people jobs.

Problem: With mounting Public debt, bond holders can lose faith in the USD which will almost certainly trigger Mass Inflation or even hyperinflation, given the USD reserve status, economies around the world will dump the currency for something else).

2. Borrow more public funds and use it for the same thing as the 1st option.

Problem: US Debt is already excessive increasing it ever more is going to make the payments soo large it could consume big parts of the budget that the Government uses to maintain the economy as it stands(this will be more of a long term problem with disastrous consequences much worse then option 3).

3. Take the hit and almost certainly go into a depression, austerity measures will be in place which will pretty much make the country decline for decades but long term the economy will be healthier(although no democraticly elected government would ever do this).

They have already done a bit of Number 1 but I expect a Mixture of 1 & 2 tbh, If it somehow works it would almost certainly require negative interest rates and a collected money printing effort around the world to maintain status quo with currency valuations.

At that point we are all in a Banana Economy.

 

[Eunos_Cosmo]

I cant see how this is temporary, with jobs lost and purchasing power decreased the recovery can't be anywhere close to the drop.

You could have the government spend trillions on projects for jobs and such which may help but then you have to remember the Debt Trap countries like the US are currently in.

The 3 options that the US has:

1. Print money to get out of the problem and put it towards infustructure or something that can give a big amount of people jobs.

Problem: With mounting Public debt, bond holders can lose faith in the USD which will almost certainly trigger Mass Inflation or even hyperinflation, given the USD reserve status, economies around the world will dump the currency for something else).

2. Borrow more public funds and use it for the same thing as the 1st option.

Problem: US Debt is already excessive increasing it ever more is going to make the payments soo large it could consume big parts of the budget that the Government uses to maintain the economy as it stands(this will be more of a long term problem with disastrous consequences much worse then option 3).

3. Take the hit and almost certainly go into a depression, austerity measures will be in place which will pretty much make the country decline for decades but long term the economy will be healthier(although no democraticly elected government would ever do this).

They have already done a bit of Number 1 but I expect a Mixture of 1 & 2 tbh, If it somehow works it would almost certainly require negative interest rates and a collected money printing effort around the world to maintain status quo with currency valuations.

At that point we are all in a Banana Economy.

I'd say it will be a healthy amount of 2, a little bit of 1, and a smidge of 3. I don't see economies around the world dumping US currency for something else because....what else is there? To dump US currency is to hold the position that in the long term, the US will fail to emerge from this pandemic. I don't think that's realistic.

 

[mustafur]

I'd say it will be a healthy amount of 2, a little bit of 1, and a smidge of 3. I don't see economies around the world dumping US currency for something else because....what else is there? To dump US currency is to hold the position that in the long term, the US will fail to emerge from this pandemic. I don't think that's realistic.

I disagree, its completely possible it could be another currency(something stable) a finite resource or even something completely left field like a crypto currency designed to be stable, I don't see why countries would keep the US as a reserve currency though if it becomes unstable and starts to devalue fast.

The USD has been used for this long due to it being Stable(and by using force against those that don't), a currency that investors lose confidence in is very far from that.

What the US needs if it's going to print it's way out of this is a collective money printing effort from around the world to maintain parity, possible but that would depend on how each country is effected.

I'm not saying the US can't recover but the recovery wouldn't be real and would have fundamental issues underlying the economy, namely no path to positive interest rates and a massive debt burden that can only be overcome with another crash or massive inflation(via printing).

 

[Eunos_Cosmo]

Why U.S. Housing Bubble 2.0 Is About To Burst

I just hope that home prices drop before inflation starts to accelerate. If the window exists at all, I'm pretty sure it will be narrow.

 

[Joey D]

Why U.S. Housing Bubble 2.0 Is About To Burst

I just hope that home prices drop before inflation starts to accelerate. If the window exists at all, I'm pretty sure it will be narrow.

God, I hope so, I'd love to be able to buy a house. Crap shacks in Salt Lake go for well over $500,000 and if you want anything resembling a decent house in an OK area, you're looking at close to a million. I'd love to be able to get a modest home for somewhere right around $275,000.

 

[Northstar]

I'll bring this over here as it's not really COVID-19 related.

Well by that logic I guess there’s no point in getting an education. I mean I’m not disagreeing with what you said about trade jobs, I help run an autobody shop and I know finding employees is tough, but what you said couldn’t be further from the truth in regards to what it is like after college.

I'm not saying nobody should go to college, I'm saying if you're going to be plopping down that much money you should be pretty damn sure there will be demand in the field your degree is in.

 

[Eunos_Cosmo]

God, I hope so, I'd love to be able to buy a house. Crap shacks in Salt Lake go for well over $500,000 and if you want anything resembling a decent house in an OK area, you're looking at close to a million. I'd love to be able to get a modest home for somewhere right around $275,000.

Same boat. If I could get something for even $400k, I'd be all over it. Unfortunately, though demand seems to have dropped of a cliff...prices have not yet started moving. It will take some time. Until then, you can pick up this charmer in SF for only $700k!

 

[Northstar]

Well someone should tell those 53 million Americans (half of whom have high school diplomas or lower qualifications, and are not currently studying) to go out and land one of those well paying jobs. Since this ain't the thread for it, I'll leave you to your delusions.

Most trade jobs are willing to train and quite a few will even pay for any schooling or training you may need to do the more advanced stuff.

It's also not a delusion as I see it every day, a majority of the people working in the trades will be retirement age in about a decade and there isn't enough people entering to replace them. I guess it's great job security for me, but bad news for consumers that need a new a/c or furnace as they will be getting considerably more expensive.

It’s ok to be-little people in a worse position than I am now, because I used to be in that same position!

Where did I say I wasn't still a "little" person?

I said I learned from past mistakes (being ill-prepared) and took steps to ensure I wouldn't be caught off guard again. It meant not investing in any hobbies or eating out for awhile, but at least now I know my car won't have to double as a house if I'm out of work for a couple months. Even than this pandemic has made me realize that I need to pad it even more.

Also, I noticed you completely ignored my question about the roles being reversed. Would you continue working for free if your employer couldn't afford to pay you?

 

[baldgye]

Most trade jobs are willing to train and quite a few will even pay for any schooling or training you may need to do the more advanced stuff.

It's also not a delusion as I see it every day, a majority of the people working in the trades will be retirement age in about a decade and there isn't enough people entering to replace them. I guess it's great job security for me, but bad news for consumers that need a new a/c or furnace as they will be getting considerably more expensive.



Where did I say I wasn't still a "little" person?

I said I learned from past mistakes (being ill-prepared) and took steps to ensure I wouldn't be caught off guard again. It meant not investing in any hobbies or eating out for awhile, but at least now I know my car won't have to double as a house if I'm out of work for a couple months. Even than this pandemic has made me realize that I need to pad it even more.

Also, I noticed you completely ignored my question about the roles being reversed. Would you continue working for free if your employer couldn't afford to pay you?

Sorry for the confusion, I wasn’t sure how it was spelt, I meant belittled*.

 

[Woodybobs]

It's also not a delusion

The delusion is that there enough well paying jobs for everyone. We're talking about millions of people of all ages. They can't all become tradespeople or drive trucks. Not to mention that we would still need to fill those low paying jobs with other people. The problem is that low paying jobs often don't pay enough to make a living wage.

 

[Northstar]

Sorry for the confusion, I wasn’t sure how it was spelt, I meant belittled*.

Wanting people to be fiscally responsible is now considered belittling?

Also, you have yet again ignored my question.

Would you continue working for free if your employer couldn't afford to pay you?

You obviously don't have to answer it if you don't want to, but if you don't I will consider this conversation over.

They can't all become tradespeople or drive trucks.

I never claimed there were, I was using them as examples as they are the ones I have the most experience with.

Not to mention that we would still need to fill those low paying jobs with other people. The problem is that low paying jobs often don't pay enough to make a living wage.

There will be fewer people to fill those jobs though, which means wages for said jobs will go up. 💡

 

[Woodybobs]

Wanting people to be fiscally responsible is now considered belittling?

It is belittling to question why people who are living paycheck to paycheck haven't saved money that they don't have.

I never claimed there were, I was using them as examples as they are the ones I have the most experience with.

Those and any other examples would only provide jobs for a fraction of the people we're talking about.

There will be fewer people to fill those jobs though, which means wages for said jobs will go up. 💡

Or, more likely, an amnesty for illegal immigrants and enough green cards issued.

Right now we're still in the early stages of this problem. As more jobs become automated we are going to struggle to create employment for everyone in the future. We're going to need a radical solution to ensure everyone gets a living wage.

 

[Northstar]

It is belittling to question why people who are living paycheck to paycheck haven't saved money that they don't have.

How long does one have to work paycheck-to-paycheck before they realize it is an issue and changes are required? I know for me personally it got old really fast.

I certainly don't mean to belittle anyone, but if you're not at least trying (as in actually trying) to improve your situation my sympathy level is rather low. I know it sounds harsh, but that is because life itself is harsh.

Those and any other examples would only provide jobs for a fraction of the people we're talking about.

That is unfortunately not a new problem nor is it one that will ever go away.

Right now we're still in the early stages of this problem. As more jobs become automated we are going to struggle to create employment for everyone in the future. We're going to need a radical solution to ensure everyone gets a living wage.

Industries/jobs come and go over time, for instance it used to be someone's job to walk around and tap on windows to wake occupants up. I wish I could say what the next big industry will be, but I am terrible at investing.

 

[Eunos_Cosmo]

It is belittling to question why people who are living paycheck to paycheck haven't saved money that they don't have.


Those and any other examples would only provide jobs for a fraction of the people we're talking about.


Or, more likely, an amnesty for illegal immigrants and enough green cards issued.

Right now we're still in the early stages of this problem. As more jobs become automated we are going to struggle to create employment for everyone in the future. We're going to need a radical solution to ensure everyone gets a living wage.

More automated jobs = more leisure time for humans = more netflix = more entertainment biz jobs for humans. I'd actually be curious to see the growth in acting & production jobs from 1950 to now.

 

[Woodybobs]

How long does one have to work paycheck-to-paycheck before they realize it is an issue and changes are required?

There are not enough jobs for everyone earning minimum wage or thereabouts to get one paying more. What should the other millions of people do when the good jobs are filled?

That is unfortunately not a new problem nor is it one that will ever go away.

That's true, but the difference is that low skilled jobs used to provide a living wage. Right now we need people to work some low skilled jobs but we don't want to pay them enough to live above the poverty line.

Industries/jobs come and go over time, for instance it used to be someone's job to walk around and tap on windows to wake occupants up. I wish I could say what the next big industry will be, but I am terrible at investing.

Most likely it'll be one that doesn't require many employees, much like most modern industries.

It's fine that technology makes some jobs obsolete but it's important that we create jobs to replace them, or we start thinking of different ways to ensure people can provide for themselves and their dependents. The rate at which jobs are being automated is increasing. You mentioned driving but in the near future it's unlikely to be an industry that requires humans. Trades will also become increasingly automated.

It's only creative jobs that are somewhat safe over the next couple of generations.

More automated jobs = more leisure time for humans = more netflix = more entertainment biz jobs for humans. I'd actually be curious to see the growth in acting & production jobs from 1950 to now.

The more leisure time is interesting as it was predicted that our working week would be significantly shorter by now. It's one possible solution to the problem.

It's possible that there are more acting jobs but the industry as a whole might not be creating as many jobs as it used to.

 

[Northstar]

What should the other millions of people do when the good jobs are filled?

Live within their means until they can locate a better job.

That's true, but the difference is that low skilled jobs used to provide a living wage.

Not really, the percentage of people living in poverty in the U.S. has been in the 11-15% range for quite awhile.

https://www.infoplease.com/business...come/persons-below-poverty-level-us-1975-2010
https://www.statista.com/statistics/200463/us-poverty-rate-since-1990/

It's fine that technology makes some jobs obsolete but it's important that we create jobs to replace them,

And they will be created as needed, much like how the IT industry has grown from non-existent to one of the largest job categories in a matter of a few decades.

Trades will also become increasingly automated.

They may become slightly more automated but unless we tear down every existing structure and re-built with automation in mind human labor will make up the bulk of trade work. Even the houses being built today aren't exactly the same even if they seem so from the outside due to customers wanting things where they want them or deciding they want to add something 3/4ths of the way into the build.

 

[mustafur]

Not really, the percentage of people living in poverty in the U.S. has been in the 11-15% range for quite awhile.

https://www.infoplease.com/business...come/persons-below-poverty-level-us-1975-2010
https://www.statista.com/statistics/200463/us-poverty-rate-since-1990/

So your saying the education rates are been at the same rate the whole time?

None of that is asking about skills to living wages.