Quote:
Originally Posted by Tyrone Slothrop
Tpm:
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You earlier stated that whatever recession we get out of this, it will be
sui generis, as will be the response to it. I agree with you.
If everything comes to a standstill out of panic or valid fear (worst case scenario), the scene will be a lot like 2008 post-Lehman. Recall the ghost town feel of everything while the market was careening and layoffs were hitting amazing monthly highs?
Fed action won't act as much of a salve this time around in that circumstance. This won't be a mere asset devaluation following a bubble popping, which can be countered with reinflation. This would be an already tenuous Main Street economy pushed into widespread defaults of various kinds (supply chain, borrowing, leases, etc.). It would also imperil a lot of the biggest companies in terms of ability to carry large corporate debt loads they've acquired since 2008.
I think they'll need a Bad Bank in that instance. It'll have to absorb and workout/restructure a shit ton of debt, or bridge debtors through the trough.
In a better case scenario, the market drops like a stone for while, this thing turns out to be manageable, and there appears a buying opportunity for the 50% of Americans who missed the last rally to jump into another one.
