> It’s looking increasingly likely that the COVID-19 pandemic will cause a recession. I’m neither an epidemiologist nor an economist
Financial markets have stability issues when the situation is calm in the short term, but it’s unknown what’s going to happen six months from now. The situation is reversed today, we’re all going through some bad mess due to our states being unprepared for this, but it’s mid to high chance this will have settled one way or another in six months.
What we had last week was a shock that came not from the financial system itself but from public health. We might have to adjust our lives to this and that might have financial implications, but there’s nothing fundamentally different in terms of financial markets between the week before and the last week.
Recessions or down cycles are normal, and that might happen - and that is finances just charting the rest of the world at large. But the 2008 crisis was a result of something going haywire in the financial system itself, which is something that is more prone to create much bigger shocks than external events. We might have a mild recession, yes. But it’s unlikely it’s going to be like 2008, since this crisis is fundamentally external.
> but there’s nothing fundamentally different in terms of finances between the week before and the last week
This is not true for many households. People with young schoolchildren, people who work for tips or in the service industry, people who can't work remotely but are forced to stay home. There are many people whose finances have fundamentally changed in the last week.
This timing is really unfortunate. I work as a freelance software engineer and my assignment ended a month ago. I've been looking for a new assignment, but it looks like nobody is hiring right now. I'm preparing for burning through all my saving because I don't see it change easily in the next months :(
Same here. I was about to start a new job abroad two weeks from now, but now my country's borders are locked and I can't fly out (not that I'd want to if I could, in this situation). I'm hoping I can renegotiate for remote, but if that fails, I'll be burning through savings too.
I'm kinda feeling this too. I've been accepted into a masters in quantitative finance abroad, and was looking forward to starting in September. Now, not so sure what's going to happen, especially if we're heading into recession and other issues...
I'd like to warn everyone to not quit, even if you have deep savings or think a layoff is coming. Do reasonable things to stay, where reasonable depends on your support network and savings.
Even 2-3 extra months is significant cash for most of you. Not having a job during a recession is scary (even to me with no kids, no spouse, no dependents). Tech might be better off in some respects, but it also means it will be much harder to get a job in an emergency as those will be filled by many others.
I am not sure if I'm lucky or unlucky - I recently, meaning 15 days ago quit my job. It was a decision prepared well in advance.
I'm glad because I am mentally prepared to not work for quite a while with okayish amount of savings. I'm sad because this means all my own business plans, that I prepared my savings for, are on hold.
Im still not sure is it better to go through resection with no work but with savings or just work through it.
I think it's much better to enter a recession while employed. For starters: not everyone is fired, obviously. If you're not fired then you can just keep going on as usual. It's not easy to find a job in a contracting economy.
FWIW: corporate layoffs are going to lag somewhat. For PR reasons, no one wants to be seen as dumping folks during a crisis. And for accounting reasons, the need to balance the sheets generally lags by a quarter (that is, virtually no employer is "agile" with its layoffs).
The more immediate job losses are in the service sector, and that is happening already.
Is that to say it's better to be dead than unemployed?
Not meaning to be glib nor overly dramatic. But I thought the whole point is that flattening the curve eases load on hospitals meaning they turn away fewer people, and thus more of them survive. So the question you are asking is: how much is preventable loss of life worth?
The alternative is letting it widely infect the population leading to 5%+ of symptomatic cases dying (which could be as much as 2% of the overall population) and people being unable to get critical medical attention for any ailments while this is happening. You don't think the economy would shut down in the scenario, if only from upper-middle-class and up individuals quitting their jobs and bunkering down to save their own skins?
In the case of the former, it's the virus that kills people. If deaths occurred by way of the latter, it would be only because the wealthy ruling class refused to pay their fair share (via the subversion of our democracy) to support basic necessities of food, shelter, and health care.
Italy has 24,747 reported cases and 60 million people. That's 0.04% of Italy's population. If we conservatively(?) assume that there are x10 actual patients, then it's still 0.4%.
If, without intervention, 40% of all people may contact coronavirus, then each country is going to be hit x100 worse than where Italy stands now. I doubt there would be a "global economy" to speak of after that.
Note that this one is not a crash imposed by market forces overextending themselves(the usual dynamic of recession), so much as a reset button suddenly pushed. An economy under quarantine is not just a depressed economy, it's a different economy, as demonstrated by the abrupt mass adoption of WFH and sudden political will for sick leave. The game took a time-out and the rules changed. When we resume business as usual, it won't move the clock backwards.
So there is a silver lining in that opportunities going forward will change, but that still means "no opportunities" in the near term while everyone sorts out what to make of it.
If anything, I think tech is protected from the effects of the coming recession. Our industry is one of the best poised to maintain business as usual. That said, the impact of the economic effects is coming.
Are you kidding me? Tech is so ridiculously inflated, just look at how many stupid "tech" startups were created recently. This will deleverage now. Not even the "big guys" are so super safe - a lot of VC money is recycled back into "tech" via AWS bills and online ads.
The only worse business right now is probably oil, especially fracking. Those guys are doomed.
Depends on which "big guys" you are on about. Likely, it's those who have recently IPO'd on VC money and depend on lots of moving parts and huge costs like cloud costs, logistics, travel and are also in specific domains which are waiting to be sherlocked by a FAAMNG company. The best of all:
It is those "tech" startups who generate little revenue and no profit, but take in VC money into their series D,E,F and G+ for years.
Ultimately, it comes to no surprise that layoffs from such startups would happen at this time since my so called "machine learning crystal ball" predicted this [0] anyway whilst ignoring other earlier vacuous predictions. FAAMNG and other profitable companies will survive this.
You are completely wrong. Tech is definitely not worst industry affected by the corona virus by a long shot. Service workers are definitely not a job that can be done at home. Tech workers usually have good salaries while service workers are likely to live paycheck to paycheck. Plus they do not have the same access to medical benefits.
From direct effects, maybe. But no one is immune from the second order effects. Once our customers start going out of business because they are directly exposed, they can't buy our software anymore.
Aye, downloaded Uber Eats and SkipTheDishes for the first time this weekend.
The streets are empty and the local gub'mnt has been advising people to avoid gatherings like restaurants and bars. They're open still, and probably slingin mad amounts of food, but all delivery...
> tech is protected from the effects of the coming recession.
How so?
> Our industry is one of the best poised to maintain business as usual.
It may look true from a certain point of view. But things change very fast. A while ago, bankers thought they were immune to disruption in their industry.
Readit News
Financial markets have stability issues when the situation is calm in the short term, but it’s unknown what’s going to happen six months from now. The situation is reversed today, we’re all going through some bad mess due to our states being unprepared for this, but it’s mid to high chance this will have settled one way or another in six months.
What we had last week was a shock that came not from the financial system itself but from public health. We might have to adjust our lives to this and that might have financial implications, but there’s nothing fundamentally different in terms of financial markets between the week before and the last week.
Recessions or down cycles are normal, and that might happen - and that is finances just charting the rest of the world at large. But the 2008 crisis was a result of something going haywire in the financial system itself, which is something that is more prone to create much bigger shocks than external events. We might have a mild recession, yes. But it’s unlikely it’s going to be like 2008, since this crisis is fundamentally external.
This is not true for many households. People with young schoolchildren, people who work for tips or in the service industry, people who can't work remotely but are forced to stay home. There are many people whose finances have fundamentally changed in the last week.
Hopefully 9 months of mortgage is enough to survive this.
Even 2-3 extra months is significant cash for most of you. Not having a job during a recession is scary (even to me with no kids, no spouse, no dependents). Tech might be better off in some respects, but it also means it will be much harder to get a job in an emergency as those will be filled by many others.
I'm glad because I am mentally prepared to not work for quite a while with okayish amount of savings. I'm sad because this means all my own business plans, that I prepared my savings for, are on hold.
Im still not sure is it better to go through resection with no work but with savings or just work through it.
Deleted Comment
The more immediate job losses are in the service sector, and that is happening already.
Not to be glib but I think most people understand this.
Not meaning to be glib nor overly dramatic. But I thought the whole point is that flattening the curve eases load on hospitals meaning they turn away fewer people, and thus more of them survive. So the question you are asking is: how much is preventable loss of life worth?
If it pays off, Britain will win handsomely out of this.
That’s one hell of a massive “if”.
If, without intervention, 40% of all people may contact coronavirus, then each country is going to be hit x100 worse than where Italy stands now. I doubt there would be a "global economy" to speak of after that.
Flattening the curve is our only hope.
So there is a silver lining in that opportunities going forward will change, but that still means "no opportunities" in the near term while everyone sorts out what to make of it.
The only worse business right now is probably oil, especially fracking. Those guys are doomed.
It is those "tech" startups who generate little revenue and no profit, but take in VC money into their series D,E,F and G+ for years.
Ultimately, it comes to no surprise that layoffs from such startups would happen at this time since my so called "machine learning crystal ball" predicted this [0] anyway whilst ignoring other earlier vacuous predictions. FAAMNG and other profitable companies will survive this.
[0] https://news.ycombinator.com/item?id=21926473
Netflix will be in great shape.
Amazon will be hurt by falling consumer spending but benefit greatly from people transitioning the rest of the retail activity to online shopping.
Apple will probably not sell too many premium goods to people who have just been laid off.
Facebook, Google, and Microsoft, being B2B companies, are subject to the rest of the economy.
Transportation is in big trouble, although food delivery is poised to take off.
The streets are empty and the local gub'mnt has been advising people to avoid gatherings like restaurants and bars. They're open still, and probably slingin mad amounts of food, but all delivery...
How so?
> Our industry is one of the best poised to maintain business as usual.
It may look true from a certain point of view. But things change very fast. A while ago, bankers thought they were immune to disruption in their industry.
Preparing your contingency plan never hurts.