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I truly don't understand why so many people think it will be a V-shaped recovery. It certainly can happen (everything can), but have they looked at the data? No

I truly don't understand why so many people think it will be a V-shaped recovery. It certainly can happen (everything can), but have they looked at the data? Nobody alive has ever seen this kind of volatility in the "fundamentals", and not just in some of them - in all of them. Literally, doesn't matter what you look at, as long as it has a fresh enough measurement. Social and political volatility is not here yet, but the potential is huge. Financial volatility is currently hiding / being suppressed, but again, the potential is massive. I'm not just talking about a normal white swan like a stock market drop - I'm talking about the "true black swans", like a potential collapse of the current iteration of the concept of money.

SpicyLemonZest 7y ago
The argument is that the primary driver of recessions is uncertainty. Some businesses fail, as happens even in good times, but people don't want to expand others or start new ones because they're not sure what the world will look like. Something could always come out of left field, but we have reason to be confident about what the world's going to look like between when lockdowns end and when we have vaccines or strong treatments.
meheleventyone 7y ago
I think it’s hard to understand for a lot of people. I know it is for me. If you’re cooped up at home, working remotely but basically normally and haven’t really been impacted by things so far other than the inconvenience it’s pretty easy to expect things will just go back to normal. All the local indicators aren’t visible and the news slips into this comfortably surreal space where there is a dream like dissonance between life and the reality outside our own homes.
- netsharc 7y ago
  Your comment got me thinking, there must be a lot of anxious people out there, out without a job and/or worried about dying. At least where I live the social system is very robust (here's hoping my judgement is right), so there should be less of said anxiety; in India there are millions of day workers who had zero savings before the crisis and are now jobless and homeless, and unable to travel to their hometowns because the train network is shutdown. A week or two more of the shutdown and there will probably be riots there. Elsewhere, anxiety will lead to bad behaviors and crimes...
chepurko 7y ago
Sure, but markets since 2009 mostly look at how much the Fed is buying (printing, whatever). Yes printing money bad, yes inflation some time in 20 years, yes unwinding their balance sheet will kill us all. None of it matters in the now, which is what markets are, now - with some looking ahead. So the volatility in the fundamentals is accompanied by a forceful response with QE. Nothing like we’ve ever seen. The QE the Fed is doing today trounces 2008’s QE. So that’s where we are now. Unemployment numbers come out, market goes up. Why? Same reason it has for the last 10 years - bad data good because Fed will just juice the market at any sign of trouble. In the end though the stock market doesn’t matter for 90% of people but what it is doing is amplifying inequality. I see this crisis amping up inequality to levels we’ve never seen before. We’ll see the same story eventually with unemployment creeping down from the 20 or 30% high it’ll reach but behind it there’ll be even more people dropping out of the workforce and wages will stay stagnant. There has been some commentary studying past pandemics where a silver lining could come from worker rights making a comeback so who knows, perhaps the lucky ones keeping/returning to their jobs get a raise in benefits (healthcare, leave) or pay.
- H8crilA 7y ago
  Your comment is so characteristic of our times - laser focused on capital markets, as if that was "the real world". I'm talking about violent protests in the streets. About your cousin graduating and not being able to find a job even at McDonalds, for years. Overthrown governments. People stealing and going on rampages because they have no money to feed their children. People drinking themselves to death because it's the n-th year without a job, or any other social purpose. On the political front - every day this goes on we're getting higher and higher probability of super redistributive policies (I don't want to use the S word or the C word). On the geopolitical front - have you seen that China has kicked out most western reporters in the middle of all of this? Or that Japan wants to "repatriate" factories, and their government has already secured funding for that? Or do you still remember the Trump trade war, and perhaps know what happened last time the world was engaged in a serious trade war in the 1930s ?
  - chepurko 7y ago

SpicyLemonZest 7y ago

The argument is that the primary driver of recessions is uncertainty. Some businesses fail, as happens even in good times, but people don't want to expand others or start new ones because they're not sure what the world will look like. Something could always come out of left field, but we have reason to be confident about what the world's going to look like between when lockdowns end and when we have vaccines or strong treatments.

meheleventyone 7y ago

I think it’s hard to understand for a lot of people. I know it is for me. If you’re cooped up at home, working remotely but basically normally and haven’t really been impacted by things so far other than the inconvenience it’s pretty easy to expect things will just go back to normal. All the local indicators aren’t visible and the news slips into this comfortably surreal space where there is a dream like dissonance between life and the reality outside our own homes.

netsharc 7y ago
Your comment got me thinking, there must be a lot of anxious people out there, out without a job and/or worried about dying. At least where I live the social system is very robust (here's hoping my judgement is right), so there should be less of said anxiety; in India there are millions of day workers who had zero savings before the crisis and are now jobless and homeless, and unable to travel to their hometowns because the train network is shutdown. A week or two more of the shutdown and there will probably be riots there. Elsewhere, anxiety will lead to bad behaviors and crimes...

chepurko 7y ago

Sure, but markets since 2009 mostly look at how much the Fed is buying (printing, whatever). Yes printing money bad, yes inflation some time in 20 years, yes unwinding their balance sheet will kill us all. None of it matters in the now, which is what markets are, now - with some looking ahead. So the volatility in the fundamentals is accompanied by a forceful response with QE. Nothing like we’ve ever seen. The QE the Fed is doing today trounces 2008’s QE. So that’s where we are now. Unemployment numbers come out, market goes up. Why? Same reason it has for the last 10 years - bad data good because Fed will just juice the market at any sign of trouble. In the end though the stock market doesn’t matter for 90% of people but what it is doing is amplifying inequality. I see this crisis amping up inequality to levels we’ve never seen before. We’ll see the same story eventually with unemployment creeping down from the 20 or 30% high it’ll reach but behind it there’ll be even more people dropping out of the workforce and wages will stay stagnant. There has been some commentary studying past pandemics where a silver lining could come from worker rights making a comeback so who knows, perhaps the lucky ones keeping/returning to their jobs get a raise in benefits (healthcare, leave) or pay.

H8crilA 7y ago
Your comment is so characteristic of our times - laser focused on capital markets, as if that was "the real world". I'm talking about violent protests in the streets. About your cousin graduating and not being able to find a job even at McDonalds, for years. Overthrown governments. People stealing and going on rampages because they have no money to feed their children. People drinking themselves to death because it's the n-th year without a job, or any other social purpose. On the political front - every day this goes on we're getting higher and higher probability of super redistributive policies (I don't want to use the S word or the C word). On the geopolitical front - have you seen that China has kicked out most western reporters in the middle of all of this? Or that Japan wants to "repatriate" factories, and their government has already secured funding for that? Or do you still remember the Trump trade war, and perhaps know what happened last time the world was engaged in a serious trade war in the 1930s ?
- chepurko 7y ago