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ORAC 2nd Apr 2020 05:17

The Great Depression
 
Now, not then.

Keeping this separate to the Coronavirus thread. it might have been triggered by it - but it will outlive it.

An article from today’s Grauniad to start it off.

https://www.theguardian.com/world/20...ggle-with-debt

Coronavirus credit crunch could make 2008 look like 'child's play'

A worldwide credit crunch triggered by the coronavirus will set in motion a wave of corporate bankruptcies that will make the global financial crisis look like “child’s play”, investors have warned..........


UniFoxOs 2nd Apr 2020 06:31

I take issue with that word "could". The appropriate word is "will". Anybody who thinks otherwise is living in cloud cuckoo land.

Interesting times.....

Nervous SLF 2nd Apr 2020 06:38

The NZ Prime Minister Jacinda Ardern is "gutted" that magazine publisher Bauer is closing its doors after refusing the
Government's coronavirus wage subsidy.

"I have to say I am extraordinarily disappointed and frankly gutted to see, what has been a part of New Zealand history,
close its doors fairly abruptly today."Bauer Media Group confirmed it did not apply for a wage subsidy to keep it going
through Covid-19 disruption. It chose to close its New Zealand operations on Thursday after many decades of publishing
in the country. Bauer Media NZ published entertainment, lifestyle and current affairs titles including the New Zealand Listener,
Woman's Day,New Zealand Woman's Weekly, North and South and Next, along with a digital network.

She said it appeared to be a decision made at the same time of the coronavirus pandemic, but was not because of it.

Islandlad 2nd Apr 2020 07:03


Originally Posted by UniFoxOs (Post 10736469)
I take issue with that word "could". The appropriate word is "will". Anybody who thinks otherwise is living in cloud cuckoo land.

Interesting times.....

Is the above just keyboard hot air, because you have nothing better to do, or is there a deep economic theory background to your statement?

How about you start with the money supply?

WuFlu - a world realignment with China?

The Malenial Bug?

Bye Bye Boomers?

Modeling these changes into the economy is indeed 'interesting times' - care to expand?

Effluent Man 2nd Apr 2020 07:19

Well rather than just questioning his take on it, which given even my sparse education in Economics ( although an A level probably puts me ahead of 98% of the population) seems a fairly likely outcome given the meltdown we are seeing in business around the world.

It's currently reckoned that we could be in for a 10% drop in GDP. Add to that another 9% that is calculated to be the cost of the UK's own suicide note to the EU and that us some recession, so come on, tell us why not.

i am just thanking my lucky stars that I am not sitting on £300,000 worth of vehicle stock, half of it on the bank, that I was six years ago. I don't know what I would have done just watching the charges rack up and the half that I owned crashing in value with no way out except a spectacular fire sale.

Islandlad 2nd Apr 2020 07:39


Originally Posted by Effluent Man (Post 10736504)
Well rather than just questioning his take on it, which given even my sparse education in Economics ( although an A level probably puts me ahead of 98% of the population) seems a fairly likely outcome given the meltdown we are seeing in business around the world.

It's currently reckoned that we could be in for a 10% drop in GDP. Add to that another 9% that is calculated to be the cost of the UK's own suicide note to the EU and that us some recession, so come on, tell us why not.

i am just thanking my lucky stars that I am not sitting on £300,000 worth of vehicle stock, half of it on the bank, that I was six years ago. I don't know what I would have done just watching the charges rack up and the half that I owned crashing in value with no way out except a spectacular fire sale.

The language of drama you both use is not backed by anything I have found yet. If you can direct me to it I would appreciate a link. The article above actually said nothing.

The economic situation we are all in is an unprecedented lock down. It has never happened before. Start from here not hyperbole.

This thread could become very interesting if some experts can dig deep into the economic theory in public rather than behind closed doors as I suspect they are right now.

What are you planning to do with your £150,000?

ORAC 2nd Apr 2020 07:59

https://www.forbes.com/sites/sarahha...se-it-can-get/

https://www.fnlondon.com/articles/no...ssion-20200324

https://www.nytimes.com/2020/04/01/b...recession.html



Effluent Man 2nd Apr 2020 08:00

I bought a cottage in a village in Suffolk, got planning consent on half the garden and built a new house with it. Build cost was almost exactly £150k. I now live there, twenty paces from my house and I'm on an open common - ideal for self isolation. I retired because I got diagnosed with prostate cancer - silver lining or what?

ATNotts 2nd Apr 2020 10:16


Originally Posted by Islandlad (Post 10736517)
The language of drama you both use is not backed by anything I have found yet. If you can direct me to it I would appreciate a link. The article above actually said nothing.

The economic situation we are all in is an unprecedented lock down. It has never happened before. Start from here not hyperbole.

This thread could become very interesting if some experts can dig deep into the economic theory in public rather than behind closed doors as I suspect they are right now.

What are you planning to do with your £150,000?

With respect, that reads rather like burying one's head in the sand or putting pencils up one's nostrils and a pair of underpants on the head in an effort to prove insanity.

Personally, as someone who has a reasonable, definitely not large sum tied up in a money purchase pension pot that I should be accessing in 2-3 years time, I am working on the assumption that once this crisis has subsided there will be diddlysquat left to finance my old age, so I am going to be very much more reliant on the UK's state pension provision. I know that for many on here who are already retired, or working in industries or for organisations that enjoy final salary schemes that may not be the case.

It appears to me that by the time we exit the crisis industry will be very much more in the hands of governments, not least because it is governments who will have underwritten it's survival, and globalisation will have been put firmly back in it's box, or at least pushed back 20 or so years, which might, ironically, be a good thing for those people still in work in western countries. You only have to look at the airline sector, where it's pretty much a given that whatever governments say at the moment, they will wind up baling out their "national" carriers, and if airports are ancillary businesses are to get up off the floor the same may well apply. In UK the government has suspended the rail franchise system. will it come back in it's current form? Doubtful. The same is likely to happen to privatised and diversified bus operations. nationalisation by the back door. Private investment will likely be on it's knees so governments will have little alternative.

Islandlad 2nd Apr 2020 10:23


Originally Posted by ATNotts (Post 10736685)
With respect, that reads rather like burying one's head in the sand or putting pencils up one's nostrils and a pair of underpants on the head in an effort to prove insanity.

Far from it.

I cannot think of any economic situation comparable to this one. Where is an economist when you need one?

ATNotts 2nd Apr 2020 10:29


Originally Posted by Islandlad (Post 10736696)
Far from it.

I cannot think of any economic situation comparable to this one. Where is an economist when you need one?

The trouble is that if you put 10 economists into a room and ask them the same question they'll likely come up with 10 different answers, well if we're being charitable perhaps 8 different answers!

Hydromet 2nd Apr 2020 10:32


Originally Posted by ATNotts (Post 10736702)
The trouble is that if you put 10 economists into a room and ask them the same question they'll likely come up with 10 different answers, well if we're being charitable perhaps 8 different answers!

No, if you ask two economists the same question, you'll get three answers.

ORAC 2nd Apr 2020 10:34

And only in hindsight. If economists could accurately predict they’d all be billionaires.....

SpringHeeledJack 2nd Apr 2020 11:19

That things will be a bit different due to this economic hiatus, is for most very obvious. That said, there's too many vested interests in the game to allow things to crumble. Think back to 2008 and the fallout from that ? End of the world and yet miraculously (perhaps with magic money) things not only recovered, but have been booming to all time highs (again, perhaps with magic accounting).

Some businesses will fail and fold, others will reorganise and carry on making money and the magical world of stocks and shares and bonds and other financial instruments will recover, albeit with the amateurs losing out and the 'in-crowd' winning 😉 If pensions etc are allowed to fail, then polite society will be finished.


Islandlad 2nd Apr 2020 11:25


Originally Posted by ORAC (Post 10736707)
And only in hindsight. If economists could accurately predict they’d all be billionaires.....

Those are the economists I am talking about. Not the academics. Some will make a lot of money out of this.

Torquetalk 2nd Apr 2020 11:48

This series goes back a few years, but a great discussion which will surely still have plenty of relevance:

https://www.bbc.co.uk/programmes/b016bhdj

Stephanie Flanders comments on the current situation seems informed and hedged.

SASless 2nd Apr 2020 12:18

By US accepted definitions.....a Recession in the US Economy is determined by two consecutive Quarters with negative growth in the GDP.

We know for sure this Quarter is toast....and shy of a miracle....the next quarter as well....depending upon when the Stay at Home and Essential Business only dictates are removed.

There were no...like none....zip...zero measures of the US Economy that forecast anything but continued growth right up and until the outbreak of the Virus and the Russia-Saudi Oil War.

Our economy can survive both of these problems...and the rebound shall be prompt and vigorous.

The real danger is the level of deficit spending by the government that will have the most impact.

National Debt and Deficit Spending....caused by both Political Parties has long been the threat to our Nation for decades and is growing worse each day.

cashash 2nd Apr 2020 13:49

New unemployment figures from the US today with a rise of 6.6 million this week. Add to the 3.3 million from last its truly horrific numbers - and they are only the ones that apply for unemployment. Many others on top of that who are not eligible or dont apply.

So given the unfolding scale of the damage to the economy I think at a point very soon we are going to get quite a few economists and accountants calculating what does more damage - the virus or the shutdown. Remember that people are dying because of delayed access to healthcare for other ailments, loss of health insurance, suicide due to loss of business or pension, less taxes mean less spending in teh future on health and welfare etc etc.

At some point the estimated 2 million deaths from allowing the virus to run its course is going to be less than the deaths caused by the current 'cure'

dead_pan 2nd Apr 2020 15:39


Originally Posted by SASless (Post 10736818)
By US accepted definitions.....a Recession in the US Economy is determined by two consecutive Quarters with negative growth in the GDP.
Our economy can survive both of these problems...and the rebound shall be prompt and vigorous.

Is this the new line from the American right play-book (of "its no worse than seasonal flu" fame)?

A former economic adviser to Dubya who was interviewed on Sky TV said if the US lock-down runs into the summer, there won't be an economy to re-start. That prediction could well be true across the globe, certainly here in the UK given the number of businesses (large and small) already in distress.

The US jobless figures today already point to a massive economic shock, way worse than any of you have ever lived through.

dead_pan 2nd Apr 2020 15:46


Originally Posted by cashash (Post 10736927)
At some point the estimated 2 million deaths from allowing the virus to run its course is going to be less than the deaths caused by the current 'cure'

And even if we did all go back to work and accept the consequences, there would still be huge economic disruption. Its not like we'd ignore what was going on around us.



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