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2023-11: Warosu is now out of extended maintenance.

/biz/ - Business & Finance

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17901198 No.17901198 [Reply] [Original]

Before anyone heard of coronavirus, the entire planet was at record levels of debt. Just in the US, corporate, consumer, municipal, state debts are record levels. The virus was just the trigger, but the problem will be loss of revenue leading to defaults. And when companies default, bond-holders default, and banks fail, and so on. QE injects more money into the system to prolong the house of cards. The virus is just a trigger.

So the Fed prints money for weeks to lend money and then they lend money and then they lend money and now I'm lent money all the way until virus is over...Now what does the world look like?

Basically just hits the pause button until people can go back to work. House of cards is an incredibly apt description of the economy in the last decade, let alone the stock market which doesn’t reflect reality whatsoever...

Stocks are literally a gamble that the company you’re investing in will grow its profits in the future, giving you a return on investment. The stock market has grown out of proportion to what the real economy can actually deliver in terms of growth. No one knows the future, but the chances the real economy meets the expectations of the market are statistically improbable.

When that giant casino of inflated values collapses, either through a banking and housing crisis in 2008, or via the economy gridding to a halt because of a virus, you see all that stock value wiped out because the true value of the economy is laid bare and no one is buying the sales pitch of infinite growth anymore.

Maybe someday when robots can produce infinite amounts of economic output without human intervention we could see true economic growth that matches the insanity of our stock market, but humans and the machines we have now can only cumulatively produce around a 3-5% annual rate of real growth, a far cry from the massive numbers in the stock market.

>> No.17901218

Didn't read. Sneed.

>> No.17901226

>>17901198
the virus was the pin and an excuse so bankers and politicians dont get dragged into the street and beaten. The UBI shit is also that because they really don't have ant other way to stop plebs from running up int heir mansions and looting. It's bad.

>> No.17901231

No ur gay

>> No.17901258

>>17901226
we still finne loot

>> No.17901265

AHHHHHHH IM COOOOOOOOOOFIIIIING

>> No.17901269
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17901269

>>17901198
didn't read, never selling

>> No.17901278

>>17901198
Dude we're just gonna open a couple cities in space and double our gdp

>> No.17901316

Hahaha money printer goes brrrrrr

>> No.17901412

I feel like this crisis is showing how for the past twenty years we have built an economy based on efficiency rather than resiliency. Many corporations have moved slowly from traditional inventory, to just in time inventory, because just in time is more efficient, you have less money tied up in inventory and are less likely to have a pile of inventory you can't sell in the event of things like technological obsolescence or changing customer preferences.

This is much more efficient than the old system of making a pile of inventory then slowly selling it over the course of a year or more. However, the second a single cog in your supply chain goes down for a day or two or a couple weeks like what happened in China, your whole system is completely shot. The economy is now less resilient to shocks from catastrophic events, whether those be natural disasters, political crises or in this case, a pandemic.

The question is whether we see this tradeoff as a good thing or not, especially after what is happening right now. I know this is not the only thing affecting the economy, but it is just something I noticed/thought about the past couple days.

Globalized specialization of tasks has made economies more interdependent and sensitive. Shocks can’t be contained geographically or by sector, much like Covid-19 can’t be contained because of the efficiency of global transportation.

>> No.17901561

>>17901198
You're right that it's partly due to in interest rates, but it's also due to general overspeculation. Companies that do not rely on loans are also not looking so good, at least comparatively. What you said about real growth being 3-5% per year is wrong. It's about 7.5% in the USA. Worldwide, 3-5% is pretty accurate.
>>17901412
Customers seldom care about the back end, so I wouldn't worry.