Middle class will hit hard. High expense(nice house, telsa, luxury stuff) and stimulus =0
But, this time the unemployment is created by shutdown. As soon shut down goes, most of those jobs will return.
Yes, exactly…until normalcy comes to USA, which we do not have any firm date as this is moving target until medicine is there to avoid spreading the virus.
Do you think the businesses who laid off workers will survive the economical wind? This is credit economy !
Take an example:
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Local restaurant closed, laid off all workers, owner is out of business, but still bound to his contract over the restaurant location. He has to pay all his commitment, lease obligations. If two months closed, restaurant owner will file bankruptcy to avoid mounting debt.
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Tenant lose job or gets Coronavirus , not paying landlord using CA rules showing proof. Still landlord owns obligations for property tax, mortgages and even maintenance of the rental home…etc. If he/she is not paying mortgages or any obligations, bank can take over or his/her credit will be affected.
The domino effect of owners will result into bankruptcy unless the owner is rich enough to pay all his obligations. Most of the US businesses are credit based, not cash based.
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Nothing to disagree with whatever you said. Do you really believe it will take 5 years to sort out these issues? Yes, they will file bankruptcy in some cases. But, if the business is still viable, do you not think they will be able to get credit, or forbearance and start again. Yes, things will be tricky. That is why Congress passed 2T support package so that they can return and work. But, I agree with the points you have raised. I think the key point is will the businesses still remain viable after two months?
For the first question, it depends on how much economical impact for USA at the beginning of normalcy. It can reduce or increase. It was my view, not having any data except comparing old recessions.
For the second question, I really double business owner can hold more than 3 months without revenue. It depends on owner’s “financial independence” condition.
During year 2000/2008, I have seen many jobless people left their CARs (on loan), Homes (Mortgages) , took flight to their home country, never returned back.
Year 2000, seen Santa Clara residents population reduced by dot.com crash.
Many unexpected stories will unfold, wait and watch.
In order to survive this recession, individuals/companies (Like AAPL, GOOGL…etc) need “financial independence”. Those who made it, they can withstand all these pressures.
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If ppl think it starts about 2 weeks ago, it’s wrong perception
This slowdown starts in dec/Jan, many tech go conservative and our company even cut 20% bonus which never happened before since 08. hiring approved but bounce back and stopped from finance department 2 months ago. We have to realize this is not United States. Whole world basically stops, all chains are related in this globalization world. China’s fake virus recovery will restart once again in next month or two, they are already releasing news to find foreigners to blame for respreading the virus for 2+ weeks. Virus never eliminated in china, it’s just illusion.
I have not read this paper, but some UC person (I do not know who it is ) made it.
http://ssingh.ucdavis.edu/uploads/1/2/3/2/123250431/pandemics_jst_mar2020_.pdf
Why not just declare bankruptcy?
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The US mortality rate has dropped thanks to Coronavirus. (at least at this moment in time). Everyone taking more precautions and shelter in place has resulted in a drop in mortality rates.
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Hardship: Court takes 9-12 months, owners needs to divest all holdings except mandatory one, who will pay lawyers when they are jobless…? A long process…
Easy: Take all the money they have, fly over safe heavens for rest of their life, bank will take the home, and cars…dispose them…file collections, finally write off. They will never be back…
One of my tenants ran away, without paying rent, they were jobless, had dispute husband and wife, filed for divorce (neighbors informed), damaged the home, spent appx $8000 to bring back, deposit did not cover too.
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Things are getting very grim in New Orleans.
FDA yesterday approved choroquine to treat corona virus related ailments. So fatalities should drop further.
There are two types of bankruptcies: One for temporary relief from creditors, one for permanent. A lot of businesses file temp relief if they are still viable as a business (in financial term depending upon whether the issue is liquidity or solvency) . Think of a good worker who is out of job for a short period of time. Still a good worker. Compare it to someone whose skills are no longer needed.
Have you ever been affected by lay off in the past 2000 or 2008?
It is hard to get a job in 6 months as no one will call after posting resume as no one company ready to hire. It can even extend 12 months easily.
Have you ever talked to a lawyer in bay area or else where?
Their charges are very high…Business owners, unless have good amount of cash or adequate insurance, will not go to this route, either chap 7 or chap 11 bankruptcy.
Why discuss or debate now, we will just see the reality in 6 months, not for away !
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We both are on the same side of debate. We are simply debating how fast can economy come back and whether it will slow recovery like 2008. Please note that we have a different president this time. The attitude, the personality, and the problem solving skills of the leader makes a big difference in the optimism of people and market. The previous president wanted government to solve the problem and talked of shovel ready jobs that never were there… This president wants private sector to solve the problem. That alone makes a huge difference in the way government agencies and private sector interact. Previous president wanted to diminish to role of private sector. Think of Obamacare. I am not commenting on politics, but the direction of leadership.
Coming to long term unemployment and people trying to take advantage of people in hardship. That will happen. Everyone wants to maximize their own well being. Therefore, the collective result will be social well being. There is no other way.
Talking of lawyers. The lawyers work only when there is a chance to make money. I had cases were lawyers will not even talk to me the moment they figure my case is lot of work with less chance for reward.
I have had lot of bad days in my life. Lot more than many others reading this. But, I have always been a fighter, an optimist, and pretty independent thinker.
Anything can happen.You said nothing wrong. But, I am just sharing my line of thought.
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