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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 f

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.
    - sxg 7y ago
      I'm not suggesting that this financial crisis doesn't count or is overblown. It is real, and it is happening. I agree that airlines and movie theaters are worth less today than they were a few weeks ago. What I'm saying is that this financial crisis has a clear, identifiable cause: covid-19. When covid-19 blows over (which it will in a few months time), the market will recover. Without covid-19, travel bans will be lifted and people will fly again. There's no reason to believe people are done with airlines forever. Same with movie theaters and the restaurant industry. My argument is that the underlying primary cause of the financial crisis matters because it determines the path to recovery. I fully expect covid-19 to disappear in a few months (as it has in China and South Korea), and I fully expect the market to recover in the months afterward.
seanmcdirmid 7y ago
I disagree. I think the Chinese economy has been due for a correction for quite awhile now, and this pandemic has finally led to an end to the CCP being able to avoid a recession or worse. An economic crisis in China would have a lot of ramifications for the rest of us like the Japanese one did in the late 80s/early 90s. And that is before we consider the actual impact of the corona virus itself.
- AnimalMuppet 7y ago
  In a weird way, the way this played out kind of helps the CCP. They can let their economy reset without loss of face, because they can blame it all on the Coronavirus (and, as they will put it, their heroic response to it).
  - seanmcdirmid 7y ago
    Yes, I agree. The CCP have a convenient scapegoat in this case to deflect responsibility away from themselves. On the other hand, I erroneously thought that scapegoat would have been Trump’s trade war, so who knows. The huge danger is in china’s real estate market, which could undergo a huge correction mimicking the turmoil of china’s property market in the late 90s. As many Chinese have speculated in hot property markets here in the USA, those effects could easily come here (again, like what happened with Japan).
JMTQp8lwXL 7y ago
The only fundamental concern is corporate debt. Repayment of that implies healthy levels of demand. Coronavirus is wiping demand, but not supply. Lower revenues might make corporate debt go belly up, which would have cascading effects on markets.
sigmar 7y ago
>financial event triggering this, There is a financial event. Massive drops in demand. I think people have gotten used to market crashes caused by issues in the financial system itself (bubbles/subprime mortgages) and forget that there can be other issues

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.
  - sxg 7y ago
    I'm not suggesting that this financial crisis doesn't count or is overblown. It is real, and it is happening. I agree that airlines and movie theaters are worth less today than they were a few weeks ago. What I'm saying is that this financial crisis has a clear, identifiable cause: covid-19. When covid-19 blows over (which it will in a few months time), the market will recover. Without covid-19, travel bans will be lifted and people will fly again. There's no reason to believe people are done with airlines forever. Same with movie theaters and the restaurant industry. My argument is that the underlying primary cause of the financial crisis matters because it determines the path to recovery. I fully expect covid-19 to disappear in a few months (as it has in China and South Korea), and I fully expect the market to recover in the months afterward.

seanmcdirmid 7y ago

I disagree. I think the Chinese economy has been due for a correction for quite awhile now, and this pandemic has finally led to an end to the CCP being able to avoid a recession or worse. An economic crisis in China would have a lot of ramifications for the rest of us like the Japanese one did in the late 80s/early 90s. And that is before we consider the actual impact of the corona virus itself.

AnimalMuppet 7y ago
In a weird way, the way this played out kind of helps the CCP. They can let their economy reset without loss of face, because they can blame it all on the Coronavirus (and, as they will put it, their heroic response to it).
- seanmcdirmid 7y ago
  Yes, I agree. The CCP have a convenient scapegoat in this case to deflect responsibility away from themselves. On the other hand, I erroneously thought that scapegoat would have been Trump’s trade war, so who knows. The huge danger is in china’s real estate market, which could undergo a huge correction mimicking the turmoil of china’s property market in the late 90s. As many Chinese have speculated in hot property markets here in the USA, those effects could easily come here (again, like what happened with Japan).

JMTQp8lwXL 7y ago

The only fundamental concern is corporate debt. Repayment of that implies healthy levels of demand. Coronavirus is wiping demand, but not supply. Lower revenues might make corporate debt go belly up, which would have cascading effects on markets.

sigmar 7y ago

>financial event triggering this, There is a financial event. Massive drops in demand. I think people have gotten used to market crashes caused by issues in the financial system itself (bubbles/subprime mortgages) and forget that there can be other issues