RE: The Recession Events (What will Happen During this Recession)
We are already in something beyond a recession. Under strict lockdown, the economic output is limited to that of consumer staple goods and agricultural industries. The rest of the companies are, as you rightly pointed out, losing money everyday. Think of a recessionary time when revenues go to 0. Unthinkable, so the consequences of this crisis will be unique.
There is no pent up demand as we keep hearing. There are few people who are undergoing depression, some are taking out extra debt to survive. There are many industries that will face a longer lockdown - hospitality, tourism, food. As a consequence of their laid-off employees lowering overall demand, other companies will lower headcount, pushing demand lower. Gig economy employment will also go down and many startups will find VC funding hard to get. I think western world will see a lot of fiscal stimulus and we have just started with free money for individuals and families. Most of that will go in reducing debt I think. Consumption will take a serious hit creating deflation, with lower commodity prices adding fuel to fire. I think conspicuous consumption will not exist for sometime.
I also agree that layoffs will increase and unemployment will be high for a long period. Some of the workforce will get into govt sponsored infrastructure projects but I am not sure if that will be enough to balance the economic loss from other industries.
Inflation is a real threat at a later date. Countless stories of farmers destroying crops, pork prices in the US rising even as hog prices crash, because factories remain shut. With supply chains broken, demand supply imbalance can push prices higher as well at some point.
The bailout of companies is what I have a problem with. Nationalization of companies without management control is a good way for taxpayers to make money at a later stage. However buying corporate debt to ensure companies remain whole is ridiculous and should be criminal.
Yen cannot be a reserve currency, euro can't be. It can be a basket or gold (difficult though as it prevents money printing freedom). The US also provides military protection to countries and has strong influence globally because of which countries agree to petro dollar. There is no economic power like that, not even China.
Long comment!
You know, so many things are going to happen in this recession or like you call it, beyond recession and i can say we might first have a deflation then a high inflation before things normalize and this things will not happen in weeks rather we are talking about months or years. So many companies will close their businesses due to deflation while and then the populace will suffer from an immediate inflation.
It has been a thing of record that world power changes hand every 50-100 years and i think the United state have held that mantle for a very long time. Being a world power comes with a lot of benefit like using the country's currency as a pair standard value for other currency and as the reserve currency and this has made the US print out more money and get into debt with no fear of having its currency losing its value. US in in over $40 trillion debt but since the dollar is a standard for valuation, it isn't visible. If it were to be another country in $40 trillion debt, they would have been a 3rd word country by now. So there need to be properly recalibrate the world reserve and in other for that to happen, the US will have to leave world power and this will crumble the US economy. Trust me, the US isn't willing to give up this title for anything and that is why they have been against China or any other country trying to hold the economy of the world. If the United States will have to forfeit that sit, it might come with a war.
Thanks for the comment.
Love to see how responsive you are buddy
Thanks a lot, i would have replied to the othe comments faster but i was admitted to recieve treatment and get my leg bandaged 😃😃😃
hope your ankle is getting better. do not walk to much now
Indeed long comment @karamyog
We've witnesses few different crashes and recessions within past 100 years. But we didn't witness anything similar to current situation. Ever.
At the same time: financial system is crashing, supply chain is down, manufacturring down, customer confidence is crashing. Unemployment never in past 100 years was as bad as it is now, just weeks since virus start spreading. And on top of all that: we need to handle this virus.
In my humble opinion, current crash will be greately bigger than this one from 2008/2009.
Chers, Piotr