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Old 03-24-2020, 12:08 PM
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"We may destroy our economy." What does this actually mean?


I understand that it is hypothetical, but I am looking for actual answers rather than opinions. (Is that even possible with this question?) But I would like to understand the concern/worry that people are expressing if the epidemic goes on for months. What does it actually mean to "destroy the economy"? Is this a bit of "the sky is falling"? I know that a lot of jobs will disappear, but won't many of them return when health begins to return? Money? The government seems to print money when it needs money. Banks have money. I mean, I know I'm ignorant of all this, but that's why I come here. Any relatively simple answers?
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Old 03-24-2020, 12:24 PM
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"The economy" isn't about money. Money is just one way of keeping track of what the economy does. The economy is about the exchange of goods and services. All of those people who are out of work right now, produce some good or provide some service that other people want or need. Right now, those goods and services are not being produced or provided, and that has consequences. It's not as simple as putting more money into the economy, because it was never about the money. The way to fix an economy is by producing more goods and providing more services.
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Old 03-24-2020, 12:25 PM
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Since as you recognize there is no clearly defined meaning to the term, let's move this to Great Debates.

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Old 03-24-2020, 12:36 PM
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I know that a lot of jobs will disappear, but won't many of them return when health begins to return? Money
A lot of the jobs that have been temporarily shut down are in the service economy. The money that would have been earned by them is permanently gone to the people who had those jobs. You can't eat the restaurant meal that you would have gone out for this week two weeks from now. The restaurant owner, cooks, waiters, and so on will earn less this year no matter what happens.

Worse, that reduction in income has effects on the rest of the economy. When a lot of people are out of work and have reduced income they won't buy the goods and services they might have otherwise, particularly goods and services that aren't strict necessities.
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Old 03-24-2020, 12:51 PM
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Just look at professional sports.
As far as necessities go, they are close to the bottom of the list, and yet it’s a multi-billion dollar business - that is being shut down by this.
When people are worried about having a job, they aren’t going to be spending money on going to sporting events, even if they were being held.
So, that’s an enormous amount of the economy that is being hurt, and not likely to recover very quickly.
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Old 03-24-2020, 12:54 PM
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I understand that it is hypothetical, but I am looking for actual answers rather than opinions. (Is that even possible with this question?) But I would like to understand the concern/worry that people are expressing if the epidemic goes on for months. What does it actually mean to "destroy the economy"? Is this a bit of "the sky is falling"? I know that a lot of jobs will disappear, but won't many of them return when health begins to return? Money? The government seems to print money when it needs money. Banks have money.
There's three different questions here:

1. Loss of money,
2. Loss of jobs, and
3. Destruction of the economy.

As Chronos has said, the ecopnomy isn't about money. Money is a way to facilitate the exchange of goods and services, but fundamentally it's the goods and services the economy is about. You cannot eat money, live in it, or drive it around, but you can buy food, housing and transportation.

Printing or creating new money can help an economy a bit, by encouraging people to borrow and invest in new business, but only to a point. Money represents the total value of the goods and services it represents so beyond a certain point if you are creating new money you're just causing massive inflation, which is very bad.

Loss of jobs is VERY bad. You are right in that eventually that problem will go away; it went away after the 2009 recession. It's very bad while it happens, though, and the extreme possibilities of this disaster would cause misery and hardship for years. Sicne World War II, the US unemployment rate has topped ten percent for an annual average only once, in 1982. 10-11 percent is really, really bad, but this could go to 15 percent or worse. That would cause at least several years of real hardship and poverty.

beowulff uses the example of pro sports, which are pretty much shut down. No one feels bad for millionaire athletes, but for the countless working class athletes and support staff this is a disaster, and pro sports is actually not that big a business; the National Football League, the richest pro sports league there ever was, between all its teams makes less money in a year than HUNDREDS of American corporations. The impact of a serious slowdown to a company like DuPont, General Motors or Procter and Gamble, all of which are as big or bigger than the entire professional team sport industry in the USA, is obviously way worse.

What people are very afraid of is total economic collapse - that is to say that the economy ceases to function at a basic level. The economy was bad in 1982 and 2009, but it still worked. Most people had jobs, stores had goods, people had food. The supply chain functioned. The tax base kept the apparatus of state working. If we try to all stay home for the rest of the year, or if COVID-19 was even worse than we thought and killed millions of people every month for a year, the economy would literally stop functioning; you would not be able to buy food, or utilities would stop working, or some ill-advised effort to print money would result in hyperinflation. Governments would fall and wars would break out.
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Old 03-24-2020, 01:19 PM
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What people are very afraid of is total economic collapse - that is to say that the economy ceases to function at a basic level. The economy was bad in 1982 and 2009, but it still worked. Most people had jobs, stores had goods, people had food. The supply chain functioned.

But it almost didn't. "Destroy the economy" usually means creating a vicious cycle or feedback loop where businesses close, jobs are lost, demand for products drop because no one can afford to buy them, causing more businesses to close, so on and so forth. If it gets bad enough, there simply won't be goods or services available.

Keep in mind, we also need the economy running so that companies can continue to perform research and manufacture critical medical supplies. So it's not simply an "either / or" choice.
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Old 03-24-2020, 02:09 PM
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I like analogies, here is an analogy that might help.

I grew up in a northern state that had winters. After I finished school, I moved to a southern climate. Once, one of my co-workers, who grew up in the southern climate, asked me, "So, what happens when it snows really bad there? Does everything just shut down?" I thought for a bit, and then answered, "Not really. See, there are still fires to fight, and people still need to get to the hospital. So, we need to get the roads cleared so the fire trucks and ambulances can get through. Then, once the roads are cleared, everyone else can get through too, so life goes on pretty much as normal."

The economy is the roads.
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Old 03-24-2020, 02:09 PM
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When you talk loss of jobs, you have to distinguish jobs lost temporarily, like in the car or airline industry, and jobs lost permanently, when the company goes bust. The research I saw from an investment company seemed to assume job loss was temporary, and workers would be swiftly reemployed when the virus subsides. I think a lot of job loss will be in the latter category - that restaurant that closes, that company that goes bankrupt.
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Old 03-24-2020, 02:26 PM
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Keep in mind you can start a recession purely on the fear of a recession. If people think financial hardship is coming, they pull back, they don't plan that vacation, they eat out less, they order fewer things on Amazon. When millions of people do that, then a percentage of people lose their jobs and they really pull back on spending because they don't have a job. Then millions of people here that jobs are being lost, so they spend even less. Its a cycle. And that didn't' even have a nasty epidemic to start it.

It is not hard to believe that this could be a blow that could replicate the great recession (2008) again. Different event, similar end result. High unemployment, companies that were already deep in debt go down, fear of deflation, etc.

It is easy for the country's leadership (with or without reelection concerns) to look at this and say, for every week we put a pause on the economy, the worse and worse the economy will be.

You can't ignore COVID and say everything back to normal because that would be terrible on one side. However, you can't pause the largest economy of the world until every last COVID case is cleared up, because that would make the great depression look like child's play. In between those extremes is the best answer and that is not an easy call.
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Old 03-24-2020, 02:29 PM
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The research I saw from an investment company seemed to assume job loss was temporary, and workers would be swiftly reemployed when the virus subsides. I think a lot of job loss will be in the latter category - that restaurant that closes, that company that goes bankrupt.
Which highlights the need for debt relief, loan guarantees, eviction abatement, and unemployment and basic living subsidies to people in need or economic crisis in addition to subsidized or free medical treatment to encourage people not to try to wait out a critical case of illness. Nearly all of the losses we are experiencing now can be recovered because there is no real loss of infrastructure or essential goods (although there will definitely be a long term effect on many service jobs) but this works only if people feel secure right now. When you see news stories of people having utilities shut off or being evicted, it is a symptom of the desperate fragility of our current systems, and homeless shelters and food banks can’t even begin to make up the difference.

This is not a time to stand on some kind of ideological principle about how people should just take care of themselves, or the market will work it out, or whatever self-serving bullshit you got from an Ayn Rand novel. This is a collective problem for the entire world, and it needs broad, expansive, and practicable solutions that can be affected right now.

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Old 03-24-2020, 02:52 PM
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But it almost didn't. "Destroy the economy" usually means creating a vicious cycle or feedback loop where businesses close, jobs are lost, demand for products drop because no one can afford to buy them, causing more businesses to close, so on and so forth. If it gets bad enough, there simply won't be goods or services available.
We weren't anywhere near that point in 1982 or 2009. This crisis, if sufficiently screwed up, could bring us there. Normally I'd say there's no chance of it getting that bad, but the world's largest economy has a moron as its head of state and a gang of criminals running the Senate.
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Old 03-24-2020, 06:11 PM
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When you talk loss of jobs, you have to distinguish jobs lost temporarily, like in the car or airline industry, and jobs lost permanently, when the company goes bust. The research I saw from an investment company seemed to assume job loss was temporary, and workers would be swiftly reemployed when the virus subsides. I think a lot of job loss will be in the latter category - that restaurant that closes, that company that goes bankrupt.
During the great recession we lost millions of jobs, and it took almost ten years to get them all back. The unemployment rate didn't go back to 2007 levels until around 2018 or so.

I mean, we'd have to create a million jobs a month for us to be back on track within a short period of time. I don't know if that kind of job growth is realistic.

Also I agree, a lot of businesses will close permanently. A lot of restaurants and things like that are going to go under and stay under.
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Old 03-24-2020, 09:26 PM
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During the great recession we lost millions of jobs, and it took almost ten years to get them all back. The unemployment rate didn't go back to 2007 levels until around 2018 or so.

I mean, we'd have to create a million jobs a month for us to be back on track within a short period of time. I don't know if that kind of job growth is realistic.

Also I agree, a lot of businesses will close permanently. A lot of restaurants and things like that are going to go under and stay under.
The data would eventually show a recovery; it would also show widening inequality. But what *that* data would be less likely to show is how some people essentially get pushed from having a chance to stay in the middle class to being in poverty for the rest of their lives. Bootstrapping is kinda overrated bullshit. Makes for a great TV documentary on A&E, but for most of us, it's not reality.
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Old 03-24-2020, 09:41 PM
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We weren't anywhere near that point in 1982 or 2009. This crisis, if sufficiently screwed up, could bring us there. Normally I'd say there's no chance of it getting that bad, but the world's largest economy has a moron as its head of state and a gang of criminals running the Senate.
I would say that it was worse in 2009 because there was a fundamental problem with the way our banking system worked. Left unchecked, you had the risk of other financial services companies like AIG going the way of Bear Sterns and Lehman Brothers. Unable to obtain financing, you would then have companies large and small suddenly unable to make payroll. There was a real concern about a cascading failure of not just banks but all kinds of companies.

There isn't anything structurally wrong with our economy now (at least, not any more than usual). Things are just on hold while we figure out how long we want to try to wait this virus thing out.

And it's been a week and a half. Companies don't just go out of business in two weeks.
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Old 03-24-2020, 09:55 PM
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There are many jobs that need doing. Always have been. When people lose their jobs because a factory, business or part of the economy no longer needs those goods or services or not enough of them to keep so many people employed, they will have to look to other positions. What did buggy-whip manufacturers do when those companies went out of business? Did the people just stop working? I doubt it. They found other lines of work. Many new positions will require training. At some point, then, new jobs or positions will open up and newly trained people will be able to fill those positions. One example, we do not have anywhere near enough immigration workers of all types - from judges to court workers to clerical workers to social workers to security workers. The government should hire people to train people to do those jobs. Two problems solved: jobs for people who needed one and improvement in our immigration system. Another example: everyone hates calling a company and getting those damned menus: If you want xyz dial 1, if you want abc, dial 2, etc. Companies have automated the job of operator because it saved them money. It's harder for customers, but they don't care because it's cheaper. The company needs to hire people for those jobs. Maybe they get a government boost of some sort for hiring new people. It's the way things worked after WWII. The government spent money to get people trained and back to work. The GI bill, etc. The economy is going to change. Society is going to change. Here's a chance to guide those changes. I bet most people can name a zillion jobs they think should be manned by someone. De-automate society and put people to work.
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Old 03-24-2020, 10:25 PM
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It seems to me that what most Very Serious People mean when they say "We may destroy the economy" is really "The economy in its current configuration advantages me greatly and to have it change substantially means it's terrible FOR ME and is therefore globally terrible for all." That's not strictly true, though. We have a really bad virus to wait out and the smart thing to do is to continue the form of the current economic system in a reduced scope in order to facilitate that. If we do things like global debt jubilee (for humans, not corporations) and a rent freeze (for humans AND corporations) and a mortgage freeze (for humans and corporations) and a stipend for necessary living expenditures (for humans only) then we do indeed just slow it all down to a crawl in order to let us hunker down and get better--pretty much the way an individual organism behaves when it's direly ill. When you have a bad case of flu you no longer care about perfectly folded laundry, whether or not your car is clean or the TPS reports from work because your focus has drawn inward and your processing capabillity is being used solely to survive. When you feel better, you expand your ability to do the things.

Corporations squawk that this means they won't survive--well, no, they'll just be operating on a lower and slower scale for a while. Transportation will drop significantly but manufacturing and health care will be booming. Once things level out and we can all think about something over and above bare survival then we'll add back in the businesses and activities we find essential and desirable. Even if Company A goes under, if Company A's functions are necessary then Companies B, C, D, and so on will spring up to take over those functions. If Company E goes under and nobody in the post pandemic world sees a need for its functions then it will stay dead--too bad for those who own it, but it's just a necessary market adjustment. I'd guess that all the businesses that need subsidies to remain afloat might actually be functions society doesn't really need or want any more but that are being kept alive by artificial means--like a lung patient on a ventilator, really.

They say the banks are too big to fail but if that's true then they can't fail. They'll fail if they're badly managed, or do things that nobody wants or needs done and don't do what people do need done. The ones who'll be disadvantaged by that are the ones taking advantage of all of us right now with their very existence.

People need to eat, they need clean water to drink, they need a place to live, and power to facilitate their lives and to be healed when they're sick. They need their kids to be educated, and a way to keep track of who owes who what and public safety and entertainment. Maybe we just need to adjust our ideas of what those things mean and how we want them to be to suit the majority of actual humans, rather than continue to prop up a system that obviously benefits the very few at the vast cost to the many. Maybe it's time to fix that.

Because this virus is going to disrupt the holy fuck out of basically everything, it's naive to think it won't, and once the Lego castle has been reduced to rubble is it actually a requirement that you rebuild that exact castle the way it was? Maybe something else would be better, I think it's worthwhile to think about that and push for systems that work for more people than just a few elites. Because fuck those people, seriously.
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Old 03-25-2020, 01:16 AM
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We still don't have a 'Like' button on these boards, do we.

We really need a 'Like button
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Old 03-25-2020, 01:40 AM
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Which highlights the need for debt relief, loan guarantees, eviction abatement, and unemployment and basic living subsidies to people in need or economic crisis in addition to subsidized or free medical treatment to encourage people not to try to wait out a critical case of illness. Nearly all of the losses we are experiencing now can be recovered because there is no real loss of infrastructure or essential goods (although there will definitely be a long term effect on many service jobs) but this works only if people feel secure right now. When you see news stories of people having utilities shut off or being evicted, it is a symptom of the desperate fragility of our current systems, and homeless shelters and food banks can’t even begin to make up the difference.

This is not a time to stand on some kind of ideological principle about how people should just take care of themselves, or the market will work it out, or whatever self-serving bullshit you got from an Ayn Rand novel. This is a collective problem for the entire world, and it needs broad, expansive, and practicable solutions that can be affected right now.

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Yes, there are times when ideologies and normal expectations have to be put aside to deal with emergency situations.

One would be seen as nuts if all of the sudden they grabbed the garden hose, walked inside and started dousing everything with water.
One would also be seen as nuts if the house was on fire and they stopped the firemen from coming in and dousing everything with water.

At a time of crisis it's a waste of time and a dangerous distraction to squabble whether abnormal situations should be taken as benchmark for policies to be applied during normal conditions.
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Old 03-25-2020, 06:47 AM
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I would say that it was worse in 2009 because there was a fundamental problem with the way our banking system worked. Left unchecked, you had the risk of other financial services companies like AIG going the way of Bear Sterns and Lehman Brothers. Unable to obtain financing, you would then have companies large and small suddenly unable to make payroll. There was a real concern about a cascading failure of not just banks but all kinds of companies.

There isn't anything structurally wrong with our economy now (at least, not any more than usual). Things are just on hold while we figure out how long we want to try to wait this virus thing out.

And it's been a week and a half. Companies don't just go out of business in two weeks.
2009 was worse because there was so much bad debt that we had a genuine crisis in confidence. Modern markets depend a lot on lending, and they can't work when people have no confidence in getting paid back. In 2009, all of the big houses were exposed. Confidence totally collapsed. Credit froze. Liquidity was zapped. The only thing people still had confidence in was the public sector's ability to pump liquidity back into the markets.

In 2020, we don't have a confidence problem so much in the private sector; however, we increasingly have one in the public sector. People are less confident that governments can work together to coordinate a global response to a global problem. People are less confident now that political factions can put aside differences to craft stimulus packages that work effectively. More to the point, in this particular situation, we may end up having a loss of confidence in the ability of officials to put aside politics to stop a once in a century contagion - and that would be disastrous.

The longer the the health crisis continues, the greater the health toll will be. And the greater the health toll, the greater the economic toll. People will end up losing faith in their government's ability to deal with both the health and economic crisis. That's how political unrest starts.
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Old 03-25-2020, 07:18 AM
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I would say that it was worse in 2009 because there was a fundamental problem with the way our banking system worked. Left unchecked, you had the risk of other financial services companies like AIG going the way of Bear Sterns and Lehman Brothers. Unable to obtain financing, you would then have companies large and small suddenly unable to make payroll. There was a real concern about a cascading failure of not just banks but all kinds of companies.

There isn't anything structurally wrong with our economy now (at least, not any more than usual). Things are just on hold while we figure out how long we want to try to wait this virus thing out.

And it's been a week and a half. Companies don't just go out of business in two weeks.
I get the sense you're thinking too much about big NEw York companies.

Obviously the economy isn't going to collapse from a two week hold. But we're not talking about total collapse from two weeks of layoff, we're talking about a few months. At that point, in fact most small businesses are dead.

The unemployment rate in 2009 topped out a shade under ten percent in the USA. This crisis could push it way, way past that.
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Old 03-25-2020, 10:34 AM
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The difference between 2008-2009 and today is that 2008-2009 was primarily an economic problem. This is a non-economic problem that is affecting the economy.

I am not going to resume my former activities until things are safer. Some guy in NOLA DJs at a club, contracts COVID-19, now dead. Not really worth it, it seems. Same as with the things I do. Not worth it for me to go play pub trivia, contract COVID-19, go to the ICU, get permanent damage possibly.

You could keep everything open and business would still be way, way, down. Look at the airlines.

We need to, as societies, make things safe again as much as we are able. I'm not going to resume those activities until we do so. You can tax me more to help the people affected, as long as I am employed that is fine. I'm not going to go and do those things, I would rather be taxed and stay home.
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Old 03-25-2020, 11:02 AM
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The problem in 2009 was not a fundamental economic problem. It was a problem with money. But again, that's not what economies are about. In 2009, goods and services still existed; it was just a question of how to exchange them. That's what McCain meant when he said that "the fundamentals of the economy were strong": People were still producing goods and providing services.

Now, though, we do have a fundamental problem, because those goods and services are currently not being produced. You can't address questions about how to exchange them until they exist. You can't even start to fix things until people are back at work. And that's only when you start fixing them. Then you still have all the same sorts of non-fundamental problems we had in 2008, and you have to fix those.
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Old 03-25-2020, 11:40 AM
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If our economy can’t stand the effects of this epidemic then that is an indication that it needs to be ‘destroyed’, i.e. replaced with something more robust and in which a moderate hiatus in non-essential services does not result in a crippling recession because the next global pandemic is likely to be worse. And if this puts a bunch of investment bankers and options traders out of work, well, we have an enormous need for carpenters, plumbers, electricians, millwrights, roofers, mechanics, and other tradespeople who produce actual value through their labor instead of multiplying Monopoly money by bullshitting each other.

As an aside, why are trading markets still open right now? Is there something essential about the stock market that it needs to function in chaotic, barely regulated fashion during a national emergency while companies and small businesses are uncertain about when and how they will be able to conduct business?

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Old 03-25-2020, 11:51 AM
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As an aside, why are trading markets still open right now? Is there something essential about the stock market that it needs to function in chaotic, barely regulated fashion during a national emergency while companies and small businesses are uncertain about when and how they will be able to conduct business?
Do you think people who need money for present emergencies shouldn't be able to liquidate their assets right now?

If you think they should be able to get cash, then most of the other rationales for a functioning market immediately follow.
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Old 03-25-2020, 11:56 AM
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As an aside, why are trading markets still open right now? Is there something essential about the stock market that it needs to function in chaotic, barely regulated fashion during a national emergency while companies and small businesses are uncertain about when and how they will be able to conduct business?
The markets are open because to the moneyed elite that IS the economy--they're fully through the looking glass and think the reflection is the actual thing. Closing down the stock market means THEY won't be making money during the pandemic, and while that's just fine for hoi polloi and peasants it simply Will Not Do for the money class to have to go without their daily fix of gambling with other people's lives and livelihoods. Hence them being frantic to get us all BACK TO WORK PEASANTS regardless of the death toll in order to facilitate their imaginary game--why they can't just play video games like ordinary losers I just don't know.

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Old 03-25-2020, 12:06 PM
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Do you think people who need money for present emergencies shouldn't be able to liquidate their assets right now?

If you think they should be able to get cash, then most of the other rationales for a functioning market immediately follow.
Yeah, the trading going on in the stock market right now has nothing to do with “need[ing] money for present emergencies”, and the amount of speculation based upon misinformation and misdirection is causing the market to oscillate in such radical, unprecedented ways that ordinary investors—most of whom are invested in mutual funds and index funds for which many are dependent as their source of retirement income—are legitimately fearful for their future, while options traders and major corporations are looking for a chance to buy back their own stock for pennies on the dollar. Meanwhile, the people most in need of immediate help—those who are homeless, are being evicted, are having their utilities shut off, or can barely pay for groceries on a good day—are literally getting “a dollar late and a day short” in terms of their needs to deal with the present emergency.

A market for public investment in capital is a necessary and valuable part of our economy, and robust trading exchanges are an inherent part of why the United States was able to grow as an economic superpower (I mean, aside from being the only major industrial power that wasn’t bombed to rubble in WWII). Letting markets run wild in a time of unpredicented crisis is not necessary, or smart, or healthy for the economy.

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  #28  
Old 03-25-2020, 01:23 PM
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The problem in 2009 was not a fundamental economic problem. It was a problem with money. But again, that's not what economies are about. In 2009, goods and services still existed; it was just a question of how to exchange them. That's what McCain meant when he said that "the fundamentals of the economy were strong": People were still producing goods and providing services.

Now, though, we do have a fundamental problem, because those goods and services are currently not being produced. You can't address questions about how to exchange them until they exist. You can't even start to fix things until people are back at work. And that's only when you start fixing them. Then you still have all the same sorts of non-fundamental problems we had in 2008, and you have to fix those.
Cite that the goods and services are not being produced? Here's a cite that says they are:

https://www.google.com/amp/s/www.nyt...tages.amp.html

Last edited by Babale; 03-25-2020 at 01:25 PM.
  #29  
Old 03-25-2020, 01:28 PM
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And so it begins: Washington Post: “ Senate aid package quietly carves out billions intended for Boeing, officials say”
In a Tuesday interview on Fox, Boeing chief executive Dave Calhoun said he would not be willing to give the government an equity stake in the company in exchange for a bailout, implying the company would only accept assistance on its own terms. President Trump has said he would support the idea, suggested by his economic adviser, of taking an equity stake in companies that receive assistance in the package.
Taking advantage of a public health crisis to line your pockets, eh?

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  #30  
Old 03-25-2020, 01:32 PM
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Cite that the goods and services are not being produced? Here's a cite that says they are:

https://www.google.com/amp/s/www.nyt...tages.amp.html
Chickens are going to keep laying, dairy cows are going to keep producing milk, and farmers will plant and grow grain (where their fields aren’t being submerged by climate change-induced flooding or bankruptcy due to Trump’s “trade war” with China). A lot of service jobs and hospitality businesses like restaurants and hotels have and will continue to be negatively impacted, which is why there is a need for subsidy and debt relief now, and a program to build up jobs in critical industries in the near term (and by “jobs” I mean real full-time employment, not “gigs” like driving for Uber at a net below-minimum-wage rate) so we don’t lose critical infrastructure. The biggest danger to the economy are the people trying to speculate upon it rather than produce anything of actual value or service.

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  #31  
Old 03-25-2020, 02:18 PM
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Yeah, the trading going on in the stock market right now has nothing to do with “need[ing] money for present emergencies”
Liquidity for those as need it has everything to do with keeping markets open. Everything. Not "nothing".

There are people who need money right now, and some of them are selling right now because they need money. These people exist, as I hope you would not deny. They need buyers on the other side of their transactions, as I hope you would not deny. They have assets, and they need someone with cash to buy their assets. We're not talking about "nothing to do" here, which is kneejerk hyperbole, probably born from understandable frustration with the general situation. (You're generally smarter than this.) The percentage of people making these trades is not 0%. It is >0%. Not much greater, but that is essentially always the case.

The stock traded in the market comes into existence with corporations selling directly to buyers to raise funds. But most trading is not corporations selling stock. Most trading is the secondary market of people buying and selling it to each other. Corporate sales are close to 0% of trades, but not literally 0%.

During normal times, corporations have greater liquidity in their sales, an easier time of raising money, and more information about how much they are likely to raise if they need to go back to the market for more, precisely because ~99.9% of trades do not involve them at all. The majority of trading serves the purposes of the small minority. This is completely normal. It's not some unusual thing. The moment we acknowledge that some small fraction of the market has liquidity needs -- as you seem to be outright denying, with your "nothing to do" nonsense -- then we acknowledge the need for the market to remain open.

And when it's open, people will trade.

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Originally Posted by Stranger On A Train View Post
and the amount of speculation based upon misinformation and misdirection is causing the market to oscillate in such radical, unprecedented ways
The market is oscillating wildly because no one has a clear idea of how many people are going to die, and how much damage that's going to cause. I've seen estimates from tens of thousands, to literally millions of deaths, within the United States alone.

Nobody has got the slightest fucking clue what these corporations should be worth.

It would be unreasonable if the price weren't oscillating wildly. The price should look like a rabbit on speed. The volatility is itself a signal of the deep and pervading ignorance of the current situation.

But some people still need to sell.

And they still need buyers on the other side of their transactions. Which means: they need the markets to be open. But according to you? "Why are trading markets still open right now?"

Because people who need to sell require buyers despite the fact that we have no clear idea what the price should be. There needs to be a market for them to sell their assets so that they can get the cash they need, despite the deep and pervading uncertainty about what that price should be. So yes, the price in that market is going to swing wildly. And yes, as soon as we acknowledge that this market should exist -- that there are people with assets who need cash -- then the existence of that market immediately implies that most of the transactions in the market are going to be for other purposes. You're acting like that is some unusual thing, but again, this is completely normal. We would ordinarily hope that regular trading involves some sort of "wisdom of crowds", aggregation of disparate information situation, but that's not necessarily going to happen all that well when no one has any idea what's going on.

But people still need to sell. And they still need buyers on the other side of the transaction. And even if our normal mechanism for trying to aggregate info is bad, it remains the least bad mechanism in existence, even during the current shitshow.

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Originally Posted by Stranger On A Train View Post
that ordinary investors—most of whom are invested in mutual funds and index funds for which many are dependent as their source of retirement income—are legitimately fearful for their future
People should be fearful for the future.

My wife and I started preparing for this in January. My mother-in-law refused to sell despite the warnings of my wife (who is also an economist). Other people who knew epidemiology were warning about the health aspects of this in January. But as it turns out, people don't always listen to experts.

Fancy that.

Did you knew there were people who go into physics threads who try to deny relativity without knowing the math?


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Originally Posted by Stranger On A Train View Post
while options traders and major corporations are looking for a chance to buy back their own stock for pennies on the dollar.
If those corporations end up going bankrupt, then that's not "pennies on the dollar". The people selling would in fact be getting a good deal by getting something out of transaction, instead of getting nothing after the bankruptcy.

If it's your personal belief that these stocks are undervalued -- if you have some insight into the current state of the world that others lack -- then you should be buying for "pennies on the dollar" right now. And in the act of buying, you would be helping push up the price to more reasonable levels. People with genuine knowledge should be acting on their knowledge, so that everyone else gets a better idea of what's going on. If those assets should be worth more, and if people have your superior knowledge that these assets are trading at pennies for the dollar, then people like you pushing up prices will help people with liquidity needs get a better price when they need to sell. People who trade with knowledge help inform everyone else. That's probably not happening a lot in the present situation, but it's still happening some. A little is better than nothing.



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Originally Posted by Stranger On A Train View Post
Meanwhile, the people most in need of immediate help—those who are homeless, are being evicted, are having their utilities shut off, or can barely pay for groceries on a good day—are literally getting “a dollar late and a day short” in terms of their needs to deal with the present emergency.
This is all completely true. The policy response has been terrible. But even given an adequate policy response in a better and smarter world, there would still be people with additional liquidity needs, and these people would still need markets to be open, even if their own transactions were a very small fraction of total volume.

But what you said was: "Why are trading markets open right now?"

They're open because people with liquidity requirements need the fucking markets to be open. We don't care, directly, about the ~99.9% of zero-sum speculative trades, except to the extent that we hope some of those trades are informative, and push the hysterical price infinitesimally closer to a reasonable figure.

We care about the small fraction of trades that legitimately matter.

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Originally Posted by Stranger On A Train View Post
Letting markets run wild in a time of unpredicented crisis is not necessary, or smart, or healthy for the economy.
Shutting down the markets completely would completely fuck over people who need cash.

If you want to talk about potential ideas that might calm the wildness of the market -- a fraction of a percent transaction tax? -- then I'd be interested in listening to that discussion. But you were outright questioning that the market should be open at all. That's a much different thing.
  #32  
Old 03-25-2020, 05:34 PM
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I'm not going to respond to the piecewise dissection of the previous post, but I'll point out that shutting down the trade exchanges during an emergency is not some kind of novel idea with no historical precedent. Offhand, I can name at least six times the exchanges were closed:
  • Assassination of President Lincoln in 1865
  • Failure of Jay Cooke & Company bank in 1873
  • During the beginning of WWI in 1914
  • For the "bank holiday" declared by FDR in 1933
  • The assassination of President Kennedy in 1963
  • In the days follwoing the World Trade Center and Pentagon attacks in September 2001

Closing the exchanges temporarily allows for the external situation to stabilize, or at least for investors to not radically speculate purely on innuendo and prevent perfidious actors from using rumor to manipulate the market. This is done because even though there is risk in losing confidence should the government admit that there is an emergency situation, it prevents the bottom falling out completely as it did on Black Tuesday of 29 October 1929.

The people who "need money right now" are not the people who have large investments in the stock markets which they can readily liquidate. They are people living paycheck to paycheck, those on fixed incomes or living in retirement on income in a 401(k), or who have just lost their job need to make the rent/mortgage payment and still be able to eat. The speculators who are bouncing the market up and down like a gerbil in cotton candy machine aren't scared for where their next meal is going to come from or whether they'll be living out of their car by the weekend; they are speculating wildly to make an instant fortune based on hoping they can outsmart the effects of a public health emergency that is beyond the experience of living memory.

It's nice that you and your wife were able to liquidate and secure your holdings. For millions of Americans who are inextricably tied into the stock market via the only unsecured retirement instruments available to them--401(k) and 403(b) plans--this kind of volatility is frightening, presenting an additional stressor while many still fear for their lives and those of their loved ones. I'm nowhere retirement so while I still have plenty of time to recover, watching the net work of my retirement funds drop by hundreds of thousands of dollars a day because "some [wealthy] people still need to sell," doesn't cut the mustard. It's a fucking lame rationalization for ignoring the reality of the situation, e.g. we are facing an unprecedented public health crisis with inadequate preparation and the legendarily incompetent and corrupt "leadership" of a reality TV host-cum-President with visions of tacky grandeur that would curdle the stomachs of the Bourbons.

The reason that trade exchanges are up and running right now, rather than taking a couple weeks to assess what life is going to look like with the employment market in transition and many businesses struggling to find a way to pay their basic operating costs with little or no income, is strictly because Trump doesn't want his "numbers" to look bad, and he feels like if he just lets it all play out that a miracle will happen, summer will come, and the virus will go away just like he promised. Except that isn't reality, and nor is the expectation that you can let the stock market freefall and then recover economically. Trump is too stupid and too cowardly to act, and you can bet on that people like Steve Mnuchin and his ilk are using this as a time to personally enrich themselves while large corporations petition for handouts so they can buy back their on stock. And just like 2009, nobody will go to prison for the fraud, waste, and abuse to come.

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  #33  
Old 03-26-2020, 09:16 AM
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As an aside, why are trading markets still open right now? Is there something essential about the stock market that it needs to function in chaotic, barely regulated fashion during a national emergency while companies and small businesses are uncertain about when and how they will be able to conduct business?
The markets, or rather the exchanges, are themselves huge businesses employing thousands of employees and enabling tens of thousands of other workers. The vast majority of trades in usual times are done electronically. In current times, the trading floors where open outcry trading takes place are closed, so it’s now 100% electronic trades. Most exchange staff are able to work from home. Some IT staff that look after the hardware will need to come in, but those are positions where interpersonal contact can be minimised to near-zero. In situations where people can work from home, they should be doing so. There’s an economic baseline being set on what the next weeks or months are going to look like. Society needs that baseline to be as high as possible while maintaining public safety. Keeping the exchanges open and operating as businesses, and enabling other finance businesses, bumps up that economic baseline.

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  #34  
Old 03-26-2020, 09:52 AM
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There’s an economic baseline being set on what the next weeks or months are going to look like. Society needs that baseline to be as high as possible while maintaining public safety. Keeping the exchanges open and operating as businesses, and enabling other finance businesses, bumps up that economic baseline.
Not when indexes are plunging like necklines at a fraternity “Little Sister” selection party, it doesn’t. As I’ve already shown, closing the exchanges temporarily to let public opinion stabilize isn’t some kind of radical pulled-directly-out-of-thin-air notion; it is the standard operating procedure when there is a sudden and unexpected social, economic, or political crisis. In this case, where we already have millions of people thrown out of work with no warning, small businesses facing indefinite closure and all the medium and large businesses that supply them in similar limbo, and projections of unavoidable deaths in the hundreds of thousands if not millions, it is obvious that trading should be suspended for at least a couple of weeks until we have might have a reasonable forecast for how long the lockdown in major cities and many states will continue to be applied. Pretending like this is all “business as normal” is farcical on its face and just invites the wealthy and well-positioned—who don’t need to liquidate their holdings immediately to have cash for basic necessities—to advantage themselves in the coming fire sale at the expense of everyone else.

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  #35  
Old 03-26-2020, 09:59 AM
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I'm not going to respond to the piecewise dissection of the previous post, but I'll point out that shutting down the trade exchanges during an emergency is not some kind of novel idea with no historical precedent. Offhand, I can name at least six times the exchanges were closed:
  • Assassination of President Lincoln in 1865
  • Failure of Jay Cooke & Company bank in 1873
  • During the beginning of WWI in 1914
  • For the "bank holiday" declared by FDR in 1933
  • The assassination of President Kennedy in 1963
  • In the days follwoing the World Trade Center and Pentagon attacks in September 2001
Those were mostly very short breaks, though; only the 1914 break was really long, and there was a 1968 break that lasted months and happened for administrative reasons I don't fully recall.

FDR's bank holiday was a week long, and that was specifically in an effort to stop a run on the banks, which isn't happening now. I mean, the stock markets take breaks for long weekends, too. The 9/11 break was just a week at most. The JFK break was what, two days?

I don't recall the length of the 1865 and 1873 breaks but damn, that was a totally different time. I'm not sure a comparison to a time when traders had to ride a donkey to work makes a lot of sense.

Quote:
The people who "need money right now" are not the people who have large investments in the stock markets which they can readily liquidate. They are people living paycheck to paycheck, those on fixed incomes or living in retirement on income in a 401(k),
... or someone trying to keep their house. Or trying to keep a small business from going belly up.
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  #36  
Old 03-26-2020, 10:07 AM
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The people who "need money right now" are not the people who have large investments in the stock markets which they can readily liquidate.
Nobody said anything about "large investments". Your words, not mine.

There are over three hundred million people in this country.

We're in a crisis situation, and some fraction of those people have assets tied up in the markets, directly or indirectly, which they presently require ether for themselves or their friends or their families or their neighbors or even their communities. If they are to sell, they need buyers on the other side of the transaction. A person making an honest argument about the costs of wild market volatility would not summarily round the existence of these people down to zero for convenience. Cost-benefit analyses become trivial when one of the columns is zeroed out, but that doesn't make it an honest calculation.



This is not the biggest item on the agenda, not anywhere close, not within orders of magnitude. But it's bothersome how flippantly the concerns of real human beings can be hand-waved away into nothingness by the abject failure to imagine people mired in difficult situations very unlike our own. Most especially from people capable of doing much, much better.

Last edited by Hellestal; 03-26-2020 at 10:09 AM.
  #37  
Old 03-26-2020, 10:50 AM
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Quoth Babale:

Cite that the goods and services are not being produced? Here's a cite that says they are:
Some goods and services are still being produced. Not all of them. Do you really need a cite that there are a lot of people who usually produce goods or services, but who aren't right now?

Now, most of the "essential" good and services are included among those that are still being produced. Most, but not all. I can tell you personally that the essential service I provide is not being provided right now.
  #38  
Old 03-26-2020, 12:24 PM
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This is not the biggest item on the agenda, not anywhere close, not within orders of magnitude. But it's bothersome how flippantly the concerns of real human beings can be hand-waved away into nothingness by the abject failure to imagine people mired in difficult situations very unlike our own. Most especially from people capable of doing much, much better.
Nice of you to poison the well in this discussion by characterizing my statements as “flippantly...handwaved away” the “concerns of real human beings” while you argue for allowing exchange markets to wildly oscillate and put the unsecured retirement savings (which are structured this way not because investors choose those instruments but because they are the only practical mechanisms for many people to invest in) in risk of massive devaluation at the hands of speculators while making a patent argument that trading is necessary so that people can pay their bills or mortgages by cashing out stocks. In fact, the demographic of people who are at greatest risk for being foreclosed upon or evicted don’t hold any investments to cash out, which the investors who are able to exploit the market swings are those with massive holdings.

What is really needed at this time is a freeze on all default-based evictions and mortgage loan foreclosures so that people are not made homeless and destitute during the greatest public health crisis in the modern era, and that the handbrake is set on speculative trading until there is some clear path to how this crisis will play out and how the government—and governments around the world—intend to buffer their economies during the crisis. Again, this isn’t some kind of ill-informed or starry-eyed proposal; it has been the standard procedure in every sudden and unexpected national and international crisis with potentially far-reaching economic implications. That doesn’t mean shutting down markets for months; just to the point that there is some kind of plan and expectation for when businesses can reopen and rehire employees. Pretending as if markets should just run normally while people are dying outside of hospitals and tens of millions are suddenly unemployed is obscene and blatantly invites unchecked speculation and manipulation of those precious markets.

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  #39  
Old 03-26-2020, 02:56 PM
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Not when indexes are plunging like necklines at a fraternity “Little Sister” selection party, it doesn’t. As I’ve already shown, closing the exchanges temporarily to let public opinion stabilize isn’t some kind of radical pulled-directly-out-of-thin-air notion; it is the standard operating procedure when there is a sudden and unexpected social, economic, or political crisis. In this case, where we already have millions of people thrown out of work with no warning, small businesses facing indefinite closure and all the medium and large businesses that supply them in similar limbo, and projections of unavoidable deaths in the hundreds of thousands if not millions, it is obvious that trading should be suspended for at least a couple of weeks until we have might have a reasonable forecast for how long the lockdown in major cities and many states will continue to be applied. Pretending like this is all “business as normal” is farcical on its face and just invites the wealthy and well-positioned—who don’t need to liquidate their holdings immediately to have cash for basic necessities—to advantage themselves in the coming fire sale at the expense of everyone else.

Stranger
Two weeks from when, and why two weeks? My 'Oh Shit' moment was on Friday (20/03/2020 for people reading this later. Also note that I live in the UK). For some people it was a few days earlier, for others it was weeks earlier. Some people haven't yet had that moment. I can't say that I'm substantially more informed now than I was three days ago when the markets opened on Monday. I'm not making buy/sell decisions at the moment, because I'm waiting for market clarity. But note that that's my choice. If I strongly felt that a stock or other financial instrument that I owned or was looking at was overvalued or undervalued, I'd want the option to buy or sell that share/instrument. You're basically saying that there's too much market volatility, and the cause of the volatility is uncertainty. There should be a lot of volatility in the market at the moment, and some things are uncertain. However, other things are certain. There's going to be a worldwide spike in unemployment, a severe economic reduction in CY2020 Q2, and some industrial segments such as the restaurant industry are going to be devastated. You're saying that people who thinks that McDonald's stock is overvalued should wait two weeks from whatever start date before they can sell it. They may know more in two weeks about MacDonald's future prospects, or they may know about the same as they know now. But there's no certainty on when there's going to be a clearer picture on the restaurant industry's future, or the future of hundreds of other business sectors, than there is now. The moment of a certain future on the Conoravirus pandemic is probably going to be only a relatively short while before the end of the pandemic. Closing the exchanges until there's certainty in the markets will be much more than two weeks from whatever starting point you choose, and will be a brake on the economy at a time when it needs every bit of help it can get.

One further point is that the New York Stock Exchange was closed for four days after the September 11 attacks. That includes the day of September 11 when there was a devastating physical attack on New York City's financial district. The security risk of the Coronavirus to Wall Street is much less that it was during the immediate period after the September 11 attacks. Do you think that the uncertainty risk is 150% greater? I don't.
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Old 03-26-2020, 10:24 PM
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The security risk of the Coronavirus to Wall Street is much less that it was during the immediate period after the September 11 attacks. Do you think that the uncertainty risk is 150% greater? I don't.
You seriously post something like the above today, the very day when 3.3 million US jobless claims were recorded and the number of Covid cases in the US have exceeded every country on the planet? Hell yes the uncertainty is much greater than after 9/11. I remember that week, and yes everyone was shocked as hell and there was a short period of the Pres flying around on AF1 afraid to land, but 4 days later it was certainly clear the attacks were over if not dealt with. This situation isn't over and we have no idea at all when it will be nor how bad it will eventually get. The uncertainty is utterly beyond 9/11.
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Old 03-27-2020, 10:07 AM
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Nice of you to poison the well in this discussion by characterizing my statements as “flippantly...handwaved away” the “concerns of real human beings”
It's not pouring in the arsenic to accurately describe your statements.

You outright denied even the possibility of these people's existence. Repeatedly. In this latest post, you have finally qualified your position, talking about "demographics" of the people who need most help, which is a way to soften the previous absolutist comments. That's good. That's a big improvement. Your implication now is that there aren't many such people I'm referring to. My guess is that your implication is that their concerns and need for liquidity are sufficiently unimportant to not make a difference in the decision of whether to keep markets open, since the "demographics" implies there aren't many of them. That's a potentially plausible belief.

Your post here is much better all around.

It still depends on the details, tho.


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Originally Posted by Stranger On A Train View Post
while you argue for allowing exchange markets to wildly oscillate and put the unsecured retirement savings (which are structured this way not because investors choose those instruments but because they are the only practical mechanisms for many people to invest in) in risk of massive devaluation at the hands of speculators
Would people who genuinely need money be better off if the prices of these stocks went even lower in the time taken from away from them?

Suppose markets open again, and there's another big drop right as they need to sell. Is that genuinely not a possibility? Price movements don't just go in one direction. Prices can keep going down. They don't have to rebound immediately in the counter-factual where markets are closed for whatever period you had in mind.

You have an apparent certainty that the price depreciations here are definitely the results of evil speculation rather than semi-sorta-okay-best-guess-available-ish appraisals of value of these companies. Now, you could be right about that. I don't know. It was dead clear the market was going to drop, but I'm not certain in the slightest about how far the drop will be, or on the period for recovery, or if the market would rebound after a weeks-long closure, or drop for another two weeks after re-opening. I don't know any of this.

But you're just asserting here. There's no strong reason to believe this.

It's hard to say how a market closure helps if it leads to another price drop at exactly the moment when people who need money finally get a first chance to dip at the trough. If values were to sharply drop again at market opening after a cessation, it hasn't really helped anyone. Another point here is that if investors in the market have no liquidity needs right now -- as you seem strongly to believe -- then it simply does not matter of prices are temporarily depressed by speculators. If that's the case, then prices will eventually go back up, market closure or no.

That leads into another essential point:


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Originally Posted by Stranger On A Train View Post
In fact, the demographic of people who are at greatest risk for being foreclosed upon or evicted don’t hold any investments to cash out, which the investors who are able to exploit the market swings are those with massive holdings.
I don't disagree, not in the slightest, that most people in the most dire financial straits don't have much if any financial assets to sell. (In a way, this whole discussion about a market closure is about a side issue, as I said before.) My point from the beginning has been that "most" is not "all". I know some people with extremely strange financial decisions, people with not much savings who nevertheless like to keep money in markets.

But here's where things are curious. The argument here is potentially working at cross purposes.

If speculators with large holdings have the ability to "exploit" major market swings... then who are they exploiting those price swings from, exactly? Subtracting any benefit from improving the information content of the market, speculation tends to be zero sum. Every buyer has a seller. But according to you, and the demographics of this country, they're not exploiting these price swings from people who most need the liquidity, either because (in previous posts) those people flat don't exist, or because (this post, much more accurate) the demographics of people who need liquidity most lean away from holders of financial assets. Not entirely, but mostly.

There is a potentially problematic circle here.

Either (previous posts) nobody with financial assets has pressing liquidity needs, in which case the speculators are only exploiting themselves so who cares, or (this post) the speculators with "massive holdings" are able to "exploit" price swings from... the demographically insignificant number of people who need the money? But in this case, we have trade-offs. If they're demographically unimportant, then why worry about their exploitation? There's not enough of them to matter. But let's say we take the position -- which has been my position from the beginning -- that there are enough of these people to matter. Obviously we don't want an unfair price, but that immediately raises the question of what the fair price would be. If it's your contention that the market is much more depressed than it should be, and that it will rebound soon, well, you know more about future prices than I do. But I'm not going to take your word on it. It might not happen.

Again: if you deprive people of a chance to sell before prices drop even further, then you haven't helped them. You just intensify the "exploitation" you're talking about. You have to know future price swings to know who you want to help. And if you know that, you are most likely in the wrong line of business.

Quote:
Originally Posted by Stranger On A Train View Post
What is really needed at this time is a freeze on all default-based evictions and mortgage loan foreclosures so that people are not made homeless and destitute during the greatest public health crisis in the modern era
Sure. Absolutely. Right there with you.


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Originally Posted by Stranger On A Train View Post
and that the handbrake is set on speculative trading until there is some clear path to how this crisis will play out and how the government—and governments around the world—intend to buffer their economies during the crisis.
I continue not to see the case for this, for the reasons laid out above.

I see potential damage, but no obvious gain. But you have a better post here, that definitely has the sketch of costs and benefits. If you want to flesh it out more, I'd be happy to read it. But it seems to me you'd need to address how temporary market fluctuations hurt people who have no need to tap their investments right now, since that's the "demographics" of investors.



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Originally Posted by Stranger On A Train View Post
Pretending as if markets should just run normally while people are dying outside of hospitals and tens of millions are suddenly unemployed is obscene and blatantly invites unchecked speculation and manipulation of those precious markets.
I've laid out the case why it's not "obscene".

I think closing the market has an excellent chance of doing more harm than good. You've made in this post the beginnings of trying to address my concerns, but I hope you can see where I fail to be convinced.
  #42  
Old 03-27-2020, 12:04 PM
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Just so we are clear, left and right sure seem to agree that these companies can't just pull themselves up by their bootstraps.
  #43  
Old 03-27-2020, 12:10 PM
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It's not pouring in the arsenic to accurately describe your statements.

You outright denied even the possibility of these people's existence. Repeatedly. In this latest post, you have finally qualified your position, talking about "demographics" of the people who need most help, which is a way to soften the previous absolutist comments. That's good. That's a big improvement. Your implication now is that there aren't many such people I'm referring to. My guess is that your implication is that their concerns and need for liquidity are sufficiently unimportant to not make a difference in the decision of whether to keep markets open, since the "demographics" implies there aren't many of them. That's a potentially plausible belief.
Your patronizing and dismissive tone is neither warranted nor helpful.

As previously demonstrated, the trade exchanges have been closed in prior public emergencies to prevent panic and rampant speculation, and as we will start to see hospitals turning away critically ill patients and making decisions to remove support based upon who has the best chance of surviving, public confidence in the ability to manage this crisis is going to plummet. The sensible thing to do right now would be to follow historical precedent and close the exchanges until there is are clear signs of how this will affect the economy and the businesses and consumers that comprise it instead of pretending that all is normal and the markets will correct once everything 'stabilizes.

Of course the people who run the markets, and those who benefit most from them, like billionaire Steve Mnuchin are just fine with keeping the exchanges open and letting the markets plunge because it will give him and his cohorts the opportunity to exploit it for personal gain just as he did from the 2007-08 financial crisis.

Quote:
Originally Posted by Fiveyearlurker View Post
Just so we are clear, left and right sure seem to agree that these companies can't just pull themselves up by their bootstraps.
The difference being, of course, that "the Left" is more concerned about the immediate impact upon people who do barely have the financial resources to survive day to day in a pre-epidemic economy that has left many of them unemployed or working gig jobs, and "the Right" is concerned about the eventual profitability of major corporations like The Boeing Company which received a very specific benefit. Of course, the economy needs major employers who need guarantees that keeping people on payroll isn't just cleaning out their cash reserves, but what we all need right now is confidence and transparency in assuring that money goes to the people and businesses that need it most, not just shoring up already failing corporations and predatory "financial services" lenders who fuck over the very people who need assistance.

Stranger

Last edited by Stranger On A Train; 03-27-2020 at 12:15 PM.
  #44  
Old 03-27-2020, 12:32 PM
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Amazing how so much of the country is depending upon the work performed by people whom conservatives have spent years arguing aren't worth $15 an hour.
  #45  
Old 03-27-2020, 12:38 PM
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Amazing how so much of the country is depending upon the work performed by people whom conservatives have spent years arguing aren't worth $15 an hour.
The wealth of the kingdom has always been built on the labor of the serfdom. This is nothing new; now they're just being caught in their hypocrisy.

Stranger
  #46  
Old 03-30-2020, 06:29 PM
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It's always disheartening to see someone who is an expert on many topics assume that their gut reaction to something outside of their expertise is just as good as actual experts in their fields.
  #47  
Old 04-03-2020, 01:38 PM
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Quote:
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I understand that it is hypothetical, but I am looking for actual answers rather than opinions. (Is that even possible with this question?) But I would like to understand the concern/worry that people are expressing if the epidemic goes on for months. What does it actually mean to "destroy the economy"? Is this a bit of "the sky is falling"? I know that a lot of jobs will disappear, but won't many of them return when health begins to return? Money? The government seems to print money when it needs money. Banks have money. I mean, I know I'm ignorant of all this, but that's why I come here. Any relatively simple answers?
There will be significant destruction of wealth and many businesses will simply not survive. This leaves opportunities for others to start a new business but it takes time for capital to be moblized. A V shaped recovery requires 2 things, excess supply capacity and excess demand capacity all waiting out the storm to get back online. We will not have a whole lot of excess capacity because so many businesses will simply be out of business. We will not have the demand capacity because we will be at depression level unemployment rates and everyone will be saving their pennies.

It would take extraordinary market intervention to rebound from this.
  #48  
Old 04-03-2020, 04:05 PM
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Quote:
Originally Posted by Fiveyearlurker View Post
Just so we are clear, left and right sure seem to agree that these companies can't just pull themselves up by their bootstraps.
Well, they are talking about paying out trillion dollar packages for people who aren't working. Sounds like "socialism" to me.
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