[Maverick Avi]

Though I am a personal believer in the saying "Ignorance is bliss", I would not want to propagate this belief on a public forum. I would safely say that too much information is also mentally unhealthy. In this age of super connected devices information is just everywhere. You can search for any of your beliefs and you would find a strong following for it. In all of recent scares recently social media and internet is playing a key role in propagating the fear. Today morning itself I saw a picture in one of the leading newspaper where India Gate is being shown as devoid of usual crowd it sees and it surely is the case too. But I just visited Nehru Park and Lodhi Garden this weekend and also had lunch at one of my usual south India restaurants in south Delhi. To my surprise the parks still had good footfall and the restaurant still had waiting . So though situation looks grim right now I feel its not that bad and knowing the fact that things would recover in 3-4-6-8 months I just want to remain optimistic.

Just visit one of those thinly populated parks, watch the spring bloom, keep sanitizing your hands, wear a mask if you feel its necessary. I myself am employed at a big corporate at a mid-manager level which has highest chances of being axed during an economic crisis but I guess that whiff of spring in the air and your kid playing, jumping around on rocks in the garden feels more comforting. We have wrecked havoc on nature, it would surely want to retaliate once a while. Give it its due, am sure its more forgiving than humans!!

[volkman10]

Volkswagen says preparing to suspend production at Bratislava plant, after Slovakia declared a state of emergency due to the coronavirus outbreak.


Link

[Samurai]

UPI, Paytm and similar digital payment methods are much safer than cash, credit or debit cards that need touching by strangers.

[Stribog]

Originally Posted by Samurai

Already dropped another 3500 points by 10:10am today

Society as we know may break down, if humans can't overcome this virus.

Sorry but this is abject fear mongering (no personal offense meant to you). COVID ultimately has a mortality rate of 2% far lower than even diseases like the Flu in cold countries. Break this down into age groups and till 70 it has next to no mortality rate.

Society as we know it has survived pandemics like the Influenza pandemic of 1918 which killed 10's of millions (close to 3-5% of the total pop) and had much higher mortality rates ESP in the age group 20-60 (some countries reported upto 90% mortality rates in this age group which is only slightly less than viruses like Ebola). Guess what happened a year later? A deadlier second wave and then it simply died out (pun unintended). Now guess what GDP growth rate of the US (one of the worst affected) was just a year after this second wave? Close to 7% and it kept climbing till the great depression hit.

Society as we know it is very advanced and we are taking precautions but this won't sustain as...business always finds a way. People are not going to be stuck indoors for months on end (assuming the virus does not die out by then) doing nothign.

Originally Posted by GTO

The Coronavirus is going to give a body-blow to the economy, not just in India, but globally.

Medium run, I think this will definitely be a net benefit to India as already many companies are seeing the problems with centralising their production in China and there already was a movement afoot to diversify production centres and it will accelerate now.

Chinese companies themselves are leading the charge here btw. Look at how FDI flows have drastically improved here.

It averaged $ 450 mn / year in 2014-15,

https://economictimes.indiatimes.com...w/52909753.cms

It has shot up to $ 2bn (a 5 fold increase) by 2017.

https://www.forbes.com/sites/suparna.../#7adfb1ca1dac

We aren't even seeing the tip of the possible Chinese iceberg, from electronics to automobiles...

Just automobiles alone seem to be possibly a $ 5bn investment.

https://www.chinadaily.com.cn/a/2019...e35577b93.html

https://www.livemint.com/auto-news/c...837264752.html

Greatwall is lining up a $ 1bn greenfield investment already.

Ditto electronics. So in my limited opinion, once the dust settles on the COVID19 in a few months, India would actually become stronger....but the caveat is that the govt has to roll out the red carpet for FDI shifting from China (which they have done by giving tax waivers in the last budget for manufacturing)

Originally Posted by Nissan1180

Whatever gains were made in the last few years have been erased. A lot of people who started investing in mutual funds when savings bank account interest rates were reduced. This crash is going to erode whatever hopes were there for the economy to revive this year. Coronavirus triggered a sell off, but the fundamentals have been weak for a long time. Not 1 consumption driven company did well in the last couple of quarters. The fake euphoria surrounding the Indian econony has ended and a lot of pain is yet to come.

The Indian economy has been growing in the top 5 of all major economies for close to 2 decades now. There is nothing 'fake' about it.

I seriously don't understand why a normal phase in the naturally forming economic cycle is being projected as some sort of eternal death of the Indian economy.

Originally Posted by Samurai

I am curious. What was the last time such a calamity hit the stock market, where businesses are losing transactions because of social distancing at every level?

What are the models they are relying on to analyze this crash?

If you look at the DOW, with a 8% fall in one day, it looks cataclysmic but it is not even in the top 10 by % changes. The greatest single day fall was black Monday of 1987.

Though I don't think there has been any modern global pandemic to rival this one, so not sure if money managers even have models for this. Not my area of expertise and just pure guess work, maybe some investment banker BHP'ian can shed light on this.

[GTO]

Originally Posted by Eddy

At the age of 40, he finally put all of his life savings into opening his own gym about 6-7 months ago in Chandigarh.

Rule no.1 of business is only put in how much capital you can afford to lose. It's what I've followed for all my businesses. At max, he should have put in 50% of his life savings, not 100%.

Now he fears closure and has no other source of income. This is hitting the likes of him hard.

Guessing he is on rent. Tell him to ask the property owner for a rent concession during the coronavirus pandemic. Not like the owner will find anyone else in this market. It's a fair request considering this extra-ordinary situation & I fully expect my tenants to call me with the same request too.

Next, tell him to cut costs on salary. Example = negotiate a lower amount with his employees. They will be happy to adjust than lose their job.

Rent & salaries will surely be making up the majority of his expenses.

Originally Posted by Stribog

Medium run, I think this will definitely be a net benefit to India as already many companies are seeing the problems with centralising their production in China and there already was a movement afoot to diversify production centres and it will accelerate now.

Thanks! Awesome post .

[Eddy]

Originally Posted by GTO

Rule no.1 of business is only put in how much capital you can afford to lose. It's what I've followed for all my businesses. At max, he should have put in 50% of his life savings, not 100%.

Guessing he is on rent. Tell him to ask the property owner for a rent concession during the coronavirus pandemic. Not like the owner will find anyone else in this market. It's a fair request considering this extra-ordinary situation & I fully expect my tenants to call me with the same request too.

Next, tell him to cut costs on salary. Example = negotiate a lower amount with his employees. They will be happy to adjust than lose their job.

Rent & salaries will surely be making up the majority of his expenses.

Yup, he is on rent and I will pass on your advice to him. Thanks.

[SmartCat]

Originally Posted by Stribog

Though I don't think there has been any modern global pandemic to rival this one, so not sure if money managers even have models for this. Not my area of expertise and just pure guess work, maybe some investment banker BHP'ian can shed light on this.

Why pandemics? There are models that take into account the probability of the Sun dying out.

If people have pulled out $100 billion from the stock market, they won't store it under their mattress. They will invest it somewhere. And when they do that, the price of those assets shoot up. Examples: US treasury bonds, Japanese treasury bonds, Indian gilt funds, Gold etc.

It's called diversification across asset classes, and works for all unexpected events. Including pandemics.

[sreejinair]

Does this say it all?

Add neodymium to that

https://www.youtube.com/watch?v=q9vklmtq3VI

[100BHP]

Excellent discussion on issues based do's & don'ts .
IMO, No one now wants to disrupt the scale & speed of growth globally. This pandemic will act like a booster shot in future preventive actions & how to protect economy from such disasters.
Amongst all this, Our Nation will rise further . It has majority young population & right goverance.

[Samurai]

Originally Posted by Stribog

Society as we know it has survived pandemics like the Influenza pandemic of 1918 which killed 10's of millions (close to 3-5% of the total pop) and had much higher mortality rates ESP in the age group 20-60 (some countries reported upto 90% mortality rates in this age group which is only slightly less than viruses like Ebola).
.
.
.
Though I don't think there has been any modern global pandemic to rival this one, so not sure if money managers even have models for this. Not my area of expertise and just pure guess work, maybe some investment banker BHP'ian can shed light on this.

Just because every domain requires/uses finance, doesn't mean finance folks will have the knowledge to make predictions on this. Investment bankers are as clueless as rest of us. I wouldn't trust the very people who caused the 2008 financial crash to give prognosis on this matter.

Comparison to Influenza pandemic of 1918 is not relevant from economics point of view. World was nowhere near interconnected in 1918 as now, not even 1% of now. Globalization has resulted in ridiculous levels inter-dependency on countries faraway. Then, 99% of people never traveled more than 50kms from their homes, ever. Except in times of war or famine. More importantly, most of the economy was local, very small amount was global. If the global trade halted it didn't effect the daily lives much, most jobs didn't depend on global trade.

But now... it is so interconnected, for both travel and business. There are no experts who can predict the state of a global economy where social distancing will be the norm. The global health expert can tell us how we have to live with the virus. But the economic impact of that is well beyond our imagination for now.

[akhil_007]

Originally Posted by Samurai

But now... it is so interconnected, for both travel and business. There are no experts who can predict the state of a global economy where social distancing will be the norm. The global health expert can tell us how we have to live with the virus. But the economic impact of that is well beyond our imagination for now.

Thank you for all your awesome posts in this thread. Very beautifully laid out. I have a question though. Wanted to hear opinions on this.

With private business taking the hit(based on cash flow etc) first and no new businesses taking off, would countries world over move closer to socialist based economy. Something on the lines of Help during distress, tax during prosperity?

Also, people in govt jobs seem to be the only ones who can cushion this financial impact.

Thoughts?

[v1p3r]

Originally Posted by akhil_007

Thank you for all your awesome posts in this thread. Very beautifully laid out. I have a question though. Wanted to hear opinions on this.

With private business taking the hit(based on cash flow etc) first and no new businesses taking off, would countries world over move closer to socialist based economy. Something on the lines of Help during distress, tax during prosperity?

Also, people in govt jobs seem to be the only ones who can cushion this financial impact.

Thoughts?

This is already happening. India has made all testing free. Trump has frozen student loan interest accrual and installments until further notice. Without government support, we're looking into the abyss. Most airlines don't have more than 1 or 2 months of runway (always time for some wordplay) and are seeking govt intervention.

The flip side will be raised taxes / surcharges / rates once things stabilise. Already GoI has decided to milk the falling price of crude for all it's worth.

I would like everyone to please keep something in mind - when we talk of up to 2% mortality rates being acceptable, and how we should go about business as usual, please take a moment to consider the implication. You are saying it's ok for someone's parents or grandparents to die. While death is both natural and commonplace, treating it as a mere statistic is cavalier. God forbid one of us or our loved ones have to make one of those statistics.

[SmartCat]

Sign to things to come across major economies of the world?

Chinese urban unemployment rises from 5.2% to 6.2%
https://www.cnbc.com/2020/03/16/chin...nt-spikes.html

Shutdown of just one province in China killed millions of jobs. Countries like Italy are seeing complete shutdown.

[Malyaj]

I am in the restaurant business and it is nothing short of a bloodbath, especially if you are a non veg eatery. People are not eating out and ordering in even less. My usual catchment area of colleges and offices is all but shut. The few who stay nearby and are aware/comfortable with the hygiene standards are still walking in, but it is quite miserable.

The thing with self imposed quarantines like these is that people get used to it and realize they aren't missing anything at all. Less shopping, less eating out, less movies at multiplexes, they stop bothering you after some time. It is the same thing with jobs. Companies start reducing staff but when business does pick up and reaches pre-slowdown levels, they realize they can manage quite well even with less staff. This is particularly true of companies that were staffed for growth and not for status quo.

Slowdowns would be easier to handle if business leaders had an understanding of whether their business has peaked or not (at least in the medium term). Everyone nowadays is so brainwashed into this 'forever growth' mindset, it comes as a rude shock to some that the economy/business may not grow as expected, or worse, may not grow at all.

I am not one to over react but I do believe that such phases are an opportunity to rethink certain life choices. Personally for me things have been rough but savings and a own loan free house have come to the rescue. I am a bit of a 'you only live once' believer myself, but within reasonable limits. It is a good catchphrase, but time flies when you are not making money and bills pile up doubly fast.

[Samurai]

Originally Posted by akhil_007

With private business taking the hit(based on cash flow etc) first and no new businesses taking off, would countries world over move closer to socialist based economy. Something on the lines of Help during distress, tax during prosperity?

It looks like we all have to learn to live with the Coronavirus. That means our healthcare system has to be enhanced dramatically, and has to be offered free by the government. This will enable easy detection and treatment to even the poorest. This doesn't have to be done only at government hospitals. Affluent folks would not want to wait for their turn, or stay in sub-standard government hospitals. That means lots of opportunities for new private nursing homes, specializing only in Coronavirus testing and treatments. They can employee lots of MBBS graduates and nurses. That will create an ecosystem. Similar things will happen other industries. For example, my wife's friend runs a company that makes detergents, soaps and other related chemical based products for corporates. Since two weeks, she has switched the entirely factory floor into making hand sanitisers. It used to be a minor product, now it is the only product.

However, businesses that rely entirely or majorly on social interaction are in real trouble. They will have to adopt dramatically, find ways to achieve the goals without social interaction.

Other than building robust healthcare to cover all the poor, I don't see why all countries have to turn to classic definition of socialism. However, if the job losses stays high, governments everywhere may have to seriously look at UBI.

Originally Posted by akhil_007

Also, people in govt jobs seem to be the only ones who can cushion this financial impact.

Temporarily, yes. This is a major shock to the current system, so most private businesses will suffer, until they learn to work the new reality. That also can mean that they need a work force that works differently, trained differently. People who are quick to adopt will have an easy time. Lots of jobs will be lost, lots of new ones will be created. If enough jobs are not created and filled, it will be a bad scenario.

Originally Posted by v1p3r

I would like everyone to please keep something in mind - when we talk of up to 2% mortality rates being acceptable, and how we should go about business as usual, please take a moment to consider the implication. You are saying it's ok for someone's parents or grandparents to die. While death is both natural and commonplace, treating it as a mere statistic is cavalier. God forbid one of us or our loved ones have to make one of those statistics.

That happens when people view the situation only from business economics POV. Like that fellow on TV who suggested we infect everyone, so that we can stop avoiding each other. But economics is not only about business economics, but also socioeconomics. This situation is affecting the society at large, while people think only about finance.