4 ms·

You know, that's what I thought too. But then I was seriously surprised when I saw 0.1% contraction during the Great recession of 2007-2009.

rogerkirkness 6y ago
It wasn't a depression in the sense that economic activity mostly continued, it was a deleveraging. People are overestimating the leverage in play in the current situation, other than giant public companies, there is less toxic debt, so it's more about actual economic activity (E.g. trade).
- Consultant32452 6y ago
  What are the odds some of that non-toxic debt turns into toxic debt as unemployment lingers?
  - _delirium 6y ago
    It's definitely possible that real estate (both commercial and residential) is going to see a bunch of deleveraging as the debt becomes unserviceable. Right now everything is frozen in place. But once it restarts and everyone is supposed to get up to speed on their rents and mortgages again, a bunch of landlords are going to realize they're never getting those n months of back rent that are officially just temporarily suspended. At that point, the more leveraged ones are going to end up with cash-flow problems and mortgages going into default (also currently officially just temporarily suspended). I won't venture a guess on how widespread that's likely to be though.
- anigbrowl 6y ago
  That's what they said at the start of the financial crisis too. I'm too tired to write an essay, but wait until there's a de facto default on college debt.
dahdum 6y ago
China and India grew substantially during the recession, just at a lower rate than they would have. No such luck this time.
- fooker 6y ago
  > No such luck this time. How do you know that? If you could predict that for certain, you could turn 10000$ into 1000000$ with ease.
  - anm89 6y ago
    No. This is reasonably predictable in the short term. You would have to have better knowledge than the market to be able to profit. If the whole market expects depressed gdp grow and you get depressed gdp growth, you have no edge.
    - third_I 6y ago
      This guy invests. More seriously, you emphasize a most important point. The delta of information is precisely where it's at. I wonder if this is exactly the same thing as what we call "bias" in trading / investing. (as a function of some objective knowledge + subjective experience) I mean, we all have the same information but if my bias happens to be correct, I will be able to outperform others (however much depends on how much risk I'm willing to take, how much hedging I conversely do). That's the delta I create with taking a stance, when I press that button, which conditions I choose to enter/increase/reduce/exit a given asset. Curious how you see it.
nl 6y ago
I also found this astonishing. World Bank data has GDP decreasing by 1.9% during the great recession[1], so I don't know where that 0.1% number comes from. [1] https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2009&locations=1W&start=2005 https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2...
lettergram 6y ago
That’s because it wasn’t a reduction in our national output (real production output). It was a reduction in perceived future earnings (I.e. loans). Today we are facing real production losses that will lead people to really stop buying. As prices increase and many many more people are out of work.

rogerkirkness 6y ago

It wasn't a depression in the sense that economic activity mostly continued, it was a deleveraging. People are overestimating the leverage in play in the current situation, other than giant public companies, there is less toxic debt, so it's more about actual economic activity (E.g. trade).

Consultant32452 6y ago
What are the odds some of that non-toxic debt turns into toxic debt as unemployment lingers?
- _delirium 6y ago
  It's definitely possible that real estate (both commercial and residential) is going to see a bunch of deleveraging as the debt becomes unserviceable. Right now everything is frozen in place. But once it restarts and everyone is supposed to get up to speed on their rents and mortgages again, a bunch of landlords are going to realize they're never getting those n months of back rent that are officially just temporarily suspended. At that point, the more leveraged ones are going to end up with cash-flow problems and mortgages going into default (also currently officially just temporarily suspended). I won't venture a guess on how widespread that's likely to be though.
anigbrowl 6y ago
That's what they said at the start of the financial crisis too. I'm too tired to write an essay, but wait until there's a de facto default on college debt.

dahdum 6y ago

China and India grew substantially during the recession, just at a lower rate than they would have. No such luck this time.

fooker 6y ago
> No such luck this time. How do you know that? If you could predict that for certain, you could turn 10000$ into 1000000$ with ease.
- anm89 6y ago
  No. This is reasonably predictable in the short term. You would have to have better knowledge than the market to be able to profit. If the whole market expects depressed gdp grow and you get depressed gdp growth, you have no edge.
  - third_I 6y ago
    This guy invests. More seriously, you emphasize a most important point. The delta of information is precisely where it's at. I wonder if this is exactly the same thing as what we call "bias" in trading / investing. (as a function of some objective knowledge + subjective experience) I mean, we all have the same information but if my bias happens to be correct, I will be able to outperform others (however much depends on how much risk I'm willing to take, how much hedging I conversely do). That's the delta I create with taking a stance, when I press that button, which conditions I choose to enter/increase/reduce/exit a given asset. Curious how you see it.

nl 6y ago

I also found this astonishing. World Bank data has GDP decreasing by 1.9% during the great recession[1], so I don't know where that 0.1% number comes from. [1] https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2009&locations=1W&start=2005 https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2...

lettergram 6y ago

That’s because it wasn’t a reduction in our national output (real production output). It was a reduction in perceived future earnings (I.e. loans). Today we are facing real production losses that will lead people to really stop buying. As prices increase and many many more people are out of work.