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im worried this article will eventually get whitewashed into "corona caused the financial crisis." HN and others have repeatedly pointed out numerous factors i

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?)
      - KaoruAoiShiho 7y ago
        Banks are fine now dude, it's nothing like 08.
        blobbers 7y ago
        Just wait. Canadian banks have been hit hard due to falling oil prices and expected resultant bankruptcies. American banks will get hit by rising unemployment.
      - a_t48 7y ago
        We need a mortgage and rent payment moratorium nationwide if the majority of the country is expected to just stop working.
      - vsareto 7y ago
        >banks didn't account for this with lax lending standards Pretty sure the ratings fraud got fixed. Also pretty sure they didn't just go back to handing loans out to anyone with a pulse. I'm sure there's some crazy intricate financial instruments made up of dogshit still around, but it's probably going to be a smaller percentage of the bank's balance sheet.
- 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
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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

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?)
    - KaoruAoiShiho 7y ago
      Banks are fine now dude, it's nothing like 08.
      - blobbers 7y ago
        Just wait. Canadian banks have been hit hard due to falling oil prices and expected resultant bankruptcies. American banks will get hit by rising unemployment.
    - a_t48 7y ago
      We need a mortgage and rent payment moratorium nationwide if the majority of the country is expected to just stop working.
    - vsareto 7y ago
      >banks didn't account for this with lax lending standards Pretty sure the ratings fraud got fixed. Also pretty sure they didn't just go back to handing loans out to anyone with a pulse. I'm sure there's some crazy intricate financial instruments made up of dogshit still around, but it's probably going to be a smaller percentage of the bank's balance sheet.
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.”

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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

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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