11 ms·

2020 Stock Market Crash

• nimbius 7y ago
  im worried this article will eventually get whitewashed into "corona caused the financial crisis." HN and others have repeatedly pointed out numerous factors in the market that definitely were not corona, that would have caused this crash eventually. untenable levels of credit card debt, automobile debt, and unreformed student loan structures as well as stagnant wages and rollbacks on a number of legislative efforts to police markets and protect investors.
  • leggomylibro 7y ago
    A stiff breeze can bring down a rotted tree just as well as a hurricane can. Time will tell what really happened.
  • Thaxll 7y ago
    The current crash is 100% because of corona, not sure what proof you need?
    • deleted 7y ago
      [deleted]
    • KaoruAoiShiho 7y ago
      Yeah I'm not sure if OP knows what he's talking about. None of those other things are correcting... ONLY the asset market.
      • AlexandrB 7y ago
        Wait until there are mass defaults because of the loss of income.
        • KaoruAoiShiho 7y ago
          Companies and banks are healthier and more asset rich than they have been for decades.
          • AlexandrB 7y ago
            Some companies are, some are not. Many have been juicing their stock price with stock buybacks at the expense of cash reserves (see Boeing).
            • KaoruAoiShiho 7y ago
              Boeing has nothing to do with the current situation and it's not really under any more pressure presently even if there is a temporary downturn.
              • AlexandrB 7y ago
                That’s an odd assertion considering how much the airline industry is going to hurt for the next 6+ months. I’m sure both Boeing and Airbus will see a drop in orders as their customers teeter on the edge of bankruptcy.
                • KaoruAoiShiho 7y ago
                  Could be wrong, but my understanding is that the aircraft industry is supply not demand constrained.
        • blobbers 7y ago
          It's going to be the financial crisis all over again. Ppl default on loans because they lack cash flow banks didn't account for this with lax lending standards banks go bankrupt but TARP style program bails out banks hopefully people stay in their homes ...somehow. (some kind of mortgage payment moratorium?)
          • 7y ago
    • daxorid 7y ago
      Coronavirus was the pin that popped the bubble. But the pin could have been some other event, at some other time. All crashes have catalysts, but the specific catalyst is usually irrelevant, in hindsight.
    • takeda 7y ago
      Corona was what broke the camel's back, the stock already was struggling before.
      • dilyevsky 7y ago
        It’s a 1000kg weight that broke camels back
        • smegger001 7y ago
          a straw would have broken the financial system camels back unfortunately it just got hit in the head by a corona brick
      • burntoutfire 7y ago
        SP500 rose over 10% in the 6 months preceding the corona outbreak - how is that struggling?
        • takeda 7y ago
          It was struggling in late 2018 (after the sugar rush of tax cut ended) and 2019. FED was lowering interest rates to make it look better even though other indicators were looking bad.
  • cultus 7y ago
    It'll be the same thing after 2008. Some piddling reforms that do nothing to solve the enormous political and economic threat that our bloated financial system poses.
    • jrs235 7y ago
      And everyone will learn once again to take big risks because if it hits the fan you'll get bailed out...
    • season2episode3 7y ago
      I have a deep distrust of the financial system as well. How much can you just keep repackaging debt until it looks palatable? After all, that's what most financial instruments are, and the financial system has enormous incentives to trap people in debt. The pattern is the same: years of deregulation allow financial giants to go on a feeding frenzy. They feed on ill-informed consumers by enticing them with deals that are too good to be true. They feed on each other by giving each other loans. The numbers look great for a while. Individuals within these firms get enormous bonuses because the numbers are so good. Then there is a moment of reckoning where the financial giants realize their credit exposure to each other is too high and furiously backpedal. They then try to obtain safe assets at any cost, crashing the market and decimating IRAs (but who cares about those). This has not been caused _by_ coronavirus. Internal data from my company (sorry, no details) have been foreshadowing a recession for months. Coronavirus just came at the most inopportune time, with a financial house of cards primed for collapse and a USFG administration that's too inept to handle it (and which encouraged the feeding to begin with). The banks are going to be hit by this, but they'll survive it one way or another. Those of us who are invested in the financial system (read: almost everyone) will get screwed. Then the financial giants, freshly bailed out with taxpayer money, will go purchase real assets at rock bottom prices and further consolidate wealth in time for the next bull market. This is when we could use an FDR to break this cycle. Instead, we have the choice of Trump, Biden, or Sanders. Yikes.
      • cultus 7y ago
        Sanders is actually proposing reforms that would actually reign in the financial sector, but that ship has sailed. There is no comparison between him and Trump or Biden.
  • ajross 7y ago
    It's a straw and camel argument. Realistically we were due for a correction. But the current 20%+ fall wasn't on anyone's menu. FWIW: I think the much bigger long-term risk to this wikipedia article's framing is that the crash almost certainly isn't over. We have months of VERY bad economic news in the future still. Realistically the recovery won't even start for real until either the virus runs its course over the population or a vaccine is widely available. Both of those are going to take a year or more. (Well, it's possible to get the virus to go faster of course. We don't want that.)
  • nostromo 7y ago
    This is an unpopular opinion on HN, but government overreaction caused the crash. Rather than having at-risk people self-quarantine for a month, with government financial assistance of course, while the rest of us build up antibody resistance, we collectively lost our shit and decided all people needed to self-quarantine for months -- just delaying the inevitable. It's actually quite easy to self-quarantine everyone over 70, since they're receiving government assistance anyway (Social Security). But now there are already thousands of job losses from young, healthy, productive people that have almost zero chance of dying from this disease. The UK will be mostly done with Covid-19 in two months, with much less dire economic consequences -- and the US will still be playing whack a mole and killing the economy with healthy 25 year-olds holed up in their apartment.
    • thepete2 7y ago
      I estimate that it's quite risky to follow that strategy. If you allow the virus to spread uncontrolled among younger people, who is to say that the then smaller fraction of serious cases doesn't still overwhelm the health system? There are rare cases where perfectly healthy people are in need of hospitalization.
      • nostromo 7y ago
        That's definitely a risk. And I think the NHS in the UK allows them to better respond to that risk by triaging patients and selecting who needs to stay at home and who needs to be admitted. But the point I keep hearing from knowledgable people is that rapid spread is inevitable at this point. So many or most of the dramatic actions taken by state and federal governments now are security theater.
        • jacobolus 7y ago
          > point I keep hearing from knowledgable people is that rapid spread is inevitable at this point. The point I keep hearing from every reputable epidemiologist, virologist, and public health expert around the world is that people need to stay the fuck at home because this virus is extremely dangerous and if left unchecked will completely overwhelm every hospital system in the world. Some public officials didn’t believe it when it was just Hubei, but after seeing the same happen in Lombardy, a rich region in Europe with a strong healthcare system, the situation became clearer. Edit: here’s a nice summary written by a Bay Area marketing executive (based on work by epidemiologists and others) https://medium.com/@tomaspueyo/coronavirus-act-today-or-people-will-die-f4d3d9cd99ca https://medium.com/@tomaspueyo/coronavirus-act-today-or-peop...
  • kaycebasques 7y ago
    I've been going back and forth on this for a week. On one hand we've been clearly headed towards a Minsky Moment / Big Debt Crisis for years. On the other hand, the impact of COVID-19 on the real economy is unprecedented. A sudden, global halting of all in-person social interaction??? Wow.
    • AnimalMuppet 7y ago
      It doesn't have to be either/or. It can be both/and. Things were unsustainable; eventually something would push it over the edge. And the something was enormous and unprecedented, something that could have pushed even a stable market into a recession.
    • kshacker 7y ago
      If we could actually do a full halt for 2 weeks, we will be back to normal in another 2. The problem is that some are doing it, some are not. And then they are doing it on different schedules.
      • vecter 7y ago
        This is definitely false. Many companies are going to have layoffs. Supply chains will become disrupted. You can't just hire those people in two weeks and get production running up to 100% right away. If we actually go into a recession due to this (if we're not already), then people won't be willing to spend as much money right away either.
    • sershe 7y ago
      I would really prefer that people were more pedantic about this. The impact of COVID-19 is presently not even a rounding error. The impact of the measures taken to try to prevent the first impact from happening is enormous.
  • 7777fps 7y ago
    Leave history to the historians! We understand nuance from the past. For example we understand that the assassination of archduke Franz Ferdinand didn't cause WW1, even if it directly led to it. Why worry that future historians won't understand such nuance from the present?
    • saagarjha 7y ago
      > We understand nuance from the past. Do we? We don't always have all the information…
    • wycy 7y ago
      Doesn't this example contradict your point? The assassination of Franz Ferdinand is widely seen as what started WW1 by the general public.
      • periya 7y ago
        The assasination was the first trigger to the war. Is that incorrect? From my understanding after the assasination Austria-Hungary gave an ultimatum to Serbia and later declared war on Serbia.
    • AndrewKemendo 7y ago
      I believe your reference set is different than the set the OP was referencing. "We understand nuance from the past." Where: We = {Specialized Historians} I think the OP meant more that the general public's perception would be wrong. I think that's probably more likely correct.
      • 7777fps 7y ago
        That's a good observation. I think however at that point we're onto worrying about how to educate future persons or peoples unknown. Also, I'd be wary of thinking (as others down thread have done, you are not guilty of this) that the general person thinks the assassination caused WW1. It's clear that many people are in fact taught that it merely triggered it. It is arrogant to assume it's not a well known fact, a case of "Well the masses are stupid and think X" without evidence that the masses do in fact think that. Indeed I am not a specialized historian, it was part of my (and all my peer groups') general education (GCSE history). Does being able to apply pythagoras make a "specialized mathematician", or knowing "Dos cerveza por favor?" make a linguist? No, it's part of a rounded education. Not everyone achieves even a basic standard (as my attempt at Spanish likely shows), but as long as the specialists do exist, then they can write the text books for the general education and correct the record.
  • snarf21 7y ago
    Exactly. I assumed this crash wouldn't happen until after the election but now we will have a double whammy to deal with. I hope this bubble truly pops so we can reset to a sustainable economy.
    • smegger001 7y ago
      Its not going to happen, the government will bail out the banks again and this time they won even bother to punish them of police them because "it was a pandemic", so congress and who ever gets the presidency will agree because it is personally profitable and they aren't the ones standing in line at the foodbanks. Everything will pick up again right where financial system left off and in another 8 to 12 years we will have another crash maybe that time we will get some reform but we wont have a middle class anymore by then.
  • leftyted 7y ago
    Saying that covid-19 caused the crash is like saying that the assassination of the archduke caused WW1. The accuracy of these kinds of statements depends on how you define "causation". If you follow this down, it turns into a deep philosophical question. Also, consider that there are always people (especially on HN) predicting stock market crashes. I'm not sure it makes sense to ascribe the ability to predict the market to people who happened to be right.
    • freehunter 7y ago
      That’s a great analogy. The assassination caused a military fight that wouldn’t have happened otherwise, but the conflicting alliances and leaders itching to use their new military power would have caused a major war anyway. The spark didn’t matter as much as the real systemic issues, but for a layman it’s a good enough cause. Something would have popped the bubble, and I’d argue the real cause of the start of the downturn was OPEC and the bottom falling out of the oil market. Then COVID set in and made things a million times worse, making a quick recovery nearly impossible. That’s what will be remembered by lay people, while experts will hopefully remember you can only pop a bubble if there is a bubble to be popped. And OPEC/COVID didn’t create the bubble, they just popped it.
      • dustingetz 7y ago
        It would have happened otherwise
        • freehunter 7y ago
          The July Ultimatum would have happened, or WWI in general would have happened? I’m not arguing that WWI would have been avoided, in fact I said it would have happened regardless. The July Ultimatum could have been avoided, but again if you read through my entire comment you’ll see I believe WWI would have happened anyway.
          • dustingetz 7y ago
            You're right I jumped you sorry
  • jfengel 7y ago
    Given that it's unlikely that we're going to reform those various debt issues, there's a sense in which it will really be the "corona crisis". They should push the market down even further, and they'll continue to lurk as a kind of price support for another decade or more until they finally cause another, different crash. There are even more issues going on, including the oil price war and an overheated market in general, so simplifying it down to "corona" will still be incorrect. But even as the downturn accurately reflects some realities, it's still only a partial correction.
    • tabtab 7y ago
      Calling it "corona crisis" is an attempt to get the debt crooks off the hook. After 9/11 and the Great Recession, we should know better and prepare for bleep happening rather than run up debt in order to brag about the economy (in the short term).
  • duxup 7y ago
    Every market has some underlying conditions, but I see no reason to think any of it would have happened purely because of the reasons you cite. Many of those conditions have been present for a LONG time and people have been predicting a correction or other events for years ... and they just haven't happened. Fair or not, I have serious doubts anyone is selling stock right now because they're concerned about student debt or etc. I feel like in every crisis we get laundry lists of people who cite "things that I'm concerned about are the real reasons" and so on.
    • tabtab 7y ago
      I agree. We were overdue for a correction, based on more than a century of stock & economic patterns. Something was gonna knock it down eventually. The longer a bull market goes on, the more fragile it becomes, like an over-inflated balloon. It was already artificially propped up by tax cuts and interest rate cuts. That "stimulus" was premature; reverse Keynes. Save up for a rainy day by paying down debt during the crest. Well, it's raining now and the piggy bank is empty. Enjoy the bacon....
      • kshacker 7y ago
        Me and friends were speculating just a few months back that for a crash to happen, one of the FAANGs has to fail, spectacularly. Even with the privacy concerns, that we deemed as top risk factor, we did not see that crash happen. Little did we know that the concentration of talent in Bay Area, Seattle, NYC and maybe London and Vancouver would be the trigger. I wonder if this gets any worse, and if one team coincidentally is wiped out, would the org be able to actually play their DR scenarios and rebuild their stack!!
        • mcqueenjordan 7y ago
          I don’t think the risk is centered around (typically young) software teams. Closing borders, flights, events, bars, and restaurants has way more impact.
        • JPKab 7y ago
  • kelvin0 7y ago
    So, in your opinion the measures against the virus only have a minimal impact on financial markets? Would you say the impact of virus related measures is : 0.1%, 1%, 10% or more (or less)?
  • Spooky23 7y ago
    The incompetent response of POTUS and the US Government is the cause. If George W. Bush or Obama or Clinton were president, you would have had a better reaction and communications plan than what you’re seeing here. All of those other factors are there, but the panic is because of the actions of the government. It sucks. I’d guess it’s 50/50 that I’ll be unemployed by January, and 30/70 that I’ll lose my home as my major assets (house, retirement, etc) are attrited down. When the risk of infection wanes, we should be taking to the streets.
    • theandrewbailey 7y ago
      Care to compare specifics? There have been enough major downturns that all three previous administrations' responses can be compared. Let's not forget that downturns are part of normal market cycles. Besides, isn't the stock market too complicated that it can't be controlled, not even by POTUS?
      • Spooky23 7y ago
        Look at NY Governor Cuomo's response to this issue. He's not always delivering good news, but he is delivering facts, being consistent about policies and when policies are changing, reporting on a regular cadence and behaving like a rational leader. Comparing the Federal response, you have a lack of coordinated response, inaccurate information from the POTUS, contradictory responses from Federal agencies, a focus on self-praise and prayer, etc. Last night (3/15), the government had a stockpile of venilators. This morning (3/16), reports are that the POTUS told states to find their own. Having a politician like the Vice President that knows how to speak effectively be the sole speaker would be better, even with the incompetent response. People and markets want to hear measured responses. After the shock of 9/11 wore off, people took solace and unified around the government's response at the Federal, State, Local level. In this, we're leaving Governors, mayors and companies to fend for themselves.
        • lazyjones 7y ago
          > eports are that the POTUS told states to find their own. Having a politician like the Vice President that knows how to speak effectively be the sole speaker would be better, even with the incompetent response. You fell for the fake news media and their usual tactics. It's not like it's hard to listen to his actual speech and draw your own conclusions about the media and the POTUS. https://www.thepostmillennial.com/busted-again-the-new-york-times-lies-about-trumps-coronavirus-remarks-to-governors https://www.thepostmillennial.com/busted-again-the-new-york-... tl;dr he said: “We will be backing you, but try getting it yourselves. Point of sales, much better, much more direct if you can get it yourself.”
  • deleted 7y ago
    [deleted]
  • lazyjones 7y ago
    > HN and others have repeatedly pointed out numerous factors in the market that definitely were not corona, that would have caused this crash eventually. untenable levels of credit card debt, automobile debt None of these were factors in the current crash, that's just fairy tales, magic thinking and posturing by self-proclaimed experts and ideologists who were preaching against capitalism. This crash was caused by a) dropping oil prices and b) the fears and uncertainty (well, increasingly certain negative outcome) around the impact of Cov-19 on the economy.
  • kfarr 7y ago
    Yes I see this similarly to the way that we talk about how a forest fire was "caused" by PG&E, or an improperly extinguished camp fire or errant lit cigarette. It's the years of accumulation of dry timber and brush that makes the fire even possible, it could have been any number of things that starts it burning, one just happened to come first.
  • mschuster91 7y ago
    A barrel of gunpowder sitting around is a danger, but as long as there is no ignition source nothing will happen. Coronavirus definitely is that ignition source, as the measures to fight it are a massive impact to the economy (freedom of movement lost, workforce dying / unable to work due to quarantine).
  • bumby 7y ago
    Are there recessions that didn’t have excessive debt as a fundamental cause? Genuinely curious.
  • deleted 7y ago
    [deleted]
  • stokedmartin 7y ago
    References which may be helpful to understand some of the factors mentioned: - debt worldwide hits 86k per person [ref: https://news.ycombinator.com/item?id=18683923 https://news.ycombinator.com/item?id=18683923] - people buying cars using financial products they don't understand [ref: https://news.ycombinator.com/item?id=14476381 https://news.ycombinator.com/item?id=14476381] - rollback of federal oversight [ref: https://www.nytimes.com/2018/05/22/business/congress-passes-... https://www.nytimes.com/2018/05/22/business/congress-passes-...] - wage stagnation [ref: https://news.ycombinator.com/item?id=19253364 https://news.ycombinator.com/item?id=19253364] - how consumers and lenders pursue consumer debt [ref: https://www.propublica.org/series/unforgiven https://www.propublica.org/series/unforgiven]
  • jb3689 7y ago
    On the other hand, it's just as easy to say "I told you so" and name a thousand factors that we've cried wolf on. We are working on small data and can't draw conclusions despite our human desire to so
• Vysero 7y ago
  Perhaps I am wrong but I get the feeling the 2020 stock market crash isn't over.
  • ytgh76 7y ago
    I think he's trying to flatten the curve to minimize the bottom
  • llcoolv 7y ago
    You're absolutely right. We (EU+US) will be lucky to get over it with less than 30% GDP loss. Mostly because the schmuckery that got us out last time doesn't appear to work this time.
    • gizmo385 7y ago
      It's been said repeatedly, but this isn't a crisis that can be fixed with monetary policy alone. The health crisis that was the catalyst needs to be solved - everything else is just a bandaid.
      • llcoolv 7y ago
        It is a crisis, which is caused by monetary politics and politics overall. The coronavirus was as you say just the catalyst.
        • aggie 7y ago
          You're stating this as a fact. Can you provide any reasoning or evidence?
          • llcoolv 7y ago
            First of all, thank you very much for reasoning instead of downvote, swear & deny. I really do appreciate it. I do - over the last 10 years of extensive money printing companies seemed to be healthy, but gathered structural problems, which were not only not solved, but deepened by expanding regulations and such. Just before the crisis started most of the investment grade instruments were BBB (one slight blow away from junk).[0] In December there was a presentation by the local Mieses Institute where a hypotetical scenario similar to what is happening right now (it was a war near EU + another migrant wave leading to in-EU border closures and state of emergency in multiple countries) was played out. What was predicted is extremely similar to what is playing out right now, though the initial shock was supposed to be weaker. I am really sorry the presentation was not in English, it really had all my thoughts put together in a very coherent way. Keep in mind that the 30% drop is just market panic. There have been no bankrupcies, defaults and layoffs yet. This is when the fun is going to start. Another thing that was predicted exactly was that if you look deeper, beyond the indexes, at how the first tranche of the $1.5 trillion package was spent you'd see that hot companies like MSFT restored their value, while troubled ones like UAL received almost nothing. So the bankrupcies, defaults and layoffs have not yet begun and we are already 30% down. What is going to remain after they're done? 0. OECD - "Figure 8. Composition of the investment and non-investment grade categories" https://www.oecd.org/corporate/Corporate-Bond-Markets-in-a-Time-of-Unconventional-Monetary-Policy.pdf https://www.oecd.org/corporate/Corporate-Bond-Markets-in-a-T... P.S. The rest of the OECD report makes for a very very interesting reading in a time like these. But what you're looking for in it is how at year 2000 most common investment grade is A followed by AA and BBB about even, while now it is a total clusterfuck (with apologies).
• elamje 7y ago
  Remember that the dates referred to in this article are literally one week ago, so it’s not reasonable to treat this like a past event. It’s very much ongoing and the market will likely remain volatile.
  • slovenlyrobot 7y ago
    The dates are up to present day. Trump is due to give another press conference during market hours (3:30 today), watch the chaos he's wreaking on your friendly neighbourhood index Expecting another rally followed by another crash
  • AnimalMuppet 7y ago
    "Likely"? You are far more optimistic than I.
  • reggieband 7y ago
    As an example of this, the article at the time of me writing this post doesn't include the 8% drop from today. Of course, the market hasn't closed for the day so it would be premature to add anything like that ... but if it stays that low today then it is yet another massive drop to add to the list.
    • Balgair 7y ago
      To further reinforce this point: The DJIA closed ~13% down today, March 16th, the largest ever fall on record. 8 of the top 10 losses are all within the last 30 days. To note here though, 4 of the top 10 largest gains on record have also occurred in this timespan too. Still, per the wikipedia article's point, the last 7 days has been VERY bad for the DJIA. There is no sugarcoating this. https://en.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average https://en.wikipedia.org/wiki/List_of_largest_daily_changes_...
• rafaele 7y ago
  a recession is happening, let's hope it doesn't turn into a depression
• rvz 7y ago
  Oh dear, Remember the ridiculous 2020 predictions made by several soothsayers? It appears my so called 'machine learning crystal ball' was to some extent correct over this. Not that it was caused by coronavirus, but eventually in 2020 a crash will come. [0] The next phase of this Act will claim all those profitless companies with high costs and burn rate who will soon collapse. [0] https://news.ycombinator.com/item?id=21926473 https://news.ycombinator.com/item?id=21926473
  • lm28469 7y ago
    It never seemed ridiculous to anyone outside the hype bubbles. Automation and AI is quite literally the same story since the 40s.
• grey-area 7y ago
  The history of this crash starts in 2008.
  • lordnacho 7y ago
    Or the dotcom bubble. Rates were kept too low after that and we got the mortgage crisis.
    • nabla9 7y ago
      Too low rates actually started around 1311 I highly recommend: "Eight centuries of global real interest rates, R-G, and the ‘suprasecular’ decline, 1311–2018." https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3485734 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3485734 Related to the paper: - Visualizing the 700-Year Fall of Interest Rates https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes... - Macro Musing podcast with author: https://soundcloud.com/macro-musings/paul-schmelzing-on-the https://soundcloud.com/macro-musings/paul-schmelzing-on-the
      • lordnacho 7y ago
        Yeah I've seen that. Going down doesn't mean too low though.
• bitexploder 7y ago
  The markets have been looking for a reset for a while anyhow. I think the market is well capitalized right now and this looks much more like a reset than some fundamental crisis. There isn't any underlying financial event triggering this, and I think we know roughly how bad this can and will get and it is not financial crisis worthy. The world governments are already injecting cash into the markets to stabilize them. I generally agree with the Goldman Sachs memo on this event (except how it subtly downplays quarantine/self isolation efforts) https://www.forbes.com/sites/abrambrown/2020/03/16/the-private-goldman-sachs-coronavirus-meeting-thats-setting-the-internet-on-fire/ https://www.forbes.com/sites/abrambrown/2020/03/16/the-priva...
  • travisjungroth 7y ago
    > There isn't any underlying financial event triggering this Flights are sharply down, large events all over the world have been cancelled, millions of people are quarantined in their homes. If that doesn’t qualify as an “underlying financial event”, I’m not sure what does.
    • sxg 7y ago
      None of those are primary events. Covid-19 is responsible for causing all of those changes. Compare that to 2008 where the sub prime mortgage crisis was the primary event.
      • travisjungroth 7y ago
        So, because they have a shared underlying cause they don't count? There seems to be this weird idea floating around that because this financial crisis was triggered by events in the real economy (instead of a financial crisis blowing up the real economy, like normal) it somehow doesn't count or it's overblown or something. Just look at the rest of the sentence I quoted: "and I think we know roughly how bad this can and will get and it is not financial crisis worthy." Airline stocks have tanked because way less people are flying. Movie theater stocks have tanked because way less people are going to movies. This financial crisis seems to be firmly rooted in real world events. These companies are truly worth a lot less than they were a month ago.
• ceilingcorner 7y ago
  I am genuinely worried that the plan of shutting everything down and instituting a quarantine will turn out to be disastrous if it continues for months on end. The stock market is just the beginning - what about the millions of people making ends meet as waiters, Uber drivers, AirBnb hosts, retail store clerks, and every other in-person job? HN might not feel this much, as the tech industry is making a pretty easy switch to working remotely. But do not be blind to the facts: the overwhelming majority of the workforce doesn't have an emergency fund and won't be able to ride this out easily, if at all.
  • nostromo 7y ago
    The tech industry will feel this if quarantine continues, it'll just be delayed. People here shouldn't fool themselves. Apple stores are closed. Ad spending will collapse for Google and Facebook. Future financing rounds will dry up. Unless this is a short term quarantine effort, layoffs are coming for tech too.
    • ThrowawayR2 7y ago
      Yep, I'm on a team that's not a profit center and I fully expect most of my team and I to be laid off at the earliest moment that my employer thinks it won't take a PR hit from doing so. Anyone else feel the same?
      • SwiftyBug 7y ago
        Well, now I do.
  • AlexandrB 7y ago
    > what about the millions of people making ends meet as waiters, Uber drivers, AirBnb hosts, retail store clerks, and every other in-person job? Unfortunately many of these are not even jobs, they’re now “contract positions” or “marketplaces” so they have no protection. We’ve traded away every backstop that could help in a crisis for convenience and investor returns.
  • 7y ago
• tus88 7y ago
  If Obama was President this would be a footnote on the Coronavirus page.
  • gizmo385 7y ago
    Mind extrapolating on that a bit? Do you honestly think that the major stock market indices plummeting around the world is only a story because Trump is president?
    • sg47 7y ago
      Yes. No one believes he's capable of handling the current crisis. He had the chance to handle it a month ago and he blew it. Worse, he laid off the team that could have prevented this. This is the tech equivalent of laying off your security team and having a massive security breach.
      • deleted 7y ago
        [deleted]
      • olivermarks 7y ago
        I'm not a Trump enthusiast but your claim 'No one believes he's capable of handling the current crisis' is typical of the thinking that DT is single handedly running the USA. There is a huge administration, DT is the spokesperson for it. The Federal Reserve should shoulder a lot of blame for allowing this financial disaster to happen. Having said that there is a huge shortage of credible and non corrupt politicians in the western world at present and I think globalization is another root cause for the current oil & gas melt down and virus panic. These two elements, corrupt politicians and globalization are related and the tinder for the current conflagration IMO...
        • jackmoore 7y ago
          DT fired the previous Fed chair and replaced her with a man that was willing to cave to his demands.
• preommr 7y ago
  How do you guys think this will affect the software job market?
  • AznHisoka 7y ago
    I have friends whose startups are already freezing hiring, and cutting back on unnecessary expenses (as they should). Lowered demand for consumer goods and services naturally mean that these companies will be trimming the fat on SaaS products, and infrastructure (unless it's truly critical for work, ie Zoom) which in turn means less technical jobs.
    • itake 7y ago
      Maybe? Enterprise SaaS deals are for year long commitments. Sure in 6 mo, they may choose to renew less tooling and having less employees means less seats, but I don't see a big shift here.
      • r00fus 7y ago
        You think that planning/sales/etc doesn't impact current operations?
        • itake 7y ago
          I think big companies are super slow to react, as they should be. There definitely will be adjustments but companies are not going to stop paying for software.
    • Loughla 7y ago
      Living outside SV, but working for institutions that subscribe to several SaaS products, I can tell you it's going to hurt, and soon. The first things on the chopping block, as we consider where to trim expenses, are those "expensive", useful, but not critical software systems with terms ending soon. Except Zoom. That baby is keeping us rolling.
  • lm28469 7y ago
• jarsin 7y ago
  honest question why is the market still open? So we all sit around and read crazy news and watch investors get destroyed for the next 2 months?
  • mindslight 7y ago
    Obviously yes. It's called a correction. We've had over a decade of monetary-policy-fueled asset bubble. VCs were spending money just to litter the sidewalks with easily-purchasable consumer goods, in hopes of renting them out for some kind of income. It has to pop some time. There is also the issue that economic annealing has optimized all of the slack out of supply and financial chains. That should have been dealt with during the good time (similar how USG should have kept domestic mask manufacturers alive). But it wasn't, and the only way forward is for that risk to be re-priced-in.
  • outworlder 7y ago
    If you close the market and don't solve the underlying problems, the moment it reopens you will wish it remained closed.
    • jarsin 7y ago
      Thats what i mean. Why is the market not closed while the world deals with the virus? If and when the world deals with the virus reopen. This is forced closure of most commerce in the world due to the virus and everyone is suppose to speculate on the future earnings of every company in the world durring this time... Its unprecedented and it needs to be shutdown.
• olivermarks 7y ago
  Intrigued by the authors https://en.wikipedia.org/w/index.php?title=2020_stock_market_crash&action=history https://en.wikipedia.org/w/index.php?title=2020_stock_market...
• raiyu 7y ago
  Before coronavirus when a company missed earnings it was battered on the public markets. With Coronavirus 90%+ of companies will be directly affected in reduced revenue. Either directly like companies that are focused on retail, or indirectly, companies that are affected by challenges in logistics. Was the market perhaps inflated, in my opinion yes, but I don't see how people can say this crash wasn't caused by coronavirus. Could we have had a crash or reset in the future without the virus? Most likely. But that unknown reality didn't happen. Instead we have a global pandemic, where the only real working solution is to institute various levels of lock down and social distancing, which will slowdown economic spending dramatically. If the entire global market has to take 2-months off from generating revenue, that is a huge blow to the system. Then you have the secondary effects. Job losses, businesses closing, rent, evictions, closures, etc. The economic impact of this will take 6 months to play out to see where the bottom is. Not all companies and industries will be affected the same way, but generally speaking only a small handful of companies will really get through this without some sort of impact to their business.
  • defterGoose 7y ago
    You could say that it was caused by the coronavirus, but that would be highly reductive. This seems epecially true when you consider that of late, there has been a waning of confidence in our economists' ability to accurately model the markets, combined with the fact that a massive shift has occurred over the past century from an economy largely based on equity, to one based largely on debt.
    • raiyu 7y ago
      Losing 2 months of global GDP because of a virus which would reduce the earnings of most companies directly and indirectly seems like a pretty solid foundation for a reduction in market cap. It's like saying we believe that the market was overheated due to zero interest rates, but we were hoping to have the market head into a recession on it's own, rather than have an outside event cause the global GDP to stop for 2 months. But since that is so obvious, we won't accept it. How many households have two months of savings. How many businesses can go for 2-3 months with 80% reduction in revenue and if they have the savings to cover that. I think this event is much larger than a simple recession that would have occurred as a result of speculation and low interest rates. This is literally stopping the world economy for 2 months and seeing how many households and businesses have enough savings to counter balance that while stress testing the governments ability to intervene, not at the top end, by providing funding to banks, but at the bottom end, of figuring out how to get all of the people who work as waiters and waitresses to go without revenue for 2-3 months and not get evicted or rack up debt that they can never escape from. I think you are underestimating the impact of this.
• baybal2 7y ago
  For once, I am glad that I kept faith in yellow metal.
  • ceejayoz 7y ago
    I'm not sure I'd find that a comfort unless I held physical possession of it.
  • alejohausner 7y ago
    Look again. Gold held up for a while during the crash, but now it's down for the year.
    • yhoneycomb 7y ago
      What's your source? According to https://goldprice.org/ https://goldprice.org/ it's +16.57% on the year Also, it's still doing WAY better than stocks.
      • alejohausner 7y ago
        Huh? On 2019 December 31, gold closed at USD 1519.50. Just now (3:15 pm), it was at 1503. Too bad, because just a couple of days ago it was a great hedge against falling stock prices. I guess you're talking about the 1-year price change. Source: goldprice.org
  • alkonaut 7y ago
    I moved my savings which were mostly in index funds into 2/3 index funds and 1/3 bear ETF with 2x leverage 3 weeks ago. Seems to keep it all at 0 for now.
    • fyp 7y ago
      Hmm why not sell everything and hold cash if you just want to keep everything at 0? You're just paying fees for no reason. Is it just some tax trick to keep long term capital gains for the index funds? (does it even work like that?)
• Havoc 7y ago
  Yeah think this is barely the start US hasn’t even gotten proper sick yet and a big chunk of the world market cap is US based
• Hamuko 7y ago
  >On 11 March, impeached US president Donald Trump gave a public address. Someone really wanted to work that in there.
  • rat87 7y ago
    To be fair if Republican Senators had simply done their jobs and removed him from office we would at least be in a somewhat better position today
• deleted 7y ago
  [deleted]
• ngngngng 7y ago
  Grateful for the wikipedia contributors putting this together so fast and well. As a side note. I know a significant amount of people (relatives and friends) that truly think this event is a big "liberal conspiracy" to stop Trumps reelection. We've had to take my grandfathers keys because his favorite news station is telling people this and he believes it so was continuing to go out.
  • burgerzzz 7y ago
    I think one can make an argument that left-leaning media is certainly elevating arguments that Trump is the one individual that is most to blame for the spread of the virus and the economic impact. Partisan paranoia runs deep on both sides of the aisle anytime we have these crisis.
    • r00fus 7y ago
      His gaslighting is not helping. It's causing a deeper distrust of institutions and the market does not like it. His historical tweet from 2014 about the then-elected president's fitness to serve "causing" a 1000pt drop is apropos.
• nikolay 7y ago
  I listened to Trump yesterday and I couldn't believe he was stupid enough to encourage people with no basis! There's no higher demand after crisis as people have no money and most of this hoarding is debt at high interest of credit cards. Many were expecting the crash since last year, the pandemic just gave no reason to wait more!
• largolagrande 7y ago
  Doesn't this crash highlight a fundamental problem with stock markets ? NASDAQ: -25% in one month. CAC40 (french stock market index) : -33% over the same period. These stock markets collapsing is just stupid, it just shows that it's pure speculation... The world economy takes a break during let's say 2 months (everything will resume as before afterwards) and hundreds of billions of euros/dollars disappear. In fact, the question is: If everyone stops working because of the covid19, if the whole economy is paused (which is basically what is happening) why doesn't the stock exchange do not simply stop too? When a company presents quaterly financial results, it's over a period of _activity_. But then at the moment it's a period of total inactivity... ?!
  • Balgair 7y ago
    The markets are assumed to be trying to factor in the losses that they think these companies will suffer in the long term. There is real damage occurring in real time. Everything is still in flux, which is why it is ringing around trying to find a position. Calling off the markets may not be outside of our future yet, but it is not likely at this point. People want to get out of companies they think are going under and put their money in other areas like bonds or mattresses. This should be considered rational.
  • edanm 7y ago
    I believe you're fundamentally misunderstanding what the stock market is and does. At its base, the stock market is just "you" owning a company. The economy isn't paused for two weeks - many companies will have to continue paying people money, paying their suppliers, paying rent on their offices, etc. Let's say you own a company that usually has say 100k in earnings and 90k in spending, making you 10k profit every month. That company now has, because of the virus, say 50k in earnings instead, and 80k in spending (it reduces some salaries where it can, but still has to keep the offices around etc.) That company is now going to be losing money for a few months. Now you own a chunk of this company. Yesterday you assumed it was worth 10 million dollars. Today, do you agree that it's worth less? After all, it's going to be losing money for a few months at least. Notice that it's only worth less on paper - if you don't sell your ownership stake, then you haven't really seen a loss. But a lot of people are selling their ownership stake. And that makes sense! If you're 60 years old and need cash right now, and you own a company that, instead of earning 10k a month, will now be losing 40k a month, you might want to sell your share to not lose money, because you need cash. Maybe some other investor that can stomach losing a few months' of profit can take it off your hands.