5 ms·

Every time the stock markets goes down I know there will be layoffs a while later. I think its psychological, a multi billionaire who has gone down from say, te

by dsq 4y ago

Every time the stock markets goes down I know there will be layoffs a while later. I think its psychological, a multi billionaire who has gone down from say, ten billion to seven billion doesn't say to himself “I still have seven”. He feels he has lost three bullion and he wants it back.

sph 4y ago
> Every time the stock markets goes down I know there will be layoffs a while later. I mean, isn't that obvious? Our global economy isn't just global in a geographical sense. "Economy" goes down, everybody pays. The average person is out of a job, the landlord has to increase rents, the billionaire is ejected from the Three Commas Club. It's traumatic to everyone.
- grugagag 4y ago
  Why does the landlord HAVE to increase rents?
  - throwaway85950 4y ago
    Because the average landlord is paying mortgage with interest rates which just went way up.
    - gruez 4y ago
      That's close, but not quite right. Rentals don't exist within a vacuum. They compete against the option of buying outright. If buying outright suddenly got more expensive (because mortgage rates went up), then rentals suddenly has less competition and therefore they can raise prices.
      - cjbgkagh 4y ago
        There are other options, like moving in with parents, group housing, van life, or even going homeless. So long as people can afford it they’ll usually avoid those options but once they’re tapped out they are no longer able to. There is a limit for how much rent can be raised even if buying becomes more difficult to finance. I don’t think we’ve ever hit that limit in the US in recent history. Landlords not being able to raise rent to cover mortgage payments would be a new thing they probably haven’t planned on.
        polygamous_bat 4y ago
        Do you rent? If yes, how much does rent have to increase before you decide, "Ah yes, I would much rather be homeless, but at least I am voting with my wallet, that will show the greedy landlords not to raise rents!" I personally cannot think of a limit at which I would decide to be homeless. I would much rather have a home to live in than buy any food beyond what sustains me, or get new clothes, or go out for any entertainment reasons. I believe I am not the only one in this. Thus, from a purely economic perspective, the landlord in these cases are "leaving money on the table", i.e. they could capture more of my surplus income if rents happened to increase in a coordinated fashion. Unfortunately, there is nothing in Econ 101 which tells you why that would be bad or unsustainable (social unrest etc.) and thus these concepts will be hard to grasp for people who do not have to live this life.
        cjbgkagh 4y ago
        I’m not the marginal renter, and from the sounds of it neither are you, it’s the person who can barely afford rent and doesn’t have good options to chose from. The person deciding between fuel, food, medicine, or rent. The person rationing their insulin. How do you think many homeless people became homeless to begin with. They didn’t all start out as drug addicts. And as mentioned homelessness isn’t the only option, I know plenty of people who have moved back in with family or still have room mates into their 30s and 40s.
        polygamous_bat 4y ago
        I think I agree with you, and so I will not risk talking past each other. Let me just take this spot to point out that from a landlord's perspective renting out two units at 100% is economically equivalent to renting out one unit at 200% while letting the other unit sits empty. However, it is strictly worse for society at large because of the artificial scarcity of a basic right.
        landemva 4y ago
        You had me until this "artificial scarcity of a basic right." Housing is not a natural right. Rights don't have limits (until they harm someone else), so something like speech can't be artificially scarce.
    - a2tech 4y ago
      What would make you think the landlord's interest rates would go up? Its unlikely that any mortgage they have will have a floating interest rate. Borrowing more money will likely be at a higher interest rate, but deals that are closed aren't going to change.
      - sph 4y ago
        What about variable rate mortgages?
      - AYBABTME 4y ago
        I assume you're used to fixed rate mortgages. A whole bunch of countries don't have those. Actually I only know about the US having real fixed rate mortgages. Other places either have mostly variable rates or some sort of fixed period and a mechanism to bring up the rate in some conditions.
        a2tech 4y ago
        That sucks for folks then. I'd definitely push for that to change. In the US you may not always get the best interest rate but it'll usually be the same for the entire length of the loan.
      - throwaway85950 4y ago
        My own payment going way up. There are no full-term fixed rate mortgages where I live - I can get it fixed for 3-7 years (and 7 gets me much worse interest rate).
        a2tech 4y ago
        That sucks. In the US we typically get fixed rate loans for the length of the loan which could be as long as 30 years.
    - cableshaft 4y ago
      Why would their rates go up? They should have a fixed mortgage rate. My mortgage rate didn't hasn't gone up at all. If it's a new purchase, sure.
    - m0llusk 4y ago
      Before the 1980s it was considered unreasonable risk to rent out a property that was not owned in the clear. Maybe this means we might want to being considering living by some of the older rules, Glass-Steagall being another prominent example among many others.
    - insane_dreamer 4y ago
      No, the mortgage rates are fixed for 30 years. So any LL that bought when rates were 3% continues to pay that for 30 years even if rates rise to 7%. That's why being a landlord works out much better than a renter. And if you do buy when rates are high you can also refi when rates fall. (Edit: This is in the US; adjustable mortgage rates are more common in other countries)
- gruez 4y ago
  >the landlord has to increase rents Is that even a thing? Looking at the data[1], there doesn't seem to be any correlation between recessions (areas shaded gray) and rents rising faster than normal. [1] https://fred.stlouisfed.org/series/CUSR0000SEHA https://fred.stlouisfed.org/series/CUSR0000SEHA (you can use "edit graph -> units -> Change from Year Ago, Index 1982-1984=100" to make changes easier to see)
  - okr 4y ago
    Depends on which country you are in. In germany some popular contracts are bound to inflation index. So rent increases, while employed workers may have to wait with their raises, as companies have to tighten their belts.
  - sph 4y ago
    That's what's happening in the United Kingdom. This recession comes with increased interest rates, and we've had a massive Buy to Let scheme for God knows how many years, where people bought houses on mortgage and rented them out. Rising interest rates = rising mortgages = landlords that have to increase rents to keep earning the same amount. The point is that the average person gets squeezed from multiple sides, and the higher on the foodchain you are, the more chances you have to outsource your losses.
    - gruez 4y ago
      >Rising interest rates = rising mortgages = landlords that have to increase rents to keep earning the same amount. And what were the landlords doing before? Leaving money on the table by refusing to raise prices to what tenants were willing to pay? I find that unlikely.
      - sph 4y ago
        I do not understand your question. Suppose the mortgage is 500, and rent 600. 100 profit for the landlord. If tomorrow the mortgage increases by 200, the rent will have to increase by the same amount to maintain a profit margin of 100. If you're asking why was the rent "only" 600 and not 800 in the first place, is that your price is affected by demand and supply. If your prices are ridiculous, nobody'll rent from you. But if everyone around is on a Buy to Let scheme and mortgages (thus rents) rise, your tenants will have to accept your rent increase because all supply has become more expensive. No one is leaving money on the table. It's markets 101.
- 2OEH8eoCRo0 4y ago
  The stock market is not the economy.
  - super256 4y ago
    True. But it always works a bit like this: First the stocks come down, then the earnings and then the whole economy. It will be interesting to watch what guidance the companies will give for the rest of the year.
    - 2OEH8eoCRo0 4y ago
      I thought it was the other way around. The economy slows which means earnings slip and then that causes people to dump the stock. This is why earnings calls are the trigger- it's when the data is officially reported to the public.
  - sph 4y ago
    If it affects the economy it is the economy.
  - jerf 4y ago
    Everything's correlated to everything. I won't make any claims that the stock market is particularly correlated to the economy... it's kinda supposed to be, but there's a lot of things that get in the way. Still, in the end, when things are "generally down", you're going to see the economy go down, the stock market go down, people's fortunes (large and small) go down... they may not be as connected as they "should" be, for some value of "should", but they are certainly neither anti-correlated, nor entirely uncorrelated.
- dsq 4y ago
  The difference is that the billionaire (better put, the owner class) is the apex predator, so to speak, so there is no one above it demanding higher rents or threatening to put out if business. He falls from ten billion to seven billion. There is so much extra padding he could never spend it. Caveat, I am not anti capitalist. But I do think much of the dynamic driving the entire financial side of the economy is the mental process of a very few. That is, at tuis level its not impersonal forces. They pick up the phone (or mail in this case) to the CEO of the companies they own and say: get the stock price back up by cutting 20 percent.
scarface74 4y ago
There have only been a few major stock declines since at least 1996 when I started working. 2000 - there was a major correction and the companies that were laying off were mostly in the nascent tech sector. If you worked as a software dev in a profitable “enterprise company” things kept humming along. I personally saw no decrease in demand in Atlanta for instance for software developers at banks, insurance companies etc. The overall tech market was so small back then it didn’t affect the rest of the market. 2001 - After 9/11 - it didn’t really have any effect on the job market. 2008-2011 - there was a real slow down in spending that was partially offset by the then new mobile market and BigTech really started taking off. 2020 - Covid - of course in some industries people were spending a lot less. 2023 - even now we are just getting back to levels of employment for the profitable tech companies that they were pre-Covid. The overall job market is not seeing layoffs and unemployment is still low.
bvm 4y ago
> lost three bullion putting the STOCK in stock market
landemva 4y ago
> Every time the stock markets goes down I know there will be layoffs After careful study of money supply and interest rates, I think this more closely matches economic cycles: When "federal reserve" manipulates money supply by raising the price of money (interest rates) or reducing the amount of money (through lender reserve requirements and other tweaks) there will be layoffs. In other words, don't fight The Fed.

by dsq 4y ago

sph 4y ago

> Every time the stock markets goes down I know there will be layoffs a while later. I mean, isn't that obvious? Our global economy isn't just global in a geographical sense. "Economy" goes down, everybody pays. The average person is out of a job, the landlord has to increase rents, the billionaire is ejected from the Three Commas Club. It's traumatic to everyone.

grugagag 4y ago
Why does the landlord HAVE to increase rents?
- throwaway85950 4y ago
  Because the average landlord is paying mortgage with interest rates which just went way up.
  - gruez 4y ago
    That's close, but not quite right. Rentals don't exist within a vacuum. They compete against the option of buying outright. If buying outright suddenly got more expensive (because mortgage rates went up), then rentals suddenly has less competition and therefore they can raise prices.
    - cjbgkagh 4y ago
      There are other options, like moving in with parents, group housing, van life, or even going homeless. So long as people can afford it they’ll usually avoid those options but once they’re tapped out they are no longer able to. There is a limit for how much rent can be raised even if buying becomes more difficult to finance. I don’t think we’ve ever hit that limit in the US in recent history. Landlords not being able to raise rent to cover mortgage payments would be a new thing they probably haven’t planned on.
      - polygamous_bat 4y ago
        Do you rent? If yes, how much does rent have to increase before you decide, "Ah yes, I would much rather be homeless, but at least I am voting with my wallet, that will show the greedy landlords not to raise rents!" I personally cannot think of a limit at which I would decide to be homeless. I would much rather have a home to live in than buy any food beyond what sustains me, or get new clothes, or go out for any entertainment reasons. I believe I am not the only one in this. Thus, from a purely economic perspective, the landlord in these cases are "leaving money on the table", i.e. they could capture more of my surplus income if rents happened to increase in a coordinated fashion. Unfortunately, there is nothing in Econ 101 which tells you why that would be bad or unsustainable (social unrest etc.) and thus these concepts will be hard to grasp for people who do not have to live this life.
        cjbgkagh 4y ago
        I’m not the marginal renter, and from the sounds of it neither are you, it’s the person who can barely afford rent and doesn’t have good options to chose from. The person deciding between fuel, food, medicine, or rent. The person rationing their insulin. How do you think many homeless people became homeless to begin with. They didn’t all start out as drug addicts. And as mentioned homelessness isn’t the only option, I know plenty of people who have moved back in with family or still have room mates into their 30s and 40s.
        polygamous_bat 4y ago
        I think I agree with you, and so I will not risk talking past each other. Let me just take this spot to point out that from a landlord's perspective renting out two units at 100% is economically equivalent to renting out one unit at 200% while letting the other unit sits empty. However, it is strictly worse for society at large because of the artificial scarcity of a basic right.
        landemva 4y ago
        You had me until this "artificial scarcity of a basic right." Housing is not a natural right. Rights don't have limits (until they harm someone else), so something like speech can't be artificially scarce.
  - a2tech 4y ago
    What would make you think the landlord's interest rates would go up? Its unlikely that any mortgage they have will have a floating interest rate. Borrowing more money will likely be at a higher interest rate, but deals that are closed aren't going to change.
    - sph 4y ago
      What about variable rate mortgages?
    - AYBABTME 4y ago
      I assume you're used to fixed rate mortgages. A whole bunch of countries don't have those. Actually I only know about the US having real fixed rate mortgages. Other places either have mostly variable rates or some sort of fixed period and a mechanism to bring up the rate in some conditions.
      - a2tech 4y ago
        That sucks for folks then. I'd definitely push for that to change. In the US you may not always get the best interest rate but it'll usually be the same for the entire length of the loan.
    - throwaway85950 4y ago
      My own payment going way up. There are no full-term fixed rate mortgages where I live - I can get it fixed for 3-7 years (and 7 gets me much worse interest rate).
      - a2tech 4y ago
        That sucks. In the US we typically get fixed rate loans for the length of the loan which could be as long as 30 years.
  - cableshaft 4y ago
    Why would their rates go up? They should have a fixed mortgage rate. My mortgage rate didn't hasn't gone up at all. If it's a new purchase, sure.
  - m0llusk 4y ago
    Before the 1980s it was considered unreasonable risk to rent out a property that was not owned in the clear. Maybe this means we might want to being considering living by some of the older rules, Glass-Steagall being another prominent example among many others.
  - insane_dreamer 4y ago
    No, the mortgage rates are fixed for 30 years. So any LL that bought when rates were 3% continues to pay that for 30 years even if rates rise to 7%. That's why being a landlord works out much better than a renter. And if you do buy when rates are high you can also refi when rates fall. (Edit: This is in the US; adjustable mortgage rates are more common in other countries)
gruez 4y ago
>the landlord has to increase rents Is that even a thing? Looking at the data[1], there doesn't seem to be any correlation between recessions (areas shaded gray) and rents rising faster than normal. [1] https://fred.stlouisfed.org/series/CUSR0000SEHA https://fred.stlouisfed.org/series/CUSR0000SEHA (you can use "edit graph -> units -> Change from Year Ago, Index 1982-1984=100" to make changes easier to see)
- okr 4y ago
  Depends on which country you are in. In germany some popular contracts are bound to inflation index. So rent increases, while employed workers may have to wait with their raises, as companies have to tighten their belts.
- sph 4y ago
  That's what's happening in the United Kingdom. This recession comes with increased interest rates, and we've had a massive Buy to Let scheme for God knows how many years, where people bought houses on mortgage and rented them out. Rising interest rates = rising mortgages = landlords that have to increase rents to keep earning the same amount. The point is that the average person gets squeezed from multiple sides, and the higher on the foodchain you are, the more chances you have to outsource your losses.
  - gruez 4y ago
    >Rising interest rates = rising mortgages = landlords that have to increase rents to keep earning the same amount. And what were the landlords doing before? Leaving money on the table by refusing to raise prices to what tenants were willing to pay? I find that unlikely.
    - sph 4y ago
      I do not understand your question. Suppose the mortgage is 500, and rent 600. 100 profit for the landlord. If tomorrow the mortgage increases by 200, the rent will have to increase by the same amount to maintain a profit margin of 100. If you're asking why was the rent "only" 600 and not 800 in the first place, is that your price is affected by demand and supply. If your prices are ridiculous, nobody'll rent from you. But if everyone around is on a Buy to Let scheme and mortgages (thus rents) rise, your tenants will have to accept your rent increase because all supply has become more expensive. No one is leaving money on the table. It's markets 101.
2OEH8eoCRo0 4y ago
The stock market is not the economy.
- super256 4y ago
  True. But it always works a bit like this: First the stocks come down, then the earnings and then the whole economy. It will be interesting to watch what guidance the companies will give for the rest of the year.
  - 2OEH8eoCRo0 4y ago
    I thought it was the other way around. The economy slows which means earnings slip and then that causes people to dump the stock. This is why earnings calls are the trigger- it's when the data is officially reported to the public.
- sph 4y ago
  If it affects the economy it is the economy.
- jerf 4y ago
  Everything's correlated to everything. I won't make any claims that the stock market is particularly correlated to the economy... it's kinda supposed to be, but there's a lot of things that get in the way. Still, in the end, when things are "generally down", you're going to see the economy go down, the stock market go down, people's fortunes (large and small) go down... they may not be as connected as they "should" be, for some value of "should", but they are certainly neither anti-correlated, nor entirely uncorrelated.
dsq 4y ago
The difference is that the billionaire (better put, the owner class) is the apex predator, so to speak, so there is no one above it demanding higher rents or threatening to put out if business. He falls from ten billion to seven billion. There is so much extra padding he could never spend it. Caveat, I am not anti capitalist. But I do think much of the dynamic driving the entire financial side of the economy is the mental process of a very few. That is, at tuis level its not impersonal forces. They pick up the phone (or mail in this case) to the CEO of the companies they own and say: get the stock price back up by cutting 20 percent.

scarface74 4y ago

There have only been a few major stock declines since at least 1996 when I started working. 2000 - there was a major correction and the companies that were laying off were mostly in the nascent tech sector. If you worked as a software dev in a profitable “enterprise company” things kept humming along. I personally saw no decrease in demand in Atlanta for instance for software developers at banks, insurance companies etc. The overall tech market was so small back then it didn’t affect the rest of the market. 2001 - After 9/11 - it didn’t really have any effect on the job market. 2008-2011 - there was a real slow down in spending that was partially offset by the then new mobile market and BigTech really started taking off. 2020 - Covid - of course in some industries people were spending a lot less. 2023 - even now we are just getting back to levels of employment for the profitable tech companies that they were pre-Covid. The overall job market is not seeing layoffs and unemployment is still low.

bvm 4y ago

> lost three bullion putting the STOCK in stock market

landemva 4y ago

> Every time the stock markets goes down I know there will be layoffs After careful study of money supply and interest rates, I think this more closely matches economic cycles: When "federal reserve" manipulates money supply by raising the price of money (interest rates) or reducing the amount of money (through lender reserve requirements and other tweaks) there will be layoffs. In other words, don't fight The Fed.