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The million dollar question is, will this be a 'V shaped recovery', a.k.a. 'pause' or will it turn into something worse. I hear a lot about companies with cash

The million dollar question is, will this be a 'V shaped recovery', a.k.a. 'pause' or will it turn into something worse. I hear a lot about companies with cash flow problems which may not survive the hit. Is that true? Beats me. It seems credit is cheap right now. What about long term though? For many industries, it takes a while to spin things back up and see cash flow. Will the economic mitigation measures be enough to see those companies through? We may also be looking at permanent changes in behavior. Sure, there is a lot of pent up demand for getting out and socializing, but if people are being bled dry by meager stimulus checks, they're not going to rush to fill the restaurants and malls when this is over. Edit: Just saw this, an interview with El-Erian on liquidity issues, https://www.youtube.com/watch?v=MjzBKtVTdtQ https://www.youtube.com/watch?v=MjzBKtVTdtQ

ta1234567890 7y ago
Credit being cheap only works if you have a good plan and expectations that the business is going to survive. Most small businesses are not in that position (and even large businesses like Macy's, Cheesecake Factory and Subway). Shops that are not getting foot traffic now have no idea when they'll be able to reopen, getting a loan to pay their lease would probably be unpayable afterwards. Business owners also need to make a living, so they are looking into getting jobs or starting alternative businesses. Their original businesses are most likely not coming back. And there's no way the economy will fully reopen before at least a year. China is not a good comparison, because 1) the US did not follow the same approach as China in dealing with the virus, 2) China has been lying about their economy and number of cases and 3) even if China was fully open for business now, the biggest markets are not buying - Europe and the US are just beginning a huge recession, that in turn will hit China back and will affect the recovery of the world economy. A V shaped recovery is, in my opinion, a made up dream to keep people from panicking.
jlokier 7y ago
Credit is cheap right now if you can get it. But just like before, it's "subject to status". Which roughly means, if you really need it, the answer is no.
ykevinator 7y ago
It's a great point

ta1234567890 7y ago

Credit being cheap only works if you have a good plan and expectations that the business is going to survive. Most small businesses are not in that position (and even large businesses like Macy's, Cheesecake Factory and Subway). Shops that are not getting foot traffic now have no idea when they'll be able to reopen, getting a loan to pay their lease would probably be unpayable afterwards. Business owners also need to make a living, so they are looking into getting jobs or starting alternative businesses. Their original businesses are most likely not coming back. And there's no way the economy will fully reopen before at least a year. China is not a good comparison, because 1) the US did not follow the same approach as China in dealing with the virus, 2) China has been lying about their economy and number of cases and 3) even if China was fully open for business now, the biggest markets are not buying - Europe and the US are just beginning a huge recession, that in turn will hit China back and will affect the recovery of the world economy. A V shaped recovery is, in my opinion, a made up dream to keep people from panicking.

jlokier 7y ago

Credit is cheap right now if you can get it. But just like before, it's "subject to status". Which roughly means, if you really need it, the answer is no.

ykevinator 7y ago

It's a great point