The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: HuskiesUnited on March 12, 2020, 06:17:27 AM
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Stock market expected to open and immediately hit the limit with a large enough halt to pause trading, second time this week.
The economy basically shutting down
- US closing the border from foreigners with European travel ban
- large events cancelled across the country
- airlines, hotels having reservations cancelled with no end in sight
- restaurants empty
Panic spreading
- store shelves emptying
- inventories soon to be depleted, won’t be able to buy some things at store
Layoffs are starting
- West Coast ports cargo down 75% in one article I read, people getting laid off
- Hospitality industry in Seattle is a ghost town, no work means layoffs
And this is just the beginning. Next week at this time, we will be hearing as much about about layoffs as the virus. And this will snowball. Trump is promising liquidity and low interest small business loans will help, but business can’t hold onto its employees with no customers.
These are unprecedented times. Maybe the virus goes away in a couple months, but the economy will be very slow to start back up. I wouldn’t be surprised to see the Dow below 10,000 in the next couple of months.
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Stock market expected to open and immediately hit the limit with a large enough halt to pause trading, second time this week.
The economy basically shutting down
- US closing the border from foreigners with European travel ban
- large events cancelled across the country
- airlines, hotels having reservations cancelled with no end in sight
- restaurants empty
Panic spreading
- store shelves emptying
- inventories soon to be depleted, won’t be able to buy some things at store
Layoffs are starting
- West Coast ports cargo down 75% in one article I read, people getting laid off
- Hospitality industry in Seattle is a ghost town, no work means layoffs
And this is just the beginning. Next week at this time, we will be hearing as much about about layoffs as the virus. And this will snowball. Trump is promising liquidity and low interest small business loans will help, but business can’t hold onto its employees with no customers.
These are unprecedented times. Maybe the virus goes away in a couple months, but the economy will be very slow to start back up. I wouldn’t be surprised to see the Dow below 10,000 in the next couple of months.
Among the biggest risks right now is the corporate bank run that appears to be happening. Boeing withdrew their entire revolving credit line yesterday, and Blackstone and other PE firms just told their portfolio companies to do the same.
My guess is the U.S. is headed for a recession but not a depression. I do believe Europe is at a serious risk of depression, however. It's possible the eurozone was already in recession before this. If there's a retraction in globalization (likely IMO) demand may just not come back in many export-heavy European markets. The demographics aren't there to support a consumption-led growth economy, either.
With the negativity out of the way, I think dumping stocks here is a risky trade. The SP500 is about to open down 25%, with many global markets down more. The time to consider a defensive move was weeks ago. In a matter of days, the oil price war could end, interest rates could drop even further, the fed could begin buying ETFs, and the virus growth rate could slow. If that happens, stocks will explode higher in a hurry.
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>no end in sight
I'm about to book plane tickets to Europe for a july vacation. Hopefully getting a hella good deal too.
This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
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This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
The Aztecs would beg to differ. Inca's too. Probably also the Maya's.
And the 20m-40m who died in 1918 of the Spanish Flu, like the Aztecs and Incas before them, would all be dead by now anyways, so what does it really matter?
I know, I know, that's ancient history and history never repeats itself, sometimes it rhymes, etc.
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Possibly.
And the sad part is it'll be totally self inflicted this time.
Assuming we actually believed these measures would stop a pandemic, they're both too late and not extensive enough. We're basically destroying our economy for something that's going to happen regardless of our actions at this point.
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It is all together possible, but didn't have to happen. We (the USA, and by default Trump) didn't take the warnings seriously. The health side of things is scary and sucks, but we will over course get over that, the real risk right now is systemic breakdown of the financial system because of unprecedented lack of demand worldwide. Interesting times!
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Not a depression, no. Talk to your grandparents about what the Great Depression was actually like.
It is a challenge. Some projections suggest 150,000 deaths in the US are possible. But we forget how catastrophic 1929-1932 was. 25% unemployment rate. 33% contraction in GDP.
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Forget depression - it's not even as scary as 2008. It won't get there unless the virus mutates and there is a massive increase in mortality rate or something.
That, however, masks the real problem. The people who will be *really* impacted are those whose jobs can't be done remotely. That is disproportionately the lower income section of the society (it also includes doctors and nurses etc - but they are dwarfed in number by the minimum wage service workers). So this will likely increase the inequality that is already at crisis level.
Secondary effects like these are impossible to handicap, however. Who knows? Maybe there will be a massive infrastructure plan funded by zero interest rate that kickstarts the economy. Maybe americans finally decide to do themselves a favor and move towards a single payer model. A lot of outcomes are possible from second order effects - and precisely 0% of that is predictable in advance.
I don't see any realistic possibility of any systemic risk anywhere. So you don't need to fear that your $$ in our account will suddenly worth nothing or lose a lot of value!
For reference, such an outcome WAS a possibility in 2008 when the money markets broke the buck and the contagion was close to affecting the payments and settlements processes. People who understood the system were shitting in their pants in 2008. No such panic, or any possibility of such a panic is visible to me.
So the mustachian money hoarders should be fine, as long as you don't liquidate before the recovery.
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Ooh I like the idea of a massive infrastructure plan. National high speed rail? Bike freeways and bike bridges? New ferry projects? New green energy projects?
Oil and gas in free fall, fracking becoming less affordable...
These are not bad things.
Time to pivot, world.
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Maybe.
Or maybe not.
Who knows.
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Ooh I like the idea of a massive infrastructure plan. National high speed rail? Bike freeways and bike bridges? New ferry projects? New green energy projects?
Oil and gas in free fall, fracking becoming less affordable...
These are not bad things.
Time to pivot, world.
Only if we build for the future and don't try to conserve the present. Do not forget that the conservatives hold half of the legislature, all of the executive branch and a majority of the judiciary. Already there is talk of bailing out the shale industry, the airlines, the cruise ship companies.
I'm skeptical that a big infrastucture package which might undercut these efforts could gain traction right now.
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Bailing out the shale industry would be a dystopian nightmare.
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Bailing out the shale industry would be a dystopian nightmare.
Dystopian: relating to or denoting an imagined state or society where there is great suffering or injustice.
I agree that bailouts are harmful to our long-term global health and financial well being, but we've been supporting the oil and gas industry for generations, and it's resulted in several of the worlds most valuable companies. It's not dystopian if it's the current reality.
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Eyeroll
It sure doesn't take much to bring out the fearful and the market timers.
The great depression was bad because of systemic problems. The great recession was bad because of systemic problems. This drop is because of a virus that will run its course in a few months up to maybe a year. It has nothing to do with the health of the system in place.
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It's not dystopian if it's the current reality.
Appreciate the perspective. Of course I'm a hypocrite as are we all since we've been benefiting from a petroleum-rich economy. However US is better positioned to pivot than, say, Russia or Saudi Arabia, since we have a more diverse economy.
Been reading stuff that says that oil and gas are already being priced for a limited future thx to Greta and renewables. Of course that is hopeful too.
I know that there's plenty more fossil fuel to pull out of the ground, but more awareness that we shouldn't.
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The great depression was bad because of systemic problems. The great recession was bad because of systemic problems. This drop is because of a virus that will run its course in a few months up to maybe a year. It has nothing to do with the health of the system in place.
Completely agree. I'd add that it's good practice for staying the course in a systemic downtown and also for learning what sort of asset allocation one is comfortable with (i.e. it's easy to be comfortable with 100% stocks until something like this happens).
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The economy basically shutting down
Mohamed Aly El-Erian said something similar, and predicts a -30% drop from the high point:
https://moneyandmarkets.com/mohamed-el-erian-6-things-to-remember-as-markets-could-crater-30-percent/
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Remember people: the stock market is not the economy.
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
There is, but I think it's getting drowned out by a whole slew of newer members who are struggling with how to handle a downturn.
As we aren't planning on touching most of our investments for a decade+, I'm thrilled that I can buy more shares of my index fund each month.
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Maybe.
Or maybe not.
Who knows.
+1
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
Where have you been looking? There are plenty of us.
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This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
The 1918 Flu pandemic lasted two winters. That's the best example that we have.
With that said, in 18 or so months when we have a vaccine I can see a lot of pent up demand. If you keep your job and keep investing you could make a lot of money.
I wouldn't be surprised if we see Dow 13K.
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The funny thing is Chinese markets (FXI) have outperformed US markets (INX). FXI is down only 16% in the past 30d while the S&P is down 25%. Betcha didn’t see that coming!
The verdict is the US has had a weaker leadership response to the crisis. Trump calling the virus a foreigner was the lowest point yet, in terms of confidence inspiring leadership. We are on track to fail.
https://www.marketwatch.com/story/symptomatic-of-the-lack-of-policy-coordination-heres-what-wall-street-analysts-are-saying-about-trumps-speech-2020-03-12?mod=home-page (https://www.marketwatch.com/story/symptomatic-of-the-lack-of-policy-coordination-heres-what-wall-street-analysts-are-saying-about-trumps-speech-2020-03-12?mod=home-page)
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
Where have you been looking? There are plenty of us.
Me investing this week
(https://i.kym-cdn.com/entries/icons/original/000/005/574/takemymoney.jpg)
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Some projections suggest 150,000 deaths in the US are possible.
Not to be grim, but I think that with what we are seeing in Italy and Germany that we can safely say that is off by an order of magnitude. Or to be more specific: I'd bet money that we are going to see at least 1 million deaths in the USA, but less than 10 million.
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
I guess I could celebrate my experiment breaking even during today's trading. I have a tiny profit that could change, so it's not much to celebrate. Most of my portfolio is still taking losses, since it's heavily invested in equities.
I think the people saying it's a good time to buy will create a sort of dead bounce tomorrow - maybe stocks will rise. But next week should reveal that countries just aren't controlling the spread of COVID-19. Will the world's economies shut down for a month?
I'll end on an upbeat note: the U.S. stock market over the past 12 months has a return of about -3%, including today's losses. For a pandemic, that's not bad!
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The 1918 Flu pandemic lasted two winters. That's the best example that we have.
Why is this the best example we have? Simply because the symptoms are "flu like"? On one hand most of teh world did not have access to quality hospital care, there were no respirators, and there was no communication of cases or symptoms across regions or countries. On the other hand we didn't have 5-6MM people flying from place to place every day in 1918.
With that said, in 18 or so months when we have a vaccine I can see a lot of pent up demand.
Again, you are assuming a lot. Maybe we will have an effective vaccine in 18 months, maybe not. Said vaccine could be easy to synthesize and we might be able to roll out several million doses each day. Or it could be finicky as hell and expensive, and we may never have enough to treat teh general public.
We also have zero idea about the long-term efficacy of a future vaccine. For reasons that are largely still unknown, or bodies are very good at prolonged immunity for some strains, but not others.
Some projections suggest 150,000 deaths in the US are possible.
Not to be grim, but I think that with what we are seeing in Italy and Germany that we can safely say that is off by an order of magnitude. Or to be more specific: I'd bet money that we are going to see at least 1 million deaths in the USA, but less than 10 million.
The Resolve to Save Lives ran a number of simulations given what we know (and including the viariance in what we know) - the range of deaths in the US ranged from 327 to 1.6MM. To quote CDC director Tom Frieden: "anyone who says they know where this is going with confidence doesn't know enough about it"
So deaths in the US could be less than a thousand, or it could ultiamtely be more than a million.
I'll end on an upbeat note: the U.S. stock market over the past 12 months has a return of about -3%, including today's losses. For a pandemic, that's not bad!
A good reminder. A drop of 30% from Feb highs (still below where we are today) pushes us all the way back to 2017. An additional 20% from where we are right now ends us equal to June 2016.
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
I guess I could celebrate my experiment breaking even during today's trading. I have a tiny profit that could change, so it's not much to celebrate. Most of my portfolio is still taking losses, since it's heavily invested in equities.
I think the people saying it's a good time to buy will create a sort of dead bounce tomorrow - maybe stocks will rise. But next week should reveal that countries just aren't controlling the spread of COVID-19. Will the world's economies shut down for a month?
I'll end on an upbeat note: the U.S. stock market over the past 12 months has a return of about -3%, including today's losses. For a pandemic, that's not bad!
Markwt ain't closed for today yet...
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This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
The 1918 Flu pandemic lasted two winters. That's the best example that we have.
With that said, in 18 or so months when we have a vaccine I can see a lot of pent up demand. If you keep your job and keep investing you could make a lot of money.
I wouldn't be surprised if we see Dow 13K.
This is nowhere near spanish flu, and that was before planes were invented
With air travel, global spread takes about 3 months
After that, a couple months of worry, then things start to go back to normal while things die down, and it's officially "over" in 12-18 months
https://www.ccohs.ca/oshanswers/diseases/pandemic_flu.html
H1N1 technically took almost 18 months to be "over" but things got back to normal much much faster than that
Ironically, DW and MIL both got H1N1 a few weeks ago in January
This flu strain is not seeming particularly dangerous with the exception of nursing homes, comparing it to the Spanish flu is not really useful
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
Where have you been looking? There are plenty of us.
(https://www.reactiongifs.us/wp-content/uploads/2013/08/dozens_of_us_arrested_development.gif)
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H1N1 technically took almost 18 months to be "over" but things got back to normal much much faster than that
I forgot to mention that. QED. H1N1 was around for two winters, but we had a vaccine by the second winter. I would love to have a SARS-COV-2 vaccine by fall, but I doubt that we will.
EDITed to add - but you think that it will spread faster than that and burn itself out? That's a fair theory, we'll see. Ironically, the better the response, the longer this will take. Of course, the longer it take the more people will live, because we'll have ICU beds for more of them.
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The "Spanish flu" was H1N1. It was catastrophic then, but over time, the human population gets used to pathogens, immunologically speaking. For now, COVID-19 is pretty terrifying, but the mortality rate in children is very low. In time (ie. years to decades), I'm sure it will become just one of the other endemic coronavirus currently in circulation, and since most will encounter it before age 10, we won't hear about it too much.
This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
The 1918 Flu pandemic lasted two winters. That's the best example that we have.
With that said, in 18 or so months when we have a vaccine I can see a lot of pent up demand. If you keep your job and keep investing you could make a lot of money.
I wouldn't be surprised if we see Dow 13K.
This is nowhere near spanish flu, and that was before planes were invented
With air travel, global spread takes about 3 months
After that, a couple months of worry, then things start to go back to normal while things die down, and it's officially "over" in 12-18 months
https://www.ccohs.ca/oshanswers/diseases/pandemic_flu.html
H1N1 technically took almost 18 months to be "over" but things got back to normal much much faster than that
Ironically, DW and MIL both got H1N1 a few weeks ago in January
This flu strain is not seeming particularly dangerous with the exception of nursing homes, comparing it to the Spanish flu is not really useful
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H1N1 technically took almost 18 months to be "over" but things got back to normal much much faster than that
I forgot to mention that. QED. H1N1 was around for two winters, but we had a vaccine by the second winter. I would love to have a SARS-COV-2 vaccine by fall, but I doubt that we will.
EDITed to add - but you think that it will spread faster than that and burn itself out? That's a fair theory. We'll see.
Multiple vaccines are in animal trials, but the pesky "making sure they don't kill people" phase generally takes awhile, many years for normal drugs
My theory is not that I think it will burn itself completely out, but that it burns in and saturates the globe quickly, and once it's permeated people get bored quickly, the news stops hyping it so much, and people unbarricade their doors and that the economic impact of things like supply chains halting, companies sending employees home, and people refusing to fly is what blows over quickly. It's not that it's gone, but my bet is that human nature will have faded it to background noise by summer, particularly for those of us on low information diets.
Only time will tell.
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My theory is not that I think it will burn itself completely out, but that it burns in and saturates the globe quickly, and once it's permeated people get bored quickly, the news stops hyping it so much, and people unbarricade their doors and that the economic impact of things like supply chains halting, companies sending employees home, and people refusing to fly is what blows over quickly. It's not that it's gone, but my bet is that human nature will have faded it to background noise by summer, particularly for those of us on low information diets.
Interesting. I was about to buy plane tickets to Europe until the whole European travel ban was announced. Technically I could still travel there, but I'd be put into quarantine on the way home. Also, I'm not sure that I would be particularly welcome if everyone is busy being in lockdown and mourning their dead.
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
I'm happy to see stocks on sale - even though my net worth has dropped five digits. I've got a 30+ year outlook so this dip is simply that, a temporary dip.
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In answer to the OP's question.
Here is a working definition of an economic depression: A depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts three or more years or leads to a decline in real gross domestic product (GDP) of at least 10 percent.
Using that definition, I think a depression as not only possible but likely. Take a hard look at the measures being taken in other democracies such as Norway and Italy. They're shut down for business. Add in the oil situation in the US, and yeah, I think there's a very good chance of a 10% drop in real GDP.
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The 1918 flu also hit while a world war was underway. Trench warfare, crowded troop transports, poor sanitation ... a war zone is about the worst possible environment for controlling a contagion. Multiply these conditions over most of the globe and you have a recipe for a massive pandemic.
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
Where have you been looking? There are plenty of us.
(https://www.reactiongifs.us/wp-content/uploads/2013/08/dozens_of_us_arrested_development.gif)
At least 10 6 of us!
I think the term I used yesterday was like being a hungry dog let loose in a butcher shop. Stocks are on sale. Yay*.
*(But not enough to interest me just yet.)
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In answer to the OP's question.
Here is a working definition of an economic depression: A depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts three or more years or leads to a decline in real gross domestic product (GDP) of at least 10 percent.
Using that definition, I think a depression as not only possible but likely. Take a hard look at the measures being taken in other democracies such as Norway and Italy. They're shut down for business. Add in the oil situation in the US, and yeah, I think there's a very good chance of a 10% drop in real GDP.
I was reading along with your post thinking for certain you would conclude the opposite. For some perspective, the 'Great Recession' resulted in a real GPD drop of -4.3% back when the economy. Since then the US economy has grown by almost 50%.
Do I think this will result in a GDP drop that was 2.2x greater (as a proportion) or 3x greater (in total dollar amounts) as in 2008?
No I do not.
People today have little comprehension of just how bad a true depression is. 2008 didn't even come close.
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The 1918 flu also hit while a world war was underway. Trench warfare, crowded troop transports, poor sanitation ... a war zone is about the worst possible environment for controlling a contagion. Multiply these conditions over most of the globe and you have a recipe for a massive pandemic.
Keep in mind that most of the worldwide deaths due to Spanish Flu were not in Europe, but in the developing world.
https://en.wikipedia.org/wiki/Spanish_flu (https://en.wikipedia.org/wiki/Spanish_flu)
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The 1918 flu also hit while a world war was underway. Trench warfare, crowded troop transports, poor sanitation ... a war zone is about the worst possible environment for controlling a contagion. Multiply these conditions over most of the globe and you have a recipe for a massive pandemic.
My family was living on a farm in rural North Dakota and got it. Also, bad pandemic response makes things worse (https://www.history.com/this-day-in-history/flu-epidemic-hits-philadelphia). Today's leaders could take note.
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In answer to the OP's question.
Here is a working definition of an economic depression: A depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts three or more years or leads to a decline in real gross domestic product (GDP) of at least 10 percent.
Using that definition, I think a depression as not only possible but likely. Take a hard look at the measures being taken in other democracies such as Norway and Italy. They're shut down for business. Add in the oil situation in the US, and yeah, I think there's a very good chance of a 10% drop in real GDP.
I was reading along with your post thinking for certain you would conclude the opposite. For some perspective, the 'Great Recession' resulted in a real GPD drop of -4.3% back when the economy. Since then the US economy has grown by almost 50%.
Do I think this will result in a GDP drop that was 2.2x greater (as a proportion) or 3x greater (in total dollar amounts) as in 2008?
No I do not.
People today have little comprehension of just how bad a true depression is. 2008 didn't even come close.
I'm going by the definition. Is a 10% real drop in GDP in the cards if the US shuts down ala Italy? I think it is. Even during the GFC, businesses were open, things were still humming along. Shut it all down and that's gonna leave a mark.
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It would not surprise me if we see two quarters down 10% GDP, especially if 2.4% of the population dies.
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...2.4% of the population dies.
Sarcasm?
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...2.4% of the population dies.
Sarcasm?
Germany says up to 70% of their population will be infected. The WHO says the mortality rate is ~3.4%. Do you think that the US response is better than Germany's? You do the math.
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Even if it's 3% fatal, which is IMO dubious, that's almost entirely the least productive members of society.
Without trying to be a jerk about it, old people dying doesn't have that much of an economic impact. They don't consume much or produce much. They tend to not invent useful things or solve new problems.
If this was killing kids and young adults at high rates, it would be time to freak out. But it's not. Keep your grandma away from that pro wrestling event she was so excited about, otherwise keep on investing as normal.
-W
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Germany says up to 70% of their population will be infected. The WHO says the mortality rate is ~3.4%. Do you think that the US response is better than Germany's? You do the math.
Important clarification: WHO says the mortality rate is ~3.4% of reported cases. Many people who experience mild symptoms never go to the doctor and testing was limited in the early weeks. The mortality rate of all cases appears to be about 1%. Which is still plenty big enough to overload our medical system.
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Important clarification: WHO says the mortality rate is ~3.4% of reported cases. Many people who experience mild symptoms never go to the doctor and testing was limited in the early weeks. The mortality rate of all cases appears to be about 1%. Which is still plenty big enough to overload our medical system.
You are welcome to your own interpretation of the data, but South Korea is testing ~20K people to find ~250 cases right now. I think the mortality rate is much higher than 1%.
EDITed to add - rumor has it that they tested almost everyone in Vò, Italy (https://www.wweek.com/news/2020/03/14/three-university-of-oregon-professors-observing-covid-19-in-italy-offer-further-advice-to-oregonians-on-how-to-slow-spread/), If that data were to surface we would know more.
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...2.4% of the population dies.
Sarcasm?
Germany says up to 70% of their population will be infected. The WHO says the mortality rate is ~3.4%. Do you think that the US response is better than Germany's? You do the math.
No they don’t.
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Depression? Nah. Recession? Probably a short one but will hit hard and end fast with steepish rises. While this one makes me a bit itchy, I don't think it'll come close to the Great Recession in 2008.
I think you are right. In 2008, there was systemic issue with the banking industry that took substantial time to work out. This recession (if we get that far) is caused by an external event. Once that event is over, I don't see why things wouldn't return to normal.
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No they don’t.
Which part, specifically, do you disagree with? (https://www.bbc.com/news/world-us-canada-51835856)
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Some projections suggest 150,000 deaths in the US are possible.
Not to be grim, but I think that with what we are seeing in Italy and Germany that we can safely say that is off by an order of magnitude. Or to be more specific: I'd bet money that we are going to see at least 1 million deaths in the USA, but less than 10 million.
I'd take that bet against 1 million+ dying any day and twice on Sunday.
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I'd take that bet against 1 million+ dying any day and twice on Sunday.
I'm willing to wager $240 to your favorite charity, 18 months from now? Because seriously, I don't want to win this bet.
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I'd take that bet against 1 million+ dying any day and twice on Sunday.
I'm willing to wager $240 to your favorite charity, 18 months from now? Because seriously, I don't want to win this bet.
$100 to favorite charity. 1,000,000 Deaths in the USA per this website: https://www.worldometers.info/coronavirus/ , September 12, 2021 end date . I'll set a reminder?
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$100 to favorite charity. 1,000,000 Deaths in the USA per this website: https://www.worldometers.info/coronavirus/ , September 12, 2021 end date . I'll set a reminder?
Assuming that website is still getting updates, absolutely.
Bet on. Fingers crossed that I lose.
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LOL. 3k deaths in *China*, which is an elderly yet poor developing country where tons of people smoke... and you expect a million in the US?
Can I get in on this bet too?
-W
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LOL. 3k deaths in *China*, which is an elderly yet poor developing country where tons of people smoke... and you expect a million in the US?
I've spent time in China. I know how fast the government is willing to react and how far they are willing to go. They also have a population with SARS experience.
Can I get in on this bet too?
Sure thing, I have $140 left to wager.
EDITed to add - I also am a little skeptical of the numbers coming out of China.
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LOL. 3k deaths in *China*, which is an elderly yet poor developing country where tons of people smoke... and you expect a million in the US?
I've spent time in China. I know how fast the government is willing to react and how far they are willing to go. They also have a population with SARs experience.
This^^^ What we American's lack in skill we make up for in confidence. Except our over confidence is going to get people killed this time around. I'm not placing bets on the actual numbers, nor do I think the actual numbers matter that much. It'll take far fewer than 1M deaths to grind our healthcare system to a halt.
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Germany says up to 70% of their population will be infected. The WHO says the mortality rate is ~3.4%. Do you think that the US response is better than Germany's? You do the math.
Important clarification: WHO says the mortality rate is ~3.4% of reported cases. Many people who experience mild symptoms never go to the doctor and testing was limited in the early weeks. The mortality rate of all cases appears to be about 1%. Which is still plenty big enough to overload our medical system.
If it comes to that
Respectfully to Germany, "Up to 70%" is pulled out of thin air
China reported only 19 new cases today, with 80,000 officially recorded and ~500,000 estimated to have occurred
19 cases seems pretty stagnant, and .5M constitutes 0.05% of their population. It could make 10 more waves and still be half a percent *infected*, of which the death rate is again a single digit percentage
And from the very article you are linking
However other German health experts say it is unlikely that two-thirds of Germans will end up getting the coronavirus.
Virologist Alexander Kekulé, a former federal government advisor on disease control, told German media that in the worst case scenario a maximum of 40,000 people in the country would die. He said this estimation was based on the number of cases in China, where the rate of new infections is slowing.
So that guy says she's full of it, and that they should expect 0.048% worst case
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
If we slow the spread more people will live, because more people will have access to ICU beds. The median age for a person in the ICU in Italy is 65 (https://www.youtube.com/watch?v=9mrPHO-nkVE). That means half of them are less than 65. How many people are you willing to kill to keep the economy from grinding to a halt, keeping in mind that those lost souls will also be lost demand and in some cases lost supply?
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
Maybe. But I think this is also good practice for when something truly scary comes around, like a more infectious SARS.
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
How do you explain such disparate nations reacting in exactly the same way, then?
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Remember all those threads way back in the day "what if everyone became frugal"?
I guess this is what happens. This is essentially forced frugality on folks.
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@PDXTabs
How about a beer bet? DW and I make our way down to Oregon every so often. You win I buy and if I win you get the first one?
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@PDXTabs
How about a beer bet? DW and I make our way down to Oregon every so often. You win I buy and if I win you get the first one?
Absolutely.
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This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
The Aztecs would beg to differ. Inca's too. Probably also the Maya's.
And the 20m-40m who died in 1918 of the Spanish Flu, like the Aztecs and Incas before them, would all be dead by now anyways, so what does it really matter?
I know, I know, that's ancient history and history never repeats itself, sometimes it rhymes, etc.
Did you all see Bernie's speech today?? He said he came from a meeting and that to expect casualties as high as Americans had in WW2. There were over 400,000 casualties of Americans in WW2. Definitely not helping the situation.
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
Yes, it is great for those still working on their way to FIRE, but for those who are already FIRED are seeing it drop daily like down $100k after a few weeks. How would you feel?
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It's funny, for years and years and YEARS all we heard about on this board is how "stocks are overpriced!" Now that we've had an actual drop in prices, no one seems to be reacting like "Yay, stocks are on sale". I mean, you people DID want some re-alingment of CAPE, didn't you? Well here it is. I thought you'd all be happy....
Yes, it is great for those still working on their way to FIRE, but for those who are already FIRED are seeing it drop daily like down $100k after a few weeks. How would you feel?
I'm FIRE. Can honestly say that I'm not worried or bothered by what the market is doing.
As part of FIRE I already had a certain percentage of my portfolio in conservative investments to help absorb a stock market panic. So I'm pulling from cash reserves and bond funds instead of equities. With some belt tightening we can do this for about 2 years, maybe longer if we really got aggressive with cost cutting. This will eventually pass and the markets will recover. The losses in the stock market only matter if you sell when things are down.
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I don't want to be a party pooper, but to bring this into perspective, when I was a young lad, this planet had 2.3 billion people living on it. Today, a good 50 years later, it's 7.4 billion. What this planet really needs for long term survival of the human race is not more Teslas and not a flu virus, but a meteor that takes about 4,000,000,000 to their creator, primarily in Africa and South East Asia.
On a related note, every weekend more people get shot to death in Chicago's gang ghettos than die from the Covidvirus nationwide. To predict that a million people in the US will die from it is beyond wacko.
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On a related note, every weekend more people get shot to death in Chicago's gang ghettos than die from the Covidvirus nationwide. To predict that a million people in the US will die from it is beyond wacko.
Careful. We're in the very earlier stages. It takes a while to infect people, and it takes while to die. As more and more people become infected, more and more will die, up to the inflection point.
Now, one million is on the high side of every estimate I've seen, but hundreds of thousands is plausible. Especially based on our government's Keystone Kops approach to dealing with it.
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I don't want to be a party pooper, but to bring this into perspective, when I was a young lad, this planet had 2.3 billion people living on it. Today, a good 50 years later, it's 7.4 billion. What this planet really needs for long term survival of the human race is not more Teslas and not a flu virus, but a meteor that takes about 4,000,000,000 to their creator, primarily in Africa and South East Asia.
On a related note, every weekend more people get shot to death in Chicago's gang ghettos than die from the Covidvirus nationwide. To predict that a million people in the US will die from it is beyond wacko.
Based on per capita energy usage per country, I would say that the world would be better off if said meteor hit the wealthy western countries: https://en.wikipedia.org/wiki/List_of_countries_by_energy_consumption_per_capita#/media/File:World_Map_-_Energy_Use_2013.png
However, I don't wish for the death of anyone anywhere and find this abhorrent, so...
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I noticed today that the CDC's own worst case US death count is 1.7 million (https://www.nytimes.com/2020/03/13/us/coronavirus-deaths-estimate.html). I'm not saying that is a likely outcome, but it's in their ballpark of reasonable.
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I don't think COVID-19 by itself will cause a recession. A month or two of collapsing aggregate demand might.
When an entire planet decides to stay home from vacations, restaurants, shopping, entertainment venues, business travel, etc. - even if just for a couple of weeks - that puts a dent in growth, which had been trending to be flat anyway. If consumer spending drops just 5% for just 2 months, let's just all agree that's a guaranteed recession. Take a look at Mint or Personal Capital and ask yourself how your spending is doing over the last week or two?
We have yet to see bankruptcies and downgrades from the bloated junk bond and B rated bond markets. According to my search screen, these include a lot of retailers and oil related companies that have only been kept afloat by the continued availability of cheap liquidity. They may now be unable to refinance or have their revolving credit revoked as earnings fall below covenant levels. A few defaults could drive a devaluation of low-grade bonds that could expand deeper into investment grade and cause a liquidity crisis to rival the mortgage bust of 2007-8.
If you disagree with my bond concerns, Royal Caribbean bonds (CUSIP: 780153AU6) now yield 10% and are technically still investment grade. Go for it!
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There is no question in my mind we are headed for a recession. In Seattle, already many restaurants have closed and the staff laid off. Hotel bookings are way down. Airplanes sit idle. Those companies will be laying off soon. Companies that service those companies will be laying off after that. European countries are going into lockdown which will crater their economies. That will affect our companies who do business over there.
The good news is that AFAIK, unlike 2008 there is nothing systemically wrong with the economy, so I would expect a fast recovery.
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There is no question in my mind we are headed for a recession. In Seattle, already many restaurants have closed and the staff laid off. Hotel bookings are way down. Airplanes sit idle. Those companies will be laying off soon. Companies that service those companies will be laying off after that. European countries are going into lockdown which will crater their economies. That will affect our companies who do business over there.
Economies shutting down are unprecedented.
What you describe is exactly the kind of chain reaction I foresee happening throughout the economy.
My wife is an audiologist who sells hearing aids and does hearing tests at a doctors office. Most of the front desk staff and nursing assistants make at most $12-13 per hour and live paycheck to paycheck in a HCOL area. The doctors schedules are getting a large number of cancellations as any type of elective appointment no one wants to come in for. My wife sends a lot of hearing aids for repair, but that stopped a couple weeks ago as no parts from China means can’t do the repair at the repair facility in the US.
One staff members daughters boyfriend has tested positive for the virus. The daughter lives with the staff member. The doctors told the staff member to go home for two weeks. Lucky for her, she is the biller and probably the only one who can work from home.
However, with a declining patient load, and lower associated revenue to cover the business expenses, all staff will likely soon be working fewer hours. This won’t matter for my wife and I, we could be FIREd but don’t mind our jobs. But it is a big deal to the other staff. If anyone has to isolate at home, the business manager says it will be without pay ... the small doctors office can’t afford extra sick pay at a time when business is way down.
Beyond that, I see all the schools and park districts around me closed and will be refunding all classes. Fees used to fund coaches and instructors won’t be getting paid, so the coaches and instructors won’t be paid. Another example of people not getting paid.
My wife and I have tickets to a theatre near our house and see 5 plays per year. They are closed through May 1. The shows are pushed out. In the interim, I’m guessing the actors, actresses, and crews won’t be paid.
Restaurant business is seeing a huge drop. Owners will need to slash schedules and pay to whatever demand they have. They will be ordering less food from their suppliers. Fewer trucks needed for delivery. One domino after another.
At what point do we see a massively reduced flight schedule? No one is traveling. Pilots, baggage crew, maintenance crews, flight control, airport restaurants, etc will be furloughed.
All schools are closed. Day care facilities closed. People at my place of employment (BigTechCo) are going to have to stay home with the kids. BigTechCo probably isn’t going to offer to pay BigTechCo salary rate extra sick pay. Then BigTechCo has a problem getting all of its work done and meeting project deadlines. Not sure where this goes. Does BigTechCo cut back on projects and lay people off?
In the next few weeks, I think we are going to see a huge drop in demand and a huge drop in GDP. Small businesses going bankrupt. Liquidity problems. Massive further drop in the stock market. Things may start getting better later this year, if we are able to get the virus under control. People are returning to work in China, the virus is improving, but will a relapse be avoided?
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I think the megacap tech companies (GOOG, AAPL, MSFT, AMZN) are going to make out like bandits in this.
1) They have the capital to last any downturn
2) A lot (or all) of their services can be used and be paid for without actually going to a particular place - demand is actually increasing for various WFH software services
3) Their mid-tier and lower competition doesn't have 1) so they can be bought on the cheap or go bankrupt
4) They can cut costs by not having as generous raises/perks/etc.
All of that being said... I'm still just doing my usual indexing per my plan.
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When we were in quarantine we went days without making a purchase; typically I can’t go 24 hours without some type of transaction.
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Not a depression, no. Talk to your grandparents about what the Great Depression was actually like.
It is a challenge. Some projections suggest 150,000 deaths in the US are possible. But we forget how catastrophic 1929-1932 was. 25% unemployment rate. 33% contraction in GDP.
I will be shocked if we only have 150,000 direct coronavirus deaths in the USA.
Don't forget - when the hospitals are swamped with coronavirus cases, they can't treat the patients from usual car wrecks, heart attacks, strokes, cancer, etc.
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The good news is that AFAIK, unlike 2008 there is nothing systemically wrong with the economy, so I would expect a fast recovery.
https://www.marketwatch.com/story/why-the-record-12-trillion-pile-of-junk-rated-debt-coming-due-is-a-worry-2020-01-24 (https://www.marketwatch.com/story/why-the-record-12-trillion-pile-of-junk-rated-debt-coming-due-is-a-worry-2020-01-24)
https://www.marketwatch.com/story/half-of-investment-grade-bonds-are-only-one-step-away-from-junk-status-2019-01-07 (https://www.marketwatch.com/story/half-of-investment-grade-bonds-are-only-one-step-away-from-junk-status-2019-01-07)
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I agree that if you are just now deciding to sell, you are a fool. You already missed the train to safety. At this point you might as well just ride it out.
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I've been invested in the market continuously since 2001 and as such have lived through multiple cycles. In every single up turn the exact same thing happens: overconfidence, people bragging about how well their investments are doing...everyone is an investing genius when a rising tide lifts all boats. Then suddenly the mood changes: doom and gloom, new normal (remember that one), things will never recover this time.
In 2001 I graduated with a CS degree into a moribund tech economy. It was fashionable at the time to claim Software Engineering was a dying profession because all the jobs were being outsourced. This wasn't the view of a few cranks, it was the consensus opinion among all the talking heads. Am I ever glad I ignored all this and instead pressed on with my career!
My point is that people are idiots. I'm an idiot, and so are you. We are idiots because we all concoct coherent yet false stories based mostly on emotion, and we cherry pick data to confirm our biases. Your only hope is to remove emotion from the equation by being a principled investor based on the only method demonstrated to work long term: buy and hold passive index investing.
Anyone thinking they (or others) are fools for not selling earlier doesn't understand the fundamentals of investing. If you're stressed and worried about what's going on right now this tells me that you had an inappropriate asset allocation, either because you weren't honest with yourself about your risk tolerance and/or you incorrectly assessed your investment horizon.
I'll kindly suggest that such folks should not be in the market. It's not worth the stress, and you'll do better saving in CDs and other safe investments vs. buying high when you're full of confidence followed by selling in a panic. Better yet, read up on how to invest for the long term and follow your plan without worrying about all the noise.
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Imperial College says that 1.1 million dead (https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf) in the USA is the best case. Unmitigated is double that.
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
That's sad and selfish. You don't care about older people dying and suffering because it hurts your stash. I say, grind everything to a halt. Yes, this is devastating and crippling to the economy and will be a long and depressing recession or depression. But I think things will start looking better in several years. Keep investing and don't cry about today's temporary losses.
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
That's sad and selfish. You don't care about older people dying and suffering because it hurts your stash. I say, grind everything to a halt. Yes, this is devastating and crippling to the economy and will be a long and depressing recession or depression. But I think things will start looking better in several years. Keep investing and don't cry about today's temporary losses.
The time will come when we will have to confront the possibility our attempts at containment have failed and the virus is circulating out of control in all communities. The social distancing measures will have done whatever good they can do flattening the curve, and a few million people will have already recovered and developed immunity. When that point comes, there will be a nasty debate between those who want to lift social distancing and avoid a depression and those who want to save lives by continuing the social distancing measures. Of course, poverty kills people all the time, particularly in the U.S, so it's something of an academic exercise to ask which will kill more people - the virus or the depression.
Of course, best case scenario is a vaccine or treatment is developed during this time we're buying right now. For that reason the social isolation measures should go on. But the pressure to reopen businesses and schools is about to get very real. Losing one's stash is one thing - mass homelessness looms for the majority of Americans who live paycheck to paycheck. Yet the elderly are the ones who vote. The fight will get nasty.
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
That's sad and selfish. You don't care about older people dying and suffering because it hurts your stash. I say, grind everything to a halt. Yes, this is devastating and crippling to the economy and will be a long and depressing recession or depression. But I think things will start looking better in several years. Keep investing and don't cry about today's temporary losses.
The time will come when we will have to confront the possibility our attempts at containment have failed and the virus is circulating out of control in all communities. The social distancing measures will have done whatever good they can do flattening the curve, and a few million people will have already recovered and developed immunity. When that point comes, there will be a nasty debate between those who want to lift social distancing and avoid a depression and those who want to save lives by continuing the social distancing measures. Of course, poverty kills people all the time, particularly in the U.S, so it's something of an academic exercise to ask which will kill more people - the virus or the depression.
Of course, best case scenario is a vaccine or treatment is developed during this time we're buying right now. For that reason the social isolation measures should go on. But the pressure to reopen businesses and schools is about to get very real. Losing one's stash is one thing - mass homelessness looms for the majority of Americans who live paycheck to paycheck. Yet the elderly are the ones who vote. The fight will get nasty.
Things will change eventually, but now is not that time. Too many people complain that this is an overreaction. Based on the modeling, it's actually a late reaction. The main thing is to slow the spread so that the healthcare industry isn't overwhelmed with massive numbers of patients at the same time, like in Italy. We will have a better idea once the SHTF.
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UK response is interesting
Basically tell the old to lockdown hard, and let the young work through it like the common cold, minimizing economic impact
Looks like they may be walking it back though
Time will tell if it backfires for them majorly
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
That's sad and selfish. You don't care about older people dying and suffering because it hurts your stash. I say, grind everything to a halt. Yes, this is devastating and crippling to the economy and will be a long and depressing recession or depression. But I think things will start looking better in several years. Keep investing and don't cry about today's temporary losses.
The time will come when we will have to confront the possibility our attempts at containment have failed and the virus is circulating out of control in all communities. The social distancing measures will have done whatever good they can do flattening the curve, and a few million people will have already recovered and developed immunity. When that point comes, there will be a nasty debate between those who want to lift social distancing and avoid a depression and those who want to save lives by continuing the social distancing measures. Of course, poverty kills people all the time, particularly in the U.S, so it's something of an academic exercise to ask which will kill more people - the virus or the depression.
Of course, best case scenario is a vaccine or treatment is developed during this time we're buying right now. For that reason the social isolation measures should go on. But the pressure to reopen businesses and schools is about to get very real. Losing one's stash is one thing - mass homelessness looms for the majority of Americans who live paycheck to paycheck. Yet the elderly are the ones who vote. The fight will get nasty.
Things will change eventually, but now is not that time. Too many people complain that this is an overreaction. Based on the modeling, it's actually a late reaction. The main thing is to slow the spread so that the healthcare industry isn't overwhelmed with massive numbers of patients at the same time, like in Italy. We will have a better idea once the SHTF.
True. I think the timing of this debate will have implications for whether we get a recession or a depression.
However, even this may be optimistic. Really there are no good options from an economic POV:
-Throw everything at slowing the virus and you get a depression, but maybe beat the virus.
-Admit defeat and try to save the economy, and you get the economic losses of lots of dead/sick people which might by itself cause a depression.
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Consider who went to prison for the 2008 financial crisis? One guy, maybe. Fraud and theft everywhere - but it was only money. But murder can carry a life sentence, because there's a much higher value placed on life than on money.
So countries that place their economies above saving lives are going to be tested, hard. I don't see how politicians will be able to remain in power as the death toll rises higher and higher. At the very least, people will become more isolated out of fear, even if the government doesn't order a lock down. I have doubts that any country will hold firm with a herd immunity approach as the pressure mounts.
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Imperial College says that 1.1 million dead (https://www.imperial.ac.uk/media/imperial-college/medicine/sph/ide/gida-fellowships/Imperial-College-COVID19-NPI-modelling-16-03-2020.pdf) in the USA is the best case. Unmitigated is double that.
Across what kind of timeline? 1.1 million deaths over 1 year? 10 years? 100 years?
Data from the WHO's most recent update ( https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports) indicates that globally there have been 179,111 confirmed cases, with 7426 deaths attributed to this virus. So across all of the various situations and demographics in humanity, the mortality rate is 4.1% of those infected being killed.
If your concern is that not enough people have been tested, then that likely increases the number of cases more than the number of deaths because they're only testing the most obvious or likely cases at the moment. If you have minimal symptoms you may have COVID-19, but you're probably not getting tested, and you're definitely not dying from it. That means the actual mortality rate is likely to be much lower than what the current data reflects.
But, if we use the WHO's 4.1% mortality rate as a constant moving forward for the US (possibly dubious), that would mean that we'd have to have over 26.8 million confirmed cases to see your 1.1million deaths estimate. That would be about 8% of the US population contracting the virus. Is there any country on Earth that's even seeing 1% of the total population contracting this yet? How long would it take for the US to see 8% of the population contract this?
Using the same WHO data, there have been 3503 confirmed cases with 58 deaths in the US. That's a mortality rate of 1.6% to this point in the US (Obviously it's currently a limited data set). But the point is that many countries have done a lot less preparation, and have worse health care systems. They're dragging the mortality rate up, while the US is likely to drag it down.
If the current mortality rate in the US continues, then it would mean 68.75 million cases of COVID-19 would have to occur to see 1.1 million deaths from it. That's roughly 20% of the US population. It's going to take more than a couple of months to go from the current 3k cases to almost 69 million cases in the current environment.
Edit: I read the report. It's basically a study on Herd Immunity vs complete Social Distancing. Their estimate of 1.1 million deaths is for a 2 year time period using what they call the "mitigation" strategy, which sounds like the "herd immunity" approach they were planning on in the UK. They're defining mitigation as- "combining home isolation of suspect cases, home quarantine of those living in the same household as suspect cases, and social distancing of the elderly and others at most risk of severe disease."
Their alternative strategy is being called "suppression" defined as "suppression will minimally require a combination of social distancing of the entire population, home isolation of cases and household quarantine of their family members. This may need to be supplemented by school and university closures"
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As for the economic impacts of the current situation, I find comparisons to 2008 a bit apples to oranges. 2008 started with Wall St and impacted Main St. It was a mess, but life went on for the average person, even if there was more financial stress.
What we're seeing now is more or less working the opposite direction. Wall St is reacting to Main street not just slowing down, but shutting down almost entirely. And it's not just the US either. It's the entire developed world retreating to their homes at the same time. Commerce has mostly stopped completely, and they're still shutting things down. It hasn't bottomed out yet.
I'm not one to make predictions, but I do think this will have very severe economic impacts that will take a few years to recover from.
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This is a case of a cure being worse than the disease.The virus doesn't scare me, 1-3% mortality, mainly the old and sick. Our economy is grinding to a halt based on that. The sky is falling mentality will kill us not the virus. We have been raised so long on doom and gloom, armageddon around the corner, that we jumped the shark.
That's sad and selfish. You don't care about older people dying and suffering because it hurts your stash. I say, grind everything to a halt. Yes, this is devastating and crippling to the economy and will be a long and depressing recession or depression. But I think things will start looking better in several years. Keep investing and don't cry about today's temporary losses.
And if more people die from the repercussions of cratering the economy?
This is pretty unprecedented right now. We've got entire cities shutting down for an indefinite period of time.
They were talking about how "store shelves will still be stocked." But will they? You shut down all schools and daycares, so now people have to make the decision to take care of their children or go to work. So the factories that produce the products on the shelves stop showing up. Eventually, the entire economy grinds to a halt. And without people producing ANYTHING because we've shut it all down, people will die.
We've reached the point where the solution is way worse than the problem.
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Using the same WHO data, there have been 3503 confirmed cases with 58 deaths in the US. That's a mortality rate of 1.6% to this point in the US (Obviously it's currently a limited data set). But the point is that many countries have done a lot less preparation, and have worse health care systems. They're dragging the mortality rate up, while the US is likely to drag it down.
If the current mortality rate in the US continues, then it would mean 68.75 million cases of COVID-19 would have to occur to see 1.1 million deaths from it. That's roughly 20% of the US population. It's going to take more than a couple of months to go from the current 3k cases to almost 69 million cases in the current environment.
Update for today: US has 6519 confirmed cases and 115 deaths.
Keep in mind that death is a seriously lagging indicator. It's 24 days from infection to half of the deaths (median time to death)
https://covid19info.live/
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I'd like to understand from those who think high death tolls are ridiculous where that notion comes from?
I'm a computer programmer, not a doctor and certainly not an infectious disease expert. So all I can do in a situation like this is try to parse the information from those most likely to have the answers. And admittedly, most of these people still seem to be saying "there's a lot we don't know at this point". But here are the numbers I have seen:
40-70% of global population gets the virus at some point
4% of those infected will die
Now let's say I'm a super skeptic and I take their lowest number of 40% and still say no way, it'll only be a quarter of that. Fine, 10% of the world gets it. And let's say I do the same and assert at most 1% mortality rate. We're still talking about 7.7M deaths worldwide. 327K deaths in the US. And this "optimistically low" number is based on absolutely nothing. A gut feeling put up against the world's expert's best guesses. I don't get that. If the US casualties of 100 9/11s hang in the balance, is it not wise to error on the side of caution?
I think we could all use some good news and some reason to think this will be less severe than we fear, so I'd love to see some credible information that suggests this could be the case.
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Using the same WHO data, there have been 3503 confirmed cases with 58 deaths in the US. That's a mortality rate of 1.6% to this point in the US (Obviously it's currently a limited data set). But the point is that many countries have done a lot less preparation, and have worse health care systems. They're dragging the mortality rate up, while the US is likely to drag it down.
If the current mortality rate in the US continues, then it would mean 68.75 million cases of COVID-19 would have to occur to see 1.1 million deaths from it. That's roughly 20% of the US population. It's going to take more than a couple of months to go from the current 3k cases to almost 69 million cases in the current environment.
Update for today: US has 6519 confirmed cases and 115 deaths.
Keep in mind that death is a seriously lagging indicator. It's 24 days from infection to half of the deaths (median time to death)
https://covid19info.live/
I've intentionally only used data from the WHO as it's generally a trusted source, and their data represents the whole globe.
The downside is that their data lags as it's based on the previous day's numbers. Obviously, the numbers for both cases and deaths are likely to climb and do so quickly at this point as testing becomes more widespread and results are compiled. The promising thing with the data you presented is that he mortality rate is still just 1.7%
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I look at the semi-log plots on the wiki article for covid-19 and you'd have to extrapolate the current trend for months before the death toll gets into the 7 figures. I don't think the virus transmission is going to spread for months because in a matter of 2 weeks the world has gone from "lax" to "full shut down mode" and I think that will stop the rate of transmission.
Moreover, I'm extremely sceptical of figures such as 40-70% of the world's population likely to be infected, etc. I don't believe that's the 50th percentile (EV) at all. I believe that's probably a very high band, maybe a 90-99th percentile figure. I don't trust health authorities to give us a proper 50% percentile EV at all. I believe public health authorities are always skewed towards prevention (since prevention is better than cure) so they will tend to provide figures that err heavily on the side of safety - they are not likely to provide figures that represent the true EV.
This is on the basis that people's lives are not a lottery or gambling chart. Fine. All the same, it means that I think those high estimates are unlikely.
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I'd like to understand from those who think high death tolls are ridiculous where that notion comes from?
I'm a computer programmer, not a doctor and certainly not an infectious disease expert. So all I can do in a situation like this is try to parse the information from those most likely to have the answers. And admittedly, most of these people still seem to be saying "there's a lot we don't know at this point". But here are the numbers I have seen:
40-70% of global population gets the virus at some point
4% of those infected will die
Now let's say I'm a super skeptic and I take their lowest number of 40% and still say no way, it'll only be a quarter of that. Fine, 10% of the world gets it. And let's say I do the same and assert at most 1% mortality rate. We're still talking about 7.7M deaths worldwide. 327K deaths in the US. And this "optimistically low" number is based on absolutely nothing. A gut feeling put up against the world's expert's best guesses. I don't get that. If the US casualties of 100 9/11s hang in the balance, is it not wise to error on the side of caution?
I think we could all use some good news and some reason to think this will be less severe than we fear, so I'd love to see some credible information that suggests this could be the case.
I think it comes down to trying to determine what's realistic, and what's sensationalized. Hearing 4% mortality rate, or that millions will likely die from this virus is scary shit, and automatically makes people assume the worst. Panic isn't productive though. Lets try to understand as much about the situation as possible and base our decision making on what's most likely for our situation.
4% mortality rate across the globe does not mean 4% mortality rate for every country, or every demographic. Countries with older populations are likely to be worse off. Countries with worse medical care, or more dense population are likely to struggle than others, etc. The distribution of cases and deaths will vary.
The current mortality rate in the US is around 1.6-1.7%. In most first world countries, that are taking actions similar to what is occurring in the US, the mortality rate has been below 3%, and I'd wager that it's lower than that in reality as there are likely many infected people that have minor enough symptoms that they don't get tested and registered officially as having this virus. The second thing to consider is the timeline. It's not like 100% of the population will get this virus in the next couple of months. We don't even have a country with just 1% of the population infected at this time. That kind of infiltration takes years or decades with no progress on a vaccine, no natural immunity development, etc.
I'm not trying to dismiss this. I think this is a serious virus, and it's certainly widespread. But as a young, healthy American my odds of surviving are pretty good. I'm taking the necessary precautions of course to be a good neighbor and citizen but I think a lot of the numbers thrown around are highly unlikely thanks to measures being taken. Fear often comes from a lack of understanding, and I think we should try to understand the actual numbers and odds as well as we can so that we can make educated choices rather than emotional ones.
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4% mortality rate across the globe does not mean 4% mortality rate for every country, or every demographic. Countries with older populations are likely to be worse off. Countries with worse medical care, or more dense population are likely to struggle than others, etc. The distribution of cases and deaths will vary.
Right, but in the US having a great healthcare system does not imply having a healthy population. We've got massive amounts of obese people with chronic illnesses. The coasts are the first to be getting hit with the virus and I'd argue they are generally the healthiest parts of the country. Here in the midwest, where people need motorized carts to roll around wal-mart, I wouldn't be surprised to see the mortality rates trend higher than what we've seen so far. And again, my numbers were based on a 1% mortality rate. And a 10% spread. 16x less than the lowest numbers the experts are putting out. And it still put us at over a quarter million dead.
It's not like 100% of the population will get this virus in the next couple of months. We don't even have a country with just 1% of the population infected at this time. That kind of infiltration takes years or decades with no progress on a vaccine, no natural immunity development, etc.
What is that statement based on? The CDC says that between 9M and 45M Americans get the flu each year. So why can't COVID spread to 30M people in one season?
Fear often comes from a lack of understanding, and I think we should try to understand the actual numbers and odds as well as we can so that we can make educated choices rather than emotional ones.
Precisely, agree 100%. But how is an educated choice made based on things that one 'believes' or 'feels' even when they contradict actual projections from experts in the field? That is what I'm struggling to understand.
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And if more people die from the repercussions of cratering the economy?
Where do you live? What sort of failed state do you think the USA is? Even in the Great Depression life expectancy went up (https://www.sciencedaily.com/releases/2009/09/090928172530.htm).
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What is that statement based on? The CDC says that between 9M and 45M Americans get the flu each year. So why can't COVID spread to 30M people in one season?
And we're really talking about two flu seasons, right? 18 months more of this, another full winter?
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And if more people die from the repercussions of cratering the economy?
Where do you live? What sort of failed state do you think the USA is? Even in the Great Depression life expectancy went up (https://www.sciencedaily.com/releases/2009/09/090928172530.htm).
Sadly, I think we'll see the suicide rate go up, especially among older working-age males. It's already been increasing, so now with more jobs disappearing it's almost inevitable.
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And if more people die from the repercussions of cratering the economy?
Where do you live? What sort of failed state do you think the USA is? Even in the Great Depression life expectancy went up (https://www.sciencedaily.com/releases/2009/09/090928172530.htm).
The US has a much grayer population now than in the 30s, and people are more dependent upon medications with worldwide supply chains. Consider the effects if people can't afford or can't find insulin, antidepressants, thyroid hormones, various heart meds, cancer drugs, etc.
When our politicians say "lock down the borders" that sounds smart, but the secondary impact is pharmacies will start running low.
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When our politicians say "lock down the borders" that sounds smart, but the secondary impact is pharmacies will start running low.
Absolutely. The WHO says to never close borders for exactly this reason. But that doesn't mean that you need bars, sporting events, and concerts.
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When our politicians say "lock down the borders" that sounds smart, but the secondary impact is pharmacies will start running low.
Absolutely. The WHO says to never close borders for exactly this reason. But that doesn't mean that you need bars, sporting events, and concerts.
Doesn't border closings exempt important things like medicine, etc? It seems everything I've read indicate that it does not impede the flow of commerce / goods, just non-essential travel.
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The good news is that AFAIK, unlike 2008 there is nothing systemically wrong with the economy, so I would expect a fast recovery.
https://www.marketwatch.com/story/why-the-record-12-trillion-pile-of-junk-rated-debt-coming-due-is-a-worry-2020-01-24 (https://www.marketwatch.com/story/why-the-record-12-trillion-pile-of-junk-rated-debt-coming-due-is-a-worry-2020-01-24)
https://www.marketwatch.com/story/half-of-investment-grade-bonds-are-only-one-step-away-from-junk-status-2019-01-07 (https://www.marketwatch.com/story/half-of-investment-grade-bonds-are-only-one-step-away-from-junk-status-2019-01-07)
There is an old saying (Warren Buffett, I think) "When the tide goes out, you can see who is swimming naked." No question a lot of people will get hammered by this.
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And if more people die from the repercussions of cratering the economy?
Where do you live? What sort of failed state do you think the USA is? Even in the Great Depression life expectancy went up (https://www.sciencedaily.com/releases/2009/09/090928172530.htm).
Life expectancy has gone down the past few years (https://www.reuters.com/article/us-health-life-expectancy/us-life-expectancy-declining-due-to-more-deaths-in-middle-age-idUSKBN1Y02C7), suicide, substance abuse and poor health in general are thought to be the cause.
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Right, but in the US having a great healthcare system does not imply having a healthy population. We've got massive amounts of obese people with chronic illnesses. The coasts are the first to be getting hit with the virus and I'd argue they are generally the healthiest parts of the country. Here in the midwest, where people need motorized carts to roll around wal-mart, I wouldn't be surprised to see the mortality rates trend higher than what we've seen so far. And again, my numbers were based on a 1% mortality rate. And a 10% spread. 16x less than the lowest numbers the experts are putting out. And it still put us at over a quarter million dead.
A quarter million dead in what time frame? 6 months? 2 years? 10 years? A lot of these studies and estimates offer timelines of several years, but only the total number of deaths is highlighted, which causes panic and leads people to jump to conclusions. There's a big difference between 250k deaths in 6 months and 250k deaths in 10 years once the virus has actually impacted 100% of the population.
It could just as easily be speculated that the denser population and worse air quality in urban areas will put city dwellers more at-risk for transmission and serious impacts of the virus. Nobody really knows how it will work out.
What is that statement based on? The CDC says that between 9M and 45M Americans get the flu each year. So why can't COVID spread to 30M people in one season?
Tons of people get the flu because we generally don't take any precautions to lessen the impact. Some people get a flu shot that varies in effectiveness each year, and that's pretty much it. Nothing gets shut down for the flu. Schools, workplaces, large gatherings, etc all go on as normal. COVID could probably infect millions of people if nothing were done to curtail it but that's not what's happening.
Precisely, agree 100%. But how is an educated choice made based on things that one 'believes' or 'feels' even when they contradict actual projections from experts in the field? That is what I'm struggling to understand.
I'm not basing it on what I 'feel', I'm looking at reputable data collected thus far from around the globe, and extrapolating that data for the US population. I don't think that's emotional. The reason it's so different from what many experts are predicting is that I'm working with a historical timeline of a few months at the longest, based on what the virus has actually done, while many of the predictions from the experts are using timelines of years into the future, and assuming that nothing will improve during that time.
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A quarter million dead in what time frame? 6 months? 2 years? 10 years? A lot of these studies and estimates offer timelines of several years, but only the total number of deaths is highlighted, which causes panic and leads people to jump to conclusions. There's a big difference between 250k deaths in 6 months and 250k deaths in 10 years once the virus has actually impacted 100% of the population.
I'm not sure why 2-10 year timelines are even coming up. The flu spreads everywhere in 1 season. Nobody is catching 2013's flu this month, it's all the new flu.
Tons of people get the flu because we generally don't take any precautions to lessen the impact. Some people get a flu shot that varies in effectiveness each year, and that's pretty much it. Nothing gets shut down for the flu. Schools, workplaces, large gatherings, etc all go on as normal. COVID could probably infect millions of people if nothing were done to curtail it but that's not what's happening.
But COVID is more contagious. R-0 on the flu is around 1. R-0 on COVID is thought to be 2.5 - 3.0. So it is possible that even with social distancing methods it still spreads everywhere in <= 1 year. The extreme steps we are taking are to ensure it doesn't spread everywhere in <= 1 month.
I'm not basing it on what I 'feel', I'm looking at reputable data collected thus far from around the globe, and extrapolating that data for the US population. I don't think that's emotional. The reason it's so different from what many experts are predicting is that I'm working with a historical timeline of a few months at the longest, based on what the virus has actually done, while many of the predictions from the experts are using timelines of years into the future, and assuming that nothing will improve during that time.
If you could link some of that reputable data that would be great. Particularly any analysis of the raw numbers. We are looking at the beginning of potentially exponential curves right now, and I'm not sure how you'd look at the yellow trace in this graph and think "yeah, this will take 10 years to spread"...
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Life expectancy has gone down the past few years (https://www.reuters.com/article/us-health-life-expectancy/us-life-expectancy-declining-due-to-more-deaths-in-middle-age-idUSKBN1Y02C7), suicide, substance abuse and poor health in general are thought to be the cause.
Yes, I was half-joking about the failed state status. But as Abba Eban once said, "[m]en and nations behave wisely when they have exhausted all other resources." We might be getting close to some wise behavior.
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I've gotten my data throughout this situation from the WHO's situation reports:
https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports
(Sorry, they're PDFs)
It covers total populations, number of cases, number of deaths, as well as new cases/deaths.
To date, China has been the most affected country. The first known case of COVID was reported in mid-November 2019:
https://www.theguardian.com/world/2020/mar/13/first-covid-19-case-happened-in-november-china-government-records-show-report
It had gotten bad enough to lock down Wuhan by Jan 23, 2020. That's 2 months for a respiratory virus to spread in a part of the country with poor air quality, a large percentage of smokers, and dense population. The outbreak peaked in mid Feb while on lockdown. To date, they've had 81116 known cases and 3231 deaths in a total Chinese population of 1.38 Billion people. That's 3.9% mortality among cases, but it's also just 0.0058% of the total population contracting the virus.
So, after being caught completely off guard by a brand new virus, and giving that virus a 2 month head start before lockdown, the Chinese still didn't even get to 0.1% of the total population being infected. It's important to note that the lockdown continues in Wuhan, but the virus is barely spreading at all anymore as you can see from the WHO data I linked. They're averaging under 50 new cases per day.
Also, I think your R0 estimate of 2.5-3 is a bit high based on the infected cruise ship they studied:
https://www.ijidonline.com/article/S1201-9712(20)30091-6/fulltext
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There is some great news come out of France that HYDROXYCHLOROQUINE AND AZITHROMYCIN can be used as a treatment for patients, curing them in 6 days.
https://www.mediterranee-infection.com/hydroxychloroquine-and-azithromycin-as-a-treatment-of-covid-19/
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Also, I think your R0 estimate of 2.5-3 is a bit high based on the infected cruise ship they studied:
https://www.ijidonline.com/article/S1201-9712(20)30091-6/fulltext
Well let's be clear, none of these are "my" estimates. I'm in no position to make such claims. This Oxford review of many studies came up with a mean value of 3.28 and a median of 2.78. I have seen others suggest as low as 2.25. But the important point is no matter where it is in this range (and it's probably silly to think we can nail it with enough precision to even be talking about decimal point values at this time), it's significantly above the 1.0 of the flu, no?
https://academic.oup.com/jtm/article/27/2/taaa021/5735319
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Using the same WHO data, there have been 3503 confirmed cases with 58 deaths in the US. That's a mortality rate of 1.6% to this point in the US (Obviously it's currently a limited data set). But the point is that many countries have done a lot less preparation, and have worse health care systems. They're dragging the mortality rate up, while the US is likely to drag it down.
If the current mortality rate in the US continues, then it would mean 68.75 million cases of COVID-19 would have to occur to see 1.1 million deaths from it. That's roughly 20% of the US population. It's going to take more than a couple of months to go from the current 3k cases to almost 69 million cases in the current environment.
Update for today: US has 6519 confirmed cases and 115 deaths.
Keep in mind that death is a seriously lagging indicator. It's 24 days from infection to half of the deaths (median time to death)
https://covid19info.live/
I've intentionally only used data from the WHO as it's generally a trusted source, and their data represents the whole globe.
The downside is that their data lags as it's based on the previous day's numbers. Obviously, the numbers for both cases and deaths are likely to climb and do so quickly at this point as testing becomes more widespread and results are compiled. The promising thing with the data you presented is that he mortality rate is still just 1.7%
Have a look at the second sentence.
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Also, I think your R0 estimate of 2.5-3 is a bit high based on the infected cruise ship they studied:
https://www.ijidonline.com/article/S1201-9712(20)30091-6/fulltext
Well let's be clear, none of these are "my" estimates. I'm in no position to make such claims. This Oxford review of many studies came up with a mean value of 3.28 and a median of 2.78. I have seen others suggest as low as 2.25. But the important point is no matter where it is in this range (and it's probably silly to think we can nail it with enough precision to even be talking about decimal point values at this time), it's significantly above the 1.0 of the flu, no?
https://academic.oup.com/jtm/article/27/2/taaa021/5735319
R0 might be about twice as high as typical influenza, which according to most articles that I can find is around 1.3. Lots of uncertainty about both to be honest. Like you said, the seasonal flu changes yearly and R0 for any virus varies by location.
Still not sure how anybody can use the spread of seasonal flu under normal conditions to try and predict the spread of COVID-19 under severely restricted conditions. Trying to predict the future in a scenario that we've never faced before is pretty difficult and requires assumptions that potentially introduce error. I think it's much easier to look at what the virus has actually done in other locations and assume that it's behavior will remain pretty similar if the environment is pretty similar.
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Using the same WHO data, there have been 3503 confirmed cases with 58 deaths in the US. That's a mortality rate of 1.6% to this point in the US (Obviously it's currently a limited data set). But the point is that many countries have done a lot less preparation, and have worse health care systems. They're dragging the mortality rate up, while the US is likely to drag it down.
If the current mortality rate in the US continues, then it would mean 68.75 million cases of COVID-19 would have to occur to see 1.1 million deaths from it. That's roughly 20% of the US population. It's going to take more than a couple of months to go from the current 3k cases to almost 69 million cases in the current environment.
Update for today: US has 6519 confirmed cases and 115 deaths.
Keep in mind that death is a seriously lagging indicator. It's 24 days from infection to half of the deaths (median time to death)
https://covid19info.live/
I've intentionally only used data from the WHO as it's generally a trusted source, and their data represents the whole globe.
The downside is that their data lags as it's based on the previous day's numbers. Obviously, the numbers for both cases and deaths are likely to climb and do so quickly at this point as testing becomes more widespread and results are compiled. The promising thing with the data you presented is that he mortality rate is still just 1.7%
Have a look at the second sentence.
Yeah, I get that. Just for total transparency of the data, I think it makes sense to get the info from a consistent, trusted source instead of jumping around from one source to another. Any spike in deaths will show up in the WHO data, it may just be later as it's compiled less frequently.
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I wouldn’t be surprised to see the Dow below 10,000 in the next couple of months.
Holy!!!! Now that is a low guess! I was considering leveraging my paid off house and backing up the truck if it got below 20k!
Backed up the truck yet?
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There is some great news come out of France that HYDROXYCHLOROQUINE AND AZITHROMYCIN can be used as a treatment for patients, curing them in 6 days.
https://www.mediterranee-infection.com/hydroxychloroquine-and-azithromycin-as-a-treatment-of-covid-19/
That does look very promising. We’ll see if it plays out.
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There is some great news come out of France that HYDROXYCHLOROQUINE AND AZITHROMYCIN can be used as a treatment for patients, curing them in 6 days.
https://www.mediterranee-infection.com/hydroxychloroquine-and-azithromycin-as-a-treatment-of-covid-19/
That does look very promising. We’ll see if it plays out.
I have heard that it is already being used in the US. Its purposely not being talked about to reduce the hoarding tendencies.
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"Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product."
https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q?srnd=premium
Wel,l that doesn't sound good.
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"Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product."
https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q?srnd=premium
Wel,l that doesn't sound good.
I mean, what do you expect when you forcibly close everything?
That our leaders don't understand that businesses don't keep months of cash on hand to float their business is also kind of concerning, and further, that supply chains that rely on each other will then close because our economy is inter-dependent. Not even going to get into the amount of people here on MMM that think this is no big deal. We're doing irreparable harm to our economy. Businesses aren't going to magically re-open once the states end their quarantines. They're going to cease to exist.
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"Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product."
https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q?srnd=premium
Wel,l that doesn't sound good.
I mean, what do you expect when you forcibly close everything?
That our leaders don't understand that businesses don't keep months of cash on hand to float their business is also kind of concerning, and further, that supply chains that rely on each other will then close because our economy is inter-dependent. Not even going to get into the amount of people here on MMM that think this is no big deal. We're doing irreparable harm to our economy. Businesses aren't going to magically re-open once the states end their quarantines. They're going to cease to exist.
I was about to share what @Buffaloski Boris shared and then was going to comment pretty much exactly what @fattest_foot said.
In reading and participating on these forums the last few days, it is abundantly clear that many MMMers are completely clueless on what this is going to do to our economy and clueless on the state of most small businesses in the US.
I've been saying on other social media platforms that we (USA) have chosen the worst possible option. We either needed to go full draconian and close everything down for 2-3 weeks Nationwide with no exceptions similar to what China did, or we should have instructed the vulnerable on how to quarantine and let the economy keep chugging.
I'm not convinced we've flattened the curve at all due to the irresponsible actions from most Americans who are paying no attention to the suggestions. I guess that is the American way of thinking for you.
We're going to wind up with a world wide depression, and if you look at the hockey stick charts from Covid 19 cases in USA, we're going to end up as bad or worse than Italy.
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"Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product."
https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q?srnd=premium
Wel,l that doesn't sound good.
I mean, what do you expect when you forcibly close everything?
That our leaders don't understand that businesses don't keep months of cash on hand to float their business is also kind of concerning, and further, that supply chains that rely on each other will then close because our economy is inter-dependent. Not even going to get into the amount of people here on MMM that think this is no big deal. We're doing irreparable harm to our economy. Businesses aren't going to magically re-open once the states end their quarantines. They're going to cease to exist.
I was about to share what @Buffaloski Boris shared and then was going to comment pretty much exactly what @fattest_foot said.
In reading and participating on these forums the last few days, it is abundantly clear that many MMMers are completely clueless on what this is going to do to our economy and clueless on the state of most small businesses in the US.
I've been saying on other social media platforms that we (USA) have chosen the worst possible option. We either needed to go full draconian and close everything down for 2-3 weeks Nationwide with no exceptions similar to what China did, or we should have instructed the vulnerable on how to quarantine and let the economy keep chugging.
I'm not convinced we've flattened the curve at all due to the irresponsible actions from most Americans who are paying no attention to the suggestions. I guess that is the American way of thinking for you.
We're going to wind up with a world wide depression, and if you look at the hockey stick charts from Covid 19 cases in USA, we're going to end up as bad or worse than Italy.
I agree.
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I wouldn’t be surprised to see the Dow below 10,000 in the next couple of months.
That would take us to 1999 levels. Do you really think that the last 20+ years were all for not?
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People have a normalcy bias because they’re used to things being normal. Essentially closing down your economy for 2 or 6 or 12 weeks not normal. This is going to cause a heck of a lot of damage. As other posters have noted, a lot of small businesses are simply not going to reopen. That’s particularly problematic given that they’re the primary employers in our country.
I believe a depression is probably a foregone conclusion. The question is the length and the lasting economic damage it does. And then there will be the cultural repercussions. I do believe that there will be some silver linings with some very dark clouds.
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This is going to cause a heck of a lot of damage. As other posters have noted, a lot of small businesses are simply not going to reopen. That’s particularly problematic given that they’re the primary employers in our country.
+1
I'm an accountant by trade. I serve the accounting, tax, payroll and general biz consulting needs of my small business clients. I completely quit doing taxes this week to make myself available to my small biz clients to try to help with planning to weather this storm. I was on back to back phone calls for 3 days straight, and I don't even have that large of a practice.
About 1/3 of my clients have already laid off all of their employees and basically shut down. A few may reopen, but most are probably done for good. If my state goes the route of shut down for non-essential businesses, I'd guess I'll be closer to 50% of clients closed.
And my practice is about 50% online entrepreneurs. If it was all small, typical local businesses, I'd probably be looking for work myself because what would be left of the client base wouldn't be enough to pay biz expenses and feed my family.
I'm in quite a few Facebook groups for accounting firm owners. 100% of them are struggling and scrambling both to try to help their clients and keep the lights on themselves.
To anyone reading who thinks this is all going to be over towards the end of April, think again. If you have small biz owners as friends, reach out and check on them. Many of those phone calls I was on this week had biz owners on the other end who were sad, shocked, and some even seemed suicidal. Imagine working your entire life to build something that was suddenly gone in a few weeks time due to no fault of your own.
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Definitely sweeping the country. Couple friends of mine from Denver, one told me today the they were having their hours cut to 3 days a week and the other that their employer was asking for people to take a voluntary leave of absence. Not fired or quit, just off the schedule, they are all hourly there.
My mom in MA is a house cleaner in a seasonal area that serves NYC and CT. Many of her clients are canceling for the summer already.
My own office I can see 2-3 weeks of work in our system before people are idle. Projects are getting canceled already. How long can we burn through cash? Couple months best case? Who knows. I wouldn’t be surprised if we had to drop 25-50% of the team before this is over. So much for my yearly raise on in April - I’m assuming that and the yearly bonus are history. That’s about 30% of my expected wages this year gone.
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Forget depression - it's not even as scary as 2008.
LOL. Most of the first page comments didn't age well.
Just goes to show how this caught all of us off guard. This comment was just 10 days ago.
In less than 2 weeks, the collective thought has moved from "this will blow over in a few weeks" to "what the hell have we gotten ourselves into?!?"
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"Federal Reserve Bank of St. Louis President James Bullard predicted the U.S. unemployment rate may hit 30% in the second quarter because of shutdowns to combat the coronavirus, with an unprecedented 50% drop in gross domestic product."
https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q?srnd=premium
Wel,l that doesn't sound good.
Yes, Bullard's predictions are baleful.
I do think an economic depression is inevitable.
There is a limit to seasoned, retail investors' acceptance of portfolio reductions below what "I put in."
It's one thing to "lose" all of a portfolio's appreciation and quite another to start "losing the money I invested."
What retail investors' limit is I do not know.
Nevertheless, I've been thinking that a wholesale, retail investors' capitulation is nearing that will plunge DJIA ~50% from its recent high, perhaps this week or this week + next week.
If selling continues, and DJIA sinks ~90% from its all-time high to ~2950, I think it will occur much quicker than the <3 years it took in the early 1930s at the beginning of the Great Depression.
Wikipedia
Wall Street Crash of 1929
The Dow then embarked on another, much longer, steady slide from April 1930 to July 8, 1932, when it closed at 41.22, its lowest level of the 20th century, concluding an 89.2% loss for the index in less than three years.
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Forget depression - it's not even as scary as 2008.
LOL. Most of the first page comments didn't age well.
Just goes to show how this caught all of us off guard. This comment was just 10 days ago.
In less than 2 weeks, the collective thought has moved from "this will blow over in a few weeks" to "what the hell have we gotten ourselves into?!?"
I am, however, convinced that the world will not end.
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Possibly.
And the sad part is it'll be totally self inflicted this time.
Assuming we actually believed these measures would stop a pandemic, they're both too late and not extensive enough. We're basically destroying our economy for something that's going to happen regardless of our actions at this point.
Japanese couldn't do it, the soviets couldn't do it, al queda couldn't do it, only we could do it by committing economic suicide. Unbelievable.
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We're going to wind up with a world wide depression, and if you look at the hockey stick charts from Covid 19 cases in USA, we're going to end up as bad or worse than Italy.
I think Italy and the US are very different situations for many reasons:
https://www.telegraph.co.uk/global-health/science-and-disease/have-many-coronavirus-patients-died-italy/
"According to Prof Walter Ricciardi, scientific adviser to Italy’s minister of health, the country’s mortality rate is far higher due to demographics - the nation has the second oldest population worldwide - and the manner in which hospitals record deaths."
“The age of our patients in hospitals is substantially older - the median is 67, while in China it was 46,” Prof Ricciardi says. “So essentially the age distribution of our patients is squeezed to an older age and this is substantial in increasing the lethality.”
“On re-evaluation by the National Institute of Health, only 12 per cent of death certificates have shown a direct causality from coronavirus, while 88 per cent of patients who have died have at least one pre-morbidity - many had two or three,” he says.
"But there are other factors that may have contributed to Italy’s fatality rates, experts say. This includes a high rate of smoking and pollution - the majority of deaths have been in the northern region Lombardy region, which is notorious for poor air quality."
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
Agreed. The demand for services and goods are not going away. People still want to go to restaurants and to the grocery store and the dentist, etc.... That demand won't go away. In fact it will be even stronger in a few months of being pent up.
In the meantime, the strong/flexible organizations will survive, the others won't. When people start going out again, there will be a raft of new businesses rushing in to fill that void. In fact, if a person ever had a desire to strike off onto their own in a business that interests them, now might be the time to start preparing to do it.
One thing I do wonder is, how much "working from home" will stick. I hope a lot. There's a lot of jobs that can be done from home perfectly well. There's a lot of advantages to working from home, as well as being one of the most environmentally friendly things you can do. Anyway, I hope more people/companies realized that WFH actually kind of rocks and they stick with it over the long term.
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
Agreed. The demand for services and goods are not going away. People still want to go to restaurants and to the grocery store and the dentist, etc.... That demand won't go away. In fact it will be even stronger in a few months of being pent up.
In the meantime, the strong/flexible organizations will survive, the others won't. When people start going out again, there will be a raft of new businesses rushing in to fill that void. In fact, if a person ever had a desire to strike off onto their own in a business that interests them, now might be the time to start preparing to do it.
One thing I do wonder is, how much "working from home" will stick. I hope a lot. There's a lot of jobs that can be done from home perfectly well. There's a lot of advantages to working from home, as well as being one of the most environmentally friendly things you can do. Anyway, I hope more people/companies realized that WFH actually kind of rocks and they stick with it over the long term.
Yes, this. One thing that people are not factoring in is that in "dire" times like this drives INNOVATION. New technologies, which will make many areas of our lives more efficient (not necessarily better, but more efficient) will be created and fast tracked. Unless there is some kind of mutation that raises the mortality demographics exponentially toward the young, our lives in March 2021 will look much like in December 2019, but with some new cool technologies and more healthcare preparedness for future illnesses.
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
My understanding is that the general definition of an economic depression is a reduction of GDP of ~10% or more that lasts for 1 year or more.
If I were a man who prayed (I am not) I would pray that my outlook is wrong and your outlook it right.
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You're all wrong.
A recession is when you neigbour loses their job.
A depression is when you lose your own job.
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
My understanding is that the general definition of an economic depression is a reduction of GDP of ~10% or more that lasts for 1 year or more.
If I were a man who prayed (I am not) I would pray that my outlook is wrong and your outlook it right.
I think there are a lot of definitions in the financial world, all revolving around things being "really really bad", but the kkey is duration. I don't think anyone thinks that if the statistics are dire, it will be for a prolonged duration - more than say 6 months - before you see substantial improvement, and likely back to original levels in 2-3 years. Depressions are usually thought to be 5-10 years till return. Again - duration.
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
My understanding is that the general definition of an economic depression is a reduction of GDP of ~10% or more that lasts for 1 year or more.
If I were a man who prayed (I am not) I would pray that my outlook is wrong and your outlook it right.
I think there are a lot of definitions in the financial world, all revolving around things being "really really bad", but the kkey is duration. I don't think anyone thinks that if the statistics are dire, it will be for a prolonged duration - more than say 6 months - before you see substantial improvement, and likely back to original levels in 2-3 years. Depressions are usually thought to be 5-10 years till return. Again - duration.
Duly noted.
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We're going to wind up with a world wide depression, and if you look at the hockey stick charts from Covid 19 cases in USA, we're going to end up as bad or worse than Italy.
I think Italy and the US are very different situations for many reasons:
https://www.telegraph.co.uk/global-health/science-and-disease/have-many-coronavirus-patients-died-italy/
"According to Prof Walter Ricciardi, scientific adviser to Italy’s minister of health, the country’s mortality rate is far higher due to demographics - the nation has the second oldest population worldwide - and the manner in which hospitals record deaths."
“The age of our patients in hospitals is substantially older - the median is 67, while in China it was 46,” Prof Ricciardi says. “So essentially the age distribution of our patients is squeezed to an older age and this is substantial in increasing the lethality.”
“On re-evaluation by the National Institute of Health, only 12 per cent of death certificates have shown a direct causality from coronavirus, while 88 per cent of patients who have died have at least one pre-morbidity - many had two or three,” he says.
"But there are other factors that may have contributed to Italy’s fatality rates, experts say. This includes a high rate of smoking and pollution - the majority of deaths have been in the northern region Lombardy region, which is notorious for poor air quality."
I don't care about the semantics. That wasn't my point. I don't pretend to be a medical expert keyboard warrior.
My only point was this:
Most people did not listen to the suggestions regarding quarantine and social distancing. Because most people did not listen, I am not convinced that we've actually done anything that will flatten the curve. So we ended up not accomplishing what was supposedly intended and at the same time birthed the worst economy in many of our lifetimes.
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I am not convinced that we've actually done anything that will flatten the curve.
Neither are the stock markets and so, their yo-yoing continues.
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
Man... Some of you guys/gals must be living under a rock... Where do you get the idea that "once Covid shows signs of peaking, it is back to work..."? Do you not understand that the majority of businesses do not have the capital to weather this storm? There is no magical re-opening if the owners are broke, with no capital, and no way of easily attaining said capital. Where are these employees going to go back to work to? Or maybe you're one of those who honestly thinks the government is going to wave a wand and magically fix everything. Yes, there will be bailouts and stimulus that will help some, but if you think that every business is going to bounce back in the near term you are dreaming.
And let me clue you in on another over looked but very important fact - when the economy is tanking (or has tanked), people become extremely risk averse. You think in the midst of a recession or depression people are going to be excited about risking the little they do have left to start a business?
I understand my view is jaded because I work with this market segment every day of my life. But it shouldn't be too hard for the rest of you to understand why your flowery views of the near future are not the likely outcomes.
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
Man... Some of you guys/gals must be living under a rock... Where do you get the idea that "once Covid shows signs of peaking, it is back to work..."? Do you not understand that the majority of businesses do not have the capital to weather this storm? There is no magical re-opening if the owners are broke, with no capital, and no way of easily attaining said capital. Where are these employees going to go back to work to? Or maybe you're one of those who honestly thinks the government is going to wave a wand and magically fix everything. Yes, there will be bailouts and stimulus that will help some, but if you think that every business is going to bounce back in the near term you are dreaming.
And let me clue you in on another over looked but very important fact - when the economy is tanking (or has tanked), people become extremely risk averse. You think in the midst of a recession or depression people are going to be excited about risking the little they do have left to start a business?
I understand my view is jaded because I work with this market segment every day of my life. But it shouldn't be too hard for the rest of you to understand why your flowery views of the near future are not the likely outcomes.
Not at all. For people on THIS forum, I would expect most of us have dialed down our expenses, have a nice big stash to fall back on, and are less likely to lose our jobs than the general population. If we have a mortgage, we have enough saved to pay it for quite a while. I mean, this is MMM, isn't it?
So for people like us, what does it matter if it's only a few months or a couple of years before recovery starts?
Unless you are saying we'll NEVER recover?
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FRom Wiki "In economics, a depression is a sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.
Depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises and bank failures are also common elements of a depression that do not normally occur during a recession."
No - we are not going to go into a depression. While we will have the individual characteristics, they were not be "long". Once the Covid shows signs of peaking, it is back to work and while the tmp unemployment will be massive, it will not be sustained. Gov will back loans, no bank failures will occur. This is painful, but even if in the "early innings" the end is in sight. Talk to your great grandmother who went through the Great Depression - there was never an end is sight when they were in the middle of it. That is the difference.
Abnormally large increases in unemployment: Bullard Says Jobless Rate May Soar to 30% https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q (https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q)
Falls in the availability of credit: Markets for junk bonds freezes up: https://www.bloomberg.com/news/articles/2020-03-18/leveraged-loan-market-freeze-risks-35-billion-banker-headache (https://www.bloomberg.com/news/articles/2020-03-18/leveraged-loan-market-freeze-risks-35-billion-banker-headache)
Shrinking production / investment: US GDP projected to shrink 13% in Q2: https://ihsmarkit.com/research-analysis/covid19-impact-update-us-gdp-to-plunge-to-13-q2.html (https://ihsmarkit.com/research-analysis/covid19-impact-update-us-gdp-to-plunge-to-13-q2.html)
Auto industry and Boeing shutting down production: https://www.cnbc.com/2020/03/23/boeing-plans-two-week-shutdown-of-factories-in-puget-sound-area-because-of-coronavirus.html (https://www.cnbc.com/2020/03/23/boeing-plans-two-week-shutdown-of-factories-in-puget-sound-area-because-of-coronavirus.html) https://www.nytimes.com/2020/03/18/business/economy/gm-ford-fiatchrysler-factories-virus.html (https://www.nytimes.com/2020/03/18/business/economy/gm-ford-fiatchrysler-factories-virus.html)
Bankruptcies / defaults: Data is mostly N/A, but commercial bankruptcy filings in Jan + Feb were already 12% over 2019 before the market collapse. https://www.abi.org/newsroom/bankruptcy-statistics (https://www.abi.org/newsroom/bankruptcy-statistics) The odds of default by Italy and Greece have increased greatly.
Reduced Trade/Commerce, Especially International: Most numbers not yet available, but the January trend was already down. https://tradingeconomics.com/united-states/balance-of-trade (https://tradingeconomics.com/united-states/balance-of-trade)
Currency fluctuations / deflation: The trade-weighted USD index dropped to a one-year low on March 9, and then shot up to an almost 3 year high by March 13. Numbers still being posted, of course. https://fred.stlouisfed.org/series/DTWEXAFEGS (https://fred.stlouisfed.org/series/DTWEXAFEGS) Also the price of oil has plummeted 64% YTD. Copper is down 21%. Coal is down 23% Gold is down 1.6%. Corn is down 11%. Cotton down 23%. Etc. https://markets.businessinsider.com/commodities (https://markets.businessinsider.com/commodities)
Financial crisis / failures: Waiting to see how many banks fail in the next few months, but it seems likely considering the employment/income loss situation. Watch the FDIC: https://www.fdic.gov/bank/individual/failed/banklist.html (https://www.fdic.gov/bank/individual/failed/banklist.html)
FWIW, the government is about to bail out a number of industries (coal, aviation, airlines, hotels, cruise ships, etc.): https://www.politico.com/news/magazine/2020/03/22/bailout-coronavirus-congress-crisis-142961 (https://www.politico.com/news/magazine/2020/03/22/bailout-coronavirus-congress-crisis-142961)
Meanwhile, my neighbor made $40 waiting tables yesterday and gave $20 of that to a babysitter. Like most people, she's paycheck to paycheck. The government is planning for the crisis to last 18 months if a vaccine is developed as quickly as possible: https://www.livescience.com/coronavirus-pandemic-could-last-18-months.html (https://www.livescience.com/coronavirus-pandemic-could-last-18-months.html)
Basically, the "no depression" case rests on "well, those final pieces of data haven't been published yet."
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Not at all. For people on THIS forum, I would expect most of us have dialed down our expenses, have a nice big stash to fall back on, and are less likely to lose our jobs than the general population. If we have a mortgage, we have enough saved to pay it for quite a while. I mean, this is MMM, isn't it?
So for people like us, what does it matter if it's only a few months or a couple of years before recovery starts?
Unless you are saying we'll NEVER recover?
What does dialing down your expenses and having a nice EF have anything to do with losing your job?!?
It matters because a deep recession or depression for a prolonged period of time means that the idea of FI is much farther away than it was just a few weeks ago.
Of course I think we will recover at some point. Of course I think most MMMers will be ok. None of that was the point of the thread though. "Are we at the beginning of a depression?"
If your point is that a depression or recession won't effect any of us, I'm afraid you belong in the crazy person quarantine as well.
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This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
With any of the past viruses, I don't remember the economy being shut down, sports seasons being cancelled, restaurants closed, empty streets, etc
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Not at all. For people on THIS forum, I would expect most of us have dialed down our expenses, have a nice big stash to fall back on, and are less likely to lose our jobs than the general population. If we have a mortgage, we have enough saved to pay it for quite a while. I mean, this is MMM, isn't it?
So for people like us, what does it matter if it's only a few months or a couple of years before recovery starts?
Unless you are saying we'll NEVER recover?
What does dialing down your expenses and having a nice EF have anything to do with losing your job?!?
It matters because a deep recession or depression for a prolonged period of time means that the idea of FI is much farther away than it was just a few weeks ago.
Of course I think we will recover at some point. Of course I think most MMMers will be ok. None of that was the point of the thread though. "Are we at the beginning of a depression?"
If your point is that a depression or recession won't effect any of us, I'm afraid you belong in the crazy person quarantine as well.
I think the point is that a lot of MMM forumites will be economically sheltered from most of the terrible head winds, and the effects will be mitigated. E.g. I am fortunate to work in a job (I'm self-employed) that is close to being an essential service. I can see my revenue going down but I can't see it drying up completely. I also have enough savings to last me 5 or 10 years in a pinch if I really need it. So my FIRE timeframe won't necessarily blow out since a lot of it is relative, i.e., if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right. In fact if anything I think this might lead me to FIRE earlier since I have a lot of cash to keep throwing at equities. I think that was the point of the person you were replying to: "So for people like us, what does it matter if it's only a few months or a couple of years before recovery starts?"
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And let me clue you in on another over looked but very important fact - when the economy is tanking (or has tanked), people become extremely risk averse. You think in the midst of a recession or depression people are going to be excited about risking the little they do have left to start a business?
Lol even in a pandemic have you seen the spring break crowds? People are not risk averse when it comes to going out and having fun. If nobody wants to invest in that business after this is over, then I will and reap all the profits!
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if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right.
If you're within about a year of FIRE, and that "some day when it recovers" is years down the road, that would cause you to have to work a few times as long as you otherwise needed to. So instead of retiring in one year, it could be three, four, or more years.
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if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right.
If you're within about a year of FIRE, and that "some day when it recovers" is years down the road, that would cause you to have to work a few times as long as you otherwise needed to. So instead of retiring in one year, it could be three, four, or more years.
Yes, no doubt, that is true. But the reverse applies for someone who is 10 or 15 years from FIRE.
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And let me clue you in on another over looked but very important fact - when the economy is tanking (or has tanked), people become extremely risk averse. You think in the midst of a recession or depression people are going to be excited about risking the little they do have left to start a business?
Lol even in a pandemic have you seen the spring break crowds? People are not risk averse when it comes to going out and having fun. If nobody wants to invest in that business after this is over, then I will and reap all the profits!
So your example of why people won't be scared to spend and invest once this this Corona stuff blows over is a bunch of drunk college kids partying for Spring break who are living off of mommy and daddy and/or student loans?!?
Genuinely not sure if you are trying to prove my point or if you really think that proves your point ;)
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Not at all. For people on THIS forum, I would expect most of us have dialed down our expenses, have a nice big stash to fall back on, and are less likely to lose our jobs than the general population. If we have a mortgage, we have enough saved to pay it for quite a while. I mean, this is MMM, isn't it?
So for people like us, what does it matter if it's only a few months or a couple of years before recovery starts?
Unless you are saying we'll NEVER recover?
What does dialing down your expenses and having a nice EF have anything to do with losing your job?!?
It matters because a deep recession or depression for a prolonged period of time means that the idea of FI is much farther away than it was just a few weeks ago.
Of course I think we will recover at some point. Of course I think most MMMers will be ok. None of that was the point of the thread though. "Are we at the beginning of a depression?"
If your point is that a depression or recession won't effect any of us, I'm afraid you belong in the crazy person quarantine as well.
I think the point is that a lot of MMM forumites will be economically sheltered from most of the terrible head winds, and the effects will be mitigated. E.g. I am fortunate to work in a job (I'm self-employed) that is close to being an essential service. I can see my revenue going down but I can't see it drying up completely. I also have enough savings to last me 5 or 10 years in a pinch if I really need it. So my FIRE timeframe won't necessarily blow out since a lot of it is relative, i.e., if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right. In fact if anything I think this might lead me to FIRE earlier since I have a lot of cash to keep throwing at equities. I think that was the point of the person you were replying to: "So for people like us, what does it matter if it's only a few months or a couple of years before recovery starts?"
Yes, I agree with most if your points. If you are able to keep enough cash flow going on the personal level to keep investing throughout this down turn you most definitely will come out ahead.
I'm assuming by all these responses that as individuals, we are all concerned and want to have hope and believe that we will be ok financially.
To me that is a separate thread/topic entirely though. I'm sure there are already some threads on these forums about "how to not just survive but thrive during the corona virus". If there isn't, please start one. I would be happy to contribute what I'm personally doing and why I think with proper planning we very well may come out ahead if our FIRE timeline is 10-15 years.
But I still don't see how my personal financial situation. (or yours) has anything to do with the potential recession/depression birthed from this Corona virus stuff.
I've been working a lot if hours lately and very well could be missing the forest for the trees. Let me know if so!
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You're right - the topic can go a number of ways. It depends on whether, when you (or any poster) answers the topic thread "Are we at the beginning of a depression", the answer relates to societal impacts, individual impacts or both. It's a fait accompli that we are going to enter a recession, and maybe a depression, and people can then take the discussion whichever way the wind blows, though sometimes we might end up posting at cross purposes.
It's in all of our interests for the economic damage to be as limited as possible. But the degree to which there is an upside depends on individual circumstances.
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Here we are barely a month past record highs and the Dow is down 37%. In 2008, market was down 54% in 18 months.
Virus is growing exponentially around the globe, especially in the US and Europe, with no end in sight. Even China and South Korea steadily add new cases and deaths each day but at a much slower pace. Hopefully social distancing will curb things, and we see the peak soon. But even once we do, when does normalcy return where stadiums are full for live sports and restaurants are packed? The way the virus spreads, I don’t see how we can reopen business as usual until there is a vaccine or the entire population is infected and builds immunity. This seems months away at best. And does it go 18 months like the 1918 Spanish Flu?
And I don’t see how the market can find a bottom until we are well past the peak and have a plan working to largely control new infections. GDP almost certain to be down more than 20% in 2Q. Will it be able to start coming back by 3Q?
The service economy today is already headed for a Great Depression in the next month that may take years to recover
- Restaurants closed across the nation and most maybe lucky to be at 20% of normal sales with takeout / drive through
- No one is flying
- No one is staying in hotels
- Large number of other small business closed and will be forced into bankruptcy if this thing goes on for a couple months, even with government assistance
- GE announcing layoffs, their supply chain will follow
- Real estate, not moving as no one can go out and look at houses.
How bad does this get?
- I believe Dow 10000 is definitely a real possibility if the virus isn’t significantly curbed in the next month. Maybe not in the next month, but in the fallout of unemployment and bankrupt businesses that follow.
- US GDP? -20 to -30% seems quite possible in 2Q.
- Unemployment? Likely over 10 percent in a hurry. Layoffs are starting at an unprecedented pace.
For me, I am considered “essential” and still going to work for big defense contractor. The defense budget is probably too large, and may well see significant cuts as part of the fallout of massive government stimulus packages. Won’t be much effect in the short term, but a significant downsizing of the defense industry is probably overdue, with big layoffs in the defense industry to follow.
My wife is an audiologist at a doctors office and will be furloughed after this week as only emergency patients are being seen right now. She will go back to work when the practice reopens. Financially a huge deal for some of the other employees who live paycheck to paycheck, though government stimulus will help.
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As a healthy 32 year old, I wish there was a place I could go get the virus in a controlled way and be isolated from my family. Say, check into a hotel for a couple weeks, get it over with, then go back to work without the fear of getting my wife sick if I get sick. Bunch of empty hotels and sick people around...
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Here we are barely a month past record highs and the Dow is down 37%. In 2008, market was down 54% in 18 months.
Virus is growing exponentially around the globe, especially in the US and Europe, with no end in sight. Even China and South Korea steadily add new cases and deaths each day but at a much slower pace. Hopefully social distancing will curb things, and we see the peak soon. But even once we do, when does normalcy return where stadiums are full for live sports and restaurants are packed? The way the virus spreads, I don’t see how we can reopen business as usual until there is a vaccine or the entire population is infected and builds immunity. This seems months away at best. And does it go 18 months like the 1918 Spanish Flu?
And I don’t see how the market can find a bottom until we are well past the peak and have a plan working to largely control new infections. GDP almost certain to be down more than 20% in 2Q. Will it be able to start coming back by 3Q?
The service economy today is already headed for a Great Depression in the next month that may take years to recover
- Restaurants closed across the nation and most maybe lucky to be at 20% of normal sales with takeout / drive through
- No one is flying
- No one is staying in hotels
- Large number of other small business closed and will be forced into bankruptcy if this thing goes on for a couple months, even with government assistance
- GE announcing layoffs, their supply chain will follow
- Real estate, not moving as no one can go out and look at houses.
How bad does this get?
- I believe Dow 10000 is definitely a real possibility if the virus isn’t significantly curbed in the next month. Maybe not in the next month, but in the fallout of unemployment and bankrupt businesses that follow.
- US GDP? -20 to -30% seems quite possible in 2Q.
- Unemployment? Likely over 10 percent in a hurry. Layoffs are starting at an unprecedented pace.
For me, I am considered “essential” and still going to work for big defense contractor. The defense budget is probably too large, and may well see significant cuts as part of the fallout of massive government stimulus packages. Won’t be much effect in the short term, but a significant downsizing of the defense industry is probably overdue, with big layoffs in the defense industry to follow.
My wife is an audiologist at a doctors office and will be furloughed after this week as only emergency patients are being seen right now. She will go back to work when the practice reopens. Financially a huge deal for some of the other employees who live paycheck to paycheck, though government stimulus will help.
I agree with you. It seems that many are a bit on the optimistic side. I'm exposed to a lot of freight/transportation data and things are getting scary. Considering the partisan bickering happening right now, I don't think Congress gets the seriousness of this situation.
I'm not quite ready to say depression, but this is looking very bad.
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I was talking with my husband about this. This could be REALLLLY bad here soon. People living paycheck to paycheck will soon not have enough money for the basic groceries. Is the governments plan to make bread lines and soup lines? Now with the virus people would be even afraid for that kind of interaction, and no one would want to staff that.
We were talking the possibility of some civil unrest. When a good portion of people can no longer afford food, let alone housing, utilities, etc. there could be people who have loaded up on guns that decide to take things into their own hands. There are militias out there just waiting to use their firepower. I wouldn't be surprised if the national guards are already prepping for this in some way. It's going to look so shitty when the US can't even provide for the basics for their own citizenry, while the wealthy have all retreated to their chalets with a years worth of food.
I see the possibility of supply chain breakdown in certain sectors. It's hard with all that's going on to not let my brain get into this major funk. Hopefully we will dig ourselves out of this, but this is waaaaaay bigger than 2008.
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A depression is an ongoing, multi-year recession. I do not see how a transient virus can cause this. There is a hard smack down going on right now but there is nothing fundamentally broken. People are chomping at the bit to get back to work and many have been told to hang on, we will get you back when we re-open, and in the meantime they are able to access unemployment benefits.
Businesses that fail because they lost 1/6 of this year's income and had no reserves and no ability to go to the Small Business Administration to stay solvent will be replaced by new businesses. People will take the risk to fill the space because there will always be someone who thinks they are smarter than the last guy. People who always wanted to run a little coffee shop or restaurant but didn't have access to an outlet space or didn't have the ability to go to the SBA will now be able to do so. Those new businesses will hire some of the folks who lost work at the last place.
Other displaced people will be newly employed in the growing online retail space that we are getting even more addicted to and will fill in the job spots along that economic chain. Most hopefully, those formerly stuck in service jobs will learn how to do manufacturing in all of the businesses coming back from China as we finally decouple, having learned our lesson about the importance of controlling our supply chain. That alone-- that HUGE bud of hope to restore manufacturing ability here again will employ so many that it could feel a lot like the public works of the 30s and through WWII. Can you just imagine how many people will be able to work in living wage jobs? It could truly be a generation-changing opportunity.
I like your optimism but I can’t fathom the utopian manufacturing dream you have described. We do manufacturing in the US,
It is just that most of it is automated to is doesn’t employ many people. I’ve walked the assembly lines in China; they are no-skill or low-skill, crushingly repetitive, boring jobs. Even in China they struggle to keep people for more than a year. In the consumer electronics industry they apparently count on having 100% turnover each year after the Chinese New Year holiday shutdown. I have a hard time imagining who in this country, aside from recent immigrants, would be drawn to those jobs. Not to mention it would be a hard sell to the US consumer to start paying a good bit more for the goods they have been conditioned to get cheaply.
How do you see this playing out?
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A depression is an ongoing, multi-year recession.
Depending on who you ask, you don't need a multi-year recession to have a depression. You only need 10% GDP loss (https://en.wikipedia.org/wiki/Depression_(economics)). We could absolutely see that (https://www.cnbc.com/2020/03/20/goldman-sees-an-unprecedented-stop-of-economic-activity-with-2nd-quarter-gdp-contracting-by-24percent.html).
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I was talking with my husband about this. This could be REALLLLY bad here soon. People living paycheck to paycheck will soon not have enough money for the basic groceries.
yahoo
Dec 16, 2019
Nearly 70% of Americans Have Less Than $1,000 in a Savings Account
statista
Dec 18, 2019
Personal savings in the U.S. The economy might be strong in the U.S., but nearly 70 percent of Americans have less than $1,000 stashed away, according to GOBankingRates' 2019 savings survey. The poll, released December 16, revealed 45 percent have nothing saved.
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No one could fathom this virus situation either. Extraordinary events cause extraordinary change. People will understand the value of building our own supply chain and the culture will shift.
I can assure you every single fortune1000 company had detailed disaster recovery plan, that will have a very detailed pandemic section.
I know! Right after 2008, they were very fashionable and it was my job to go out to client locations and create these shiny documents on their behalf (that likely nobody read).
The fact that preparedness was foregone, that the president decided that pandemic response team was too unimportant to stay an independent entity with any significant resources allocated to it etc were all active choices - which should come with it's own "personal responsibility" consequences.
We're all adults and are supposed to be treated as such!!
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if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right.
If you're within about a year of FIRE, and that "some day when it recovers" is years down the road, that would cause you to have to work a few times as long as you otherwise needed to. So instead of retiring in one year, it could be three, four, or more years.
Isn't that the purpose of the 4% WR and SORR plans? If your retirement hinged on a record long bull market continuing for another decade, there was something wrong with your plans.
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A depression is an ongoing, multi-year recession. I do not see how a transient virus can cause this.
You're absolutely right, but this is almost certainly not a transient virus! It will become a permanent fixture like the current big 4 coronaviridae that are omnipresent and go largely unnoticed, causing common cold symptoms.
Containment has failed in the west, and there's no putting the genie back in the bottle. A vaccine is at least a year out from being available, most likely closer to 2 years if ever. After the first wave relaxes, this virus will be back until we start getting herd immunity due to having caught it.
There is no seasonality to coronaviridae! We will not see a relaxation in the summer like with the flu.
Saving grace is that we may have within a month more actionable data for drug treatments and ramp up supply of them - the more people that we can have avoid the ICU in the first place, the faster we can reach herd immunity with only localized outbreaks.
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I was talking with my husband about this. This could be REALLLLY bad here soon. People living paycheck to paycheck will soon not have enough money for the basic groceries.
yahoo
Dec 16, 2019
Nearly 70% of Americans Have Less Than $1,000 in a Savings Account
statista
Dec 18, 2019
Personal savings in the U.S. The economy might be strong in the U.S., but nearly 70 percent of Americans have less than $1,000 stashed away, according to GOBankingRates' 2019 savings survey. The poll, released December 16, revealed 45 percent have nothing saved.
I mean I generally agree that the average American is not as prepared for hardship as they should be, but at the same time you should ignore all of these polls because they're all worthless because they ask worthless questions.
I'm incredibly wealthy by almost any metric, and I have $0 in a savings account. Why would anyone have a savings account when they pay 0.0002% interest?
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No one could fathom this virus situation either. Extraordinary events cause extraordinary change. People will understand the value of building our own supply chain and the culture will shift.
I can assure you every single fortune1000 company had detailed disaster recovery plan, that will have a very detailed pandemic section.
I know! Right after 2008, they were very fashionable and it was my job to go out to client locations and create these shiny documents on their behalf (that likely nobody read).
The fact that preparedness was foregone, that the president decided that pandemic response team was too unimportant to stay an independent entity with any significant resources allocated to it etc were all active choices - which should come with it's own "personal responsibility" consequences.
We're all adults and are supposed to be treated as such!!
I read an article recently that as part of the power transfer between presidential administrations the outgoing administration ran through a bunch of simulated crises for the incoming administration, including a pandemic. I’ll see if I can find the article again. Apparently most of the Trump administration participants have been purged since that day.
***
Edit: here we go https://www.politico.com/news/2020/03/16/trump-inauguration-warning-scenario-pandemic-132797
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No one could fathom this virus situation either. Extraordinary events cause extraordinary change. People will understand the value of building our own supply chain and the culture will shift.
I can assure you every single fortune1000 company had detailed disaster recovery plan, that will have a very detailed pandemic section.
I know! Right after 2008, they were very fashionable and it was my job to go out to client locations and create these shiny documents on their behalf (that likely nobody read).
The fact that preparedness was foregone, that the president decided that pandemic response team was too unimportant to stay an independent entity with any significant resources allocated to it etc were all active choices - which should come with it's own "personal responsibility" consequences.
We're all adults and are supposed to be treated as such!!
Hey I’m sure they are keeping that plan nice and safe in a filing cabinet somewhere
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This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
With any of the past viruses, I don't remember the economy being shut down, sports seasons being cancelled, restaurants closed, empty streets, etc
Not many of us remember 1918 very well...
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This pandemic, like all pandemics before it, will run its course over a few months. It's not a zombie apocalypse.
With any of the past viruses, I don't remember the economy being shut down, sports seasons being cancelled, restaurants closed, empty streets, etc
Not many of us remember 1918 very well...
There were quarantines (https://en.wikipedia.org/wiki/1918_Spanish_flu_quarantine_in_Portland,_Oregon). Towns closed to the outside world (https://www.theguardian.com/world/2020/mar/01/gunnison-colorado-the-town-that-dodged-the-1918-spanish-flu-pandemic). No depression followed.
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if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right.
If you're within about a year of FIRE, and that "some day when it recovers" is years down the road, that would cause you to have to work a few times as long as you otherwise needed to. So instead of retiring in one year, it could be three, four, or more years.
Isn't that the purpose of the 4% WR and SORR plans? If your retirement hinged on a record long bull market continuing for another decade, there was something wrong with your plans.
Are you kidding? LOL I was 40% equities, which gave me the highest % of success based on FireCalc, and I still dropped about 5 years of retirement expenses by Monday afternoon.
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if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right.
If you're within about a year of FIRE, and that "some day when it recovers" is years down the road, that would cause you to have to work a few times as long as you otherwise needed to. So instead of retiring in one year, it could be three, four, or more years.
Isn't that the purpose of the 4% WR and SORR plans? If your retirement hinged on a record long bull market continuing for another decade, there was something wrong with your plans.
Are you kidding? LOL I was 40% equities, which gave me the highest % of success based on FireCalc, and I still dropped about 5 years of retirement expenses by Monday afternoon.
Would your plan have failed? I'm in 95% equities and I only dropped about a year's worth of retirement expenses.
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if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right.
If you're within about a year of FIRE, and that "some day when it recovers" is years down the road, that would cause you to have to work a few times as long as you otherwise needed to. So instead of retiring in one year, it could be three, four, or more years.
Isn't that the purpose of the 4% WR and SORR plans? If your retirement hinged on a record long bull market continuing for another decade, there was something wrong with your plans.
Are you kidding? LOL I was 40% equities, which gave me the highest % of success based on FireCalc, and I still dropped about 5 years of retirement expenses by Monday afternoon.
What’s the other 60%? Total bond market? I haven’t checked but assume corporate bonds have not done well. Personally against “diversifying” into highly correlated assets
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Singapore Q1 gdp came in -10.6% from previous quarter.. so yup, looks likely
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if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right.
If you're within about a year of FIRE, and that "some day when it recovers" is years down the road, that would cause you to have to work a few times as long as you otherwise needed to. So instead of retiring in one year, it could be three, four, or more years.
Isn't that the purpose of the 4% WR and SORR plans? If your retirement hinged on a record long bull market continuing for another decade, there was something wrong with your plans.
Are you kidding? LOL I was 40% equities, which gave me the highest % of success based on FireCalc, and I still dropped about 5 years of retirement expenses by Monday afternoon.
Would your plan have failed? I'm in 95% equities and I only dropped about a year's worth of retirement expenses.
I’m confused how the math works here. We have lost around four years’ worth of spending so far and we are 60% equities.
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Singapore Q1 gdp came in -10.6% from previous quarter.. so yup, looks likely
New unemployment claims this week in the US were 3.3 million. Out of a total workforce of 164.5 million. And really, this lockdown just got swinging a week or so ago. I suspect we’ll be past 10% unemployment in a couple of weeks.
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if everyone loses 40% in the stock market but you're able to keep buying in, some day when it recovers, you'll be right.
If you're within about a year of FIRE, and that "some day when it recovers" is years down the road, that would cause you to have to work a few times as long as you otherwise needed to. So instead of retiring in one year, it could be three, four, or more years.
Isn't that the purpose of the 4% WR and SORR plans? If your retirement hinged on a record long bull market continuing for another decade, there was something wrong with your plans.
Are you kidding? LOL I was 40% equities, which gave me the highest % of success based on FireCalc, and I still dropped about 5 years of retirement expenses by Monday afternoon.
Would your plan have failed? I'm in 95% equities and I only dropped about a year's worth of retirement expenses.
I’m confused how the math works here. We have lost around four years’ worth of spending so far and we are 60% equities.
Exactly why it's meaningless. Not everybody has the same spending levels or the same size stash. It also doesn't matter if you lost "5 years" of spending if you had 100 years of spending saved. And if you were ready to retire, a drop like this should already be accounted for in your plans.
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I don't want to be a party pooper, but to bring this into perspective, when I was a young lad, this planet had 2.3 billion people living on it. Today, a good 50 years later, it's 7.4 billion. What this planet really needs for long term survival of the human race is not more Teslas and not a flu virus, but a meteor that takes about 4,000,000,000 to their creator, primarily in Africa and South East Asia.
On a related note, every weekend more people get shot to death in Chicago's gang ghettos than die from the Covidvirus nationwide. To predict that a million people in the US will die from it is beyond wacko.
Wow, we got Thanos here!
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I don't want to be a party pooper, but to bring this into perspective, when I was a young lad, this planet had 2.3 billion people living on it. Today, a good 50 years later, it's 7.4 billion. What this planet really needs for long term survival of the human race is not more Teslas and not a flu virus, but a meteor that takes about 4,000,000,000 to their creator, primarily in Africa and South East Asia.
On a related note, every weekend more people get shot to death in Chicago's gang ghettos than die from the Covidvirus nationwide. To predict that a million people in the US will die from it is beyond wacko.
Wow, we got Thanos here!
I'll be honest. I kind of thought that Thanos had a point.
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I don't want to be a party pooper, but to bring this into perspective, when I was a young lad, this planet had 2.3 billion people living on it. Today, a good 50 years later, it's 7.4 billion. What this planet really needs for long term survival of the human race is not more Teslas and not a flu virus, but a meteor that takes about 4,000,000,000 to their creator, primarily in Africa and South East Asia.
On a related note, every weekend more people get shot to death in Chicago's gang ghettos than die from the Covidvirus nationwide. To predict that a million people in the US will die from it is beyond wacko.
Wow, we got Thanos here!
I'll be honest. I kind of thought that Thanos had a point.
If your overriding goal is environmentalism then killing half the people is the fastest and most sure-fire way to get to your goals.
If your overriding goal is doing what's best for mankind, and environmentalism is an off-shoot that flows out of that main concern, then it's obviously not a workable solution. :)
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as depressing and negative as this sounds, Im trying to picture the US market after 300,000-400,000 people die over the next few months....since covid doesn't stop until either, a) a vaccine is successful administered to significant amount of the population, or b) until most have had it and are over it.
A is unlikely.
B is more likely given the RO and lack of initial measures to curtail.
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I don't want to be a party pooper, but to bring this into perspective, when I was a young lad, this planet had 2.3 billion people living on it. Today, a good 50 years later, it's 7.4 billion. What this planet really needs for long term survival of the human race is not more Teslas and not a flu virus, but a meteor that takes about 4,000,000,000 to their creator, primarily in Africa and South East Asia.
On a related note, every weekend more people get shot to death in Chicago's gang ghettos than die from the Covidvirus nationwide. To predict that a million people in the US will die from it is beyond wacko.
Wow, we got Thanos here!
I'll be honest. I kind of thought that Thanos had a point.
Has the COVID lesson in exponential growth changed your mind about the effectiveness of killing half the population?
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I was talking with my husband about this. This could be REALLLLY bad here soon. People living paycheck to paycheck will soon not have enough money for the basic groceries. Is the governments plan to make bread lines and soup lines? Now with the virus people would be even afraid for that kind of interaction, and no one would want to staff that.
We were talking the possibility of some civil unrest. When a good portion of people can no longer afford food, let alone housing, utilities, etc. there could be people who have loaded up on guns that decide to take things into their own hands. There are militias out there just waiting to use their firepower. I wouldn't be surprised if the national guards are already prepping for this in some way. It's going to look so shitty when the US can't even provide for the basics for their own citizenry, while the wealthy have all retreated to their chalets with a years worth of food.
I see the possibility of supply chain breakdown in certain sectors. It's hard with all that's going on to not let my brain get into this major funk. Hopefully we will dig ourselves out of this, but this is waaaaaay bigger than 2008.
i've had this same thought now for awhile. america is ripe for a situation like this. once the first shot is fired, somewhere, it's going to spread. this is one of the reasons i have longed to move to canada. a day late, dollar short i guess.
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I was talking with my husband about this. This could be REALLLLY bad here soon. People living paycheck to paycheck will soon not have enough money for the basic groceries. Is the governments plan to make bread lines and soup lines? Now with the virus people would be even afraid for that kind of interaction, and no one would want to staff that.
We literally invented the modern welfare state during the Great Depression to eliminate the need for bread lines and poor farms (because the poor farm system was overwhelmed).
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I don't want to be a party pooper, but to bring this into perspective, when I was a young lad, this planet had 2.3 billion people living on it. Today, a good 50 years later, it's 7.4 billion. What this planet really needs for long term survival of the human race is not more Teslas and not a flu virus, but a meteor that takes about 4,000,000,000 to their creator, primarily in Africa and South East Asia.
On a related note, every weekend more people get shot to death in Chicago's gang ghettos than die from the Covidvirus nationwide. To predict that a million people in the US will die from it is beyond wacko.
Wow, we got Thanos here!
I'll be honest. I kind of thought that Thanos had a point.
Has the COVID lesson in exponential growth changed your mind about the effectiveness of killing half the population?
I’m not really certain what you’re asking.
However, snapping away half the population wouldn’t really do much anyway. Based on how often the earth doubles its population, we’d be right back at the current population in less than a century.
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However, snapping away half the population wouldn’t really do much anyway. Based on how often the earth doubles its population, we’d be right back at the current population in less than a century.
You haven't watched modern trendlines.
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I was talking with my husband about this. This could be REALLLLY bad here soon. People living paycheck to paycheck will soon not have enough money for the basic groceries. Is the governments plan to make bread lines and soup lines? Now with the virus people would be even afraid for that kind of interaction, and no one would want to staff that.
We were talking the possibility of some civil unrest. When a good portion of people can no longer afford food, let alone housing, utilities, etc. there could be people who have loaded up on guns that decide to take things into their own hands. There are militias out there just waiting to use their firepower. I wouldn't be surprised if the national guards are already prepping for this in some way. It's going to look so shitty when the US can't even provide for the basics for their own citizenry, while the wealthy have all retreated to their chalets with a years worth of food.
I see the possibility of supply chain breakdown in certain sectors. It's hard with all that's going on to not let my brain get into this major funk. Hopefully we will dig ourselves out of this, but this is waaaaaay bigger than 2008.
The 1990s called, they want their militia conspiracy back.
As someone who has been in the National Guard my entire adult life, I can assure you we are not planning for that. We are planning for distributing medical supplies, food, water, etc. which is what they're already doing. Beyond that, defense support to civil authorities, or DSCA, is one of our missions. But it pretty much means providing logistical or similar support - rarely is it to quell civil unrest or law enforcement.
Food pantries are still going to be open along with other forms of charity. We have a neighbor who has been helping out my family by going to the store for some things that can't get delivered. Most people will soon get their helicopter money from the government. Some, like us, will donate it to those in need. Americans are pretty damn generous when it comes to helping others and I've no doubt people will continue to step up.
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A week ago someone mentioned exponential spread, then pointed to China and Korea as examples of places where it's still slowly spreading. China are Korea see less than a dozen COVID-19 deaths a day for the past week - a sharply lower trend from weeks ago. The data I see show a flattening of the curve more than exponential increase right now.
Although an infected person can't be cured, the virus can be killed by ~75% alcohol sprayed on surfaces. I thought Korea was overdoing it, now I see spraying in many countries during the lock down - and probably afterwards. If mask production gets high enough, will enough people wear them to limit the virus' spread?
Korea flattened the curve using tests that require people wait in isolation 2-3 days for the results. More recently, I see people waiting ~10 hours for results at the location. And newly approved tests work in 15-45 minutes using existing hospital equipment, which sounds like the ideal combination for mass testing.
Past epidemics ended with detection and quarantine, not vaccines. If you look at other coronavirus epidemics, MERS ended without a vaccine. Or skipping over past epidemics smaller than the current 500k cases, I think you wind up at the Spanish Flu epidemic that coincided with WWI (which helped it spread). Also not ended with a vaccine. To me, the story is testing, testing, testing.
CDC has already given guidance on health care workers returning to work. Some places are already dealing with returning to work, to save lives. What stops the same approach being used elsewhere? Producing more protective masks and gowns? More tests? If the only thing stopping the U.S. economy from getting back to normal is some stuff people want to buy, I'm betting on Americans buying stuff and getting back to work (after the first wave of COVID-19).
The CDC guidelines, in case it's informative:
https://www.cdc.gov/coronavirus/2019-ncov/healthcare-facilities/hcp-return-work.html
This article about workplaces is more interesting, but unlike the CDC the writer isn't an expert on health care:
https://qz.com/1824506/coronavirus-people-can-return-to-work-if-us-follows-these-steps/
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This opinion article is arguing that we won’t be able to produce enough masks or gowns or chemical reagents needed for tests to meet our needs.
https://www.nytimes.com/2020/03/27/opinion/coronavirus-trump-testing-shortages.html?referringSource=articleShare
That is a frightening figure in my opinion, especially when we don’t have any intelligent human being in a leadership position at the federal level.
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This opinion article is arguing that we won’t be able to produce enough masks or gowns or chemical reagents needed for tests to meet our needs.
https://www.nytimes.com/2020/03/27/opinion/coronavirus-trump-testing-shortages.html?referringSource=articleShare
That is a frightening figure in my opinion, especially when we don’t have any intelligent human being in a leadership position at the federal level.
Good thing that's a useless opinion article.
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$100 to favorite charity. 1,000,000 Deaths in the USA per this website: https://www.worldometers.info/coronavirus/ , September 12, 2021 end date . I'll set a reminder?
Assuming that website is still getting updates, absolutely.
Bet on. Fingers crossed that I lose.
$100 to favorite charity. 1,000,000 Deaths in the USA per this website: https://www.worldometers.info/coronavirus/ , September 12, 2021 end date . I'll set a reminder?
Assuming that website is still getting updates, absolutely.
Bet on. Fingers crossed that I lose.
@PDXTabs it is September 13 today, the total death count per the website we agreed on states 678,001 (including 9/12) as the total deaths in the USA which is less than 1,000,000. I will PM you my charity info for the $100. A lot has happened since this bet was placed 18 months ago. I'll say that the death count was higher than I thought, I would have taken the bet at 1/2 million... but I'm glad I didn't.
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Indeed, thanks for re-activating the thread.
It's pretty impressive how resilient our Private Sector has been.
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Here in Louisiana I can conclusively say that we are at the beginning of a depression.... of the tropical type.
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$100 to favorite charity. 1,000,000 Deaths in the USA per this website: https://www.worldometers.info/coronavirus/ , September 12, 2021 end date . I'll set a reminder?
Assuming that website is still getting updates, absolutely.
Bet on. Fingers crossed that I lose.
@PDXTabs it is September 13 today, the total death count per the website we agreed on states 678,001 (including 9/12) as the total deaths in the USA which is less than 1,000,000. I will PM you my charity info for the $100. A lot has happened since this bet was placed 18 months ago. I'll say that the death count was higher than I thought, I would have taken the bet at 1/2 million... but I'm glad I didn't.
Glad I got to see the outcome of this bet. I know the worldometers counter was the chosen metric for the purposes of betting, but I wanted to check out the estimates on *all* excess deaths to see if that number comes out to be <1 million. The CDC estimates 636k-810k surplus deaths associated with COVID, including death due to COVID-19.
So even at the high end we are in better shape than 1 million deaths. But at our current rate we will probably hit that by the beginning of next year, especially factoring in high-travel holidays, COVID fatigue, and spread due to schools. It's a lose lose for everyone.
https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm
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I'm glad to have this thread re-activated too. It's a learning experience to see my thought process at the time, the things I was right about, and the things I was wrong about. Here are my benefit-of-hindsight observations:
1) I was probably a bit too influenced by financial media, which has a primary goal of being attention-getting.
2) I kept digging (through financial media) for a unique perspective or a piece of data that everyone else was dismissing. I believed that I would find this info, and it would be my advantage. E.g. the risk of Greece and Italy defaulting, or another mortgage crisis. The crowd was right to ignore these distractions.
3) Something about the process involved with #2 caused me to not dig into the $2.2T CARES Act as much as I should have. I couldn't tell if this was huge or a drop in the bucket compared to the impending economic damage. Obviously in hindsight it was the most important thing, and all I had to know was "don't fight the fed".
4) Even after the CARES Act started pushing stock prices back up, I still hesitated because I was seeing the rapid collapse of industry all around me. Prices seem detached from fundamentals, I told myself. Rising stock prices during a period of deflation? Really?
5) My confidence was shattered by Trump's inept leadership during the early pandemic. The Hoover administration's reaction to the 1929 stock market crash came to mind, and my imagination raced with concerns about how bad it could get. I was right that Trump's ineptitude would cause hundreds of thousands of deaths and cripple the U.S's public health response, but I was wrong about the financial impact of all this suffering (see #3). I thought the rising case count would have something to do with corporate earnings, but in hindsight I was expecting the tail to wag the dog.
6) Biden's no-physical-appearances campaign strategy plus the rising stock market concerned me, and I expected Trump to win re-election. I figured that outcome might guarantee a continued failure to deal with the pandemic in 2021 (see #2). In hindsight, the election wasn't the reason the COVID wave crashed in December/January. It was the span of time without a holiday after New Year's.
7) I foresaw the development of vaccines, but I failed to foresee the speed at which highly effective vaccines were produced, approved, and distributed. At least when the Pfizer results were announced in November 2020, I went from a conservative allocation to all-in, so I salvaged 2020 in the 4th quarter and escaped with a small portfolio gain.
8) I extrapolated COVID's mortality rate and decided in early summer 2020 that the pandemic would probably kill 1M Americans. This estimate has been prescient so far, if you count official COVID deaths plus the excess death rate. However, the pandemic is clearly not done with us yet, so perhaps my estimate will turn out to be low.
Overall, I made some correct estimates about the scope of the pandemic, Trump's incompetence, and the eventuality of vaccines. However, I was mostly wrong about the financial impacts because I underweighted the impact of the CARES Act. This may reflect the difference in quality between my information sources for science information and my information sources for financial information. In the future, I should discount financial journalism, and lean harder on scientific sources like the CDC, FDA, pharma companies, or less speculative forms of news.
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Here in Louisiana I can conclusively say that we are at the beginning of a depression.... of the tropical type.
Nice reference to the Alan Jackson song.
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$100 to favorite charity. 1,000,000 Deaths in the USA per this website: https://www.worldometers.info/coronavirus/ , September 12, 2021 end date . I'll set a reminder?
Assuming that website is still getting updates, absolutely.
Bet on. Fingers crossed that I lose.
$100 to favorite charity. 1,000,000 Deaths in the USA per this website: https://www.worldometers.info/coronavirus/ , September 12, 2021 end date . I'll set a reminder?
Assuming that website is still getting updates, absolutely.
Bet on. Fingers crossed that I lose.
@PDXTabs it is September 13 today, the total death count per the website we agreed on states 678,001 (including 9/12) as the total deaths in the USA which is less than 1,000,000. I will PM you my charity info for the $100. A lot has happened since this bet was placed 18 months ago. I'll say that the death count was higher than I thought, I would have taken the bet at 1/2 million... but I'm glad I didn't.
PM sent. Happy to lose.
@bbates728, I owe you a beer.
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Haha awesome. Happy to see that the death toll was lower than anticipated but damn, that is still a lot of people...
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That figure accurate?
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That figure accurate?
Agreed upon terms of the bet to use that source. Anyone can find a source to say what they want it to say at this point.
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That figure accurate?
https://www.cdc.gov/nchs/nvss/vsrr/covid19/excess_deaths.htm has 676,466 - 848,138 deaths.
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While it's pretty clear that the parties to the wager are both satisfied, I'm a bit relieved to see people arguing the official death toll is too low. Feels like a bunch of people around me (both spatially, and via social media) still think the whole COVID thing is no big deal, and should have something like the flu death toll of 30,000-75,000.
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While it's pretty clear that the parties to the wager are both satisfied, I'm a bit relieved to see people arguing the official death toll is too low. Feels like a bunch of people around me (both spatially, and via social media) still think the whole COVID thing is no big deal, and should have something like the flu death toll of 30,000-75,000.
we could get to that number if people would take the vaccine currently 76% of the US has at least had 1 shot so that's higher than I'd expect. Biden's mandate looks to have precedence so that should get us into the mid to high 80s. Basically hardcore precovid antivaxxers are all you have left after they have to deal with losing their job. See Delta airlines.
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I am contemplating a work trip to a city about 400 miles away, and it just seems like flying is a mess right now, I found a deal on a rental car, and I'm just going to drive it. I don't enjoy doing the driving myself (when it could be a professional flying a plane), but airlines seem like they're having trouble staying on schedule, and I would like to not worry about the other people on the plane proving they're constitutional prowess.
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I am contemplating a work trip to a city about 400 miles away, and it just seems like flying is a mess right now, I found a deal on a rental car, and I'm just going to drive it. I don't enjoy doing the driving myself (when it could be a professional flying a plane), but airlines seem like they're having trouble staying on schedule, and I would like to not worry about the other people on the plane proving they're constitutional prowess.
i currently have 2 rountrips to maui booked on top of each other incase one changes and i dont like the new flights.
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I feel like a minnow swimming among whales.
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I feel like a minnow swimming among whales.
Huh?
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I am contemplating a work trip to a city about 400 miles away, and it just seems like flying is a mess right now, I found a deal on a rental car, and I'm just going to drive it. I don't enjoy doing the driving myself (when it could be a professional flying a plane), but airlines seem like they're having trouble staying on schedule, and I would like to not worry about the other people on the plane proving they're constitutional prowess.
i currently have 2 rountrips to maui booked on top of each other incase one changes and i dont like the new flights.
Under what conditions would you re-book one of these so as not to burn the trip?
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I am contemplating a work trip to a city about 400 miles away, and it just seems like flying is a mess right now, I found a deal on a rental car, and I'm just going to drive it. I don't enjoy doing the driving myself (when it could be a professional flying a plane), but airlines seem like they're having trouble staying on schedule, and I would like to not worry about the other people on the plane proving they're constitutional prowess.
i currently have 2 rountrips to maui booked on top of each other incase one changes and i dont like the new flights.
Under what conditions would you re-book one of these so as not to burn the trip?
I'm not sure i understand what you're asking.
I have a one way on american to hawaii booked and a one way on southwest booked the same day
I have delta and southwest booked to return on the same day.
These are all booked with points and i get all my points back if i cancel any of the flights. currently both southwest flights are most favorable if they dont change.
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being able to costlessly exit the itineraries seems like a Nice use of the points...
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being able to costlessly exit the itineraries seems like a Nice use of the points...
This used to be my loophole on Southwest all the time. A refundable ticket was like $200-400 but a non-refundable ticket was like $50-100 in points (Wanna Get Away fare over three weeks in advance). Cancel the points ticket, points back no questions asked
Of course Southwest had a decent fare bank for canceled non-refundable flights but it was kind of a pain to manage because I had to keep track of old reservation numbers.