Supply, demand and a scary mountain of debt: The challenges facing IT as COVID-19 grips the global economy

If The Register's readers are anything like its writers, Monday is not the most cheerful morning of the week. We might console ourselves with the thought that if the weekend was a blur, perhaps last week was a dream. Sadly, it was not. The worst day on financial markets since 1987? Real. The US stopping flights from most of …

[Youngone]

Re: The NEUKlearer Option ..... in Derivative AI Futures Markets in Support of Quantum Leaping

I think amanfromMars1 may have almost got the hang of English.

I understood quite a lot of his post this time. Amazing.

[Julz]

Re: The NEUKlearer Option ..... in Derivative AI Futures Markets in Support of Quantum Leaping

The AI is learning...

[phuzz]

At least a lot of IT jobs are just as easy to do from home as sat in the office, so there's no talk of shutting my employers down. In fact, what with helping all our clients rush to get VPNs and soft phones running, I wouldn't be surprised if we have quite a good month or two.

I'm just not sure how it's going to work for companies that (eg) set up trade shows, and if they can't make money, they probably can't pay their IT supplier...

[The Oncoming Scorn]

Already Started Alas

A friend of mine in the promotions\exhibitions trade, has already lost his job.

[phuzz]

Re: Already Started Alas

My brother has too, although it's formal redundancy so at least he'll get some final pay.

[whitepines]

they probably can't pay their IT supplier...

That right there is the problem. I'm increasingly concerned this will cement Slurp and co. and help drive anyone smaller to the wall.

Worse, the effects will be delayed. Normally I'd say start polishing CVs, but this time I'm thinking start looking at career shifts. Problem is I don't know where IT folk would fit in a new career.

[Anonymous Coward]

I forsee...

Many, many more jobs going offshore as a result of this.

We (IT staff) are going to be extinct here within 5 years.

If you can get out, do it now. Don't wait. Take the exit door on your terms

If you are sent home on no pay, use the time you would be otherwise working to develop a new skill.

I did that after the 2008 debacle.

I'm now a full time author. 16 books to my name so far. Not a huge income after Amazon takes its 30% (see Apple aren't the only one but I could have signed up for their 70/30, 70% to them deal).

[Michael Wojcik]

Re: I forsee...

We (IT staff) are going to be extinct here within 5 years.

Yeah, that's what they were saying in 1985, too. Still waiting.

[NonyaDB]

"The leader of the free world dumbly in denial over the basic scientific facts of the worst public health crisis in a generation? Opinions vary."

And [CLOSE TAB] without bothering to read rest of this "analysis".

[BigSLitleP]

Yet you still came in here and made a comment on your closed tab......

[Anonymous Coward]

Cultists really don’t like it when you criticise their leader.

[Michael Wojcik]

And [CLOSE TABMIND] without bothering to read

FTFY. HTH. HAND.

[Anonymous Coward]

Reality Check

US is the worlds THIRD largest economy, after the EU and China. It is not really the source of the worlds tech, it only thinks it is.

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)

Their economy is puffed up by debt, loading students with debt is borrowing from the future. Government debt is borrowing from the future. Loading up sick people with medical debt they cannot afford to pay back, is borrowing from the future.

Republicans cut taxes for billionaires. It was supposed to trickle down, it didn't. Annual deficit practically doubled $600 billion to $1.2 trillion, that would be 6% GDP growth if it made its way into the economy. It didn't. Turns out billionaires had all the money they could ever need. Who knew??!! Only everyone knew, including every Republican signing the tax cut.

That extra borrowing is supposed to be paid for by the future children already loaded with student debt and propping up existing treasuries. How? Billionaires won't pay taxes and won't be repaying the debt borrowed to fluff them, the rest of the economy has to cover that debt.

Republicans get 2.9% growth that year, it falls down to 2.1% by end of the year. i.e. well below 6%. THEIR FUCKING FAKE ECONOMY IS IMPLODING. Perhaps it was dumb to attack your major customers, and your largest suppliers when you're running a huge deficit?

April 2019: Trump appoints trumpettes to the Federal Reserve board. One is a Restaurant manager who set up a PAC to help Trump get elected. Quid-pro-quos all round!

https://www.npr.org/2019/04/06/710712202/trump-picks-partisan-nominees-for-apolitical-federal-reserve

March 2019: No surprises China reduces its investment in US debts. May, the 10 years treasury bond auction is dismal. People don't want that junk bonds from a Trump stuffed Federal Reserve!

https://www.reuters.com/article/us-usa-treasury-securities-idUSKCN1SL2U4

Nov 2019. Federal reserve steps in an buys up government debt with magic funny money. Warns it cannot continue like this.

Funny Trump money is flowing! What could possibly go wrong! Trump Atlantic City Junk Bonds here we come!

Jan 2020: Covid 19 hits. The Federal Reserve goes into frantic money printing mode, it buys up a shitload more government debt, it buys up distressed stocks at face value, the money presses cannot keep up there is a FUCKING TSUNAMI OF DOLLARS FLOODING THE USA!

You get a billion and YOU GET A BILLION and YOU GET A BILLION, BILLIONS FOR EVERYONE!!

Now it made money free as of Sunday, Fed targeting 0%. TOILET PAPER IS WORTH MORE THAN THE DOLLAR!

But the USA is too big to fail right? It's the worlds biggest economy? With rock solid debt? Nah. It's the worlds third biggest economy with shaky unsupportable debt.

[Doctor Syntax]

Re: Reality Check

"loading students with debt is borrowing from the future"

The US doesn't have a monopoly of that, I'm afraid.

[A-nonCoward]

have you seen Japan's? Re: Reality Check

Years agom I looked at Japan's Debt/GDP, made the US look like responsible adults.

Scary. Haven't looked at it again, denial is better for my nerves.

[Anonymous Coward]

Virgin

Peter Norris, the chairman of Virgin Atlantic, is calling for a £7.5bn bail-out.

Is he now? Seems to me they already had it when they sued the NHS for millions just a little while ago. I sincerely hope they tell the bearded twat to fuck off and die.

[BebopWeBop]

Re: Virgin

Cheaper to buy them when they go bankrupt.

[macjules]

Re: Virgin

Never trust a virgin, they always cry when you bail out.

[amanfromMars 1]

Re: Virgin and Boeing Bong Gone

Can you imagine the dread panic at Boeing nowadays?

So, no, nobody in their right minds should give Boeing even one penny in "short term aid". Instead, management and the board should be ordered to sell as much stock as they need - you know, the opposite of buying it back - to maintain the business, even it means sending the stock price crashing far lower.

Because it's called capitalism, and because there is no reason why taxpayers should foot the bill for a company which instead of saving cash when times were good, was handing it out to shareholders and a handful of executives, and which should now for some insane reason be eligible for a bailout when times suddenly go bad.

That makes sense. Is there anybody out in the market anxious to purchase or support a Double Whammy Zombie Ponzi Vampire Squid which leaves you with all the bills and expenses to be paid as they play ?

[Doctor Syntax]

"The fear then is that a lack of liquidity leads to another credit crunch. Instead of the 2008-09 crash warning companies off debt, they have become addicted to cheap interest rates and built up a mountain of it."

It's not surprising. Back in 8/9 governments were so terrified of the consequences of their low interest bubble that they didn't dare burst it. Their response was to keep interest rates low and print money - disguised by inventing a new term, quantitative easing. So instead of fixing the problem they kicked it further into the future and we're now in that future. Businesses did just what governments wanted them to do and they're now worse off than ever. Let's hope that this time a tiny smidgeon of sanity ans some of the worst excesses line leveraged buy-outs far into the future.

[A-nonCoward]

graph data looks odd, am I missing something?

here's the data from the FRED horse mouth:

Delinquency Rate on All Loans, All Commercial Banks

or

Delinquency Rate on All Loans, Top 100 Banks Ranked by Assets

https://fred.stlouisfed.org/series/DRALT100N

neither looks anywhere like what is in the article. Defaults in 2003 were nowhere as big as the other peaks. And why 4-year old data?

here a bunch of info on debt vs. GDP, not just for USA but also for others:

https://fred.stlouisfed.org/searchresults/?st=debt%20gdp

[Palpy]

Re: graph data looks odd, and I see what you mean.

The only obvious thing I see is that the FRED graphs seem to indicate all debt, whilst the one El Reg posted appears to be labeled as corporate debt only. The early 2001 recession followed the collapse of the dot-com bubble in 2000, didn't it? Would that suggest that a plethora of corporate defaults -- a bunch of failed internet start-ups, I guess -- show up on the El Reg trend, but on the FRED trend they're not as prominent because in that particular recession there were not a lot of non-corporate debt defaults?

I think my suggestions here are stretched damned thin. Tom Waits, playing the devil, delivers a great line in The Imaginarium of Doctor Parnassus: "Ooohhhh, I think that's a very unlikely hypothesis."

Somebody has to have a better explanation.

[Julz]

Hindsight

"There's a real tendency in the human condition to feel that if you don't know what to do, standing still is going to keep you stable. That is not the case; the situation is evolving around you and it's entirely possible in some situations that doing nothing can be more risky than doing something."

It is also always possible that standing still is exactly the right thing to do and that doing something is the incorrect response. The buggeration is that knowing which is which is tricky. Looking at what is going on in my neck of the woods would lead me to the conclusion that the human condition is exactly the opposite of what he thinks and that the majority are happily going about just doing something, anything, so that they feel like they have some control. Even if it is as bizarre as buying up all of the available toilet tissue.