From a Health Crises to a Wealth Crises

[RBM]

On 4/30/2020 at 5:34 PM, GeoffH said:

The figures aren't wrong but they need to be put into perspective.

Most Asian economies are growing at between 3 and 6% and are looking at returning to those growth levels in 2022.

For first world economies it's mostly between 1 and 3% and again returning to those growth levels in 2022.

So at worst we'll lose 3 years of growth, it's not the end of the world.

 

 

3 years of negative growth will have sever repercussions, imagine the spin off from massive unemployment plus there are no free meals.

All this so called stimulus must be repaid....How will this be accomplished during recessions.....Increase taxes? Higher GST? what ever is done will not encourage growth....Interesting times ahead.

[GeoffH]

30 minutes ago, RBM said:

3 years of negative growth will have sever repercussions, imagine the spin off from massive unemployment plus there are no free meals.

All this so called stimulus must be repaid....How will this be accomplished during recessions.....Increase taxes? Higher GST? what ever is done will not encourage growth....Interesting times ahead.

I would delay repayment until economies had fully recovered, allowing inflation to reduce the real value of the debt and giving breathing time.

[Tommy T.]

43 minutes ago, GeoffH said:

I would delay repayment until economies had fully recovered, allowing inflation to reduce the real value of the debt and giving breathing time.

Looking at recent history in USA, at least, Geoff, I think all the politicians there will simply continue to kick the can down the road until the road runs out. It is very unpopular to pass legislation to raise taxes or reduce entitlements...

Just look at what happened in USA when its economy has never been stronger? Reduce taxes on the rich and wealthy corporations, increase military spending...and on and on ad nauseum...

What a wonderful legacy to pass on to your kids and their kids... Just my opinion.

Edited May 2, 2020 by Tommy T.

[hk blues]

I think comparisons with previous depressions such as the 1930s are not relevant. The way economies work has changed, the way businesses are financed has changed and most importantly the way governments fund their countries has changed. In theory, there is nothing to stop the printing of money and, as Tom put it, keep kicking the can down the road.

Anyone who imagines governments can afford the massive amounts being spent to keep people alive at the moment are optimistic, and even more so if they think there is a plan in place as to how to repay the 'debt'. I liken it to sitting at the bedside of a close family member and being told you need to pay 1m bucks for the operation - shall we go ahead or let your relative die. You go ahead and worry sbout the money later - it's such a big amount anyway that you ain't got a plan so what the hell.

36 million Americans effectively unemployed - now, much of that is due to the furlough system moving people to government payroll but dollars to donuts those 36 million won't all get their jobs back.

I don't think the new normal will be as much about social distancing, WFH or shaking elbows but more about making an economic system that ensures we all get by. 

If I were the CEO of one of the global tech behemoths, I'd be starting to wonder if my days of maximising tax efficiencies were coming to an end. I can't say many will feel too much sympathy for them.

[Jack Peterson]

3 minutes ago, hk blues said:

If I were the CEO of one of the global tech behemoths, I'd be starting to wonder if my days of maximising tax efficiencies were coming to an end.

 On the other hand, is ir not said, that every cloud has a " Silver Lining" Food for thought maybe? 

[scott h]

34 minutes ago, hk blues said:

36 million Americans effectively unemployed

 

35 minutes ago, hk blues said:

36 million won't all get their jobs back.

I would be willing to bet a large large majority will. There is already talk about decentralizing from china. That and the US economy is just to massive to lie idle for long

[graham59]

I always trusted that my accountant knew what was good for me (and several of my self-employed colleagues, who were also his clients)...... seeing as he lived a prosperous lifestyle, including driving a Rolls Royce...and of course his, (actually very reasonable) fees were 'tax deductible' anyway... as was his Rolls.   

[hk blues]

1 hour ago, Jack Peterson said:

 On the other hand, is ir not said, that every cloud has a " Silver Lining" Food for thought maybe? 

Absolutely Jack.

Coincidentally today I read that Amazon's profits from Q1 (I think) would be totally wiped out due to additional costs associated with Covid-19. Now, that may be true but the scinic in me is reading this as a bit of a sob story to sow some seeds that things aren't as rosy as we think - at least that's what he wants us to think.

[Tommy T.]

4 hours ago, Tommy T. said:

Looking at recent history in USA, at least, Geoff, I think all the politicians there will simply continue to kick the can down the road until the road runs out. It is very unpopular to pass legislation to raise taxes or reduce entitlements...

 

Does this about sum it up?

[MikeB]

6 hours ago, hk blues said:

36 million Americans effectively unemployed - now, much of that is due to the furlough system moving people to government payroll but dollars to donuts those 36 million won't all get their jobs back.

I'm not sure what you're referring to, I'm not aware of any program that moves people to govt payroll unless it's unemployment benefits. I read the UK has something like that. You can be "furloughed" by a private company and kept on payroll but there is no obligation to continue benefits. Loss of job and income is bad enough but losing your employer-based health insurance on top is devastating. You are usually covered until the end of month so millions of those laid off workers lost health insurance on April 1, May 1, etc.