Loading...

Forum

You need to log in to create posts and topics.

general economical situation

Cullen,

It's been said that something always sets the ball rolling on a crisis waiting to happen.   Could it be that the Coronoavirus sets this ball rolling?  Check out this article and let me know what you think:  https://www.nbcnews.com/business/economy/dozen-years-after-2008-recession-different-kind-debt-threatens-world-n1151801

So, has anyone besides me read this article?  I maintain my claim as an economic ignoramus, but I find unsettling comparisons with the 2008-era debt, and the 2020-era debt (whose economy has now been brought to a virtual standstill by an outside crisis).

 

All depends on how long this thing lasts. If it lasts for 6-12 months then the debt issue becomes a huge huge problem. If it passes in 3-6 months then the defaults will be far fewer and businesses will come back online much faster.

So, the outcome here is a healthcare question that leads to an economic question, unikee the GFC which was basically the opposite.

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche

Cullen,

Thx for your honesty.  I have one more request (since I am economically ignorant).  What would be a warning sign (or signs) of the possibilty of a credit freeze-up?

Measures like LIBOR-OIS spread are good measures to keep an eye on. But honestly, once they start spiking it's usually too late. Credit markets are responding at the same time.

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche

Thanks Cullen. I have decided that for now my investment thesis for the foreseeable future is that covid will continue to impede the economy, perhaps not as much as now but still to a significant degree, and therefore that defaults will abound in most industries. If you were in that state of mind, how would you go about investing and protecting your wealth ? Note, it's probably relevant to say that my total asset worth is just a bit more than $1M, so small numbers and not enough scale for some strategies and possibilities.