by NomBok
I think because of the great recession in ’08, when people hear about a coming ‘recession’ they think it will basically be a collapse like the last time. In reality, a recession is literally just 2 consecutive quarters of negative GDP growth.
Now since we have to assume bull markets and awesome economies can’t last forever, something will eventually have to cause a recession. Often times, such as the great recession and great depression, it’s caused by unmitigated greed and delusion. Then the delusional euphoria for ‘no reason’ is followed by people shutting down (financially) because of fear, and no other reason. Things are great and then all of a sudden things collapse when delusion reaches a maximum. In that case, it’s a self fulfilling prophecy. When confidence returns, and all the nonsensical businesses are purged, things can return.
BUT, say we get a recession because of this virus. Would that even be surprise at all? Obviously people are going to not want to go outside, or buy a new car for a trip they no longer want to go on, and suddenly people are more concerned with staying healthy than having the latest new dumb gadget or fancy clothes. It’s a recession that has a reason.
And I think it will be a lot easier to swallow for the general public. Like, “of course we had a recession, no one was buying anything because of the virus!”
But I’d argue the result is the same. The crappy unnecessary businesses and products will fail because they can’t sustain themselves through any significant downturn, and the higher quality stuff remains. But once things cool down, like if we get a vaccine after a year, it’s possible we’ll come out of the other end with the benefits of having the fat cut, but way less uncertainty, and dare I say optimism. There will be a light at the end of the tunnel so to speak.
I don’t know if I really have a point, I was just wondering what thoughts everyone else had and it might make a good discussion.