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> A generation of young people whose education was blighted by COVID lockdowns, will face a closed labour market. But shortly after, when all inefficient compa

> A generation of young people whose education was blighted by COVID lockdowns, will face a closed labour market. But shortly after, when all inefficient companies bankrupt, they'll wake up in the booming economy, finding places in perspective businesses. Crisis is good for the economy in the long term. I only worry that governments won't allow young trees to grow after the forest's fire.

desindol 4y ago
Crisis is never good look at the correlation between unemployment and excess mortality rates…
- nie100sowny 4y ago
  I think you refer to the long unemployment. Crisis time needs to be shortened then. Banks should raise rates firmly, reaching levels higher than inflation. Big companies should not be artificially saved from collapsing, and regulations simplified. The unemployment period will be then short.
  - landemva 4y ago
    I agree with much of this. If we got the Fed out of the business of propping things up, the downturn would be quick and underperforming assets would change hands and quickly be productively redeployed. Instead, Fed in partnership with government will prop this up and protect the incumbents/existing winners.
    - dragonwriter 4y ago
      > If we got the Fed out of the business of propping things up, the downturn would be quick and underperforming assets would change hands and quickly be productively redeployed Interesting belief. Things like the Long Depression challenge it, though.
      - reasonabl_human 4y ago
        Where do you folks go to learn on these macroeconomic topics?
  - FormerBandmate 4y ago
    When big companies collapse people take huge losses, lose the trust in the economy necessary for things to grow, and the economy is hurt for a long time. The bankruptcy of Lehman Brothers almost destroyed the entire financial system, slow-motion collapses like GE and Sears that take decades are vastly preferable
A4ET8a8uTh0 4y ago
<< But shortly after, when all inefficient companies bankrupt, Eh. It sounds great in theory, but in practice ( including in US, where all the more recent crises shown ) inefficient companies get saved if they are sufficiently connected or 'important' enough to the system writ large. I am not defending the practice, but I want to point to obvious flaw in the analysis since it diverges from reality somewhat ( I just noticed the inclusion of government involvement ).
- CSMastermind 4y ago
  The government bails out comparatively few businesses. While many, myself included, dislike the practice, I don't think it happens on a large enough scale to make a significant impact on the economy at large.
  - endtime 4y ago
    I don't really feel like I know much about this, so someone may point out an obvious way in which I'm wrong, but: How do you measure the effects of the moral hazard created by the post-housing crisis bailouts circa 2008? Are major financial institutions incentivized to take outsized risks if they're too big to fail? How can we be sure that doesn't "make a significant impact on the economy at large"?
- mistrial9 4y ago
  the War economies are related to this phenomenon of massive, inefficient companies getting new contracts and new cash; similar to Old World central contract awards connected to long-term govt cash flows, I believe..
mistrial9 4y ago
> Crisis is good for the economy in the long term. there is some name for this kind of dismissive optimism, but I do not know it.. suggestions? I hear this kind of thing from the Cato Institute Human Progress people, who have trillions in paper wealth and the Oil and Gas economy to defend. What could go wrong?
- 0xdde 4y ago
  Internalized propaganda?
- munificent 4y ago
  A forest fire might be good for the forest as a whole, but that's a cold consolation to any particular tree or rabbit who ends up turned to cinder.
  - nie100sowny 4y ago
    A better analogy would be a strong wind collapsing big and old trees :)
Balgair 4y ago
Whenever I see takes on the long term status, I'm reminded of the casino scene in The Big Short. Though it may be good in the long term, the short term can be pretty grim for a lot of people. https://www.youtube.com/watch?v=II4Ct2n5FiE https://www.youtube.com/watch?v=II4Ct2n5FiE The pertinent part is at ~2 minutes.

desindol 4y ago

Crisis is never good look at the correlation between unemployment and excess mortality rates…

nie100sowny 4y ago
I think you refer to the long unemployment. Crisis time needs to be shortened then. Banks should raise rates firmly, reaching levels higher than inflation. Big companies should not be artificially saved from collapsing, and regulations simplified. The unemployment period will be then short.
- landemva 4y ago
  I agree with much of this. If we got the Fed out of the business of propping things up, the downturn would be quick and underperforming assets would change hands and quickly be productively redeployed. Instead, Fed in partnership with government will prop this up and protect the incumbents/existing winners.
  - dragonwriter 4y ago
    > If we got the Fed out of the business of propping things up, the downturn would be quick and underperforming assets would change hands and quickly be productively redeployed Interesting belief. Things like the Long Depression challenge it, though.
    - reasonabl_human 4y ago
      Where do you folks go to learn on these macroeconomic topics?
- FormerBandmate 4y ago
  When big companies collapse people take huge losses, lose the trust in the economy necessary for things to grow, and the economy is hurt for a long time. The bankruptcy of Lehman Brothers almost destroyed the entire financial system, slow-motion collapses like GE and Sears that take decades are vastly preferable

A4ET8a8uTh0 4y ago

<< But shortly after, when all inefficient companies bankrupt, Eh. It sounds great in theory, but in practice ( including in US, where all the more recent crises shown ) inefficient companies get saved if they are sufficiently connected or 'important' enough to the system writ large. I am not defending the practice, but I want to point to obvious flaw in the analysis since it diverges from reality somewhat ( I just noticed the inclusion of government involvement ).

CSMastermind 4y ago
The government bails out comparatively few businesses. While many, myself included, dislike the practice, I don't think it happens on a large enough scale to make a significant impact on the economy at large.
- endtime 4y ago
  I don't really feel like I know much about this, so someone may point out an obvious way in which I'm wrong, but: How do you measure the effects of the moral hazard created by the post-housing crisis bailouts circa 2008? Are major financial institutions incentivized to take outsized risks if they're too big to fail? How can we be sure that doesn't "make a significant impact on the economy at large"?
mistrial9 4y ago
the War economies are related to this phenomenon of massive, inefficient companies getting new contracts and new cash; similar to Old World central contract awards connected to long-term govt cash flows, I believe..

mistrial9 4y ago

> Crisis is good for the economy in the long term. there is some name for this kind of dismissive optimism, but I do not know it.. suggestions? I hear this kind of thing from the Cato Institute Human Progress people, who have trillions in paper wealth and the Oil and Gas economy to defend. What could go wrong?

0xdde 4y ago
Internalized propaganda?
munificent 4y ago
A forest fire might be good for the forest as a whole, but that's a cold consolation to any particular tree or rabbit who ends up turned to cinder.
- nie100sowny 4y ago
  A better analogy would be a strong wind collapsing big and old trees :)

Balgair 4y ago

Whenever I see takes on the long term status, I'm reminded of the casino scene in The Big Short. Though it may be good in the long term, the short term can be pretty grim for a lot of people. https://www.youtube.com/watch?v=II4Ct2n5FiE https://www.youtube.com/watch?v=II4Ct2n5FiE The pertinent part is at ~2 minutes.