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Originally Posted by boost
Poop
On restarting the economy: I think you're woefully wrong here. I'll give a hypothetical and an analogy, maybe you'll find either or both insightful.
There's essentially no more easy to get oil in the US. Therefore, production only makes sense when crude prices are high. Due to the breakdown of the Saudi/Russo cartel, they are both flooding the market with oil, depressing the price below the profit point for US shale producers. So, you'd think the shale producers would just close the tap, furlough everyone, and wait for MBS and Putin to sort their shit out, and for the price to rebound above their point of profit. Well, this isn't what is happening, instead they continue to pump oil at a loss for two reasons: for one, it's highly leveraged business and many producers simply need the cashflow to service their debt. Secondly, and far more important, it's extremely expensive to cap a well, and often times it damages the well, significantly reducing it's ultimate output should it be retapped. This is one industry, and their current crisis isn't primarily predicated on the pandemic, but it is illustrative of how shutting down and restarting complex systems is not necessarily as simple as flicking a light switch.
Now for the hypothetical. Say a company is able to stay afloat, but they have to make some tough choices-- they need to fire some percent of their staff. Which percent are they going to fire? The bottom %. Surely people had an idea of who were the top performers and who weren't, but now it's being made explicit who the powers that be think those people are. If that relationship isn't permanently severed, it's certainly significantly damaged.
Lastly I'll say that your reasoning here sounds awfully similar to someone insisting the UK would simply eat more fish to buoy the country against the negative economic effects of Brexit. Your model is absurdly simplistic and doesn't pass muster.
Well first, I don't have a model, I am talking off the top of my head. Let's be clear about that.
Second, inasmuch as any such model does exist, I think it should properly account for the fact that people who are continuing to make an income will be sitting on a pile of savings when the crisis ends will inevitably spend it. No-one is going to decide to start saving now becuase a once in a centry event occurred. Or maybe they will; i really don't know.
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