Our discussion was if this is 2008 or not. It’s not.
I agree to all of David Rosenberg’s points.
There is a difference though, between a downturn that takes 2 years to recover and a downturn that takes 2 months to recover, I think that what’s happening now falls into the latter camp, even if the downturn deepens.
It is definitely not. It's very different. Possibly worse. 2008 was related to toxic financial assets. The implosion was predictable, it was just a matter of timing. It was also a matter of how widespread the effects are. But the malaise was clearly defined.
The COVID-19 (or whatever we call it) pandemic is an exogenous total surprise. It isn't the freezing of finances and credit, it is the freezing of ACTUAL ECONOMIC ACTIVITY AND PRODUCTION. Furthermore, there is still so much that is unknown about it. It is potentially much more damaging than what we saw in 2008.
Back in 2008 there were those who were advocating no Fed action, allowing for creative destruction to clear the system through tremendous short-lived pain. The power that be chose to avoid the real pain and kick the can down the road. Yes, certain institutions that might have been deemed insolvent if forced to mark-to-market were saved, and the banking world is more stable now, but it all came at a cost that will have to be paid at some point. It was a financial problem caused by toxic financial assets and "solved" with financial tools.
The current events don't stem from financial toxic assets, but from real-world dangers that don't discriminate based on wealth or liquidity. The effects of the supply chain are very real. And there is no end or solution in sight (are you following the DDF COVID-19 thread?)
So when the Fed fired their first round of artillery this morning, markets weren't sure what to make of it, first up, then down, then up again. Bottom line seems to be that any upside is based on speculation of Fed easing (first by dropping short term rates, and then by bringing in the heavy artillery, probably some kind of a new economic atomic bomb the likes of which haven't been seen before). However what can any of this do if factories and schools are shut (or operating at significantly reduced levels). If global freight transport is down. If global travel is down, and none of those due to lack of liquidity or cash?
ETA: Just saw the following Tweet. Look at it and the replies.
https://twitter.com/PuffDragon11/status/1234601774377390080