I read you description of possible adjustments, and all I could think was “bankrupt, bankrupt, bankrupt.” Maybe not every business, but many, which will kill commercial RE and have many other downstream effects.
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Best case scenario - second biggest global economic disruption of the last couple hundred years.
Although, maybe it’s just “least impactful scenario”. I think there are some possibly beneficial or needed changes that might happen, but $80 movie theater tickets is not one of them.
I am in commercial banking. We are granting payment deferrals for retail and hotels, for now. Most banks are doing the same, and as long as banks don’t have to reclassify these loans as criticized (bank jargon for “fucked”), I think they will generally be ok re: commercial real estate.
However, there is a massive market for securitized commercial mortgages. I have no idea how you can defer payments on mortgages that are tied to tradeable securities made up of dozens of commercial properties, and in different tranches. That’s going to be a total shit show.
Commercial buildings in every city in the country, every country in the world, will be boarded up for years.
Shopping mall demolition is going to be big business if the local governments have enough money. A lot of them were already on the brink. If only we could turn them into parks or little wilderness areas.
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Housing seems much more likely.
The word trenches sure brings back fond memories of 2008!
I think commercial RE is fucked, but I think that’s more from the WFH side of this with white collar jobs and the long-term implications.
They will be the arenas for the hunger games.
Definitely something to this. Our company has been trying to get people to work from home forever to shrink our office space cost. Now that it’s been forced on us I can definitely see them trying to keep many of us from ever coming back in.
Not sure if this belongs here or the covid thread but what is the impact of running a 10T+ deficit this year going to be? Tax revenue is going to crater and it seems like we aren’t even close to the end of the bailouts. What, if any, are the likely longterm consequences of this?
One effect is the interest cost becomes a bigger part of the government budget, so future deficits continue to snowball as there is no political will to actually raise taxes or cut defense spending.
In theory, the value of the dollar should go down, which would make US labor more competitive and foreign imports more expensive, reducing the trade deficit. In practice other countries do anything they can to prevent that from happening as they want to maintain trade deficits with the US, so perhaps it is business as usual as long as US shows no intent to default on the debt and no other nation is able to fully replace us as the global economic superpower.
Commodities, stocks, pretty much everything is still going down relative to the dollar so the market is still signalling deflation. People were projecting hyperinflation in 2008 too, but it really isn’t a likely thing in the short term
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Yup and I think the opposite will be true, too. Companies that have been resisting WFH due to fear of productivity losses will realize the work still gets done and they get to reduce their overhead.
A knock on impact (at least in Toronto where my office is) is that there is a ton of small businesses that support the downtown office crowd. Those companies don’t even open on weekends pre-COVID. That industry is going to be completely decimated.
This one reminded me of you guys, lol.
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I’ve got a friend like this. Part time pro bettor full time finance bro. Bought 100k in triple leveraged shorts (net worth 250k). Down 30% on paper.
Yes, but also that demand will still be there to be served in other ways by other businesses.
6.6m jobless claims
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Cant decide if I should lower my 401k contributions from max to 5% to pocket the extra $1k a month. I make a majority of the money between my wife and I but she has job security that’s a near lock (elementary teacher - they are not firing teachers in my opinion). I’m in renewable energy/infrastructure construction. Assuming we keep her income we have about 6 months of expenses in an emergency fund, along with 25k in credit lines available and an HSA that would cover 3 years of deductibles. There’s a chance I might have to help my parents/sister if this continues it’s current path, but hopefully they end up fine. Anyone in a similar situation or have advice?