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How ugly could it get? Trump faces echoes of 1929 in coronavirus crisis.

edited March 17 in Off-Topic
The headline is a little sensational. But, this is a useful look at the role that policy decisions made by the federal government will play in determining the length and depth of this crisis.
William Lee, chief economist at the Milken Institute, suggested the United States is headed into what could be the first recession whose length and depth will be determined largely by how effectively Washington responds, both on the fiscal and public health fronts.

“This will be first recession induced by public health policies, and the nature of those public health policies and their effectiveness accelerating the recovery from the virus. And that will determine the course of the depth of the recession.

Lee said he was certain the second quarter would show a contraction, but that multiple policies, most of which are currently under consideration, could prime the economy to bounce back.”

https://politico.com/news/2020/03/16/trump-faces-1929-save-economy-133053

Comments

  • I think that's an optimistic scenario given the economic numbers that came out of China over the weekend. And the lack of action by the Senate.

  • How China handled the situation may not work in democratic society? It is hard to imagine closing down New York City or any metropolitan cities in Europe for several weeks. How South Korea handled their situation may be more workable, while Italy does not. Where does US fall between South Korea and Italy?

    @davfor, another article from Reuters.
    “A 2008-like financial contagion is not yet priced into this market,” Donald said, but she added the market “probably won’t have any reassurance that we have avoided that 2008-type scenario completely until we see a calming of credit spreads and the pace of Covid-19 cases starts to decline.”
    Reported Covid-19 cases still has yet to peak, thus means there is a way to go to contain the spread.

    https://reuters.com/article/us-health-coronavirus-stocks-economy-usa/d-word-rears-head-as-coronavirus-hit-markets-brace-for-recession-idUSKBN2140IC
  • "It is hard to imagine closing down New York City or any metropolitan cities in Europe for several weeks."

    I don't know, @Sven. Here in SF we live one block from a major retail commercial and public transit (tramcars and buses) street, similar to a European "high street". Lots of banks, financial houses, small retail, restaurants, a major public transit terminal. From our front windows we can see the streets and an intersection there.

    Normally the traffic is heavy and constant. Normally you can't find a parking space.

    Today the streets are empty. There is almost no traffic. You could park thirty cars on our street alone. Up at that intersection the traffic signals are working, but there are only one or two vehicles waiting for the signal, and there is no cross-traffic at all. They are waiting for nothing. This is right out of a science-fiction movie.
  • edited March 17
    My sense is the next few weeks will inform us about how widespread and long lasting this crisis will turn out to be. It was encouraging to finally see Trump treat the crisis seriously during his press conference. If the Federal government is able to provide coordinated public health policy and fiscal policy leadership, the second half of the year may well prove to be much more upbeat than the first half is so far proving to be image. Otherwise....image

  • A pic from SF, courtesy of the San Francisco Chronicle:

    North Beach:image

    And the San Francisco Chronicle newsroom:image

    For the first time since the Civil War the Chronicle's newsroom is completely empty. The staffers are all working from home to maintain the coverage, and so far they have managed to deliver a full internet version and an abridged print edition every day. Good work!
  • Hi home! SF is pretty wired up which will help. Happy to see they are dealing in reality. I sincerely hope all the service folks and the places they work for make it through this. Many, many happy memories.
  • edited March 17
    Re - Trump faces echoes of 1929 in coronavirus crisis.

    I could give you 10-15 “reasons” why that will happen. But could have given you just about as many reasons before the C-Virus erupted. I’ve found that investing based on predictions is a good way to lose money.
  • "The headline is a little sensational. " "Trump faces echoes of 1929 in coronavirus crisis" enough said. It's amazing how someone politically biased shapes their opinion.

    I do my own research.
    Flu deaths in the last several months according to the CDC is 22,000 to 55,000. Let's call it 35,000. Coronavirus death < 100. I know, it's 10 times more deadly.

    Trump declared a national emergency after we had about 50 deaths in several weeks, Obama declared after 1000 H1N1 deaths and several months.
    The rest is just yada, yada. Sure, we should take it seriously and we do.

    I never use any politics for my investments.
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