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It will be an interesting test to see what happens after things return to "normal". Real economic downturns happen because deep structural issues have develope
by zmmmmm 7y ago
It will be an interesting test to see what happens after things return to "normal".
Real economic downturns happen because deep structural issues have developed in the economy that cannot be dealth with other than by broad scale cyclical restructuring. But in this case there is not an underlying structural issue - everything was "fine" and then an externality prevented normal productivity. So in one theory of things, once the lockdowns are over people will mostly go back to doing what they were doing before and apart for some one-off bad debts, etc life will just resume. In another theory, economic downturns are like self-fulfilling prophecies and once started will take many years to work out.
It will be interesting to see which one of these happens.
- HSO 7y agoThings were far from "normal" before. This is still the same crisis that started in 2007.
- anm89 7y agoAnd the same bubble that started with dot com boom collapse which Greenspan reinflated into the housing crisis
- HaloZero 7y agoLet's say a vaccine happens. You still have to get it to 7 BILLION people or at least disseminate it across the entire globe. It's going to take forever and even if the developed nations are back to normal it's going to be a shit show in the rest of the world.
- james_s_tayler 7y agoYup. The push for "equitable distribution" means you know the geopolitical shit fight is going to go down.
- dclusin 7y agoPeople were incredibly leveraged before the this virus. Not earning for several months could prove fatal to enough people to create a wider catastrophe. Think about cascading failures in software systems. One relatively smaller sub-system fails which others were dependent on. These other dependent subsystems now fail because their dependency is now unavailable. It snowballs until the entire system is unavailable.
- pbourke 7y ago> everything was "fine" There were signs that everything wasn’t fine before the crisis. The periods of inverted yield curve and freeze up in the overnight repo market last fall come to mind. The tide has gone out and we’ll quickly find out who wasn’t wearing their bathing suit.
- quickthrowman 7y agoWhy was the Fed cutting interest rates if things were fine? Why did the Fed stop unwinding QE if things were fine? Why did the Fed intervene in repo lending if things were fine?
- anigbrowl 7y agoBut in this case there is not an underlying structural issue There is - inequality. It's just that the market is still resistant to pricing it in, and until now people had enough coming in that they were merely unhappy rather than angry and desperate. Laugh now, but book mark this thread and take another look at the end of the year.