I live on the first floor so I don’t have anywhere to jump. My potential energy can’t be converted to enough kinetic energy to do any damage. I’ve been looking at downturns to try and see which one this rhymes with and best fit IMHO is 1929. The great depression lasted from 1929 to about 1940 when WW2 intervened. The depression consisted of 2 verses the 1929 verse and the 1937 verse. A good measure of depression is unemployment. This is the picture of unemployment in the 1929 depression.
Unemployment peaked to about 22% and later to about 17% in 1937 following a drop to a mere 14% in between.
Everything will flow from the unemployment graph. Unemployment directly measures productivity and productivity is the engine of GDP so you can bet GDP is going to match unemployment. It took 13 years to get back to 5% unemployment. You may say “what about robots!” What about them. What company is going to capex a bunch of robots in a depression? What bank will bankroll such capex?.
This is the reason it’s different this time. Nobody’s ever seen this before. This chart goes back to 2004 which includes the tail end of the .com bust. This spike is the beginning of the fingerprint of this depression. People have yet to come to terms with reality and are changing chairs on the deck as if the iceberg was just an inconvenient bump, all with full expectation of resuming the trip with minor consequence.
The virus is expected to peak in mid may 6 weeks from now. What does “peak” mean?
Peak is defined when the second derivative of the growth curve goes from + to -. It’s also called the inflection point. It’s where the black line touches the orange curve. Let’s say by “peak” in May, say May 15, there are 3M sick and the peak rate of infection is 100K/day. On May 16 there will be 95,000 additional sick and on the 17th 93,000 and on the 18th 91,000. It will take till July or Aug to get the new case rate down to where it was in January.
I read a frightening stat. 70% to 83% of vented patients die. That’s like picking up a 6 shooter with 5 bullets loaded for your game of Russian roulette. So even if you have a vent it isn’t going to save you. You’re going to die and probably 30% of the health care workers taking care of you are going to get creamed. As I write this there are 207K confirmed cases and well over 1M slated by Easter. People are going to try and assign blame. They will quack about testing or this or that but in reality none of that matters. Strong self quarantine of you and your family for 4 or 5 months is all that matters. Spring break with the invincible’s happened and now they are sick. In march we woke up to tangerine trees and marmalade skies. We no longer reside in Kansas.
I read a blog post by “Our Next Life“. This is a woman, a retired Democrat political adviser with bright red hair and a bone in her nose opining on the way forward. I guess she wrote a book called “work optional” If unemployment is 25% it isn’t “work optional”, it’s Sorry No Work Available. I guess this guru had to cancel a couple of fabulous ski vaca’s
While you’re watching CNBC and them trying to get you to BUY STOCKS and my pillows!! You might consider the unemployment graph. Many if not most businesses will be gone in 6 months due to cash flow and leverage. I have read of people considering renters strikes where they tell landlords to go pound sand. “I don’t have a job and No I don’t have the rent and NO I’m not moving out!” Do you really think COVID cops have any time to deal with that shit? How long can you survive paying that mortgage with no income from the investment? What about if they get sick in your apartment and die? Nothing like passive income to stiffen up the ol bone. A Real Estate crisis usually lags unemployment by 2 to 4 years so that bomb is yet to explode.