this is incorrect. the price going up is a reflection of the market's believe about the % likelihood of a deal.
for example at market close of $45.08, the market is betting there is a $45.08/$54.20 = 83% chance that this transaction goes through.
there are certainly individual stockholders who are buying because they like his involvement, but that is tiny compared to people buying and selling a very near-term bet
Correct, and furthermore, Musk's offer was made after he announced his stake in the company, which is what caused the price of the stock to rise. Him offering to buy it outright barely affected the share price:
> The social media company’s shares were little changed at $45.81 in New York on Thursday, a sign there’s skepticism that one of the platform’s most outspoken users will succeed in his takeover attempt. -- Bloomberg
So while the news of a major stakeholder with the power to join the board and affect how things are run did cause a significant blip in Twitter's stock price, the attempt to buy it outright doesn't seem to have affected things much. Even if we (incorrectly) assumed that all of the rise from ~$40 to ~$45 is associated with the possibility of Musk paying $54 a share, that suggests the market assigns only a ~36% chance of the deal going through.
yes, there are many factors that can influence a valuation. and in different price ranges, different factors will have different weights. since the price is not $0 today and is relatively close to the potential transaction price, the % likelihood of a transaction has much more influence.
I think the comment is more about the fact that your calculation of 83% doesn't make sense. However, I agree with you that likelihood of the deal going through is definitely impacting the short term valuation.
Not sure if you are misremembering the Phil Ivey edge sorting case [1] or if you are thinking of another story. Notable in this case that the casinos won in the end.
Ive seen enough f these such cases that i cannot believe that anyone spends money in a casino anymore. If the casino can claw back winnings even if the person did in fact "exploit" the game they can do it for any outsize win. Basically nullifying the reason anyone plays games of chance.
1. This week's 6.6M new jobless claims represents ~4% of the estimated ~160-165M US Workforce.
2. This is incremental to the 3.3M new jobless claims filed week ending 3/21, totaling ~10M total jobless claims in the past 2 weeks.
3. The US unemployment rate was ~3.5% as of EOM February [1], so cumulatively that means we've hit ~10% unemployment as of EOW 3/28 (~10M incremental jobless claims = ~6%). That number is likely low and continuing to increase, as new jobless claims do not account for gig workers and many state unemployment sites have been inundated by these claims resulting in site crashes and people unable to file claims. In addition, layoffs have almost certainly continued between 3/28 and today.
4. The consensus estimate for this week's jobless claims was ~3.76M jobless claims, and the 6.6M actual claims blow the consensus estimate out of the water. That said, some analysts such as Goldman Sachs had estimated ~5.5M joblesss claims. Goldman Sachs estimates that unemployment will peak at ~15%. [2]
I'm also hearing this morning that we've hit the 10% mark. I also heard the same economist say "The economy is collapsing, and it's a global collapse". I don't even need coffee to be alert the rest of the day...
Not really, sadly. I just heard him on an internal conference call we have twice a week, so don't really have a link to provide but don't think he's published his views in writing just yet. I expect a lot of similar predictions to come out now that the unemployment claims number is out (as of ~1 hour ago)
For general views of very smart people on the economy and markets, I recommend Bloomberg Surveillance every morning on the Bloomberg app, radio and on your favorite podcast app
This kind of info usually circulates in the corporate world for a week before it hits the wider media zeitgeist. My company has been holding weekly analyst briefings on what to expect.
Right now, the sources I have say to expect to be WFH and "socially distanced" until July or August at the earliest. Restaurants will probably start slowly opening back up around then, but conferences or sporting events are going to be cancelled through at least the end of the year. A single sporting event or conference can lead to thousands of new infections, so none of that stuff is coming back for a long time.
Past that, we were told to expect 3 waves of economic pain: one right now when everyone loses their job, another big layoff cycle in 3 months once companies that can WFH start to adjust for structural changes, and a third wave near the end of the year after people start to seriously curtail consumption in response to the first two waves and global demand falls off a cliff.
This information has been getting priced into the market for a few weeks, so none of it is new. But these numbers are just starting to hit the wider media and your average American is starting to panic because we're looking at a decade or more of hurt before this is all over.
Great info (and scary), thank you. Is this based on assumptions that have a decent potential to not hold true, like e.g. lack of vaccines and adequate testing? Or does this assume those will happen in the next (say) ~year? And would you know if there are predictions on whether e.g. housing prices might fall?
I'm more pessimistic in the short term than this (particularly for the US, which still doesn't have a national lockdown), but more optimistic in the long term.
Despite our best efforts, this thing is burning through entire populations, and will do so quickly (within a couple of months globally, except some places in asia who escaped the first wave but are now seeing more). Every active person leaving home is going to be exposed in short order, thus infecting their household, and even in lockdowns people need to eat. Almost every country waited too long to lock down, and large countries still haven't effectively done so.
The downside of that is a horrific global death toll (1 million confirmed cases this month, maybe 10 million infected? megadeath next month?). The upside is that we will at some point reach herd immunity and/or develop and manufacture a vaccine and economies will restart.
Looking at Italy I find it hard to believe that almost every household has not been exposed by now - all it takes is one infected during the lockdown and the entire household gets it. Their new cases are declining and their deaths are flat already.
There will be substantial economic damage but I think the recovery may be quite fast as there will be a clear cause which has been addressed (probably by a rushed vaccine currently in trials - there are lots globally). I don't believe a lockdown of more than 2 months is acceptable to most, even with a 1% risk of death, and such lockdowns require the consent of the population to function.
"Every active person leaving home is going to be exposed in short order"
This virus is not transmitted via magic. Even basic precautions lower the transmission rate considerable. Most places are now taking precautions that are far beyond basic.
Most places are seeing increasing rates of infection, even in spite of extreme measures. I'm not suggesting it's magic, just that it's more infectious than a common cold, which is pretty hard to avoid in winter where I live at least.
I agree that could be worded better (I'll leave it up since you've replied), but I meant it's hard to avoid if you're going shopping every few days - people are not good at infection control and many are pretty much asymptomatic for a long period. Lockdowns are controlling the rate of spread, not stopping it, despite best efforts, and will I suspect be released after a few months for that reason - because it has infected > 50% anyway and those people are allowed out after testing.
Unfortunately, it's really, really hard to say anything concrete about the transmission rate. Testing is different everywhere, and usually far too limited, and we know there are a lot of asymptomatic cases. But, if we accept some big caveats, it certainly looks like the transmission rates in locked down regions are dramatically reduced. People are still going to the store, ordering food delivery, going for walks and jogs, etc. A big chunk of people are actually still going to work everyday for essential services. But nonetheless, transmission appears to be way down, even in Italy, which had one of the worst starts of any country.
Yes sure, probably we won't know much concrete till well after this is past.
I'm encouraged by the progress in Italy, but don't see how you can avoid having most of the population catch this in the long term without a vaccine. It appears to be very hard to control even with really draconian quarantines which only have an impact after weeks and cannot realistically hold for more than a a few months, esp in poorer countries. I'm not saying don't quarantine, it's essential to avoid really horrific deaths, just that it may not stop the majority getting it in within a year or so.
If it mutates of course that's another problem but this disease is so virulent and the economic damage of effective countermeasures is so disastrous that I cannot believe the world will not prioritise mass vaccinations when that arrives and eliminate it whatever the cost.
>such lockdowns require the consent of the population to function.
NO, they require they compliance of a population when faced with the military and martial law -- Which was already intimated directly as not being needed "just yet" by Trump.
Massive rumors of troop deployments and getting ready - videos of trains with tons of equipment being moved around the country.
Videos of the suposed "testing centers" setup at various places were the military setup huge tents - and they are completely empty, as well as fema delivering refridgerated trailers to these places...
They are planning on mass death coming very soon.
Media claiming that the hospitals are a "war zone" and guys went to these hospitals and they were empty.
Remember that 100 years ago, and then again 80 years ago, large percentages of men in Europe were removed from their own countries and sent somewhere else; ships transporting food and supplies were actively sunk, houses and factories were bombed to smithereens. In spite of the massive economic damage that caused, civilization did not descend into anarchy, and very few people who weren't prisoners starved to death.
COVID-19 isn't going to destroy any of our infrastructure, and if we mobilize properly, isn't going to kill nearly as many people. If our [great-]grandparents made it through WWII, there's no reason we can't make it through this.
>very few people who weren't prisoners starved to death [during WWII].
If it's relevant, 3 million people in India died due to widespread starvation during World War 2 caused by British colonial and war-time policies. Additionally all their cloth production was used by the British war effort, so many Indians went without clothes during that period. https://en.wikipedia.org/wiki/Bengal_famine_of_1943#Cloth_fa...
Right, I remember listening to an episode of Revisionist History about that [1]. Outrageous and shameful.
I'd have to listen to the episode again, but I think the most outrageous and shameful thing about it is that it wasn't actually necessary. The way Gladwell portrays it, they died mostly due to the personal spite of one person.
> Remember that 100 years ago, and then again 80 years ago, large percentages of men in Europe were removed from their own countries and sent somewhere else; ships transporting food and supplies were actively sunk, houses and factories were bombed to smithereens. In spite of the massive economic damage that caused, civilization did not descend into anarchy, and very few people who weren't prisoners starved to death.
> COVID-19 isn't going to destroy any of our infrastructure, and if we mobilize properly, isn't going to kill nearly as many people. If our [great-]grandparents made it through WWII, there's no reason we can't make it through this.
In The U.S., WWII was funded by the savings of that generation, which is really amazing considering they had been in the longest, deepest economic depression in the nation's history prior to the start of the war.
After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country.
Going into what we are doing right now, Americans don't have any savings plus many private and nearly all public institutions have a lot of debt.
There is no indication that the government will permit such a freely flowing economy even after whatever it is we are doing has ended, so I don't find direct comparisons relevant.
> After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country
the reason the US was ably to basically jump start it's economy after ww2 was mainly because all of its competitors got either got their industries and cities literally leveled, or their nation/people nearly utterly destroyed.
Even the UK, which was a victor of world war 2 had an economy which was basically dead in the water until the late 70's.
The US got incredibly "lucky" during world war 2 in the sense that it didn't fight the conflict on its own continent.
Also, the marshall plan was a smart policy in an economic sense because it allowed the war economy to transistion back into civilian goods thanks to having a massive (subsidized) export market.
> > After the war ended, cooler heads prevailed and all wartime orders were lifted and capital and labor could reform, as it saw fit, and as such, the year immediately following the war produced the greatest annualized economic gains in the history of the country
> the reason the US was ably to basically jump start it's economy after ww2 was mainly because all of its competitors got either got their industries and cities literally leveled, or their nation/people nearly utterly destroyed.
> Even the UK, which was a victor of world war 2 had an economy which was basically dead in the water until the late 70's.
> The US got incredibly "lucky" during world war 2 in the sense that it didn't fight the conflict on its own continent.
> Also, the marshall plan was a smart policy in an economic sense because it allowed the war economy to transistion back into civilian goods thanks to having a massive (subsidized) export market.
Nations are not competitors. They are trade partners.
> Nations are not competitors. They are trade partners.
Of course nations are competitors. International trade is an unregulated market, every nation competes economically with each other and tries to extract maximally favorable deal for themselves; when negotiations get heated, they get backed up by military strength, and the only reason we don't go to war often is a combination of sanity and MADness.
> > Nations are not competitors. They are trade partners.
> Of course nations are competitors. International trade is an unregulated market, every nation competes economically with each other and tries to extract maximally favorable deal for themselves; when negotiations get heated, they get backed up by military strength, and the only reason we don't go to war often is a combination of sanity and MADness.
What does this have to do with post-WWII economic recovery in the U.S.?
Do you have any sources that compare government and private savings at the two time points? I am surprised by your claim that savings were higher at the height of the great depression
> Do you have any sources that compare government and private savings at the two time points? I am surprised by your claim that savings were higher at the height of the great depression
Not immediately, but the U.S. was on a gold standard at the time and funded the war through war bonds (and establishment of income taxes) which were largely purchased domestically.
The gold standard bit is important because the government was not able to simply print money to fund the war.
It sounds like you're arguing against the idea of debt altogether. Debt is a great, great thing that's allowed us to accomplish way more as a society than we ever could before. Way faster too.
Yes, there is irresponsible lending that winds up in temporary value being created that we later find out was fake, and yes it's scary when the government is that lender. Maybe ironically, gold now works as a store of value that hedges against government money going bad.
But debt it still a great system that will continue to work well after COVID-19.
> It sounds like you're arguing against the idea of debt altogether. Debt is a great, great thing that's allowed us to accomplish way more as a society than we ever could before. Way faster too.
> Yes, there is irresponsible lending that winds up in temporary value being created that we later find out was fake, and yes it's scary when the government is that lender. Maybe ironically, gold now works as a store of value that hedges against government money going bad.
> But debt it still a great system that will continue to work well after COVID-19.
There is no argument for or against debt. You are inserting something not there.
It is notable, however, that to create debt there must be a creditor.
You know those signs we memed the hell out of last decade? They're so cliched that they don't mean anything anymore, but think of those.
Keep calm and carry on
You should relax. We're not the first humans to see some hardship. Everything isn't going to fall apart because the economy has a downturn. Society isn't going to collapse because of this. It didn't happen in the 1600s, nor the 1700s, nor the 1800s, nor the 1900s. It's not going to happen in the 2000s.
Two global wars, the use of nuclear weapons, and a 50 year cold war with the ever present threat of nuclear apocalypse didn't cause society to break down last century, a flu won't cause it to fall apart this century either.
While all of that is true, it can be very painful for most people. These types of events almost invariably lead to social unrest which compounds the problem. Ambitious and unscrupulous leaders in government and businesses will use this to undermine many of the norms we take for granted.
What is clear is that people are underestimating this crisis, no one wants to think we are in a WWII level moment, and so we don’t activate the appropriate level of response. But it is and will be a world altering period.
Once consistent pattern is that countries seem to feel like you do, it’s just a flu, then doctors see patients gasping for breath and literally drowning as their lungs fill up with fluid, and the true dread sets in. My friend is a doctor in NYC. She said this feels like war, and the nature of death experienced by people is horrific. If people were bleeding from their eyeballs like a movie maybe that would capture people’s attention but on the front lines people are terrified because this is an awful awful way to die.
I agree with you, but still would like to point out that the same line of argument (we’ve been fine before) would be as valid if society were to actually collapse. No species has ever gone extinct before... until it does!
So you're saying -- if things now return to conditions that were present during "Two global wars, the use of nuclear weapons" of last century... no cause for alarm?
1. HN is not "an informed audience", it's literally the public. And it's common for software developers to mistake themselves for domain experts on any domain but they aren't.
2. It's not an informed audience if misinformation is not challenged, it's a misinformed audience.
3. The flu is a bad parallel. The flu, while annually killing lots of people, does not overwhelm hospitals like a novel virus does. At best it makes people think this is like swine flu, while it has quickly shown to be nothing like swine flu.
Regarding 3, upper estimates for the 2009 swine flu are north of 500k deaths and the 1918 Spanish flu is 50 million.
Flus can be very deadly and the poster obviously did not intend to use the word in a diminutive way. You added that interpretation, knowing it is wrong, and then challenged it.
The whole post was playing down the effects of the current pandemic on society. The whole conclusion was that "a flu won't cause [society to break down]".
So yes, the poster was using flu in a diminutive sense. And yes, flu is deadly and a lot worse than a lot of people (who've probably never had flu) realise. But even given that, even recent novel flu strains haven't stressed and shut down the global economy like this pandemic has.
>The whole conclusion was that "a flu won't cause [society to break down]"
This does not minimize the harm a flu can do, it puts it in perspective. Nuclear bombs going off over LA, London, New York, and Beijing probably would not cause society to break down. That does not mean that does not mean that it wouldn't be terrible, deadly, and disruptive.
When planning for how to prepare and deal with this pandemic, people should not be preparing for some Mad-Max scenario where an assault rifle is their most valuable possession.
While the death toll remains smaller, at this point the global consequences of this pandemic are worse than LA, London, New York and Beijing getting glassed (assuming this hypothetical scenario was some kind of a terror attack, and not the first strike in WWIII).
To respond to "Clayton" in this thread, we did not have much of an option for reacting to the virus once it got to our land. Legally, the federal government cannot shut down the country and order lockdowns, only cities and states can do that. We could have taken the need for testing and equipment preparation more seriously, but we didn't.
In the absence of data around who is sick, who is not, and who is immune, there is no way to slow the spread of the virus during an outbreak except to keep everyone away from everyone else.
This is juxtaposition, a form of literary style. He is sarcastically downplaying the _flu_ in comparison to the world wars because the _flu_ is already significantly lesser than the holocaust or an atomic bomb landing in Japan.
You know that that meme originated from a campaign designed by the British government for motivation in the face of mass bombing anticipated in England before the onset of WWII right? I think saying that "this won't be any worse than being bombed by nazis" is not a particularly motivated slogan.
> a flu won't cause it to fall apart this century either.
If you think this is just a freak thing that is happening, som e flu what will pass, then you don't understand what is happening. What we're seeing is the way this pandemic is exposing vulnerabilities in our global capitalist system.
And finally, plenty of societies of collapse in those time periods. Of course humans and societies continue to exist, but there are more an enough examples of societies that have ceases to exist and the transition is a painful process.
It's actually way more ironic than that. It's traced back to the public stance of the British government during the spanish flu pandemic in WW1, where they decided that keeping the economy going was more important than trying to slow the spread of the flu.
"According to Dr Honigsbaum, the “carry on” advice may well have been responsible for thousands of the 250,000 Britons who ultimately died in the Spanish flu pandemic."
While many people will likely get very sick, they only stay that way for ~2-6 weeks. Further, around half of people below 50 will show minimal if any symptoms. So, while most non essential jobs are shut down we are likely to see a surplus of labor in terms of trucking etc.
My guess is plenty of essential jobs will have heavy overtime while many people are unemployed. Simply because the disruptions are going to cascade through individual factories very quickly. The economic impact is largely going to be a question of how much do we shut down to save lives?
That thinking negates the economic impact that a bunch of people dying is going to have on the economy. There are really two options here.
1) A huge impact on the economy and fewer people die.
2) A huge impact on the economy and lots of people die.
Nobody has the capability to predict the real outcome of one scenario over the other from an economic perspective.
If the US does everything perfectly, we'll probably lose 200k people to COVID-19. If we "reopen the economy" prematurely, the number could easily be 5x to 10x that figure.
Loss of human life has a very tangible impact on the economy, so folks should not be thinking of this as a binary decision ("do we save lives vs do we save the economy").
That’s incredibly simplified. Policy makers don’t have a simple switch to which results in some specific known outcome. Nobody wants millions of Americans to die or for another outbreak to happen in 6+ months. Unfortunately, avoiding both without shutting everything down until a vaccine is developed is tricky.
I'm pointing at the fact that it keeps getting presented like a binary decision in the media over and over again, and that's not an appropriate characterization.
If that’s what your thinking don’t say: There are really two options here.
Frankly, the US with effective leadership could have less than 1/10th your quoted 200,000 deaths, just look at South Korea. Any time someone says their are two options on a complex issue it’s a straw man argument which is what I objected to.
>Policy makers don’t have a simple switch to which results in some specific known outcome
BS: Donald Trump was specifically asked yesterday how he feels about the poor and especially illegal immigrants who will have zero access to help, both financial and medical.
He litaerally tilted his head and said "what are you gunna do?" knowing what that outcome is going to result in.
> around half of people below 50 will show minimal if any symptoms.
I have a middle finger for you for how cold hearted you sound. As though “it’s no big deal”. My wife went through this (previously healthy 34 year old) and it was terrible. The docs just said: “there’s nothing more we can do”
I'm sorry for what you're going through. Maybe reading a thread on the economic implications of this disaster -- which will inevitably discuss both the terrible parts and the silver linings -- isn't the healthiest thing for you right now?
"Forecasting is hard, especially when it's about the future"
Whether or not you need ammo probably depends on where you live... but I'd stock up on non-perishables and necessities if you can afford it.
Not sure you need vodka at all, but I think that's a matter of personal preference. I'm actually trying to be as healthy and fit as possible to fight the weirdness that is self-isolation and to be ready for the virus when it inevitably comes (if 80% of us really are going to be infected...)
Am also hearing PE funds are forecasting anything between "18 months until we're back to normal" to "it will never be the same"..
The vodka and ammo was a bit of the joke (though I think the saying goes that post-apocalypse currency is fuel, ammo and cigarettes).
I've stocked up a month ago for a minor supply chain disruption. But the more I read the news every day, the more it seems to me that it isn't going to be a minor disruption. I'm starting to worry about survival even if neither myself nor anyone around me actually catches COVID-19.
Food, non-perishables, fuel? Yes. Firearms and ammo? To each their own. We did, but we're more rural.
Our concern is a supply chain meltdown when you have millions infected and sick. I would rather be prepared and not need something, then need something and not be prepared.
> Our concern is a supply chain meltdown when you have millions infected and sick.
This is an absurdist prediction - we are looking at maximum 2 million 75+ year olds dying with some much smaller number of people of different ages. This is the group least likely to be involved in the day-to-day functioning of our supply chains.
Honestly, where are people coming up with these doomsday predictions?
Have you watched the supply chains? Spikes in demand followed by demand collapse have already wreaked havoc. From what I read from people from that business, there's total chaos.
And even if the elderly bear most of the risk, countries are shutting down completely for their sake - and that means companies stopping operations, leading to further disruptions. Also this article: US already has 10 million unemployed, and it barely started to consider doing anything about the virus.
I think this is closest to actual doomsday since the peak of Cold War.
If you were to value all human lives equally, the Cold War potential threat was far greater than this. The actual realized causality count is of course orders of magnitude lower for the Cold War.
In terms of being an existential threat to human life, this virus as we currently understand it (ignoring all the unknowns) isn't a real Doomsday. Historically it's merely a blip on the radar of awful things humanity has went through, endured, and survived leading to where we are now. People survived the bubonic plague and continued on. It was awful and they lacked much of the knowledge and understanding we now have to better curb these threats.
The vast majority of the population is going to be fine, healthy, and moving along. There may be economic restructuring after this (I don't see it as likely though). You're probably going to see a drop in quality/standard of living at large no matter what, but the majority of our infrastructure will still be there and the majority of the people who operate it will still be there. It's not like humans won't be around, infrastructure will be destroyed, our acquired knowledge and skills are lost...
The absolute worst case scenario is that this virus mutates regularly (perhaps with higher mortality rates) and we aren't able to manage it. Each mutation comes with significant risk of death. Although the risk could low for many, multiple exposures to relatively low risk leads to higher more realized unwelcome outcomes. This would absolutely force a complete systematic restructuring of societies, how we interact, how we work, etc. long term.
Based on what we currently know this will be a fairly long decline in productivity that most will be immune to and life will probably continue on mostly as is. It all boils down to questions about who deserves what, who takes the hit on losses, etc. Right now it looks like your average US citizen will see a larger decline in standards of living and our economic system will further consolidate/concentrate wealth and power barring some sort of (hopefully non-violent) social revolution.
As isolation habits go, it's slightly safer to overindulge in news than in liquor, but not much less unhealthy.
If you're worried about a real collapse, then do what you can to prepare, sure - ideally remembering that, by all the accounts of people who've been through such collapses and later told the tale, what really gets you through in the long run isn't liquor, smokes, or bullets, but relationships.
You don't need to soak in the news to do that. Indeed, soaking in the news probably makes it harder. Anxiety can get paralyzing, and there's a lot in the news to be anxious about. But it's also worth remembering that what's going to happen is going to happen whether you obsess over it or not. It can't be hurried, helped, or fought. It can only be dealt with as best you can, and from here it seems like you're not really helping yourself by what you're doing just now. So, maybe consider trying doing something else for a while? You know, just to see if it feels any different.
For food, fuel, and other essentials? If stuff like that starts getting disrupted to the point that people are actually dying, you can bet that we are going to lift our shelter-in-place. I have seen no evidence of that being borne out at all.
> I think this is closest to actual doomsday since the peak of Cold War
I agree, but I think that more speaks to the relative safety and stability of the post-Cold War era than any particularly huge danger from the pandemic. 2 million deaths is terrifying and we should do what we can to prevent it - I don't see any evidence that this is the lead up to general societal collapse or even substantial supply chain disruption for things you need to survive.
Because countries are shutting their borders and we have a tightly coupled network. Add to that decades of streamlining logistics to avoid any inventory and consistent dividends and stock buy backs that make scaling up additional capacity difficult and you can quickly see disruption.
If this triggers a financial crisis, then working capital can disappear so even if capacity exists liquidity won’t and there won’t be enough purchase power to float inventory.
I worked at the best corporate bankruptcy law firm in the country in 2008. I can tell you there was a real concern that lack of liquidity would result in grocery stores not having food for extended periods from lacking working capital. That can happen fast.
Not to mention that when the healthcare system gets overloaded with all the covid-cases, everything else that requires medical intervention also becomes dangerous.
The curve will barely flatten, before 'peak infection' is reached. At the current rate, we have only 1 or 2 months to accomplish this, and no progress so far.
Many folks will get sick; the oldest will die at home. For others it will suck, and there will be no help even from neighbors, churches etc (like the last time, they quit functioning entirely)
Some will not notice at all, apparently. They will survive into a world changed by loss, conservatism, suspicion and paranoia.
An initial recession, while paradoxically goods are plentiful due to the reduced demand
The Social Security fund will disappear entirely as a topic of discussion
Civilization won't fall, and public order will only be occasionally disrupted in small localities
I'd recommend establishing a network of close friends who will support one another during this time. It's about the only support we can expect.
> The curve will barely flatten, before 'peak infection' is reached. At the current rate, we have only 1 or 2 months to accomplish this, and no progress so far.
The curve is flat (at least the new "X" curve) in both Seattle and the Bay Area. That's definitely progress.
Yeah, well, I unnecessarily asked my question in the indirect way. What I meant is: what do we expect to see? Wars and famines, or just little hardship? Or something in between?
I've done some preparations over a month ago, but these were preparations for a short-term supply chain disruption. Not for what increasingly seems like a global economic meltdown.
Obviously it's impossible to say for certain. This was/is a relatively controlled economic crash landing. The decision was made to take the plane from 30,000 feet to the runway in record time. So everyone has bumps and bruises, some are going to have broken bones and a few may die as a result of their injuries... but that was the best option available at the time.
Personally, I find this a lot less scary than '08. The main objective of the current exercise is to ensure the healthcare system does not collapse... because if that happens, things could get dicey. (i.e. blind terror would likely cause more damage than the virus itself) Once we get to the point where the medical community feels like 'OK, we've got this under control' things should start looking up since we'll know for sure what the bottom looks like from a health/mortality standpoint. Then people can start sorting out the economic side of the equation. Right now there's fear because no one knows where the bottom is for either situation.
2008 started in 2007, things move slow until they don’t. Banks are just as leveraged as they were then. They started doing many of the same things they did then in recent years. They are stronger in part because of the stress tests and implications fed back stop they are counting on so luckily the won’t likely panic and stop lending to each other. But make no mistake. If mortgages and credit cards start to default their balance sheets have limits on what they can with stand. Tightly coupled systems implode quickly even with small changes.
I live in a state barely touched by COVID-19. Since Mar 15, I've never seen a roll of TP in any of the stores in town. Not Costco, Sam's Club, Target or the local grocery chain. I feel bad for people who didn't manage to stock up.
You speak as if the toilet paper factories have shut down and the delivery trucks are all sitting idle. Everyone decided to rush the stores and buy up all of the toilet paper, and unsurprisingly the stores don't stock enough for every household to buy 200 rolls in the same week.
All you need to do is wait for the next delivery to show up (which it will). The problem is, people like you will continue to buy up everything as quickly as possible, so after the first couple hundred customers the shelves will be empty again. Until the next delivery. That is the problem, not supply shortages.
Don't feel bad for people who didn't horde resources at everyone else's expense. Help those people by buying what you need plus only a little extra.
Thanks for the ad hominem and patronizing reply. I haven't been trying to buy TP, I just noticed it was missing every time. There may be plenty of TP (and other goods) in the pipeline, but that doesn't matter to the end user. They're just SOL because there's so little slack in supply chain management anymore.
Your post was completely and factually incorrect, then you not only blame me, but blame the people trying to adjust to a supply issue. How do you determine "what you need plus only a little extra" when you can't determine when TP will be in stock? It's been weeks now, and it's perfectly rational to buy more than you need since you can't count on the supply chain.
Your math doesn't check out. 5% of people that get it (among a wide range of ages) require serious medical care for weeks. And if we send 5% of any population to the hospital in a given month the death rate for ALL diseases goes way up.
It still sends as many people to the hospitals as it sends to the hospitals, weak epidemiological data or no. If that's more than the hospitals can handle, people start dying who otherwise wouldn't. That, too, is not an indicator subject to measurement bias imposed by lousy testing regimes. It's also a thing that is happening. We will see more of it before we see less.
> 5% of people that get it (among a wide range of ages) require serious medical care for weeks
Just based on the experience in other countries, GP seems quite spot on in terms of who is impacted, who dies, and the percentage of the population. Your comment seems speculative and substantial number of non-70+ year olds dying has not been borne out by the data at all.
There are far more deaths in Italy and France then statistics show...
> On Tuesday night, the health authority in the Grand Est region said two-thirds of its 620 old people’s homes had been affected by the coronavirus pandemic and 570 residents had died.
> Those 570 people are not recorded in France’s official coronavirus death toll, which reached 4,032 on April 1, but so far counts only those who have died in hospital.
> In an Italian retirement home in Mediglia, outside Milan, 52 of the 152 elderly staying there had died from Covid-19 infection by last week.
> In the province of Bergamo, 2,060 deaths were attributed to the virus in March. However L’Eco di Bergamo, a local newspaper, found that a total of 5,400 deaths occurred in the province in March, up from just 900 in the same month in 2019.
I was under the impression that Italy did test for covid also post-mortem? there were claims here couple days back that this was the case (and a claim that apparently Germany didn't). if that's the case then how could the numbers be different?
People also die now for example because of a heart attack that cant be treated due to overwhelmed hospitals. Not saying that is the case for the numbers, I dont know.
In London someone died of malaria last week because it took 9 hours for an ambulance to show up.
It kills 1% if ICU care is available. It kills a lot more if the healthcare system is overwhelmed. Look at Spain or Italy. Case fatality rate is around 10%.
Letting it run its course it needs to infect 60-70% of the population before herd immunity kicks in. 1% of 60% of the population of the US is 2 million people. World-wide you're looking at 45 million people for a very optimistic scenario. The numbers could easily be 5 or 10 times larger. If we're lucky and the number of asymptomatic cases is very high, the numbers could also be lower. At this stage we really don't know, but I don't think it's ethical to take that risk.
Spain and Italy have fatality rates of 10% because the infection exploded far before they could ramp up testing capacity, so they were only testing the people who were in serious medical distress.
This is obvious if you compare the numbers between different countries versus their relative level of hospital capacity.
The comment you're replying to referred to "1% of the people who get it", which has basically nothing to do with CFR. Getting the virus is necessary but far from sufficient to become a case.
Not quite. 1% of people who get it don't survive when healthcare resources are not strained. But when ICUs fill up, that number starts to skyrocket, because people who need intensive care cannot get it.
You're really missing my point. CFR is not the percentage of "people who get it" that don't survive. It's the percentage of "people who get it, get tested, test positive and are thus confirmed as a case" that don't survive. The actual mortality rate, whether ICUs are working or not (they mostly are), isn't known.
That was a prediction CDC made in early Feb for broader China. More recent CDC reports for United States (https://www.cdc.gov/mmwr/volumes/69/wr/pdfs/mm6912e2-H.pdf) say mortality is somewhere between 1% (lower bound) and ~30% (depending on age) based on calculations they did w/ cases having "known outcomes". The CDC says they only have 44 such samples at this time, and that ICU status data is missing or unknown for the several thousand or so other cases. So we really just don't know the facts yet.
I know. But we don't know the true fatality rate yet and we won't know it before it's way too late to act. I don't think it's okay to literally risk millions of lives on the off chance that we missed 95% of the cases with our testing.
That is a reasonable line of thought, but incomplete. How many lives are we risking by tanking the global economy? That seems like it should be a more quantifiable risk. It becomes a trade-off between the amount of lives we can calculate will be lost via our pandemic-prevention measures (and to what degree of certainty) and the number that might be lost without them (and to what degree of certainty).
The trade-off is between loss of lives one way versus loss of lives another way.
Okay, but you have to look at both sides of it. How many people aren't dying in road traffic accidents that don't happen because of isolation? How many people aren't dying of diseases they won't develop because reduced economic output has also reduced the output of carcinogens and toxins produced by manufacturing that's not being done? And like that - those are just the first two examples off the top of my head; there are more.
I don't see much mention of this among the "back to work at any cost" crowd, and I wonder why. It seems like a pretty obvious consideration.
Exactly this! The WHO estimates that air pollution kills 7M people annually[0]. A really big range of estimates suggest 20-50% decrease in airborne pollutants since the start of the pandemic. Even a 10% decrease, sustained, could save 700k lives/year.
Yes, bad economies harm people. But they also reduce harm. Pointing simply at directionality due to a bad economy is disingenuous.
A natural outcome when you have 30% unemployment in the worlds largest economies. Who knows, maybe we will get lucky and it will only be civil wars in China and India with only hundreds of millions dead.
It is quantifiable, however it appears that periods of economic decline are strongly associated with decreased mortality rates, at least according to the best evidence I can find from Nature.
In Italy you see 10% mortality because Italy tests only (really) sick people. It's really likely that millions of italians have covid. This is not really demonstrable at the moment, but still https://www.wantedinrome.com/news/coronavirus-report-six-mil...
Italy is treating every single patient with high standard healthcare. They did not reach the "0 free ICUs" moment yet.
What we can say as of today is that the high number of deaths do not depend on overwhelmed hospitals, but likely just because there are A LOT of covid patients. Also a greater average age and the fact that older people are much more integrated in the society played a role affecting mortality, but still those are only theories and we can't say how much they affected the total.
The US media reporting has also been terrible. CNN even noticed that a lack of testing was correlated with a higher reported percentage of deaths... and then went and concluded that the reason for this was that more testing caused fewer people to be infected, even though this wouldn't directly affect the mortality rate and there was other evidence indicating that the lack of testing had screwed with the denominator in the calculation.
sick of hearing this silliness: https://www.ecodibergamo.it/stories/bergamo-citta/coronaviru... so yeah, they barely test half the dead people (which are still double the normal deaths...). And A LOT of covid patients means a lot of deaths as well, bc. at 1.3% (Diamond Princess, where people are still not through it/dying) to 5% letality, the thing IS BAD.
But again, what was the age group on Diamond Princes? Because it matters, the death rate goes up with age. 5% says the average age was something like 50.
with emphasis on "should". Most people started to argue with the low number of deaths, when there were 5. Now there are at least 10 and about 100 people unaccounted in statistics...
Hm - 10 as of a few weeks or so ago, I doubt we will see any more and certainly not 2-3x more. That 10/800 = 1.2% and the cruise ship skewed older. 100 people entirely unaccounted for would only impact spread rates, not CFR, unless the unaccounted people are more likely to have died than those from the ship writ large.
I don't see where people are getting 5% from. 1% is already 10x worse or so than the flu, I don't see the need to exaggerate the facts.
There was an 11th death Apr 1, and 113 of the 712 are still active, not recovered. Didn't find from a quick search how critical or mild they are, but it is concerning that it's been this long...
That doesn't appear to be entirely correct - from my research, it appears to actually have been about 12 deaths (the last on March 28th from https://www.mhlw.go.jp/stf/newpage_10599.html) but there appear to be multiple sources on this.
Regardless, I'll admit that I was wrong - there are still people dying. Regardless, we'd have to get about 3-4x the number of deaths we've had so far to reach 5% - and from the sources I can find most of those remaining cases are non-critical (though there could be even a doubling).
What do you feel is stupid about the response to this? 1% is a lot of people. The whole point of social distancing and staying at home is to not overwhelm the healthcare system and to give more time to develop proper care procedures.
Playing devil's advocate for a moment, 1% would be approximately the same number of deaths we get in a typical year. Slightly more, yes, but some number of the COVID deaths are probably people that had a high likelihood of dying this year anyway, so it seems like an okay estimate.
In that case we are doubling our deaths for a year. Very significant, but in the grand scheme of things it poses no real danger to the species. I haven't decided if I agree with the position that collapsing the economy is worse than letting those deaths happen, but I understand how someone could feel that way. Ask me again after I lose my cushy software job because it's a luxury companies can no longer afford with nobody buying anything.
And yet you did not address the issue that the health care systems will collapse. Why are you (and many others) ignoring that outcome?
Everyone seems to get tied up in the % of fatalities. Debating those numbers are a waste of energy, everyone is just cherry-picking numbers that support their own arguments. But we know for a fact that without containment measures (and even with them), this virus can result in the health care system getting overwhelmed and possibly collapsing.
This has a number of impacts, 1) Health care workers will die at a much higher rate than normal. This will have lasting impacts. 2) Anyone who needs health care for any reason will be in trouble (cancer patients, diabetes patients, pregnant women, accidents, etc...). I read somewhere that ~30% of home births require emergency hospitalization. How would our economy do if ~30% of pregnant mothers died during child birth? 3). Even without government mandated shut-downs, people will reduce economic activity to avoid the risk of getting COVID or getting into an accident that would require a hospital visit. Many companies were cancelling events and implementing WFH policies before local governments required it.
This isn't really an either/or option. The economy is going to take a massive hit regardless of the actions we take. But by implementing shut-downs we can save lives and also potentially get back to normal business faster than we would otherwise.
I'm in the fashion industry right now, I get the layoff worries. But, okay, worst case, I get laid off and then I get a less cushy job in an industry that's less affected. Maybe I draw down my savings for a couple of months before I find one. It's not the end of the world. That's a major benefit of having a skillset as portable as ours.
I'd definitely rather risk that than risk a couple million people dying over the course of a few months - 1% of 70% of 320M, and that's just in the US. What effect on the economy do you expect would come of that?
> What effect on the economy do you expect would come of that?
On the economy? Very little. Most of the people dying are not in the job market any more nor are they big consumers. It might even reduce the load slightly on Social Security and Medicare.
No, the risk of letting a couple million extra people die this year is a social/moral one, not an economic one IMO.
Even in countries with no lockdown in place, economic activity is way down.
For instance in Sweden, at least when I read about it a few days ago, restaurants and everything were still open.
If I remember correctly, they had between 10-20% of the usual activity.
Even if it's not mandated, people don't want to take the risk, either for others or for themselves.
All of this to say: I don't think the options are between close the economy to save people (at least short term), and don't close the economy and bear the hit.
The latest one is not an option, the economy will mostly shut down by itself
>I'd definitely rather risk that than risk a couple million people dying over the course of a few months - 1% of 70% of 320M, and that's just in the US. What effect on the economy do you expect would come of that?
A hugely positive one because the deaths are for people who no longer work and generally are net drains on the economy, with either multiple diseases, old age or some other disability.
The effect of wealth transfer between generations alone would be amazing, with 20-40 year olds inheriting housing for the first time since the 90s in large numbers.
> I haven't decided if I agree with the position that collapsing the economy is worse than letting those deaths happen
Have you considered the position that a collapsed economy is inevitable due to deaths? Or that it would lead to less pollution, saving lives (although who knows what the net-net would be)?
7M people die annually from air pollution, according to the WHO. Early estimates of pollution reduction are in the 20-50% range; even a sustained 5% reduction is 350k lives saved/year.
You should check the numbers coming out of Italy. It’s not 1% if the medical system is overwhelmed. Moreover, you do realize that’s 3 million dead in the US alone?
It's also not the reported number in Italy. The sources of error in the data are enough to make the data fairly meaningless.
1. We have no idea how many people were infected
2. We have no idea how many people who have died died from Covid 19
3. The population pyramid in Italy is extremely disparate from the rest of the world.
The medical system being overwhelmed is a portion of the contribution, and what it means to be 'overwhelmed' is about as clear as what it means to have an error in your application. Are you overwhelmed due to lack of beds? Lack of ventilator access? Lack of doctors? What are the numbers for these in the remainder of the world?
Treating any modeling we have of the impact of Covid 19 as reliable is an exercise in insanity.
EDIT: To be clear this isn't to say that the responses are unwarranted. It's just to say that they are conservative and acting on knowingly incorrect information. If they were the right decisions remains to be seen. The impact of global financial collapse isn't just 'stocks down', but has tangible impacts on life expectancy, healthcare quality, and quality of life globally. Time will tell.
> Treating any modeling we have of the impact of Covid 19 as reliable is an exercise in insanity.
In detail, yes. In general, you can still make some good back-of-an-envelope calculations.
Conservative estimates are that the coronavirus has a CFR of about 1% given adequate medical care (South Korea's statistics, where testing has been comprehensive enough that we should have identified any wide pool of asymptomatic cases), and another low estimate of its R0 factor is 2. Left unsuppressed, this implies that the disease would spread to infect about half of the population, and it would kill 1% of those infected.
For the United States, that implies that a "flattened curve" -- where mitigation prevents medical resources from being overwhelmed but does not fully suppress the disease's spread -- will kill about 1.6 million people.
Beyond that, we know that the disease requires intensive care at some multiple of the death rate (say 2x) and hospitalization at another multiple (say a further 3x). These estimates are reasonably consistent with New York's numbers (https://nymag.com/intelligencer/article/new-york-coronavirus...). Testing shortfalls could make these multiples worse, if there are hospitalized or ICU patients positive for the virus but not included in these totals.
Given overwhelmed medical services, we can presume that a large fraction (say half?) of ICU patients would die for want of care, and a smaller but still significant fraction of hospitalized patients would do the same (1/8?).
This implies that an un-flattened curve would have roughly triple the death rate, with the excess caused by inadequate care. With a 3% inadequate-care CFR, if left to run its course the disease would then kill about 4.8 million Americans.
> It's just to say that they are conservative and acting on knowingly incorrect information.
If policymakers are acting on "knowingly incorrect information," it's because their assumptions are too benign rather than too severe. I believe that my estimates above should be uncontroversial, and to the extent they err I've tried to err on the less-deadly, less-contagious side.
Various models and data sets put asymptomatic cases at between 20% and 50%. Those are fully asymptomatic - i.e. total end-to-end progression with either very mild symptoms indistinguishable from a minor cold, or no symptoms at all.
It's almost impossible to estimate expected population mortality with limited and noisy data, but I've seen estimates from 1.5% to 0.05%.
The only thing that can be said with certainty is that social distancing, testing, and tracking all do a lot to prevent initial infection, and good access to ICU hugely improves chances of survival after infection.
The rest is guesswork at this point. Having said that - my current hand-wavy estimate of deaths in the UK is high five, low six figures. Multiply by five or so for the US.
> Various models and data sets put asymptomatic cases at between 20% and 50%. Those are fully asymptomatic - i.e. total end-to-end progression with either very mild symptoms indistinguishable from a minor cold, or no symptoms at all.
That's why I use South Korea as a model. They've tested enough that they should have found the majority of asymptomatic cases, and they still have CFR above 1% (1.7% as of this writing).
That also puts a bound on reasonable levels of occult spread. We can support maybe 50% of cases being totally asymptomatic and undetected, but if that is significantly greater then we'd see contact-tracing (again, SK-style) entirely fail as a control measure.
So it seems like an absolute best-case CFR is 0.5%, if it would be 1% among symptomatic cases and there again that many that never notice / are diagnosed with the disease. For the UK, that would give an optimistic projection of (66e6 * 50% * 0.5% =) 165k deaths in a "herd immunity" outcome with a "flat curve", so this is consistent with the range of your "hand-wavy estimate."
We will not know how effective testing has been until we have serological tests. There are a few assumptions being made regarding the efficacy of testing, and contact tracing will certainly miss pockets of asymptomatic people.
The financial probelms are a given. Joining some political death cult to sacrifice the weak and elderly portion of our population to feed the COVID-19 Volcano isn't going to make the virus end any sooner, and you'll have even fewer consumers left after it's all over if governments choose to go that route. The virus doesn't care, and as far as I'm concerned any economic system that isn't capable of protecting the vulnerable isn't worth reviving.
”Joining some political death cult to sacrifice the weak and elderly portion of our population...isn't going to make the virus end any sooner”
Barring the development of a vaccine (which is far from guaranteed, and a year or more away, in the best case), letting the virus sweep through the population is pretty much the only thing that would bring this to an end quickly. We could achieve herd immunity in a few months and have it behind us.
This situation is a direct tradeoff of time (and money) for lives.
Letting it sweep through uncontrollably quickly by pretending it's business-as-normal out there will lead to many times more deaths due to hospital overutilization.
Our current actions are focused on the goal of leveling the curve, not putting up a wall. There aren't armed guards outside our homes preventing us from leaving. The grocery stores are open. We can come into contact with others to order just about all goods we've always been able to order. We can go to parks and trails and beaches. This will cause more infections, and we all know it; but thanks to these measures, ER visits in our city are down over 20%, allowing healthcare some capacity to deal with the influx infected people, and our daily growth of infections doesn't look exponential anymore.
This thing hospitalizes many young (under 40 years of age) people as well, and in our state that has been on lockdown for longer than many others, medical fellows and residents from unrelated specialties are being asked to help with COVID-19 cases. In a week or two at most it's expected they'll be required to help. If our government wasn't taking these defensive measures, we'd already need more space to store the bodies.
Yeah, I get it. It was implicit in the point I was making: we’re explicitly trading time for lives.
Literally the fastest way to get this over with is to let it sweep through the population. More people might die if we did that, but it would get it over with quickly.
Remember, it's a ratio. What matters isn't the raw number of missed cases, it's the ratio of missed-to-detected cases versus uncounted-to-counted deaths.
If Italy has missed half of its deaths but also half of its total cases, the fatality ratio would remain the same. To bring its CFR down to the level of South Korea, you'd have to make the implausible assumption that Italy has caught nearly all of its deaths but missed more than 85% of its total cases.
Yes, I know it’s a ratio. That’s why I used the term “numerator” and “denominator”.
It’s not at all implausible that Italy has missed the vast majority of it’s cases, because they’re barely testing, and they’re not testing minor cases. It’s essentially guaranteed that they’re missing a huge number of cases.
A reasonable estimate is that they’re missing 10 cases for every one they actually detect. The error in the denominator is much larger than the error in the numerator.
It's universally true that the people eager to feed the olds (and a bunch of non-olds, too) into the wood chipper never seem to have their, and their parents', do-not-treat orders signed.
We don't like to think about it explicitly, but human life has a market or dollar value. You can figure it out by how much we spend on things like safety measures and court settlements and judgments for deaths. As it turns out, it runs about $7 million per person in the United States.
That does make some sense. None of us picked the circumstances of our birth, but we have billions of people because of the economy, because we don't all grow our own food, because some people specialize in scientific research, etc. Now, we have billions of people that depend on a functioning economy, and if it doesn't function, people will die that way as well.
So what if it's 1%. It's life. Nothing else matters.
Should we shut down the country and quarantine ourselves during every flu season? In an average year the flu kills about 0.01% of the population, and nothing else matters but trying to save those tens of thousands of people, right?
Afaik Norway was one of the first countries that made similar numbers public, as about a week ago they had announced that unemployment had risen from app. 2% to 10.4%. The article is here [1]. My ballpark estimate is GDP going down by 20-30% for the next two quarters at least.
If the unemployment rate continues to rise at this pace (about 7% every two weeks), it will match the peak during the Great Depression (25%) around the end of April.
That's 40 million people who will have no income and likely no health care in the middle of a pandemic.
Not sure how to process this information honestly.
>That's 40 million people who will have no income and likely no health care in the middle of a pandemic.
if the government were to help regular people that would be say $1T/40M = $25K - one can survive a month or two on that (and those money would have naturally trickled promptly up thus also supporting the top of the economy - corporations, banks, etc. - instead of being directly accumulated there like in the current trickle down approach). My understanding that is what they ultimately did in Great Depression - by way of public works and rudimentary safety net - though the things had to get really bad before they did it, and one can only wonder how much things have to get bad this time.
You can't extrapolate trends ad infinitum, and I didn't.
I extrapolated them for four weeks.
All we need is four more weeks of what has happened for the last two (and most authorities are saying that the lockdowns will last at least this long), and we're at the peak of the Great Depression, unemployment-wise at least.
Moreover, by assuming constant linear growth, I was being optimistic about the slope of the curve. The second week of jobless claims was worse than the first.
Correct. Todays number isn't even much of a surprise, although it's still shocking to see. I thought the consensus estimate was way too low. Some analysts have been kicking around 20%-30% unemployment before this is all over.
The virtuous cycle provided by a functioning market is not a pyramid scheme. Not even close.
Pyramid schemes transfer wealth from the bottom to the top while creating no new additional wealth. America is creating tons of additional wealth and how much each gets from that wealth is proportional to one's leverage and one's leverage is generally proportional to how much one is able to contribute to wealth generation (in either talent or useful capital)
You're going to have to elaborate on what you mean by "destroyed".
Also, the US isn't a single entity. It's an agglomeration of 330 million people interacting with one another and it's various levels of governance at the local, state and federal level.
Natural disasters can destroy wealth by destroying assets. Individuals can squander their wealth through bad investments. A government can steal wealth through taxes. Wealth can be forfeited through civil or criminal proceedings. Wealth can dwindle in real terms due to inflation. So on and so forth.
But to say that the "US destroyed wealth" makes no sense and isn't either a supportable or falsifiable statement.
“Virtuous”. It is fueled by artificial growth. It demands growth and makes sustainable, stable businesses a liability. It is absurd to see companies folding barely two weeks into hardship.
> It is absurd to see companies folding barely two weeks into hardship.
Why? Companies sitting on tons of cash is a bad thing. That cash either needs to be invested through hiring, buying equipment, etc...or paid out to the shareholders (who then spend, invest, etc...). Sitting on cash traps capital that could be doing something else to create value.
And before you say companies need to plan better, companies do plan for downturns. But, no company plans for their revenues to go to near zero overnight.
^ for anyone who doesn't know, 1893 seemed to be the first of many Argentine financial crises, caused by a wheat crop failure, which caused a negative feedback loop as (mostly) European investors pulled out of South Africa and Australia. The effects spilled over into the US and UK financial systems, led to runs on the banks, and caused a severe recession for 2 years.
Then again for the part of that which is related to corona it’s mostly through the mechanism of temporary unemployment, where the state takes over paying part of the paycheck for the duration of the time that the workers can’t work, and they are expected to return to their jobs once the lockdown is over. Of course not all companies will survive post-corona but it seems like an approach that potentially better preserves the social and economic tissue.
The US' unemployment rate was much, much lower than many western European unemployment rates prior to coronavirus, so it doesn't make sense to compare the absolute number here - instead you should be comparing relative figures. The US' unemployment rate has tripled in the past 2 weeks based on this analysis.
This is just a personal opinion, but I think ~15% unemployment peak is far too optimistic.
I believe that 50-75% of restaurants will never reopen. 20-35% of small to mid-size hotels, venues, spas will declare bankruptcy within this year. Both employ a lot of people.
So I'm afraid the number is going to much higher, maybe even double.
I know it's really not PC to talk about this (how dare you value money over human lives!?), but at what point does the economic damage this causes become too much? 15% joblessness would be ~50M americans. If just 0.1% of them commit suicide as a result of losing their jobs or businesses, that would be 50,000 dead.
Maybe there's some kind of intermediate between forcing everyone to stay home and not having any mitigation measures in place whatsoever? Maybe a midway strategy would be less destructive. Protecting the economy isn't just about protecting the rich. The rich will be fine, they will get huge government bailouts (zero-interest loans). However, as you point out, a large percentage of small businesses will never reopen. If anything, this crisis is hugely benefitting Amazon & co.
the problem with your statement that NOT doing any of the counter measures (like self isolation) would result in the overloading of the healthcare system and many people dying.
(heck, the healthcare system in the US seems to be overloaded already).
When you have no further option for healthcare because the system is broken and overloaded, why would going into work make any sense if it resulted in either an period of illness with structural symptons or even death.
In times of crisis, people want food on the table and a roof over their head, if the cost benefit of doing legal work and following the rule of law turns negative, people might aswell just steal food and stop paying rent, who is there to stop them?
I think the difference here is that virus bring death to us. Suicides can be reduced if governments create the correct stimulus.
Again, it's super easy to criticize when not in charge, but my reaction would have been to shut down any means of travels to and from the country, shut down the country for 45 days completely, slowly restart the economy from crucial business to less and introduce couple of strong measurements to compensate workers for lost income.
At start of year, situation normal, the economy we had was unsustainable. We were collectively waging war on our environment and winning. Folks mostly had jobs, which was good, but income inequality was nuts and lots of jobs didn't pay a living wage. Housing costs, healthcare and college were out of control.
In short, the world could really use a correction. The pollution reduction from this shutdown has been dramatic and wonderful.
This will hit the economy very hard. The rich will be livid and will push hard to return to business as usual. The rest of us will suffer terribly. Maybe so terribly, and in such numbers, that we have to address it. Maybe we'll come out the other end with something more sustainable for everyone.
> Maybe so terribly, and in such numbers, that we have to address it
That’s unfortunately my reading. There are stores boarding their storefronts in LA [0]. Very very premature but gives you a glimpse into the believes of some.
I’m sure at the end we will come out of it in better place that we entered it, but I’m dreading the path we have to take to get there.
After this is over (whenever that is) we expect people to resume eating out and traveling. I agree that it's likely that 50% of restaurants and 25% of hotels/spas would become bankrupt and shut down, but that does not mean a 50% / 25% reduction of employment; I would expect most of the bankrupt restaurants and hotels/spas to be immediately replaced with new ones, employing much of the same people and renting much of the same premises (only cheaper), and ran/owned by the same people. In such an environment, the main impact of a restaurant going bankrupt is that the creditors and investors of that restaurant lose their capital, but it can reopen after a reorganization when there's demand once again.
You are of course correct. There will be a bottom and then a recovery.
The speed of recovery will depend on how much liquidity will be available in the market. And I believe it’s going to be quite low.
You see, all of these business depend on discretionary income and after the shock to the people they will sit on any penny or they will not have it themselves.
I believe we will eventually get out of this but my timeline is 3-5 years. If people are unemployed for more than few months their prospects drop rapidly. People with no options produce ruthless competition that pushes salaries down producing wider inequality and limits the discretionary funds needed to spend in those establishments in the first place producing quite a vicious circle.
I agree that wider inequality is a likely outcome.
There will be people who won't be able to spend anything because the depression drained them absolutely, and there will be people who are accumulating income that they can't spend due to the lockdown, and will have the funds to resume all the postponed vacations with vigor as soon as they can - in the aftermath, tourism will be cheap for those who have discretionary funds for tourism, because many won't, and the service industry will be agressively competing for any income they can get while having a cheap workforce.
Very true. I spoke to a few economists and they believe there are going to be two or three waves of CARE ACT-like packages.
It's easy to criticize the government without having to bear the responsibility but I wish they did this much earlier, with more force to bring confidence to the people rather than markets.
I spoke with a branch manager at a bank day before they announced the extended timeline for shut down up until end of April. She was cheerful because she believed that this will be over in two weeks. I tried to gently tell her that I believe we are looking at months (two at minimum), not weeks of lockdown and even that might be very optimistic. She didn't take it well.
People are confused and scared. I do wish the govs (local and federal) would be the leaders everyone needs them to be, but unfortunately, that's not yet happening (there are some exceptions, but very few unfortunately).
Probably most small(and medium, and big) businesses can hold on for a month or two at this rate but failure rate is going to approach 100% as time goes on.
What happens to all this commercial rental space? Rents are going to drop through the floor, and any business who signs up will have dramatically lower operating costs than in January.
A bunch of Portland restaurants found that they were losing money faster by offering takeout versus simply closing their doors completely. Obviously, a number of factors play into whether this is true for any given restaurant but takeout business isn't necessarily a panacea.
That is interesting but probably not indicative of elsewhere.
Portland OR is a bit techy and boogie but even then it has still been hit HARD. The places I frequent all have had drastically reduced hours and business. I haven’t heard of any closed for good but more and more and just on a long hiatus or boarded over...
I live in LA. It's not that different. I did talk to some owners of the restaurants and they said that their revenue is down by around 80% even with takeouts. Most people are not spending money. So it's something, but hardly enough.
The weekly numbers are unemployment benefit claims, whereas I think the monthly employment statistics are based on surveying the population and counting the actual number of people who are employed, seeking work, etc.
Yeah I understand the distinction but the weekly numbers capture much of the same information and are more accurate. The monthly survey is just something we do because we’ve done it for a long time.
Everything that is non essential in California is closed and only companies that can function with only working from home are still operating AFAIK. It doesn't matter how bad the outbreak is here, we've been on a shutdown for longer than anywhere in the USA, at least here in Northern California. Many restaurants have closed, only some are open for take out, but that probably depends on area. This last week they finally told many construction/lawn maintenance workers to stay home as well, depending upon circumstances.
Florida could worse, they just shut things down yesterday(!) and they have more cases than WA today which has been effectively shut down for a month or so.
Building on my analysis from last week:
1. This week's 6.6M jobless claims represents ~4% of the estimated ~160-165M US Workforce.
2. This is incremental to the 3.3M jobless claims filed week ending 3/21, totaling ~10M total jobless claims in the past 2 weeks
3. The US unemployment rate was ~3.5% as of EOM February, so cumulatively that means we've hit ~10% unemployment as of EOW 3/28 and that number is likely low (not accounting for gig workers) and almost certainly worsening this week.
1. These figures are only new claims as of 3/21, so the numbers will get worse.
2. This is ~2% of the estimated ~160-165M US Workforce.
3. This is nearly 5x (!) the prior record of 671K new jobless claims from 1982, and redefines the scale for jobless claims. [1]
4. This does not account for the countless gig workers that are part of the modern economy that likely did not file for unemployment since they were not covered prior to the passing of the senate bill last night.
This goes to show just how sharp of an impact the coronavirus pandemic has had relative to past recessions. Even the '08 Financial Crisis took MONTHS to unravel.
Further, unemployment benefits are managed by the states, and those states are running web services which typically see a few hundred hits a day. They are now trying to process tens of thousands of new records each day, and at least in MI the service is absolutely not up to the task.
My wife managed to get her filing completed a little after 1am this morning. She was the only one of her 20 coworkers to successfully file, the rest are continuing to attempt to get the state web site to work today, while more people pile in.
Somewhere there is an architect saying "I told you so!" I can almost guarantee the requirement was to handle several hundred requests per day, an architect pointed out if we get deluged then we won't be able to handle it, so maybe they were able to get them to allow for one or two thousand requests per day.
Now of course we don't know what the architecture of this system is and what the deltas in cost would have been to allow this to scale-out more - but I do know that all too often the more robust solution giving you much greater protection and lower cost down the road is often discarded if it costs even just 5%-10% more. Then the day comes when the people making these decisions get caught flat-footed and they try to blame everyone but themselves. It doesn't always happen like this - but it happens a lot.
This reminds me of an old story about an engineer who took initiative and automated the accounts receivable process at his company, now they get paid 25% faster! He shows his boss and gets a promotion.
He decides to do it again, this time with accounts payable, and is promptly fired.
I think that is small-think. The technical solution is only part of the problem and scaling up all systems to meet the .1% case seldom makes sense. They were smart to save 5-10%.
Eh.... On the flip side, processing and storing some simple text forms should be able to handle 1000s of simultaneous users on one box.
So, probably like most software of this nature, the reason it's not scaling is simply because the people who made it probably weren't the greatest engineers on the block.
These are the same kinds of assumptions that lead engineers to think they can build a [any product] clone in a weekend. It's unlikely that the problem or constraints are nearly as simple as one may think.
Consider: single auth across all the state's services, external APIs, identity verification, address verification, employer ID verification, federal/military ID verification, income/tax verification, phone verification, bank account information, translation into multiple languages, accessibility features, etc. Also, there's probably a lot of legacy infrastructure and process.
Also, if "ability to burst to 10x normal filings per week that might happen once every 40 years" wasn't in the spec, I think they were right not to engineer for it.
Admittedly it's a value call. My thought is generally if it's a small incremental cost that greatly increases the robustness then you should go for it. But - sometimes the money or time just isn't there. I'm bothered more by the people not even wanting to have the discussion than by those who do a summary analysis and decide it's not worth it.
The 0.1% case happens. And if it’s going to seriously wreck lives when it happens then you should solve for it. Does Instagram need to handle the 0.1% case? No. But the unemployment website should.
Wow, just found what my state (CO) is doing to help manage the influx. Talk about a low-tech workaround.
>IMPORTANT NOTICE: Because of the high volume of claims, we are asking that you help us help you and our greater community.
>If you need to file an unemployment claim and your last name begins with the letter A - M, file a claim on Sunday, Tuesday, Thursday, or after 12 noon on Saturday.
>If you need to file an unemployment claim and your last name begins with the letter N - Z, file a claim on Monday, Wednesday, Friday or before 12 noon on Saturday.
> Wow, just found what my state (CO) is doing to help manage the influx. Talk about a low-tech workaround.
> Ooooh, like gas rationing in the 70s.
I wasn't born back then, but I heard about that being based on License plates at a few car meetups by the older guys in the group and I had the same thought when I heard that on CPR.
Odd, but it could work if you have total compliance; lets see how that pans out.
As a developer I immediately though of the power of queues. Twenty people trying to submit same form does not work for everyone, but a queue processing one person at a time might allow the twenty people to submit within a short time. It is flattening the curve! If I was contracted to fix this ASAP, I would set up an nginx front-end proxy config that doesn't allow more than X sessions and suggest a time in the future when they could try again.
Having worked on this type of application in the past they should find a new company to work with if they can't handle this traffic. We were handling hundreds of requests per second with ease 10 years ago. That was with MySQL and the app running on the same server.
It doesn't take many resources to show the user a form, validate it, and save to a DB.
A bunch of armchair developers seem to have been summoned to tell the Federal government how to handle form submissions for an extremely security and privacy intense application using their fancy modern techniques.
You are talking about comparing a basic web form with an application for unemployment benefits which must go into a federal tax database and be processed using a what I assume is a garbage mainframe system.
It not only needs to be validated, it needs to securely store records, be able to compare them, and hook up to the system that handles payments, etc.
They can't just circumvent it and dump it into some silly Amazon or MySQL database and call it a day. That would require the employees to basically copy and paste that data into the actual warehouse and considering they have 3+ million to go through as it is making it easy for them to process is just as important as allowing people to submit.
For the time being the correct response is a queue gate.
Yep, USDS and 18F folks would have to agree with you here. The arcane crap that we have to deal with in payment and government information systems is beyond frustrating and makes it extremely tough. I read an article about having to fix a multi-decade Cisco router bug to get CI/CD and automated deployments working after USDS / 18F started setting up faster deployments but still needed to figure out how to deal with legacy stateful DB connections.
The reality of government paperwork systems on the backend is much, much closer to this hell and is part of why so many like myself ran screaming from public sector because when you see so many peers doing so well at FAANGS, why would you subject yourself to something that resists change and wants to keep it the same way? https://www.washingtonpost.com/news/federal-eye/wp/2014/03/2...
The point is that backend pain shouldn't stop you from accepting it on the front end and putting it into a queue. Making the problem of getting the application through backend systems the states' to deal with, not the applicants'.
Yeah, even in the SF/SJ locality which has the highest Locality Pay Adjustment (at 41.44%)[1], the position would likely have to be GS-12/GS/13 to start being competitive.
There is the option of going to some area with a much lower cost of living and trying to hire there, but the problem might be getting enough people together to form a team. If you can easily get enough people with skill and experience, the area probably has jobs for them that pay better, and if those jobs don't exist, it might be hard to find the people.
Eh, USDS and 18F jobs are kind of contract-based and do hit past six figures last I saw. However, they were defunded a lot since last I saw by POTUS45 so it's not clear what the state of comp is. DC area tech is a mish mash of rather enterprise-centric businesses and can be challenging if you're in the wrong domains of expertise.
Unemployment services are ran by the state. The entry level Software Engineer salary by the state of California is around $64k, with senior level salaries between about $75-$105k in Sacramento. I do not know if if this is normal, above average, or below average when compared with other states.
Virginia, DC, Maryland have similar cost of living but VA, MD, and DC have drastically different governments, tax rates, rights, and laws despite people working in roughly the same 40 square miles. Even a federal employee graduating and writing software should make more than that. Senior salaries are between $110k and $140k with not a lot of outliers on either end (the distribution matters more to me than a median when talking salary these days for white collar jobs).
California is a huge state and the Bay Area is going to have drastically different stats for even the same industry comparing San Diego, Los Angeles, Sacramento, and San Luis Obispo (yep, there's software jobs there too).
> The point is that backend pain shouldn't stop you from accepting it on the front end and putting it into a queue.
What if the backend rejects the form? The user's already moved on before their form made it through the queue. So then you're stuck re-implementing all the validations the backend needs in order to give the user feedback (which you may not even be able to do) or trying to get the user to come back later to try again.
> Making the problem of getting the application through backend systems the states' to deal with, not the applicants'.
Reducing permanent staff involved in processing applications is probably one of the main reasons the automated system was built in the first place. If they still have to do that, then you might as well just replace the frontend with a printable PDF.
You can pick a balance between some validations and 100%, and I don't think it's that hard unless you're invested in saying this is just UNPOSSIBLE.
There is already processes (a workforce and/or outbound written letters) to reach out to applicants in the case of eg a dispute (terminated for cause vs laid off).
> You can pick a balance between some validations and 100%, and I don't think it's that hard unless you're invested in saying this is just UNPOSSIBLE.
The point is that it's easy to say things should be easy when you don't know anything except the very surface details of the problem, and it's not your job to actually solve it.
Maybe the team that built the system in question were a bunch of dumb-dumbs who just needed a rockstar developer to show them how easy it is to scale, or maybe the problem is actually more complicated than it seems due some hidden complexities or constraints none of us actually know anything about (either technical or business).
Put it in a workflow where a form is filled out until it reaches a point where the back-end needs to do some heavy lifting, queue the form for processing, and then notify the user to continue to the next form in the workflow.
They could, they just don't want to pay for it. The government has no interest in being known for easily handling a huge spike of traffic during a crisis. They can just take the lower road and get by with less and saying 'try again later'. There's no repercussions here because it's the government.
Hence mainframe maintainers should really move to charging $1 million/year in a decade or two.
They aren't choosing to have crap infrastructure, their infrastructure is intentionally defunded as part of a political campaign to engender distrust in government functions and increase privatization. Government is incompetent because if it is, its easy to justify selling off the country to the incredibly wealthy so they can get wealthier.
It's a bit worse than that. The infrastructure isn't actually defunded, there are huge funds allocated to projects, but they're being consumed by managers at Deloitte, Lockheed, Booz Allen, Accenture, etc. The times when we see success is when enough funding trickled down to the few engineers who could make it work with what they get. Other times we see success is when there is enough public oversight by sufficiently independent stake holders. I see this in many local government agencies that are small, and projects accountable to city council, and so on.
So, legitimately, how to we make it so the government does have repercussions? I see a lot of people making jokes about guillotines and nooses, but is there no better way?
I suggest by campaigning to bring logic and critical thinking into early childhood education. Then philosophy, the classics. Science education.
Once you have more people who can understand that there are scientific and moral issues with manifest destiny, and religion isn't going to solve global warming, there will be some shifts in the public discourse and public policies.
It's the creation of pseudo-scientific explanations for coincidental advantages Europeans had, that created extreme intellectual complacency and bias that is holding back progress.
Validation is the problem. If someone thinks they’ve successfully applied, rejecting them asynchronously is often worse than not letting them apply in the first place.
I’m sure, but there’s still, I’d wager, an order of magnitude difference between the paperwork rejected now and that if users were unable to receive immediate feedback in order to correct their input.
You need to think of all of these things and many, many more to run a robust online service that can handle spikes hundreds of times bigger than the usual level. It's really not straightforward or simple.
Or it's a much simpler problem that they didn't make it semi-fast because it didn't need to be semi-fast.
When "hundreds of times the usual level" is still only 50 page loads per second, and 10 milliseconds of CPU per page would be extreme overkill for anything written in a reasonable way, it actually is straightforward.
Even 5 seconds will work if the actions can overlap. If it can't do things in parallel then we have issues much more fundamental than "performance", and there's no defending it as a competent system.
(That is not to say it's necessarily the devs' fault.)
I don't mean to defend it too much, because realistically it should be possible with relative ease to handle much more traffic than that - but my point is that in the enterprise and government worlds, things are often not as simple as you think.
Aside from potentially having to interface with dozens of unreliable, painfully slow SOAP-based web services, everything is often hosted on creaking, over-subscribed VMWare hosts, in VMs that would be under-specced regardless.
There is also often a "governing body" that severely restricts your tech stack choices.
Want to use Postgres? Nope, our standard is SQL Server - 2008 edition, actually!
Want to use Python/Ruby/Elixir/Clojure/Kotlin? None of that hipster nonsense here, we use good ole Java/VB.NET here!
Message queue, you say? It's Windows Message Queue with distributed COM all the way down here!
"Containers"? What's a one of those? You'll get a crappy VM with 1 vCPU and 1GB of RAM, and you'll thank me for it! etc...
As a dev, it's horrible and soul-destroying to work under such limitations, but if you have no choice...
All of those items are manageable. Some are simple setup or programming errors, some require a bit of added complexity but are normal in modern web apps.
Completely agree with the sentiment. I think most often it is inadequate default configuration that bottle-necks somewhere, that never got tested with more than a handful of users at a time. Going to a hundred highlights some bugs. going to 1000 others. On the other hand, I have worked on a project for USDA and they had 10 year old servers running 15 year old software and did not allow any system administration, while the system admins were some unknown government employees completely inaccessible.
I have had to build python distribution completely in home/user-space in some cases, working on conservatively managed servers.
Usually it's not so much the form that causes things to fall down but some validation step that they are trying to do synchronously, that might have to access an IBM mainframe, and things time out. When you're getting a few an hour, it's not a big deal.
At this point introducing a new company could cause more problems than it solves, and I think it's understandable to not be prepared for a volume of jobless claims that is almost an order of magnitude more than at any point in US history.
Put the web form (plain static assets JS/CSS/HTML) on a globally accessible CDN. Then use SQS intake for each unemployment application form. Then firehouse it out, wherever it needs to go, at a rate which you can realistically deal with it.
Queuing access to the form itself and telling someone to wake up at 4:52 AM so they can then merely access the static assets is a less-than-desirable user experience.
It is more desirable than 504, and first thing I would do in 15 minutes with zero context. If I can get more context, of course something like your solution is more desirable, depending on the issue. It would take some time to figure whether it is necessary to bring in AWS or just database connection pooler, or whatever.
Ocado (the IaaS for online supermarkets company, and, in the UK, online-only supermarket itself) has done this in response to the increased demand, and makes you wait in a 'virtual queue' (virtual relative to what in America you call a 'line-up', but we call a 'queue', at a physical supermarket) before you can place or edit your order.
You’re assuming that the people who built it in the first place (or the people that may or may not be contracted to fix it later) know or care. Remember, this is government contracting we’re talking about - lowest bidder wins. How do you win the lowest bid? By doing it as cheap and quick as you can. That means hiring inexperienced/cheap developers who can build something that looks like it will work for far less money than you can build something that actually will.
I briefly interned with a state judiciary's IT department around 2015 and got to get lunch with the CIO. He described to me how most court filings in the state had been manual prior to 2008 when the mortgage crisis hit and judges in the tax courts got _slammed_ with cases surrounding foreclosures. This , in turn, drove a need to develop a platform to automate the process of filing a case. It started with the tax court and gradually expanded to automate filings for other court divisions as well (e.g. Family, Civil).
I wouldn't be shocked if the revelation of "holy shit no one can file for unemployment" drove such an investment. I honestly think the next generation of politicians should take a page from product owners by isolate some shitty process that they'd have jurisdiction over, and finding some way to automate it. Bonus points if it's right before a watershed moment- imagine if someone had considered the problem you described prior to the coronavirus epidemic.
I mean, you can tell the numbers are extremely inaccurate via just a simple, cursory glance at the report.
Pennsylvania reported 378k claims.
California reported... 186k claims.
Yesterday, California's governor said they've received more than 1 million claims since March 13th (so, over a 12 day period from the 13th to the 25th). This DOL report covers March 14th through the 21st.
Are we to believe that the remaining 800k+ people all filed on March 13th, or March 22nd through the 25th?
But there's more. Utah reported an increase of only 9 claims compared to the week before. They went from 1,305 to 1,314.
Then, New York, where more than half of Covid-19 cases in the US are, reported only 80k?
They also tend to have some... interesting features dictated by the state UI office. When I'd applied in Wisconsin about 6 years back the site stopped accepting form submissions outside business hours.
I assume some less computer-literate higher up thought that someone needed to be around to actually accept the form, same as in-person submissions.
2008 took months to unravel because of the nature of the crisis. Foreclosure is a process and in some areas can take up to 6 months or more from the time you stop paying your mortgage.
Here we had state governments practically shutting down their economies overnight. Overnight, every restaurant in my state was no longer allowed to have dine in. Only maybe half in my local area stayed open for carryout, and at least 80% of those have closed in the few weeks since.
The speed at which this happened is astronomical, but that doesn't necessarily mean that it's going to be multiple times worse than 2008. Just that the onset was very quick.
The biggest risk stated in 2008 was contagion to "main street" economy, which did eventually occur to some degree.
This virus and fallout went directly to the main street economy (of the entire world at same time) and stopped it cold.
I think its entirely unknown what the ultimate ramifications are of this cold stop to the world economy. But I see no reason to think its not bigger than 2008.
Also the knockon effect on landlords ... many bossiness want some sort of rental relief or those with limited cash flow are saying they are not going to pay.
Small business owners almost always have to personally guarantee commercial rents. "My business doesn't have revenue so I'm not paying" is simply not a valid response unless the owner is willing to take it the whole way to bankruptcy, which I'm sure we'll see a surge of in the coming months from the more aggressive landlords. It varies by state but my state is very forgiving to residential tenants and very unforgiving for commercial tenants (I say this as a former commercial tenant who owed past due rent at one point).
The SBOs with resources will just have to continue paying rent out of pocket, or face liens against their personal assets.
Right. Quite a lot of SBOs never thought this day would come, that they had no choice but to sign such agreements. Tenant ignored the reality of these unfair and untenable agreements. And here we are.
My response to a landlord insisting on 100% rent for property, that just become non-revenue generating by order of the government, or else they will take my personal property? Force majeure, I owe you $0, this contract is null and void. Shall we re-negotiate?
Liens are going to require court judgements. That system is about to get plugged up with cases. Most SBOs and landlords are going to have to re-negotiate. Landlords will talk deferred rents and suggest SBOs get one of these SBA 3.75% loans, in order to make the landlord 100% whole, eventually. SBOs should seek better advice than that which comes from their landlord. SBOs could do much worse than mimicking the likes of Subway, Mattress Firm, etc. by insisting haircuts are coming, fast. And by much worse, I mean, paying the landlord 100% and making them whole.
> I don't understand the vitriol towards landlords.
It's because real estate is - the vast majority of time - a tried and true way to accrue wealth, and it takes a least some measure of wealth (or a lot of personal risk) to get into it. People get angry when they see folks they think of as "less deserving" with money, and literally the only thing you need to get into real estate is money. So there are a lot of "dumb" people doing it, making a lot of money, seemingly for no reason other than they own the right building.
I've dealt with commercial landlords before and they can be ruthless. As a commercial tenant, you're most likely paying everything. Your rent (with yearly increases well beyond inflation), pro rata insurance, pro rata real estate and school taxes, common area maintenance (CAM) fees that can be thousands a month between all tenants for snow to get plowed ten times a year and the grass to get mowed.
If you're a low margin business it's easy to look at half your revenue leaving the door to your landlord who (in your eyes) has zero risk and provides no value and get angry. But I owned a brick and mortar business for 4 years and had 3 landlords in that time because they kept going bankrupt. So there's definitely some risk associated with it.
Commercial leases have rent increases built into them that are agreed to by all parties. Nobody is getting a surprise by their rent going up, and they're typically negotiated and signed close to a year before becoming effective. If the rent is too much, you can move your business or find ways to grow your revenue. If there's nothing cheaper, then that's what the market has decide a square foot of commercial real estate in your area is worth. If your business doesn't support that, the market doesn't want your business.
We tell contract developers all the time "you need to charge more!" and "charge what you're worth!" but the minute someone does it to us we scream about how unfair it is and how the system is broken. I'm sure the guy selling widgets who has his WordPress guy charging him $125/hr thinks that's unfair, too. And I say that as someone who has been both the widget salesman and the $125/hr WordPress dev.
The financial crisis didn’t prevent most people from spending money on entertainment or eating out. People scaled back spending or went to cheaper places.
People are fearful and a lot of folks are supposed to be sheltering in place. Business are being told to do takeout only which is a huge difference.
I was in the restaurant industry during the last crisis. Lots of places stopped hiring and slowed down but business didn’t suddenly stop.
My brother is a restaurant owner and reports that despite volume being down, profit is up due to less overhead. Others in the restaurant industry are reporting the same. When we come out on the other side of this, I think a lot of businesses are going to rethink a lot of things they held on to as infallible truths.
Sorry as many mentioned, yes the key ingredient is takeout: This is a fast casual italian / pizza restaurant. I find fast casual restaurants doing just fine in my area. It's traditional sit downs that are struggling.
Almost every restaurant owner I know is about to fold or taking emergency loans. From people with several franchised sandwich shops to stand alone restaurants.
I'm guessing they're confusing profit and margin. It wouldn't surprise me if margins were higher now, but I have a hard time believing overall profits are up, anywhere.
Especially when you consider a lot of restaurants make a good chunk of their profit on alcohol sales. While many are offering alcohol to go, I think most of us are picking it up from the corner store instead.
Anecdotally, the owner of one of the nearby pizza places mentioned that both profits and margins are up for her. Of course pizza places historically have a large amount of delivery already. I imagine the current crisis has driven more customers to them at the expense of places that are traditionally dine-in only.
Did his business already have a robust take-out business? If so, I wouldn't be surprised by this comment. I would expect revenues, for awhile, to be the same or even increase... though as individual customers circumstances turn less certain I would expect that to decline over time. Certainly there's less labor overhead, and slightly less expense for utilities, cleaning supplies, etc. But larger pieces, like rents, would remain the same absent some sort of accommodation for the crisis.
A business that didn't have a robust take-out business prior to the crisis I would expect to fare worse. You'd have to do things like get the word out that you are a take out business for one... and some couldn't likely make that transition. Would you order fine dining take out? Sure the food might be good, but half the reason to go to a good restaurant, rather than a cheaper one, is the service.
My personal experience has been that quality of restaurant/food/dining experience has always been negatively correlated with number of tables, or even total sq. ft.
Is the change something that can be stabilized? Or when people have the option to eat out again, will delivery-only restaurants suffer too much from competition with eat-in restaurants? (Assuming there's some level of customer preference for eating in?)
Now I'm curious about pizza places. Most pizza places offer seating. But I feel like Domino's might in fact be delivery-only.
For most major fast food franchises, the drive through constitutes a majority of the food sales. Labor also constitutes the largest line item on a P&L, so if you can work it right, you might be able to make it work. Especially if you're getting assistance (in the form of suspended franchise/royalty fees).
Of course there's less overhead, they are employing fewer people (or drastically reducing paid hours for employees). That's kind of the point of the parent article.
I imagine those less at risk will eventually give up on confinement and continue on with their lives, forcing those at risk (risk factors, 60+, immunocompromised) to remain confined voluntarily or risk a greater chance of death by venturing out. Those not at risk (younger and healthier) will be prioritized for triage and ventilator access if they do get sick.
You can't expect people to shelter in place indefinitely, and they won't.
I think the next couple of weeks are going to be eye opening - we're going to get a lot of reports of deaths, even of the young and healthy, which we're already seeing. That should steel the collective resolve to last a while here. People are talking of lifting the restrictions and our collective endurance and things have barely gotten going. It's really complaining about the length of the red light when it's just turned yellow.
Naturally people aren't going hole up for a year, but we have to stop acting antsy when we've been in our houses a week or two.
Edit: I'm assuming the government does its job and takes care of its people so that they can do the right thing here.
The government is passing relief package of 18,000 dollars for every citizen of the USA. That's more than enough money to tide things over if it's distributed well, in a way that incentivizes the right things.
Unforunately, a very small portion of that money will go to individuals who have lost their jobs, and a very large portion will go to companies that were run on razor-thin balance sheets, ready to topple at the first sign of trouble. No incentives to run things properly the next time around, and limited help for regular people. While costing everyone a fortune in the form of inflation the next few years.
I’ve heard this point made a lot, that these “bailouts” are in any way equivalent to previous bailouts based on poor management and immoral business practices.
These aren’t the same. This shutdown (however justified) is because of the govt. If the government demands you shut down your business, or that you can’t go to work, you deserve to be compensated for that. If the government hadn’t mandated it, young people would still be out working and spending. Those businesses would be fine. If the govt wants to shut everything down, they have to pay people for it.
Businesses (including many of those demanding bailouts) have spent unprecedented amounts of money on stock buybacks in the last decade. If citizens are expected to have a reserve fund to handle unexpected crises, so should businesses.
The alternative seems to be to let millions get sick en masse, potentially leading to similar shutdowns for longer time periods (i.e. failing to "flatten the curve"). I don't think you can claim those businesses would be fine unless you define a timeline to go with your assertion; say, "those businesses would be fine for n weeks."
Remember that sick != dead, unless you have risk factors, 60+ or is immunocompromised in which case you should do everything you can to stay at home and practice distancing.
The other thing is that half of the cost is in the form of low interest loans and loan guarantees, and presumably most of those will not default if this doesn’t go on too long and thus won’t actually be real costs
If those companies go under they take a lot of jobs with them. It seems more efficient to prop them up instead of making direct payments to the employees who would have lots their jobs.
Especially since a lot of the companies are only asking for loans, not handouts.
> Naturally people aren't going hole up for a year, but we have to stop acting antsy when we've been in our houses a week or two.
It's natural to be antsy if you've lost your job, have no social safety net, and can't pay for food or your rent.
Either pay them to stay home, or don't be surprised when they leave to attempt to make a living to survive. They're already at risk of being homeless and destitute, so COVID matters much less to them. And I don't blame them.
State and local governments are doing a good job in many locales. Assuming more Governors don't follow the jackwagon leading Mississippi and override local efforts, the situation should improve despite the lack of leadership and execution at the federal level.
Governor overriding local efforts to contain the virus. While the order improves things in some areas it weakens efforts in the cities that were trying to get ahead of the curve.
It could very well be a bad assumption, but efforts seem ot be being made now to get people support. Hopefully they get there or this is going to be really bad.
>Hopefully they get there or this is going to be really bad.
The right thing for governments to do is to help mitigate the damage they've caused by ordering massive shutdowns. They can't do one without the other otherwise, indeed, it will be really bad.
Got any data to support your claim, otherwise I could argue that risk factors, 60+, immunocompromised are the MAJOR concerns as stated above.
Looking to Italy and Spain seems to confirm this view.
Does it? Let's set aside the scorekeeping systems we use (money, profit, ownership, wealth) for a moment. I see no reason to think we can't get people properly fed indefinitely. We'll still have power, water, sewage, bandwidth. And it's not like the shut down businesses will evaporate or anything. The buildings will be there. The equipment will be there. 97%+ of the staff will still be around.
Eventually we'll have a vaccine, and life can go back to normal (if we want). The main problem in the interim is keeping everybody from freaking out because the before-times social constructions weren't really set up for a global pandemic. But we can fix that if we want.
As you can see from the sentence before the one you quoted, I didn't forget about it.
I agree there's a lot of complexity there. But it's still a relatively small slice of the population. A friend is a farmer; she's just carrying ahead farming. Compared with urban life, she's been "socially distancing" for years. For the more dense parts of the chain, we need to take other infection-prevention measures. But food production is already pretty good at keeping things clean, and the rest we can work on.
It's worth remembering how efficient our modern food systems have become that less than 3 out of 100 people are enough to work them.
That said, it wouldn't hurt anything to start a "victory garden", it's the right time of year. https://en.wikipedia.org/wiki/Victory_garden (but that's a good idea anyway, orthogonal to the virus.)
You just need to find the right event for comparison. In this case probably the 2004 Indian Ocean Tsunami or the 2011 East Japan Earthquake (Tsunami, Fukushima Nuke plant etc)
There, you had relatively short duration disasters where very soon afterwards, coordinated efforts were dedicated to putting the pieces back together.
Now, most of the press and leadership seems to be thinking only about how to manage the health related consequences of an ongoing crisis. I really don't hear anyone strategizing how to put the pieces back together or how to contain the crisis (note that I did not say contain the disease) so things don't fall apart so completely. There is a profound absence of thought amongst those in decision-making positions, at least insofar as I can see.
So they don't stop all the time. Those events you gave did not cause 3 billion people to be forced to stay at home. A tsunami or earthquake is isolated to a particular place. It may affect a few million. This is a different order of magnitude
>4. This does not account for the countless gig workers that are part of the modern economy that likely did not file for unemployment since they were not covered prior to the passing of the senate bill last night.
You (and others) are probably aware, but worth pointing out that these people still can not currently file for unemployment benefits until the house passes the bill, the senate approves any house amendments to the bill, and the president signs the bill.
The house isn't voting on this until tomorrow at the earliest, so there's still a ways to go.
There's probably others as well that have had their pay reduced, that are waiting to see what's going to be passed before filing for benefits. Anecdotally I know of some software engineers in this boat.
I'm kind of confused by what it means for a gig worker to become unemployed; specifically the criteria. Is it along the lines of "I normally drive Uber. There are no riders anymore. Therefore, I can't collect income?" I mean, it'd be hard to verify such a statement is fact. A gig worker could just stop logging into Uber, then file an unemployment application. I hope there's an angle to this I'm missing.
You likely will need to prove that your unemployment or lack of ability to work was caused by COVID-19. So doctors note, test result, order to stop work by governor, etc.
Also doesn't take into account those who have had reduced hours or salary at their jobs, like my wife's entire company (at least the employees that didn't get furloughed at her company). She got reduced to 3 days a week, for a 40% salary reduction.
> 3. This is nearly 5x (!) the prior record of 671K new jobless claims from 1982, and redefines the scale for jobless claims. [1]
This should be normalized to be per-capita, comparing absolute figures is distorted by population growth. The US was only 230M people in 1982, 100M less than today.
> This goes to show just how sharp of an impact the coronavirus pandemic has had relative to past recessions. Even the '08 Financial Crisis took MONTHS to unravel.
I think we need to couple the two events a little more closely. The 2008 Financial Crisis accelerated inequality, political instability, asset inflation, and the rise of precarious work to such a degree that the damage of this hit is being greatly compounded.
To my mind, the hole that was the 2008 crisis was papered over and someone just came by and dropped a brick on it.
The former Minister of Finance in greece and current MP Yanis Varoufakis has made the same connection [0]. He argues that it's the same crisis, but that the crisis has transformed, so that the solution can't be the same as in 2008. E.g. the ability of China to offer massive renminbi-swaps is set into question because they are being hit hard by this crisis. The weren't hit during 2008.
He also questions whether the US will be willing to offer the same condition-less USD-swaps.
I'm not going to disagree that there was a rise in precarious work, but I think many people don't realize how valuable having this work as option is.
Brazil has been economically struggling for almost a decade now, which is the same decade when this type of work appeared. For many people in Brazil this has been a godsend. It's provided an employment option where previously there would have been none. The option wasn't between precarious work and non-precarious work. It was between precarious work and no work.
Precarious work at least lets workers get back on the work ladder and just being on the ladder makes it easier to grab the next rung on the ladder and pull themselves up. It's especially valuable that the precarious work also tends to be flexible. This lets people study for new skills and go to interviews, which is something much harder to do with scheduled work.
The economic situation in Brazil would have been far worse if another million or more people doing this precarious work had been unemployed for the last decade instead.
It's not that simple, because up to some point, precarious work outcompetes non-precarious work, reducing the later one.
You will see all kinds of arguments and researches, but actually nobody is really sure about what that point is, and if it is a net positive or negative for workers. To make it worse, Brazil is in a kind of unique situation because official work is extremely regulated, while precarious work is well accepted and widespread (and not as new as you think), so one can not even apply the lessons from most of the world.
Not from the US, so not quite in phase with how things work. What can this tell us about actual unemployment and actual people that won't have a job now (short, medium or forever)?
Most businesses do not have capacity to pay workers and rather than hold out, some are terminating immediately so their employees can claim unemployment benefits. I know for example of Dental offices (which in Texas are mandated closed until April 21st I believe) are doing this, but have every intention of re-hiring the same staff the moment they are allowed to re-open. I'm not sure this is the typical case, but its certainly a subset.
Just my personal opinion here, but one should be careful to view the pandemic through the socialism vs. capitalism lens. I think it's better to focus on the particulars of events rather classifying them as in on of the two camps.
Hard to say. Some of them might still be employed but with zero pay, others might have been laid off, and for others their employers just folded the business.
Markets are complicated. Especially in the short term, you have large forces that aren't concerned only with future expected value.
For instance, if you manage a fund that sold substantially on the way down, you now have a great deal of cash you need to do something with. Considering a 'local bottom' has been found, you may be very interested in trying to re-enter the market now. The risk of waiting for a lower entry begins to compete heavily with the risk of missing a buying opportunity.
Job losses are expected and are priced in (which is why it crashed a couple weeks ago). The job losses were less than some expected so the market went up.
Normally, when a company lays off workers, the market cheers, and the stock price goes up. Investors get to keep more of their money, and no longer have to pay out in expensive labor.
But this situation is quite different, in that the economy just came to a stop, for practically everyone. At some point, this has got to trickle up, and affect the larger corporations. People won’t fly, so airlines go bankrupt. Hotels go bankrupt. Travel Agencies go bankrupt. And on and on.
But of course, maybe Wall Street is expecting a bailout of the airlines, and other big businesses, so maybe that explains the optimism.
I definitely know more people laid off this week than last week. No one was really sure how much business they could sustain with this whole thing going on, and now that there's been a full week and a partial week employers are starting to pull the plug.
The scheme is found at an earlier date in a novel by Jerzy Kosinski. I believe it's in his book called "Steps" (1968), however I forget exactly which work it's in.
The scam seems to be well known. I presume it happened sometime.
The writer made a pretty common finance misunderstanding mistake here:
"That may change soon: Spotify bought Gimlet Media, a premium podcast studio, and Anchor, a podcast hosting platform, for $340 million earlier this month. That's a lot of money for an industry that was sized at just $314 million in 2017."
Gimlet Media's $340M price tag reflects enterprise value which bakes in future cash flows, while the industry market size of $314M is reflective of estimated revenues in 2017. Apples and oranges.
This comment fundamentally misunderstands what insider trading is. There is no such thing as "insider trading" in private equity - insider trading by necessity is gaining an unfair advantage via non-public information. Private equity and venture capital investors both get access to substantial non-public information and are allowed to buy and sell equity in the private markets with as much or as little non-public info as they want, because that is not disadvantaging other public investors lacking that information.
While I would agree that the comment you're responding to is probably using the term incorrectly, there is definitely such a thing as insider trading in private equity.
Knowing that a public company is about to be taken private by a friend's PE firm is material non-public information (MNPI).
Knowing that a PE-backed company is about to be bought by a public strategic acquiror is MNPI.
Knowing that sales of a private company's products to a public company are changing rapidly is MNPI (think of knowing the order pipeline for an electronics manufacturer who sells to Apple).
Trading on any of this MNPI would absolutely count as insider trading, and is watched closely by PE/VC firms, who are all regulated by the SEC and FINRA (in the US, at least)
This MOI story seems to come up every few years, but McKinsey has kept everything so private that typically all the articles can say is "MIO seems suspicious, and may be conflicted"
To answer your question, the debt holders take precedence over the equity holders like Bain Capital, and generally being an equity holder and having your equity stake wiped to $0 is not a good outcome for a private equity firm. Bain does have to pay off debts - that is what the liquidation of assets is being done for - to pay off debts to the debt holders. Bain doesn't get to keep those assets.
This assumes they occur post bankruptcy. Looting a company involves dept then dividends from selling off assets to the point a company can't make debt payments. The money is already gone by the time the company can't pay, so they don't care what happens to the shell at that point.
Leveraged buyouts are basically ponzi schemes designed to use recurring revenue to pay back debtors, rather than the usual scheduled lump sum payout down the road.
They were tweaked to work on a different time scale.
The idea they can get some distance to avoid scrutiny.
In a lot of cases, the debtors are also the owners of the firm that initiated the leveraged buyout. They load the target up with debt, can't make the payments, and then they collect as debtors.
See Sears and their current CEO for exactly that model. It's been going on in retail for years. They're all getting boned hard though thanks to Amazon gutting brick-n-mortar retail. OOPS.
Of course the real people being screwed are the folks on main street.
Except, I think the rub here is that Bain will have paid itself enormous consulting fees from toys r us coffers.
My guess is that they come out ahead even after the bankruptcy. They would have put some of their own money in to purchase equity but my guess is, not more than fees would amount to after a decade.
These are really great use cases. That said, the article is totally missing the fact that these labs are aggressively developing alternatives to the Cas9 protein to dance around the ongoing CRISPR patent battle...
for example at market close of $45.08, the market is betting there is a $45.08/$54.20 = 83% chance that this transaction goes through.
there are certainly individual stockholders who are buying because they like his involvement, but that is tiny compared to people buying and selling a very near-term bet