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ITT is lots of failure to acknowledge the scope of this crisis. This isn't just a pruning of companies that had weak paths to profitability anway, few businesse

ITT is lots of failure to acknowledge the scope of this crisis. This isn't just a pruning of companies that had weak paths to profitability anway, few businesses have the capacity to completely halt revenue for months on end and survive. Plenty of otherwise good companies are going to go broke.

coliveira 7y ago
I really wonder how people are so blind to the current economic situation. Things would be bad enough if the problem was just with China. I believe economies will contract by up to 20% in the next few months, and lots of companies will go bankrupt at the end of this process.
- DarthMader 7y ago
  guessing a lot of folks who have yet to be personally affected. once they are, it'll become much clearer.
  - xienze 7y ago
    And suddenly you’ll hear a lot less talk about how it’s completely irresponsible to even think about getting the economy started again...
    - d1zzy 7y ago
      I agree there's going to be less talk about that but that doesn't make it any less irresponsible.
      - xienze 7y ago
        In all honesty, how is it irresponsible? New York is really bad. The rest of the country is in considerably better shape, and hospitals aren’t even close to being stressed in many areas. You’ve got nurses and doctors getting their hours cut back to nothing because no elective procedures are being done and the expected Covid surge never happened (again, not New York). Who honestly would’ve imagined there’d be doctors and nurses sitting idle during all of this? There aren’t going to be any large gatherings or sporting events for the foreseeable future, lots of people are starting to wear masks and are doing much better as far as hygiene and social distancing are concerned. Why _can’t_ we start to think about getting things to slowly go back to normal? Keep the elderly (way easier for them to quarantine) and sick at home. If you can work from home, continue to do so. Everything else, figure out how to make it work within the framework of social distancing. There has to be more than a choice between “total lockdown” or “everyone’s gonna die.”
        triceratops 7y ago
        > The rest of the country is in considerably better shape, and hospitals aren’t even close to being stressed in many areas. Why do you think that is? Because the stay-at-home orders worked. NY is the worst case scenario and you want to stop things before they get that bad. If we had a magic dial for precisely tuning social distancing measures to cause minimum economic harm and death, we'd use it. Since we don't we have to err on one side or the other. So far we've erred on the side of caution, accepting short-term economic damage. As things get less crazy these measures will be gradually scaled back. It doesn't mean they were never necessary.
        james-skemp 7y ago
        A lot of this situation reminds me of Y2K planning, but your comment is really spot on. Thank you. Y2K is going to be a big deal if we don't do anything about it. We do something about it. People complain Y2K wasn't a big deal. That, like this, means we're doing things right. Maybe we're going a little extreme, but the alternative is likely worse, and there is never a magic dial to spend just the right amount of effort/money/time.
        triceratops 7y ago
        :-) I've made that comparison before too. https://news.ycombinator.com/item?id=22559590 https://news.ycombinator.com/item?id=22559590
        james-skemp 7y ago
        I remember that article but not your comment; that article made me realize that I had forgotten the science behind soap, and just knew that it was good to use. :) It's unfortunate that it's so easy to find preparation wasteful when it ends up not being necessary. But, we all have different life experiences.
        bduerst 7y ago
        Yeah, it's like inverse survivor bias.
    - ThrowawayR2 7y ago
      Nobody wants to go down in history as the person responsible for a large number of short-term deaths by giving the directive to lift the stay-at-home directives too soon.
      - deleted 7y ago
        [deleted]
      - user5994461 7y ago
        That's one explanation for politics, another explanation is that politicians do not care because they are not economically affected by their decisions, they have steady jobs and income, many have significant accumulated assets. Unfortunately, both options are not mutually exclusive
        empath75 7y ago
        Are you suggesting they’re shutting the economy down just for the hell of it? I can assure you that politicians do not harm the pocket books of their campaign donors on a whim. There is almost no one profiting from this.
        user5994461 7y ago
        I think we can all agree that the shutdown happened because of a genuine concern for what the new unknown virus could do. The last coronaviruses SARS and MERS could wipe 10-20% of the population, so that the baseline to prepare for. Now we know the virus is not quite as deadly as anticipated (around 2%). And we know the economic impact is disastrous (+15% unemployment in the US after 3 weeks). So the strategy will have to be re-evaluated eventually. My opinion is that politicians taking the decisions are too remote from people experiencing economic hardship, so they will let the economy get much much worse for way too long.
        empath75 7y ago
        Or are you too remote from people who would be dying.
- PowerfulWizard 7y ago
  I think we're going to see three basic categories: 1. Essential+Unaffected: demand will be steady because there is no other choice, i.e. food, communication, ecommerce. 2. Horribly Affected: maybe even illegal to open right now, and when they open demand will be down significantly i.e. restaurants, bars, live entertainment, travel, some segments of education like language schools that cater to international, conferences and trade shows. Maybe back to full strength in 2 years but not going to be fun for a while, huge hit to demand. 3. Affected proportional to total global economy: If the overall economic activity goes down 20%, some businesses are going to track that. Transportation, business services, maybe banking. The governments of the world certainly have the ability to stimulate asset bubbles, but I'm not sure that they can generally stimulate business activity other than on the demand side, i.e. rising incomes for labor. I think there could be a stratification of national economies performance over the next 2 years based on the ultimate success of their COVID-19 response. I'm seriously considering if I should try to predict the most robust regional response and look at moving there post crisis for the next 2 years or so. I think there could be significant differences. Not necessarily who is suffering the least, but who is going to emerge most vigorously.
  - coliveira 7y ago
    I don't think even #1 is out of the woods. Demand for food will change and probably not for the better with so much people without a job. E-commerce will increase in some areas, but lots of companies that are not dealing with essencial products will close again due to the large number of unemployed. If the rest of the economy tanks, advertisement will also be in a difficult position.
  - _curious_ 7y ago
    "I'm seriously considering if I should try to predict the most robust regional response and look at moving there post crisis or the next 2 years or so. I think there could be significant differences. Not necessarily who is suffering the least, but who is going to emerge most vigorously." Same...always better to thrive than to survive and we all get to choose :)
  - nostrademons 7y ago
    Also don't forget the effect of competitive position within an industry. I have a friend who owns a factory in a very unsexy niche industry (packaging). They're relishing this crisis, because they manage the business very conservatively in terms of cash flow and leverage, and are expecting many of their competitors to go bankrupt in the near future. When the dust settles, they'll be one of the few left over, which means they can charge much higher rates. This'll likely be the story in many industries. Rich monopolies like Google and Facebook are going to do fine. (And note that both of them are still hiring, meaning they can potentially clean out the supply of engineers while many of the newer growth unicorns have instituted hiring freezes.) Marginal players in competitive industries are going to get killed.
- jdashg 7y ago
  With a true safety net a 20% contraction doesn't cause loss of life. Choosing to let this push people out on the street or into otherwise dire straits is a government's choice, not an inevitability. If companies fold and people can switch seamlessly from position to safety net to new position, allegedly the market will normalize and reallocate resources efficiently. You can't reallocate without freeing resources! A contraction of 20% only puts us nominally back less than a decade. People didn't have to be sacrificed back then, and they don't today. There are interventions we do need, but if everyone took a 20% hit as a group instead of a de facto Hunger Games, it wouldn't be nearly as ghastly.
  - ajross 7y ago
    > if everyone took a 20% hit as a group instead of a de facto Hunger Games Off topic, but that is a brilliant framing. I'm going to steal and use that repeatedly.
okareaman 7y ago
I'm guessing ITT a majority of programmers reading didn't go through the dotcom bubble burst. It was brutal.
- oiasdjfoiasd 7y ago
  As a young person who didn't go through the first bubble, but is sitting on cash, I say bring it on!
- icedchai 7y ago
  I did. It was tough, not a lot of "interesting" companies, but if you road it out doing government contracting or working at a boring-but-stable financial firm, you were fine.
- scarface74 7y ago
  The dotcom bust was only brutal if you were either working for a non profitable VC backed startup or your profit depended on VC spending. Regular old big enterprise kept chugging along and were still hiring. I was looking for a job in early 2000 as a software developer with three years of experience in Atlanta and there were plenty of companies hiring.
- ThrowawayR2 7y ago
  The dotcom bust was bad for the software and computer industry (and, yeah, it was definitely brutal) but didn't affect the larger economy all that much. Take a look at the list of recessions in the US (https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...) and you can see it was relatively mild by the numbers. This time, it's global and nearly every sector is affected; there won't be a place to hide. The US is already at unemployment rates not seen since the recessions of the 1920s/1930s and the bleeding hasn't stopped yet. These unicorn collapses are just the rumble, not the avalanche itself and anybody not terrified right now, darned well should be.
- ttul 7y ago
  You could get brick and timber office space for free. Vacancy of 50% in SOMA. Try to imagine that today... we might get there once again.
CydeWeys 7y ago
ITT also will be lots of people blaming this economic impact solely on the social isolation measures, ignoring the fact that a pandemic ravaging unchecked through the entire population would be having an even worse effect. Once the pandemic started, there was no way it was gonna end well, regardless of our actions in response to it. At least with the social isolation measures, fewer people are dead by the end of it.
- anewhope 7y ago
  We could be donating plasma instead of sitting at home. Probably better plasma than ventilators.
  - ethbro 7y ago
    Do you mean convalescent plasma?
  - CydeWeys 7y ago
    I'm trying to donate plasma. Unfortunately, that's very much a 1-at-a-time kind of thing and doesn't scale well. We also don't know how effective it actually is.
- ashtonkem 7y ago
  Demand started dropping before official shut-down orders arrived, as risk-conscious citizens cut down on high risk activities before officially ordered to do so.
  - asdf21 7y ago
    As someone who runs a restaurant in the Bay Area, that's not really accurate. We were busy right up until the shut-down.
    - ashtonkem 7y ago
      San Francisco shut down incredibly early compared to most of the US, especially compared to their case load. By the time SF shut down they had 50 cases, while NYC waited until they had 10,000 cases to shut down. That probably is why the shut down and lack of demand line up so closely for businesses in the Bay Area.

coliveira 7y ago

I really wonder how people are so blind to the current economic situation. Things would be bad enough if the problem was just with China. I believe economies will contract by up to 20% in the next few months, and lots of companies will go bankrupt at the end of this process.

DarthMader 7y ago
guessing a lot of folks who have yet to be personally affected. once they are, it'll become much clearer.
- xienze 7y ago
  And suddenly you’ll hear a lot less talk about how it’s completely irresponsible to even think about getting the economy started again...
  - d1zzy 7y ago
    I agree there's going to be less talk about that but that doesn't make it any less irresponsible.
    - xienze 7y ago
      In all honesty, how is it irresponsible? New York is really bad. The rest of the country is in considerably better shape, and hospitals aren’t even close to being stressed in many areas. You’ve got nurses and doctors getting their hours cut back to nothing because no elective procedures are being done and the expected Covid surge never happened (again, not New York). Who honestly would’ve imagined there’d be doctors and nurses sitting idle during all of this? There aren’t going to be any large gatherings or sporting events for the foreseeable future, lots of people are starting to wear masks and are doing much better as far as hygiene and social distancing are concerned. Why _can’t_ we start to think about getting things to slowly go back to normal? Keep the elderly (way easier for them to quarantine) and sick at home. If you can work from home, continue to do so. Everything else, figure out how to make it work within the framework of social distancing. There has to be more than a choice between “total lockdown” or “everyone’s gonna die.”
      - triceratops 7y ago
        > The rest of the country is in considerably better shape, and hospitals aren’t even close to being stressed in many areas. Why do you think that is? Because the stay-at-home orders worked. NY is the worst case scenario and you want to stop things before they get that bad. If we had a magic dial for precisely tuning social distancing measures to cause minimum economic harm and death, we'd use it. Since we don't we have to err on one side or the other. So far we've erred on the side of caution, accepting short-term economic damage. As things get less crazy these measures will be gradually scaled back. It doesn't mean they were never necessary.
        james-skemp 7y ago
        A lot of this situation reminds me of Y2K planning, but your comment is really spot on. Thank you. Y2K is going to be a big deal if we don't do anything about it. We do something about it. People complain Y2K wasn't a big deal. That, like this, means we're doing things right. Maybe we're going a little extreme, but the alternative is likely worse, and there is never a magic dial to spend just the right amount of effort/money/time.
        triceratops 7y ago
        :-) I've made that comparison before too. https://news.ycombinator.com/item?id=22559590 https://news.ycombinator.com/item?id=22559590
        james-skemp 7y ago
        I remember that article but not your comment; that article made me realize that I had forgotten the science behind soap, and just knew that it was good to use. :) It's unfortunate that it's so easy to find preparation wasteful when it ends up not being necessary. But, we all have different life experiences.
        bduerst 7y ago
        Yeah, it's like inverse survivor bias.
  - ThrowawayR2 7y ago
    Nobody wants to go down in history as the person responsible for a large number of short-term deaths by giving the directive to lift the stay-at-home directives too soon.
    - deleted 7y ago
      [deleted]
    - user5994461 7y ago
      That's one explanation for politics, another explanation is that politicians do not care because they are not economically affected by their decisions, they have steady jobs and income, many have significant accumulated assets. Unfortunately, both options are not mutually exclusive
      - empath75 7y ago
        Are you suggesting they’re shutting the economy down just for the hell of it? I can assure you that politicians do not harm the pocket books of their campaign donors on a whim. There is almost no one profiting from this.
        user5994461 7y ago
        I think we can all agree that the shutdown happened because of a genuine concern for what the new unknown virus could do. The last coronaviruses SARS and MERS could wipe 10-20% of the population, so that the baseline to prepare for. Now we know the virus is not quite as deadly as anticipated (around 2%). And we know the economic impact is disastrous (+15% unemployment in the US after 3 weeks). So the strategy will have to be re-evaluated eventually. My opinion is that politicians taking the decisions are too remote from people experiencing economic hardship, so they will let the economy get much much worse for way too long.
        empath75 7y ago
        Or are you too remote from people who would be dying.
PowerfulWizard 7y ago
I think we're going to see three basic categories: 1. Essential+Unaffected: demand will be steady because there is no other choice, i.e. food, communication, ecommerce. 2. Horribly Affected: maybe even illegal to open right now, and when they open demand will be down significantly i.e. restaurants, bars, live entertainment, travel, some segments of education like language schools that cater to international, conferences and trade shows. Maybe back to full strength in 2 years but not going to be fun for a while, huge hit to demand. 3. Affected proportional to total global economy: If the overall economic activity goes down 20%, some businesses are going to track that. Transportation, business services, maybe banking. The governments of the world certainly have the ability to stimulate asset bubbles, but I'm not sure that they can generally stimulate business activity other than on the demand side, i.e. rising incomes for labor. I think there could be a stratification of national economies performance over the next 2 years based on the ultimate success of their COVID-19 response. I'm seriously considering if I should try to predict the most robust regional response and look at moving there post crisis for the next 2 years or so. I think there could be significant differences. Not necessarily who is suffering the least, but who is going to emerge most vigorously.
- coliveira 7y ago
  I don't think even #1 is out of the woods. Demand for food will change and probably not for the better with so much people without a job. E-commerce will increase in some areas, but lots of companies that are not dealing with essencial products will close again due to the large number of unemployed. If the rest of the economy tanks, advertisement will also be in a difficult position.
- _curious_ 7y ago
  "I'm seriously considering if I should try to predict the most robust regional response and look at moving there post crisis or the next 2 years or so. I think there could be significant differences. Not necessarily who is suffering the least, but who is going to emerge most vigorously." Same...always better to thrive than to survive and we all get to choose :)
- nostrademons 7y ago
  Also don't forget the effect of competitive position within an industry. I have a friend who owns a factory in a very unsexy niche industry (packaging). They're relishing this crisis, because they manage the business very conservatively in terms of cash flow and leverage, and are expecting many of their competitors to go bankrupt in the near future. When the dust settles, they'll be one of the few left over, which means they can charge much higher rates. This'll likely be the story in many industries. Rich monopolies like Google and Facebook are going to do fine. (And note that both of them are still hiring, meaning they can potentially clean out the supply of engineers while many of the newer growth unicorns have instituted hiring freezes.) Marginal players in competitive industries are going to get killed.
jdashg 7y ago
With a true safety net a 20% contraction doesn't cause loss of life. Choosing to let this push people out on the street or into otherwise dire straits is a government's choice, not an inevitability. If companies fold and people can switch seamlessly from position to safety net to new position, allegedly the market will normalize and reallocate resources efficiently. You can't reallocate without freeing resources! A contraction of 20% only puts us nominally back less than a decade. People didn't have to be sacrificed back then, and they don't today. There are interventions we do need, but if everyone took a 20% hit as a group instead of a de facto Hunger Games, it wouldn't be nearly as ghastly.
- ajross 7y ago
  > if everyone took a 20% hit as a group instead of a de facto Hunger Games Off topic, but that is a brilliant framing. I'm going to steal and use that repeatedly.

okareaman 7y ago

I'm guessing ITT a majority of programmers reading didn't go through the dotcom bubble burst. It was brutal.

oiasdjfoiasd 7y ago
As a young person who didn't go through the first bubble, but is sitting on cash, I say bring it on!
icedchai 7y ago
I did. It was tough, not a lot of "interesting" companies, but if you road it out doing government contracting or working at a boring-but-stable financial firm, you were fine.
scarface74 7y ago
The dotcom bust was only brutal if you were either working for a non profitable VC backed startup or your profit depended on VC spending. Regular old big enterprise kept chugging along and were still hiring. I was looking for a job in early 2000 as a software developer with three years of experience in Atlanta and there were plenty of companies hiring.
ThrowawayR2 7y ago
The dotcom bust was bad for the software and computer industry (and, yeah, it was definitely brutal) but didn't affect the larger economy all that much. Take a look at the list of recessions in the US (https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit...) and you can see it was relatively mild by the numbers. This time, it's global and nearly every sector is affected; there won't be a place to hide. The US is already at unemployment rates not seen since the recessions of the 1920s/1930s and the bleeding hasn't stopped yet. These unicorn collapses are just the rumble, not the avalanche itself and anybody not terrified right now, darned well should be.
ttul 7y ago
You could get brick and timber office space for free. Vacancy of 50% in SOMA. Try to imagine that today... we might get there once again.

CydeWeys 7y ago

ITT also will be lots of people blaming this economic impact solely on the social isolation measures, ignoring the fact that a pandemic ravaging unchecked through the entire population would be having an even worse effect. Once the pandemic started, there was no way it was gonna end well, regardless of our actions in response to it. At least with the social isolation measures, fewer people are dead by the end of it.

anewhope 7y ago
We could be donating plasma instead of sitting at home. Probably better plasma than ventilators.
- ethbro 7y ago
  Do you mean convalescent plasma?
- CydeWeys 7y ago
  I'm trying to donate plasma. Unfortunately, that's very much a 1-at-a-time kind of thing and doesn't scale well. We also don't know how effective it actually is.
ashtonkem 7y ago
Demand started dropping before official shut-down orders arrived, as risk-conscious citizens cut down on high risk activities before officially ordered to do so.
- asdf21 7y ago
  As someone who runs a restaurant in the Bay Area, that's not really accurate. We were busy right up until the shut-down.
  - ashtonkem 7y ago
    San Francisco shut down incredibly early compared to most of the US, especially compared to their case load. By the time SF shut down they had 50 cases, while NYC waited until they had 10,000 cases to shut down. That probably is why the shut down and lack of demand line up so closely for businesses in the Bay Area.