Coronavirus Economics/Finance
- Thread starter groveChuck
- Start date
There's some politics involved but it mostly addresses Krugman's "broken windows" nonsense.
https://www.aei.org/economics/paul-krugman-a-broken-window-equals-economic-strength/
https://www.aei.org/economics/paul-krugman-a-broken-window-equals-economic-strength/
ahalpert
Major Contributor
I dont know, man. Until you posted those links below, you didnt say an actual thing about economics. Just ad hominem attacks against Krugman and myself. Zero discussion of the substance of what he wrote, which was neither political, controversial, or counterintuitive.
I read everybody. I read Forbes, the Economist, Business Insider, Fox News. I dont care where information comes from. I only care about its logic and if it makes sense.
I tried to read the links you posted. I only made it about 10 paragraphs into each.
Both started with a lot of name-calling and very little technical analysis. They followed it up with a good dose of gold-buggery ("unbacked currency"). But the real issue is that neither one seemed to understand the nature of a demand shock.
When I talk about Keynes vs Friedman, I'm thinking mostly about their views on austerity.
Friedman believed that austerity could he expansionary during a recession because if the government balanced its budget, it would inspire confidence in business which would lead to investments and growth. His theory was soundly disproven by the great recession because countries that imposed harsh austerity had brutally slow recoveries and protracted unemployment. I can pull the charts if you like.
Keynes wrote that, "The boom, not the slump, is the time for austerity at the Treasury." In other words - the government should inject stimulus during a recession to boost demand. It should balance its budget during economic expansions so it can afford to raise aggregate demand during a demand shock.
The economy is like a perpetual motion machine. If the gears get gummed up, it needs to get moving again.
An oldie but goody.
https://seekingalpha.com/article/189...mans-fallacies
There's some politics involved but it mostly addresses Krugman's "broken windows" nonsense.
https://www.aei.org/economics/paul-k...omic-strength/
Wow. It's hard to know how to react to something so stupid, when the views of Keynes (and by extension Krugman) are misrepresented to the point of being the exact opposite, and then smugly attacking that straw man, all the while ignoring documented facts plainly visible to all. Because it's not like Keynes views are somehow obscure, so I don't understand how one can breezily assert something that's contradicted by the nearest google search by anybody, let alone refuted by a degreed economist. Somehow Keynes is accused of having the exact same policy recommenations as John Law from centuries before - when that was emphatically not the case. John Law created inflationary bubbles - Keynes specifically recommended spending not to inflate during a bubble, but to prevent a deflationary spiral (Great Depression). That's like saying that Keynes was a proponent of the wild speculation that led to the Great Depression (the John Law accusation) - the exact opposite was true, because Keynes recommenation was to *stop* speculative inflationary bubbles by taxation and spend only to get out of deflation. The. Exact. Opposite. What in the world is this insanity?? Then the seekingalpha guy goes on to cite Krugman - who in the cited text is referring approvingly to Summers - "And as he also notes, in this situation the normal rules of economic policy don't apply. As I like to put it, virtue becomes vice and prudence becomes folly. Saving hurts the economy - it even hurts investment, thanks to the paradox of thrift. Fixating on debt and deficits deepens the depression. And so on down the line."" Oh, the humanity, and a huge LOL! This cite is meant to discredit Krugman - and it was written in 2013, proving that the oldie is not goodie, but baddie, insofar as time has yet again vindicated Krugman and clowned his critics. Because the exact thing that Krugman outlined is exactly what happened. The aftermath of the 2008 crash and the current COVID-19 economic crash both show that in spades. The only way a world-wide depression was avoided was by massive liquidity injections, not by austerity measures and we have proof of that in smaller markets by contrasting approaches of market localities which opted for some measure of austerity vs spending to get out of the deflationary spiral. And guess what - reluctance to spend by consumers and businesses built on itself in the aftermath of the 2008 crash had exactly the effect Krugman (and Keynes before him) predicted - the severe danger of deflation (see: The Great Depression). Meanwhile, the deficit spending has NOT lead to hyperinflation as predicted by Krugman's opponents, and Krugman was exactly right again - debt levels which were already insane since 2000 joined by criminally irresponsible budget deficits and now levels of debt that are historically off the charts with spending like drunken sailors all on borrowed and printed money... and what do the interest rates do? do we have hyperinflation? NO, we have the lowest interest rates historically wherever you look - the bond market or even the mortgage rates which hover barely above zero. Krugman FOR THE MF'ING WIN! Massive, massive own of his critics... by reality. It's there for anyone to see. And it's been going on for decades, punctuated by the crashes.
The AEI article is basically incoherent, amounting to not much more than personal insults and such extensive strawmanning that we now have a world-wide straw shortage. It's not even worth refuting as there's nothing coherent to even refute.
And this is the best Krugman's critics can come up with? Holy Moses.
https://seekingalpha.com/article/189...mans-fallacies
There's some politics involved but it mostly addresses Krugman's "broken windows" nonsense.
https://www.aei.org/economics/paul-k...omic-strength/
Wow. It's hard to know how to react to something so stupid, when the views of Keynes (and by extension Krugman) are misrepresented to the point of being the exact opposite, and then smugly attacking that straw man, all the while ignoring documented facts plainly visible to all. Because it's not like Keynes views are somehow obscure, so I don't understand how one can breezily assert something that's contradicted by the nearest google search by anybody, let alone refuted by a degreed economist. Somehow Keynes is accused of having the exact same policy recommenations as John Law from centuries before - when that was emphatically not the case. John Law created inflationary bubbles - Keynes specifically recommended spending not to inflate during a bubble, but to prevent a deflationary spiral (Great Depression). That's like saying that Keynes was a proponent of the wild speculation that led to the Great Depression (the John Law accusation) - the exact opposite was true, because Keynes recommenation was to *stop* speculative inflationary bubbles by taxation and spend only to get out of deflation. The. Exact. Opposite. What in the world is this insanity?? Then the seekingalpha guy goes on to cite Krugman - who in the cited text is referring approvingly to Summers - "And as he also notes, in this situation the normal rules of economic policy don't apply. As I like to put it, virtue becomes vice and prudence becomes folly. Saving hurts the economy - it even hurts investment, thanks to the paradox of thrift. Fixating on debt and deficits deepens the depression. And so on down the line."" Oh, the humanity, and a huge LOL! This cite is meant to discredit Krugman - and it was written in 2013, proving that the oldie is not goodie, but baddie, insofar as time has yet again vindicated Krugman and clowned his critics. Because the exact thing that Krugman outlined is exactly what happened. The aftermath of the 2008 crash and the current COVID-19 economic crash both show that in spades. The only way a world-wide depression was avoided was by massive liquidity injections, not by austerity measures and we have proof of that in smaller markets by contrasting approaches of market localities which opted for some measure of austerity vs spending to get out of the deflationary spiral. And guess what - reluctance to spend by consumers and businesses built on itself in the aftermath of the 2008 crash had exactly the effect Krugman (and Keynes before him) predicted - the severe danger of deflation (see: The Great Depression). Meanwhile, the deficit spending has NOT lead to hyperinflation as predicted by Krugman's opponents, and Krugman was exactly right again - debt levels which were already insane since 2000 joined by criminally irresponsible budget deficits and now levels of debt that are historically off the charts with spending like drunken sailors all on borrowed and printed money... and what do the interest rates do? do we have hyperinflation? NO, we have the lowest interest rates historically wherever you look - the bond market or even the mortgage rates which hover barely above zero. Krugman FOR THE MF'ING WIN! Massive, massive own of his critics... by reality. It's there for anyone to see. And it's been going on for decades, punctuated by the crashes.
The AEI article is basically incoherent, amounting to not much more than personal insults and such extensive strawmanning that we now have a world-wide straw shortage. It's not even worth refuting as there's nothing coherent to even refute.
And this is the best Krugman's critics can come up with? Holy Moses.
ahalpert
Major Contributor
"The Pandemic Has Brought New Money to Hollywood
The pandemic has put studios in a bind. They need money to make movies, but their budgets keep getting larger and larger. Insurance against coronavirus is pricey, and to cover those kinds of costs, Hollywood is taking on new investors..."
https://nofilmschool.com/new-movie-financing
The pandemic has put studios in a bind. They need money to make movies, but their budgets keep getting larger and larger. Insurance against coronavirus is pricey, and to cover those kinds of costs, Hollywood is taking on new investors..."
https://nofilmschool.com/new-movie-financing
Dante Yze
Member
I wonder what is going to happen to real estate markets in 2021. Especially talking about European locations. Some experts say that the prices are going lower this year but I am sceptical about that because the same experts said that stock market would crash because of pandemic and it didn't happen. If I was sure of that I would definitely buy some apartment in Alicante, Spain. They say that this is a most profitable purchase as an investment.
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NorBro
Major Contributor
Just like almost anything else, real estate is always fluctuating. If people aren't buying properties, prices decrease as most cannot afford to sit on them.
As far as the pandemic and how it has specifically affected real estate, it has been great for some areas and terrible for others.
As far as the pandemic and how it has specifically affected real estate, it has been great for some areas and terrible for others.
Low interest rates effect the higher priced enclaves - you Manhattans and your Beverly Hills - simply because there's more money to be saved on financing. Subsequently, the market driven price hikes create additional "price momentum", as someone could make money by simply flipping properties. This cycle can last anywhere from 18 to 36 months, depending on a whole lot of variables.
The same easy credit policies are a temporary boon to other industries where financing plays an important role, among them automobile and the financials.
The next cycle depends on a central bank but, at some point, bad debts have to written off even as a central bank keeps destroying its country's currency. At some point, the winding down cycle ends and normal operations can resume. Or one can sit on bad debt without funds to repay it with what is known as "zombie companies". Japan and the US are full of them. By the same token, Nikkei is still a third off its 1989 high.
The same easy credit policies are a temporary boon to other industries where financing plays an important role, among them automobile and the financials.
The next cycle depends on a central bank but, at some point, bad debts have to written off even as a central bank keeps destroying its country's currency. At some point, the winding down cycle ends and normal operations can resume. Or one can sit on bad debt without funds to repay it with what is known as "zombie companies". Japan and the US are full of them. By the same token, Nikkei is still a third off its 1989 high.
Liam Hall
Veteran
It's not an area I work in but I know people making a fortune doing virtual tours as Covid means no site visits for potential buyers.
JPNola
Veteran
"fortune" being relative, I suppose.
I find it hard to believe that any realty business is going to pay my $1200-$1800 a day rate for myself and my camera package to document the interior of a property on video, if they out-source that task at all. Likely they'd choke upon hearing any quote much over $500. "but my cousin's husband owns a Canon 5D and he did it for only $150! How come you are so much more??".
rob norton
Veteran
You're right, they wouldn't but the successful real estate shooters make their money through a ridiculous volume.
I think the 5d hack days are pretty much gone. Those serious about it are using an a7siii with a gimbal and doing some pretty impressive things.
By impressive I don't mean hollywood movie quality but what can be done with one person running through a bunch of rooms in minutes - impressive for the people using the videos.
- http://www.youtube.com/watch?v=JtgkmY6QAMg&t=1m34s
In short, you're not the right guy for real estate and the real estate shooter isn't going to replace JP.
JPNola
Veteran
Even more impressive is where they shoot the interior on a 360 camera and you can "walk around" / "look around" inside the home virtually.
As a career professional, what is most impressive about either method- mirrorless on gimbal or 360 camera- is that cameras can now shoot those interiors without needing any supplemental lighting. It used to be that there was no way to shoot an interior without video lighting added, unless that interior had an exceptional abundance of natural light. To do those sorts of interior shots we used to have to pump a 1200w HMI into the room and even then it wasn't always enough additional light to produce proper exposure. Lighting has become much, much easier today as a result of the increase in camera sensor sensitivity. So easy at times, such as in the example linked above, that there is no supplemental lighting at all to be executed.
As a career professional, what is most impressive about either method- mirrorless on gimbal or 360 camera- is that cameras can now shoot those interiors without needing any supplemental lighting. It used to be that there was no way to shoot an interior without video lighting added, unless that interior had an exceptional abundance of natural light. To do those sorts of interior shots we used to have to pump a 1200w HMI into the room and even then it wasn't always enough additional light to produce proper exposure. Lighting has become much, much easier today as a result of the increase in camera sensor sensitivity. So easy at times, such as in the example linked above, that there is no supplemental lighting at all to be executed.
Liam Hall
Veteran
They mainly use 360 cameras and do commercial property. I know he quoted over £5000 for one medium-sized office block. It would have been a day to shoot and a couple of days to process. Not a fortune, but money for old rope...
Liam Hall
Veteran
That's what I'm talking about, which is why I said virtual tours.
As I said, it's not an area I work in but I did make a little marketing film for a mate of mine (two-hour shoot, one day edit, £1500). This was the property that had the £5000 quote for a virtual tour I mention above.
https://vimeo.com/470335323
ahalpert
Major Contributor
yes, but every corner of the industry has a high end. similarly with wedding films - I'm sure iPhones will dominate the low end. but for anyone making decent money in the field, it's a no-brainer to invest the extra $10-20k in mirrorless cameras, lenses and rigging to kick things up a notch, especially as the costs amortize well across hundreds of weddings over several years (even more weddings and years for the lenses). I'm sure it's the same in real estate, especially since the extra 10-50% in deliverable quality merits a 2-4x increase in your rate (which is probably more or less true in every corner of the industry)
Dante Yze
Member
For the last 6 months I have been listening to tales that stock market is a bubble which will burst relatively soon. But it doesn't happen for some reason. What do you think when it is gonna happen (if it ever does)?I think this is why the stock market is peaking:
"Americans saved a stunning $3.2 trillion in July..." (Politico)
The whole stock market is worth about $35 trillion. So, assuming that a significant portion of savings go into stocks, it's enough to cause record rises. Crypto market also rose seriously. I bought lots of coins and now stake them. That is pretty profitable
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ahalpert
Major Contributor
I have no idea. I have no idea what the "inherent" value of a stock is. I don't think it has one since the value depends on how many people want to buy it. If nobody pulls their money out of the stock market, then the values will stay where they are or go higher.
And there are huge macro factors at work that drive these trends. If interest rates go up, the guaranteed yield from a savings account may entice people away from stocks. If bitcoin collapses for some reason, people may need to sell stocks to cover those losses.
Maybe as the pandemic ends, people will sell stocks and take profit so they can party like there's no tomorrow. Or to finance the cost of buying a home at these inflated prices.
But it does seem like the federal government is loathe to allow a correction in stock prices, which in and of itself could mean that the bubble never ends. Or that it gets bigger than anyone possibly imagined before it bursts. Let me go find my crystal ball...
Peter C.
Veteran
What's currently driving the stock market is the government has been pumping large amounts of cash into everyone's hands. If you hold cash you will lose money with virtually 0% interest factoring inflation. Stocks are the easiest place you can put your money in. The only other option is real estate but that's more complicated. This is the reason the stock market continues to go up despite being over valued. A serious correction could happen at anytime because their is nothing holding up the price but this buying pressure. I recently took profits because I believe a crash could happen at any time.