The Viral Economy

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Re: The Viral Economy

Post by LawBeefaroni »

If you change the phrase to "nobody wants to work under current 'traditional' norms anymore" it would probably be accurate.


I'd add that the unwillingness to pay propper wages is also a driver:

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Re: The Viral Economy

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After getting our highest-ever power bill last month at $223, we took action to decrease usage in order to keep it from being so high. Despite turning the AC up to four degrees warmer, keeping all of the blinds and curtains closed, and keeping even more things turned off, our power bill broke records yet again at $252 this month. That's compared to $166 a year ago, $153 two year ago, and $157 three years ago.

And eating for $800/month now (for four people) involves eating a lot more filler, and a lot few luxuries than a similar amount paid for six months ago.

Meanwhile, our income hasn't budged. I'm curious to see what they're going to be doing for next years Social Security COLA adjustment.
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Re: The Viral Economy

Post by stessier »

Blackhawk wrote: Wed Jul 20, 2022 4:04 pm I'm curious to see what they're going to be doing for next years Social Security COLA adjustment.
I follow some people tracking it for retirement and predictions are between 8-9%.
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Re: The Viral Economy

Post by malchior »

The income cap on SS deductions jumped something along those lines this year. It only makes sense for the program to track up as well along with that.
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Re: The Viral Economy

Post by Isgrimnur »

I bonds are at 9.62%. They're supposed to be an inflation hedge.
It's almost as if people are the problem.
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Re: The Viral Economy

Post by Jeff V »

Well, that's my lot now. After 2 years trying to get back into an IT gig (over 30 years experience...you're old AF, get lost!) I finally gave in to a friend's pressure and my wife's demand I earn something else we'll soon be relocated to the Philippines. It's going to take a few weeks before I figure this all out to be optimal. Fortunately, I'm a fucking people person, damn it! Week one has at least been interesting. Such as...

Day one. Dude's car breaks down. I'm summoned to take him to Auto Zone, which doesn't have the starter he needs, but there's one at a location quite far away! So we go there, he gets his starter, and I drop him back at his car. $60. But Uber flags it for review, and for 5 days now it's listed as -$1.05.

I live on the western edge of civilization. Which means nearly everyone is headed east. This has brought me to the shooty part of town...we're not allowed to see where the pending customer is before we accept it. I do not want to serve the shooty part of town (also, coincidentally, the hijacking part of town). I don't want to do the city at all...driving there is stressful. On Sunday I had a fare from Aurora to the East Bank Club downtown...the follow-up fares took me to Uptown...which was surprisingly not bad that day. The problem is getting fares back to where I live (the western edge of civilization). I got a couple to take me to the near southside (Douglas Park for those who know). That day ended with one more fare...which ended up being Naperville-O'Hare. I do not yet have the vehicle dressing to run people out of O'Hare, so that was basically one-way with no return fares.

Uber allows you to twice a day select a destination (like home), and will try to present available fares along the route. Yesterday, it worked out to the minute. Today, not so much, I got home 2 hours past the kid's dinner time.

Other oddities in just 5 days....

Yesterday I had some almost-trailer trash (their business plan involves suing Wal-Mart), going, incidentally, from Wal-Mart to their home...a row of townhouses in Lockport. After dropping them off (and telling Uber I want to go home), I was summoned to the same damned row of townhouses to someone with the same damned name ("Robert"). Before this, I was leaving my subdivision (not a hot-bed of activity since it's at the edge of civilization) and had to turn around to get a girl that lives on the next block. She was going to a location a few blocks away from where we used to live. Today, I gave a lady a ride down the street from another place we used to live. I also gave someone a ride in the town I grew up in -- yesterday I was in the vicinity too and tried to make it to a beloved bakery (the last of the old Czech bakeries) but kept getting pulled elsewhere.

Also today, I took a guy to some truck repair place. Not the kind of place you'd notice -- it's in an industrial area and there's just a bunch of semi-trucks in the parking lot. After that I picked up a guy going downtown to Union Station ...at around 3 pm. It took an hour to get out of the city, at which point I put myself on-line again. And got a customer...going to the same truck repair place I'd been to 3 hours earlier.

After feeding the kids a late dinner, I went out again. Presently, I need to do 20 rides tomorrow to get a bonus. I only got 2 going out after 8, one was a Mexican who spoke very little English but that didn't stop him from being chatty. He asked if I liked to drink (I said not when I'm driving) -- I'm pretty sure he'd have taken me somewhere for tequila shots. He also asked if I wanted a burger, and even if the real answer was "yes" I still needed to be home in time to wake my wife for work. He lived down the street from one of my wife's good friends.

It the last couple of days, I've been within spitting distance of my favorite Bohemian bakery in Berwyn. Before I could actually get there, I was summoned elsewhere. I asked one guy today what he thought my odds were to actually getting there...and he replied, "not very good, this is a busy area." And he was right...after coming back west from the guy I dropped at Union Station, I had to fetch a lady in Berwyn and drove past the bakery (too late to matter, gotta get there early).

It remains to be seen how good the money actually is...Federal mileage allowance increased again this year and much of this income can be offset by deductions. I'll find out for sure next tax season. But so far, it certainly is an interesting experience. We'll see if it amounts to enough to keep us in the country in 2024 when I can claim social security and our condo in Manila and house in Ormoc, Leyte is ready for occupancy.
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Re: The Viral Economy

Post by stimpy »

Jeff V wrote: Thu Jul 21, 2022 1:52 am Today, I gave a lady a ride down the street from another place we used to live. I also gave someone a ride in the town I grew up in -- yesterday I was in the vicinity too and tried to make it to a beloved bakery (the last of the old Czech bakeries) but kept getting pulled elsewhere.
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Re: The Viral Economy

Post by Smoove_B »

I'm sure this won't ripple out into the current disruptions in our economy and supply chain, right?
China's southern megacity of Shenzhen vowed to "mobilise all resources" to curb a slowly spreading COVID-19 outbreak, ordering strict implementation of testing and temperature checks, and lockdowns for COVID-affected buildings.

Shenzhen, with a population of nearly 18 million, reported 22 new locally transmitted cases for Wednesday, with the daily count creeping up from single digits earlier this month.

Though the caseload is still negligible by global standards, the slow uptick has pushed Shenzhen authorities to step up vigilance, to comply with the central government's "dynamic zero" policy of containing outbreaks as soon as they emerge.

Shenzhen has not ordered blanket closure of businesses or tough curbs on people's movement but has sealed residential compounds and buildings identified as being at higher risk. Officials have been told to make their virus measures more targeted to avoid unnecessary disruption to the economy.
I'm guessing whatever happens (and is reported) over the next ~72 hours is going to give us an indication as to whether or not there will be ~6 weeks of shutdowns.
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Re: The Viral Economy

Post by The Meal »

Is that where they’re assembling iPhone 14s right now? I’ve worked for a few places with factories there.
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Re: The Viral Economy

Post by Smoove_B »

I believe so
Shenzhen is known as “the world's factory” because so much of our stuff is made there. In fact, Inc. reported that 90% of the world's electronics come from Shenzhen, including toys, televisions, air conditioning units, mobile phones and drones.
Lots of board game manufacturing and assembly there too (if that's not clear from "toys").
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Re: The Viral Economy

Post by Jeff V »

stimpy wrote: Thu Jul 21, 2022 9:25 am
Jeff V wrote: Thu Jul 21, 2022 1:52 am Today, I gave a lady a ride down the street from another place we used to live. I also gave someone a ride in the town I grew up in -- yesterday I was in the vicinity too and tried to make it to a beloved bakery (the last of the old Czech bakeries) but kept getting pulled elsewhere.
Veseckys?
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Re: The Viral Economy

Post by hitbyambulance »

malchior wrote: Wed Jul 13, 2022 1:25 pm
I'm also seeing other dumb stuff happening. I work for a pre-IPO and we just announced a "hiring freeze" yet our most central money engine in the business just landed several new large clients. Like their book of business just grew 40% or something absurd. That team was already stretched. And they had people people in the interview process who are now frozen out of the blue when the orders came on from on high. Our financials overall are above target. It does feels much like we're going to see a secular 'very serious' people appeasement/propaganda for the money overlords campaign versus a sound business fundamentals thing. "Why would you hire! Everyone else is laying off" (The answer is we're growing quite briskly but fuck living in reality. Let's see how far we can stretch the team...for PROFIT!).
a friend was working at a company that was doing just this. she ended up quitting because the workload became far too large to sanely handle.
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Re: The Viral Economy

Post by LordMortis »

Companies, I'd imagine ,are sick of competing for workers and the accompanying wage inflation. They'd been getting 60-80 hours a week for the last few decades out of nearly everyone with the promises and plans to rise on the corporate ladder carrot and they want to return to that. I see and hear of hiring freezes where workers are insufficient in a lot of spaces to say nothing of the talent companies have settled for in the work they have. Things are going to get interesting. I only hope that my own timing for post employment doesn't get crushed by the inflation and the inability to get medical along others exiting the job market and corporate America having no idea how to react. For me this took a lot of planning and saving and living on nothing with no family to support. I don't know how everyone else exiting are doing it. I don't blame them, but I'm selfish and I don't want them to tank my ability to not work. I just don't have it in me to put in 20 hour workweek much less 60 or more under the illusion of being 40.

I think this is as much a function of the fed reacting to inflation as it is the Viral Economy. However, the Viral Economy was definitely and accellerant. This is the long game on our dousing the 2008 housing market and subsequent economy crash and then never taking the foot off the pedal afterwards. We have to pay the piper for all the free COVID money but that money is sitting on 12 years of "Don't call it QE" prior that also have to be paid for.
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Re: The Viral Economy

Post by malchior »

LordMortis wrote: Fri Jul 22, 2022 6:20 pmI think this is as much a function of the fed reacting to inflation as it is the Viral Economy. However, the Viral Economy was definitely and accellerant.
Supply disruption in both energy and goods are still the biggest drivers/components in inflation trends. The biggest component of the YoY increase was energy alone. The next biggest component was used cars. That aligns well with new car deliveries still living below pre-pandemic levels. We still are seeing microelectronics shortages and all sorts of raw material shortages in chemical manufacturing. The persistent theme running through all this is supply shock.
This is the long game on our dousing the 2008 housing market and subsequent economy crash and then never taking the foot off the pedal afterwards.
This is not the case. We had an extremely slow and shallow recovery from 2008. The vast majority of economists and policy makers now admit that we under stimulated. We actually had austerity measures in there for a few years that people have forgotten about apparently.
We have to pay the piper for all the free COVID money but that money is sitting on 12 years of "Don't call it QE" prior that also have to be paid for.
I keep hearing this from people but where is the evidence other than feelings? The free COVID money theory frankly doesn't hold up when inflation is everywhere.

The best explanation I'd offer is that there was a pot of money and generally a stable supply of goods to purchase. The supply of goods shrank considerably and people started substitute spending on various other goods and services. In ways that were not normal. Those goods and services didn't have the capacity to serve all those dollars also. The 'problem' was the economy had stable prices for decades. That implies that goods/services were well-balanced and predictable. Then COVID hit the economy like a meteor and badly broke the balance. Cash flows became unpredictable. Price shocks are still working their way through the economy. Yet from a macro standpoint, supply is still constrained so the economy can't even find a new balance.

Anyway, so back to the COVID cash...sure, some extra money might be having some impact but it probably wasn't the cause. In any case, even if it was the COVID money the alternative would have been far worse.

Frankly a lot of this are ideas that people bounce around a lot but have scant theoretical foundation. It's true a lot of economists didn't have a good model for the last year. Krugman had an article about how tradition IS-LM analysis didn't fully predict some of this. However, then again we've never seen a global economy this tightly integrated undergo so many shocks at once. And we're about to see another wave of COVID shutdowns potentially in China.
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Re: The Viral Economy

Post by LordMortis »

malchior wrote: Fri Jul 22, 2022 6:41 pm I keep hearing this from people but where is the evidence other than feelings? The free COVID money theory frankly doesn't hold up when inflation is everywhere.
Bitcoin, Tesla, QQQ, Ark Innovation, Twitter, mortgage rates...

https://screener.fidelity.com/ftgw/etf/ ... ymbols=QQQ


COVID money was icing.

All that money, equity, investment, etc... built on free interest in growth companies. And yeah, supply is the catalyst but the lack of it is not curbing demand because "the middle class" in their mid forties plus still have their investments, equity, cheap loans, etc...

If supply were the only problem then cutting hiring would would make no sense at all. Expanding production (and logistics) capacity is the solution to problems only rooted in supply.
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Re: The Viral Economy

Post by malchior »

LordMortis wrote: Sat Jul 23, 2022 6:29 am
malchior wrote: Fri Jul 22, 2022 6:41 pm I keep hearing this from people but where is the evidence other than feelings? The free COVID money theory frankly doesn't hold up when inflation is everywhere.
Bitcoin, Tesla, QQQ, Ark Innovation, Twitter, mortgage rates...

https://screener.fidelity.com/ftgw/etf/ ... ymbols=QQQ
Markets fall. I'm saying where is the evidence this is the explanation. People say this but my question is what is the theory other than feelings.

COVID money was icing.

All that money, equity, investment, etc... built on free interest in growth companies. And yeah, supply is the catalyst but the lack of it is not curbing demand because "the middle class" in their mid forties plus still have their investments, equity, cheap loans, etc...
What I'm getting at is that this is a moral position and not necessarily one based on sound principles about economics. The idea that 'free interest' is a problem and left people with too much money is not really supported by the facts. It's in there to be sure and we did see a surge in personal savings in 2020 as people paid off debt in the lockdowns while they were bunkered. Still that was also a feed in component to supply chain disruption that the global economy is still struggling with.

In fact, the history was that prices were stable for decades. This was true through the 2008 financial crisis (except with a brief dalliance with deflation) and price stability ended as economies re-opened. I'd argue if we had seen this without the pandemic then we'd have something to think about. Otherwise, the simplest explanation is the pandemic/supply chain/energy shocks we have seen. My question is why do we need this theory about low interest regimes or QE instead of ascribing it to the impact of a major political, economic, and health crisis?
If supply were the only problem then cutting hiring would would make no sense at all.
Correct. It doesn't make sense where it is happening other than psychology stuff. Tesla laying off people because Musk had a bad feeling is the prime example. It's an asshole's whim. (Edit: Sidenote Business Insider reports that Tesla employees who were let go where snapped up by other tech firms pretty much immediately.) Still for most companies if they aren't having issues they should follow the fundamentals. Additionally the jobs numbers indicate this economy is *hiring*.
Expanding production (and logistics) capacity is the solution to problems only rooted in supply.
The key word is supply chain. The whole system is disrupted. We have a fixed (or slightly juiced) pool of money sloshing around chasing goods that may or may not be available at any given moment that used to have a steady supply. Manufactures are struggling to get raw inputs, importers are having trouble getting product and are paying inflated rates trying to get stable, reliable long-term logistics contracts. For example, we saw importers paying 25-30% above the normal rate to secure yearly transport over the pacific. The importers had to offer a premium because shipping companies have been seeing huge price swings on the spot market because there is no uniform stream of goods and the backlog on the system keeps building.

In any case, what used to be a well-oiled, uniform, and predictable flow of goods isn't current state. Now doesn't resemble the global marketplace we had pre-COVID. It's a huge component of what is going on. When you get your head around it I believe it leads to greater understanding about what is happening in the markets. I don't think pop theories about QE or low interest rates for too long are useless but they aren't the star of the show so to speak.
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Re: The Viral Economy

Post by stimpy »

Jeff V wrote: Fri Jul 22, 2022 3:41 pm
stimpy wrote: Thu Jul 21, 2022 9:25 am
Jeff V wrote: Thu Jul 21, 2022 1:52 am Today, I gave a lady a ride down the street from another place we used to live. I also gave someone a ride in the town I grew up in -- yesterday I was in the vicinity too and tried to make it to a beloved bakery (the last of the old Czech bakeries) but kept getting pulled elsewhere.
Veseckys?
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Re: The Viral Economy

Post by LawBeefaroni »

malchior wrote: Sat Jul 23, 2022 6:50 am The key word is supply chain. The whole system is disrupted. We have a fixed (or slightly juiced) pool of money sloshing around chasing goods that may or may not be available at any given moment that used to have a steady supply. Manufactures are struggling to get raw inputs, importers are having trouble getting product and are paying inflated rates trying to get stable, reliable long-term logistics contracts. For example, we saw importers paying 25-30% above the normal rate to secure yearly transport over the pacific. The importers had to offer a premium because shipping companies have been seeing huge price swings on the spot market because there is no uniform stream of goods and the backlog on the system keeps building.

In any case, what used to be a well-oiled, uniform, and predictable flow of goods isn't current state. Now doesn't resemble the global marketplace we had pre-COVID. It's a huge component of what is going on. When you get your head around it I believe it leads to greater understanding about what is happening in the markets. I don't think pop theories about QE or low interest rates for too long are useless but they aren't the star of the show so to speak.
I'd add touch more nuance in there. It's not just supply chain. Target announced surplus inventory last quarter and got crushed. Likewise WMT. They had goods but not the right goods. The fickle consumer is used to JIT everything all the time. They will chase the good of the moment. We saw that with shortages early in COVID.

Add on energy issues and everything becomes harder to get. Every state of production and shipping becomes a hurdle, even if there are adequate raw materials and labor.



I also think there is a lot of fear in raising interest rates because of all the cycling debt out there. Zombie companies and zombie consumers just living on taking out new credit. When they can no longer get a serviceable debt they will have to face reality. Which means everyone will have to face reality.

Bloomberg wrote:Firms that could once count on virtually unfettered access to the bond and loan markets to stay afloat are being turned away as investors girding for a recession close the spigot to all but the most creditworthy issuers. The fortunate few that can still find willing lenders face significantly higher borrowing costs as the Federal Reserve raises interest rates to tame inflation of more than 8%. With surging input costs poised to eat away at earnings, it’s left a broad swath of corporate America with little margin for error.

The end result could be a prolonged stretch of bankruptcies unlike any in recent memory.
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Re: The Viral Economy

Post by Max Peck »

Where have all the workers gone? Don't blame COVID, economists say
Canada is in the throes of a serious labour shortage, but economists say it's not all the pandemic's fault — it's the inevitable culmination of a seismic demographic shift decades in the making.

"It's the slowest-moving train on the planet. It was predictable 60 to 65 years ago, and we have done nothing about it," said Armine Yalnizyan, an economist and Atkinson Fellow on the Future of Workers. "We knew this transition was going to happen."

The numbers behind all those help wanted signs are startling.

According to Statistics Canada, the unemployment-to-job vacancy ratio — a key measure comparing the number of Canadians looking for work to the number of available jobs — is currently hovering at a historic low in every province. In fact, the ratio is significantly lower now than it was before the COVID-19 pandemic began.

The reason isn't that there are fewer jobs opening up — remember the help wanted signs? It's that there are fewer workers available to fill them. And the reason for that, economists say, can be traced back to the post-war baby boom.
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Re: The Viral Economy

Post by Isgrimnur »

It's almost as if growth at any cost also requires population growth at any cost.

It's almost as if people are the problem.
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Re: The Viral Economy

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Today I met a guy who just moved to the neighborhood. He's a software engineer from Argentina. He works for a large multinational analytics company (you probably know it) and they made him a huge offer to move to the US and fill an open position. He loves Argentina but really couldn't refuse. I guess they couldn't find anyone locally with the same skill set also willing to go in to the office. He has to go a few days a week.
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Re: The Viral Economy

Post by Smoove_B »

Totally sustainable

“For the period from June 29 to July 11, 3.9 million Americans said they didn’t work because they were sick with Covid-19 or were caring for someone with it, according to Census Bureau data. In the comparable period last year, 1.8 million people missed work for those reasons.”
I'm sure it's just lazy workers taking advantage though.
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Re: The Viral Economy

Post by LawBeefaroni »

Smoove_B wrote: Mon Jul 25, 2022 9:47 am Totally sustainable

“For the period from June 29 to July 11, 3.9 million Americans said they didn’t work because they were sick with Covid-19 or were caring for someone with it, according to Census Bureau data. In the comparable period last year, 1.8 million people missed work for those reasons.”
I'm sure it's just lazy workers taking advantage though.
Is that because more people are sick with COVID or more people are able to take time off work when they have COVID (or are caring for someone with COVID)? Are people getting wicker and less able to work? Various combinations thereof?
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Re: The Viral Economy

Post by malchior »

LawBeefaroni wrote: Sun Jul 24, 2022 9:27 am
malchior wrote: Sat Jul 23, 2022 6:50 am The key word is supply chain. The whole system is disrupted. We have a fixed (or slightly juiced) pool of money sloshing around chasing goods that may or may not be available at any given moment that used to have a steady supply. Manufactures are struggling to get raw inputs, importers are having trouble getting product and are paying inflated rates trying to get stable, reliable long-term logistics contracts. For example, we saw importers paying 25-30% above the normal rate to secure yearly transport over the pacific. The importers had to offer a premium because shipping companies have been seeing huge price swings on the spot market because there is no uniform stream of goods and the backlog on the system keeps building.

In any case, what used to be a well-oiled, uniform, and predictable flow of goods isn't current state. Now doesn't resemble the global marketplace we had pre-COVID. It's a huge component of what is going on. When you get your head around it I believe it leads to greater understanding about what is happening in the markets. I don't think pop theories about QE or low interest rates for too long are useless but they aren't the star of the show so to speak.
I'd add touch more nuance in there. It's not just supply chain. Target announced surplus inventory last quarter and got crushed. Likewise WMT. They had goods but not the right goods. The fickle consumer is used to JIT everything all the time. They will chase the good of the moment. We saw that with shortages early in COVID.
Yeah totally agree - that's what I mean when I talk about balance. We had years of steady-ish flows of goods through the economy. It all broke and people are piling into whatever goods they can. Companies can't rely on timely delivery of goods - especially seasonal ones - and can't forecast demand. It's a mess.
Add on energy issues and everything becomes harder to get. Every state of production and shipping becomes a hurdle, even if there are adequate raw materials and labor.
I've mentioned my wife works in chemical manufacturing. The last 2 years have been a nightmare for the industry. I think what is lost as well is so much efficiency goes down the drain. She is constantly working with customers to reformulate products based on what is available. That's time and labor intensive for the lab, QA, and production teams. They can't just throw untested consumer products in bottles with rando components. And its not like that's her only job and getting a job posted has been impossible because it's 'temporary'. Temporary for over a year now that is.


I also think there is a lot of fear in raising interest rates because of all the cycling debt out there. Zombie companies and zombie consumers just living on taking out new credit. When they can no longer get a serviceable debt they will have to face reality. Which means everyone will have to face reality.
It's possible for sure but it seems like for now the majority of companies have robust cash holdings on their balance sheets and are paying out a lot of cash to shareholders. Zombie firms doesn't seem like it'll be a big driver to me. Are there weak firms? Sure but nothing that appears out of the norm...yet.

The real fear IMO is that it's way out of the normal realm of unpredictable. That's driving fear that is causing companies to do self-destructive things which moves the herd...which makes things unpredictable...that part of the cycle isn't great looking.
Bloomberg wrote:Firms that could once count on virtually unfettered access to the bond and loan markets to stay afloat are being turned away as investors girding for a recession close the spigot to all but the most creditworthy issuers. The fortunate few that can still find willing lenders face significantly higher borrowing costs as the Federal Reserve raises interest rates to tame inflation of more than 8%. With surging input costs poised to eat away at earnings, it’s left a broad swath of corporate America with little margin for error.

The end result could be a prolonged stretch of bankruptcies unlike any in recent memory.
Eating away at earnings is one thing but the question being put to a lot of businesses is macro level IMO between should they join the herd and protect that profit margin or bunker down and try to keep scarce labor on the books through the storm.
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Re: The Viral Economy

Post by Smoove_B »

LawBeefaroni wrote: Mon Jul 25, 2022 9:51 am Is that because more people are sick with COVID or more people are able to take time off work when they have COVID (or are caring for someone with COVID)? Are people getting wicker and less able to work? Various combinations thereof?
It's a combo factor (according to the author) - high rates of circulating Covid-19 + vacation season + "labor shortage". The vacation season and labor fluctuation issues are the constant, but the Covid-19 levels (and associated illness) are causing more disruptions.
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Re: The Viral Economy

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There is nearly $1T in estimated zombie company debt, and that's only publicly traded companies. And only debt. That's a lot for the system to absorb.
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Re: The Viral Economy

Post by malchior »

LawBeefaroni wrote: Mon Jul 25, 2022 10:08 am There is nearly $1T in estimated zombie company debt, and that's only publicly traded companies. And only debt. That's a lot for the system to absorb.
I don't quite buy it when just the SP500 aggregate cash balance sheet has $2T in the coffers. Again I think that there are firms that'd have a tough time but at a macro layer this doesn't really register as a top risk. Depending on the severity of the downturn at least.
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Re: The Viral Economy

Post by Isgrimnur »

It's almost as if people are the problem.
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Re: The Viral Economy

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malchior wrote: Mon Jul 25, 2022 10:20 am
LawBeefaroni wrote: Mon Jul 25, 2022 10:08 am There is nearly $1T in estimated zombie company debt, and that's only publicly traded companies. And only debt. That's a lot for the system to absorb.
I don't quite buy it when just the SP500 aggregate cash balance sheet has $2T in the coffers. Again I think that there are firms that'd have a tough time but at a macro layer this doesn't really register as a top risk. Depending on the severity of the downturn at least.
If, say, $500B in debt becomes unserviceable, I don't see cash positive companies willingly bailing out the zombies.

One example. CVNA is a fucking turd. It has a $2.5B market cap and over $3.5B in debt. They have lost money on every car sold. It's a con. If (when) it goes under that's what, $6B wiped out? Drop in the bucket maybe but if there is a cascade across markets as rates go up it's going to be a another massive drag on the "recovery."

There are a ton of these companies out there.
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Re: The Viral Economy

Post by malchior »

LawBeefaroni wrote: Mon Jul 25, 2022 10:39 am
malchior wrote: Mon Jul 25, 2022 10:20 am
LawBeefaroni wrote: Mon Jul 25, 2022 10:08 am There is nearly $1T in estimated zombie company debt, and that's only publicly traded companies. And only debt. That's a lot for the system to absorb.
I don't quite buy it when just the SP500 aggregate cash balance sheet has $2T in the coffers. Again I think that there are firms that'd have a tough time but at a macro layer this doesn't really register as a top risk. Depending on the severity of the downturn at least.
If, say, $500B in debt becomes unserviceable, I don't see cash positive companies willingly bailing out the zombies.
Sure. I however do expect the United States to do so if the system gets systemically unstable. :roll:
One example. CVNA is a fucking turd. It has a $2.5B market cap and over $3.5B in debt. They have lost money on every car sold. It's a con. If (when) it goes under that's what, $6B wiped out? Drop in the bucket maybe but if there is a cascade across markets as rates go up it's going to be a another massive drag on the "recovery."

There are a ton of these companies out there.
Totally on board but I think CVNA is more of an outlier. And the scale is small. The S&P 500 is surprisingly robust considering all the doom and gloom. I think it's confounding everyone.

In any case, capital markets are essentially closed to IPOs and even the SPAC train has left the station. So the pile of crappy companies isn't at least getting much larger. There is definitely a elevated chance companies might wash out. There probably is also some level of risk that there is some black swan credit effect out there. I still don't buy its a top risk though. I think the Fed has bigger problems to work through and are certainly considering the credit market in their worldview.
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Re: The Viral Economy

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China allegedly taking the NBA approach to keep the economy moving in Szenzhen:
The Chinese city of Shenzhen told 100 major companies including iPhone maker Foxconn to set up "closed-loop" systems as it battles COVID-19, according to a document attributed to the local government circulating online on Monday.

While Reuters could not independently verify the document, a notice at a Shenzhen office of oil giant CNOOC Ltd seen by Reuters said that the building would be closed for seven days until July 31, with staff to work from home and continue with daily COVID testing.

A CNOOC spokesperson did not have an immediate comment.

The Shenzhen government did not respond to a request for comment.

Taiwan-based Foxconn said that operations at its Shenzhen facilities were "normal" and that it would follow government guidelines to ensure safe production.

The order attributed to Shenzhen's department for industry and information said that major companies, including BYD Co, Huawei Technologies Co, and ZTE Corp, should minimise entry and exit into the so-called loops.
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Re: The Viral Economy

Post by malchior »

AFAIK they did that in the big Shanghai shutdown. It worked but it means that they've basically locked the employees in a factory. The perks of authoritarianism, amirite?!
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Re: The Viral Economy

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The bars on our prison are personal/family debt and a complete lack of social support.
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Re: The Viral Economy

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Smoove_B wrote: Mon Jul 25, 2022 12:09 pm The bars on our prison are personal/family debt and a complete lack of social support.
But with none of the perks of a COVID bubble.
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Re: The Viral Economy

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Our state job market is back to pre-pandemic levels in the private sector.
New Jersey added 9,800 jobs and its unemployment remained a low 3.9% in June, the state Department of Labor and Workforce Development said Thursday in a sign that businesses and consumers have continued their robust spending despite the highest inflation levels in 40 years.

With the latest job gains, the Labor Department noted, New Jersey has recovered all of the 702,000 private-sector jobs that it lost during the first two months of the pandemic in 2020.

...

New Jersey's job market, like the nation's, has recovered from the COVID-19 losses faster than economists expected thanks to a huge federal stimulus and record low interest rates that put money in consumers' pockets, experts have said.

When the public sector is included, the Garden State through June regained 98% of the jobs it lost during the onset of the pandemic, in line with the U.S.

The state Labor Department said Thursday that New Jersey ended the first half of the year with 96,000 jobs, a pace slightly slower than last year, but still one that would be considered historically strong.
So weird that locally all I see on social media is that that business owners can't find people - no one wants to work. I suspect their pool of workers (1) is dead or (2) has moved on to other job sectors.
Still, financial activities lost 2,700 jobs; professional and business services lost 2,600 jobs; and the construction industry lost 2,200 jobs. And as interest rates rise, making it more expensive for consumers and businesses to borrow money, economists expect the job market to cool.
Interesting times.
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Re: The Viral Economy

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Smoove_B wrote: Mon Jul 25, 2022 2:15 pm Our state job market is back to pre-pandemic levels in the private sector.
New Jersey added 9,800 jobs and its unemployment remained a low 3.9% in June, the state Department of Labor and Workforce Development said Thursday in a sign that businesses and consumers have continued their robust spending despite the highest inflation levels in 40 years.

With the latest job gains, the Labor Department noted, New Jersey has recovered all of the 702,000 private-sector jobs that it lost during the first two months of the pandemic in 2020.

...

New Jersey's job market, like the nation's, has recovered from the COVID-19 losses faster than economists expected thanks to a huge federal stimulus and record low interest rates that put money in consumers' pockets, experts have said.

When the public sector is included, the Garden State through June regained 98% of the jobs it lost during the onset of the pandemic, in line with the U.S.

The state Labor Department said Thursday that New Jersey ended the first half of the year with 96,000 jobs, a pace slightly slower than last year, but still one that would be considered historically strong.
So weird that locally all I see on social media is that that business owners can't find people - no one wants to work. I suspect their pool of workers (1) is dead or (2) has moved on to other job sectors.
Still, financial activities lost 2,700 jobs; professional and business services lost 2,600 jobs; and the construction industry lost 2,200 jobs. And as interest rates rise, making it more expensive for consumers and businesses to borrow money, economists expect the job market to cool.
Interesting times.
The data:
https://nj.gov/labor/lwdhome/press/2022 ... TABLES.pdf

Would have to pull more to see sector comparisons to pre pandemic, might be interesting to see hospitality and health care comps.

Worth noting: nursing homes lost 600 jobs YoY.
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Re: The Viral Economy

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This is a twist:
Inflation is crushing rural America and driving some people to consider moving closer to cities in an effort to ease the financial stress, according to the latest analysis from one expert.

Iowa State University professor Dave Peters has been studying the effect of inflation on people in rural communities as part of the school's Small Town Project. He found that this year alone, expenses for rural Americans had increased by 9.2%, but their earnings only increased by 2.6%.


...
His analysis found it costs rural households $2,500 more a year to pay for gasoline than it did two years ago. At the same time, prices are also rising for health insurance, veterinarian care, and fuel to heat homes.
$2,500 more a year on gas? I haven't spent $2,500 total on gas in the last 4 years combined. I've maybe spent $3,800 on gas in the entire 7 years I've owned my car. That's assuming average gas around $4. Different worlds.
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Re: The Viral Economy

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Ya that sounds about right. I did some quick math and between the two cars it's around 2,700-3,000 more for the year. Figure 25 gallons a week 2.50 a gallon would be 62.50. 4.75 a gallon would be 118.75 a week. 3,250 vs 6,175. And that's with cars that get good gas mileage. :doh:
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Re: The Viral Economy

Post by malchior »

I was going to say lots of folks in rural areas have to make long trips to get even basic household goods. However, I haven't dug in but I wonder if they are also cherry picking into the pandemic where prices were abnormally low.
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Re: The Viral Economy

Post by Octavious »

Ya well even 3x25=75 vs 4.5 x25=112.50. Still around 2k and while we drive a lot I'm sure there are people that drive a lot more than I do. So doesn't seem like a crazy comparison. In some ways we may have been better off Trump winning and everything going nuts. Who am I kidding though? It would just be spun into something else. :P
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