Conversation

Here’s arguing we’re in for a brutal and long recovery even though the narrative and metagame have converged on a short+deep recovery. I’ve actually been leaning towards short+deep due to the 1920 recession, which followed WW1+Spanish Flu
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I don’t know why the market consensus might be around short+deep but my own reasoning is based on the observation that a lot of the long+brutal has already been logged in the last decade by a lot of people. It’s only the protected buyback-wealthy classes that hadn’t been hit yet.
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The real economy isn’t in great shape, but no actual non-financial capital is being either destroyed or misallocated that wasn’t already in that state. And afaict no new kinds of non-financial wealth worth protecting are suddenly under threat. 🤔
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I have a feeling I may be making some sort of “financialization dualism” error here but I can’t shake the feeling that when a Jenga stack of shaky financial instruments falls, it’s just not as serious as say a hurricane destroying a city or ransomware permanently destroying bits.
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It’s what I call a control failure rather than a plant failure. Bad information washing out. Of course, it can later cause plant failure. That’s the Air France crash pattern. Bad pitot tube data —> autopilot goes nuts —> inexperienced pilot fails to override correctly —> crash.
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So long as you arrest the causal chain before the plane itself crashes, it’s a recoverable error. I’m not sure at what point the financialization control system crashes the economic plane. We’ve caught the pitot tube error at this point.
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There’s a pretty good case that the recovery from 08 was long and slow due to policy choices by the Fed where they kept on trying to pull away monetary support. They eventually stopped trying to do that, and hopefully have learned the lesson.
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Let's step back one unit: when do you expect "normality" to arrive? IF vaccines OR retrovirals play out ideally, in six months? If not, in eighteen months? A lot depends on that. How long are we willing to collectively run at 30% capacity before we look down and panic?
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