Quote:
Originally Posted by Table 5
I was in living in NYC during the financial meltdown of 2008, so perhaps that amplified the noise, but in many ways that was much more troubling economically. It was an internal collapse of the entire financial system based on layers of terrible decisions, and shook the foundation and trust of the entire backbone of the US (and therefore the world).
The effects of Coronavirus, on the other hand, was brought on by external forces, at a time when the economy was doing well (at least in the US). There will be of course still be major repercussions, but at least it will be mostly because of economic inactivity, as opposed to a crisis of faith in the entire system.
I think we're extra-hooped in Alberta because the collapse of oil on top of things, but I think many in the US see this more like a pause, as opposed to a total re-assessment of everything they believe. At least, that's my hope!
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I think that is a good anecdote of of the crisis being in New York but what scares me more about this crisis is the 'what-ifs' (maybe they were equally present in 2008). In 2008 I was still in University with little skin in the game but some of my economics and finance professors didn't seem as concerned. Their points were the typical points 'bail-outs', 'too-big-to-fail', etc,. The US financial markets and banks simply were too important for the world to let fail and there just had to be a solution. It just felt different.
Fast forward to today, and I guess wearing the oil and gas lens definitely does not help, but I just can't see the next 2 - 3 years being positive. As this is a Calgary centric forum and most of us posters are worried locally this is where my focus is. I am worried locally for the housing market, I am worried for our jobs, and I am worried for our economy. The rate at which we are filling up global oil storage capacity however is staggering and the only way draw downs will occur is when demand starts to outpace supply. This won't happen for years - and my question is how long can the city of Calgary hold on.
On a more macro level I am also interested to see how the US does coming out of this thing. They have had to pull monster fiscal stimulus and will likely have to pull much more. Remember 2008 only saw a $800 B package, what we have seen today out of the US is $2 Trillion. This stimulus is going to be far larger than what we saw come out of the US and shows the severity of what we are dealing. 2008 saw a huge crash, but it didn't see unemployment rates which we are going to see nor the pervasiveness of the issue (in my opinion). The debt globally that is going to be needed to taken on will have far reaching consequences that not doubt will have impacts going forward (inflation, credit worthiness, etc).
My previous post foretasted volatility for the next 6 months and I stand by that. I also believe once we return to normalcy we will see slow economic recovery. But all of the social programs and stimulus isn't going to make everyone whole. There will be people out a lot of money that will be forced to make dramatic lifestyle changes. I think this will be a far slower recovery than people are hoping.