10 votes

The new U.S. stimulus bill is massive, but it might not be enough

16 comments

  1. [2]
    gpl
    Link
    This recession is simply unlike any other in history in its cause. This wasn't some market bubble that finally popped like in 2008 - this is a near total shutdown of very import parts of the...

    This recession is simply unlike any other in history in its cause. This wasn't some market bubble that finally popped like in 2008 - this is a near total shutdown of very import parts of the economy. It happened suddenly and has an indefinite endpoint. This stimulus bill should be nothing more than a lifeline until we get the virus under control - that is the only way to get the economy working again and climb out of this. That fact that only like 10% (not sure on the exact numbers) of this bill goes directly to hospitals and healthcare meant to combat the virus seems incredibly short sighted to me.

    6 votes
    1. nacho
      Link Parent
      But there's also the tech bubble valuations and the pump-and-dump Trump economic policy to build short-term gains for reelection at long-term costs.

      But there's also the tech bubble valuations and the pump-and-dump Trump economic policy to build short-term gains for reelection at long-term costs.

      5 votes
  2. [13]
    Icarus
    Link
    Its crazy to me how much the stock market is climbing these past few days. I anticipate it to crash further once reality sets in that this isn't a couple weeks ordeal we are going through.

    Its crazy to me how much the stock market is climbing these past few days. I anticipate it to crash further once reality sets in that this isn't a couple weeks ordeal we are going through.

    5 votes
    1. [4]
      Loire
      Link Parent
      We are down 20% YoY. A dead cat bounce was inevitable. Also keep in mind a lot of people might be buying in on the dip, if you have the liquid assets buying in now is a no brainer.

      We are down 20% YoY. A dead cat bounce was inevitable. Also keep in mind a lot of people might be buying in on the dip, if you have the liquid assets buying in now is a no brainer.

      3 votes
      1. [3]
        nacho
        Link Parent
        I'd wait/ am waiting for the pandemic to hit the US full force. Four arguments: It's hard to overestimate the psychological impact of local people or loved ones dying on TV because of missing...

        I'd wait/ am waiting for the pandemic to hit the US full force. Four arguments:

        • It's hard to overestimate the psychological impact of local people or loved ones dying on TV because of missing health care (see Italy).

        • I think the US-specific phenomenon of increasing medical bankruptcies and reduction in discretionary spending due to health care costs has been hugely understated in media and consequently in the markets once we close in on peak-corona.

        • Trump will have to walk back or go through with re-opening the country way too early. Either way that's going to hurt markets.

        • Liquidity issues of small businesses will hit when bills come due. That's when bankruptcies will start happening and the cycle of more bankruptcies continue. This is when the fact that joblessness will last for a long time manifests itself.

        The market is waiting for at least these four shocks. I'm willing to bet significant amounts of money on the market still having a lot further to go. I'm not looking to invest at the bottom, but further down the decline before things start going up again.

        9 votes
        1. NaraVara
          Link Parent
          If the economy tanks because a bunch of storefronts go under, it is absolutely the landlords and creditors who should lose their shirts and not the store owners. A store that continues to operate...

          Liquidity issues of small businesses will hit when bills come due. That's when bankruptcies will start happening and the cycle of more bankruptcies continue. This is when the fact that joblessness will last for a long time manifests itself.

          If the economy tanks because a bunch of storefronts go under, it is absolutely the landlords and creditors who should lose their shirts and not the store owners. A store that continues to operate can simply. . .continue to operate and generate economic activity. If you let the store go under, then you've got a vacancy that needs to be filled but can't because because all the people who would have started a business have no money to restart. The lag time to catch up on production gets waaaaay extended if you try to save the landlords, shareholders, or creditors. They are the least value-additive parts of the production chain yet our entire economic system is predicated on protecting their fortunes.

          4 votes
        2. Loire
          Link Parent
          I agree with you for the most part but trying to predict how deep this dive is going to go is market timing no matter how likely the prediction is. I am going to ride the dip a couple thousand a...

          I agree with you for the most part but trying to predict how deep this dive is going to go is market timing no matter how likely the prediction is. I am going to ride the dip a couple thousand a week all the way down on the off chance the market does bear this better than we think it will. My timeframe is 40 years so if I miss out on a few extra hundred from failing to catch the valley, I will survive, and if by some miracle the stock market is already at bottom I'll be alright.

          2 votes
    2. [2]
      Autoxidation
      Link Parent
      I believe it may be a dead cat bounce.

      I believe it may be a dead cat bounce.

      2 votes
      1. skybrian
        Link Parent
        It's not based on nothing. Congress passing a major bill is very straightforwardly good news. But there will be bad news after that.

        It's not based on nothing. Congress passing a major bill is very straightforwardly good news. But there will be bad news after that.

        2 votes
    3. [6]
      SantalBlush
      Link Parent
      I imagine that this information is already reflected in the price, since it seems to be common knowledge. I could still see the market declining further for plenty of other reasons though.

      I anticipate it to crash further once reality sets in that this isn't a couple weeks ordeal we are going through.

      I imagine that this information is already reflected in the price, since it seems to be common knowledge. I could still see the market declining further for plenty of other reasons though.

      1 vote
      1. [5]
        skybrian
        Link Parent
        Well, some is probably priced in, but confirming widely suspected predictions does move markets, as the uncertain future becomes fixed history. And things are plenty uncertain lately. It seems...

        Well, some is probably priced in, but confirming widely suspected predictions does move markets, as the uncertain future becomes fixed history. And things are plenty uncertain lately.

        It seems likely that there will be plenty of market-moving bad news.

        1 vote
        1. [4]
          SantalBlush
          (edited )
          Link Parent
          OP is not from the future. They are referring to widely suspected predictions only, not the confirmation of those predictions, which none of us presently have access to. How likely? What is this...

          OP is not from the future. They are referring to widely suspected predictions only, not the confirmation of those predictions, which none of us presently have access to.

          It seems likely that there will be plenty of market-moving bad news.

          How likely? What is this bad news, and how strongly will it turn the market downward? What is the time frame in which this is likely to happen?

          1. [3]
            skybrian
            Link Parent
            As the infection and death rates go up in different parts of the world, this will be in some ways confirming what is already widely expected. But exactly how well or badly different regions handle...

            As the infection and death rates go up in different parts of the world, this will be in some ways confirming what is already widely expected. But exactly how well or badly different regions handle it isn't known yet. It is almost inevitable that there will be important news, one way or the other.

            For example, it wasn't clear until recently that New York City would be hit before other parts of the United States. It's not known where it will get really bad next. And the timing matters.

            1. [2]
              SantalBlush
              Link Parent
              It seems that your entire assertion here is that we will learn more as time goes on, and we don't know yet how the stock market will respond to future events. I'm honestly not sure why you're...

              It seems that your entire assertion here is that we will learn more as time goes on, and we don't know yet how the stock market will respond to future events. I'm honestly not sure why you're writing it, or what you're responding to. Perhaps I missed something.

              1. skybrian
                Link Parent
                Okay, yeah, reading it over I'm not sure we're disagreeing on anything. I'm just emphasizing the uncertainty of it all.

                Okay, yeah, reading it over I'm not sure we're disagreeing on anything. I'm just emphasizing the uncertainty of it all.

                2 votes
  3. Kuromantis
    Link

    Economists say Congress’s response was too slow, too stingy and too focused on big Wall Street firms during the Great Recession, and that prevented a faster turnaround. Many analysts say Congress deserves some credit for doing better this time. This relief package is more than double the $830 billion measure that Congress passed in 2009. It came together in a few days, and it’s far more targeted at Main Street.

    Middle-class and low-income Americans are slated to receive $1,200 checks (more for people with children). Small-business owners will soon have access to $10,000 emergency grants and millions in loans. And additional money is set aside for the unemployed. Only about a quarter of the money will go to large companies this time, including billions earmarked for Boeing and airlines.

    But economists say two key problems remain: fixing the health crisis and getting money to people in time.

    Constance Hunter, chief economist at KPMG, predicts that it will take at least six to 10 weeks for the government to disburse a significant amount of the money. That’s a long time for laid-off workers and small-business owners with no money coming in to wait. It makes it less likely that they will bounce back quickly.

    “There isn’t some magic restart button for the economy,” Hunter said. “Before the money arrives, there will be a lot of collateral damage to the economy. That’s going to make restarting it difficult."

    Majority Leader Mitch McConnell (R-Ky.) declared on the Senate floor Wednesday that “this is not even a stimulus package; it is emergency relief.” Economists agree. This $2 trillion isn’t about boosting the economy; it’s about trying to compensate people for what could be $2.5 trillion in lost business and wages in the coming weeks. And that’s a best-case scenario. Losses will be deeper if the pandemic lasts into the summer.

    2 votes