Bank of America: 58,000 small businesses ask for $6B in loans since 9 a.m | Hacker News Reader

Bank of America: 58,000 small businesses ask for $6B in loans since 9 a.m

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128 pointscmurf193 comments

I don't think people appreciate how many businesses literally go into a death cycle the minute that cash flow is cut by any significant percentage. With this shut down, it's like, 90+% of revenue cut off for entire industries. This is going to trigger a series of defaults and bankruptcies that are incalculable. These SBA loans are a bandaid. They won't prevent massive bankruptcies and economic depression if these shut downs continue for any longer.

The insanity is that people pushing to reopen the economy are being called shills for wall street.

Elite wall street doesn't care when the economy reopens. They are gonna get bailed out by the Fed no matter what, and the worse it is on main street, the more assets they can buy up at distressed prices.

Main street is getting absolutely wrecked right now: barbers, restaurants, mom & pops, etc. Gates can sit in his multi-million dollar compound and talk about how we are gonna have to shut the entire country down for the summer. He is going to be fine, sure. But until he starts talking about how he is helping the average family feed itself he's just an impossibly out of touch elite, and, what is worse, potentially talking his own book.

I think the more substantial critique of this position is that the option to reopen the economy is a fantasy. The notion that we're all going to go out and start going to restaurants again amidst stories of people dying in hospital hallways for lack of medical equipment is ridiculous.

We have already seen the outcomes for countries skeptical of the lockdown strategy, they have paid dearly for it, and the worse is yet to come.

Exactly. I sure as hell am not going out to eat or sending my kids back to school or... anything I can possibly avoid until I feel safe doing so.

This is a public health crisis. You have to fix that to start fixing the economy.

To put this in perspective, NYC is projected to run out of ventilators early next week[1]. That means if you catch it now and need ICU, there's no medical equipment to save you.

Whether government mandated or not, people are gonna stay the fuck home because they don't want themselves or their parents to die in a hallway.

[1] https://www.nytimes.com/2020/04/02/nyregion/coronavirus-new-...

> The notion that we're all going to go out and start going to restaurants again amidst stories of people dying in hospital hallways for lack of medical equipment is ridiculous.

It's not as ridiculous as you think. Most people would just go about their lives and risk the disease because most people will be okay. If people weren't forced/threatened to quarantine, they wouldn't. If the nba season wasn't canceled, people would still attend the games. Same with baseball games, comedy clubs, concerts, etc.

The question is the cost-benefit analysis. What is lost and what is gained via the lockdown/shutdown and whether it is worth it.

Some would go, but I think it’d be a worst case middle ground where activity is slowed enough to keep us in a depression but not enough to slow the growth of the virus

You gotta come to a compromise, a middle ground. Especially since a vaccine is at least 13 months out. We cannot continue this. And the problem with this disease is it's got this asynchronous transmission. It's shutting down entire nations, but not all regions are equally affected. And so, we may get this situation where NYC hits its peak in 2-4 weeks but then Dallas gets their peak in 2 months but then San Diego gets their peak in 4 months but then Phoenix gets their's in October and so on. This is how it's playing out across the globe. You can require masks in public. You can strongly encourage the elderly to stay home. You can shut down public transportation. You can go to 50% occupancy in restaurants and theaters. But you can't commit economic suicide. It will kill more people in the long run than the disease does.

> The insanity is that people pushing to re-open the economy are being called shills for wall street.

I don't know where you're hearing this. I think people generally understand that SMBs are getting fucking wrecked by this.

The argument against has nothing to do with Wall Street. It has to do with there being a pandemic and keeping people away from each other. We re-open too soon, people die and this gets even worse.

We _should_ be talking about how businesses weather the storm. But conversations about re-opening the economy are not simply "do we want to stay closed and help rich people or do we care about the little guy."

> I don't know where you're hearing this.

I've seen this sentiment on Twitter. What happens is that, as with any concept that gets put through that digital meat-grinder, it gets simplified beyond all meaning. In this case people read it as "Republicans are suggesting we should sacrifice vulnerable lives to the economy". And when they see "the economy", they read it as "the rich". "The rich think we should sacrifice our lives for their pocketbooks" is obviously an inflammatory idea, and therefore it spreads. Small businesses never enter the conversation.

Nevermind the fact that big businesses are about to go bankrupt too. The airline industry is in trouble. Deep trouble. The tourism industry alone is huge and completely decimated right now. Disney World is shut down. Universal. Beaches shut down. Entire regional economies are built on tourism, like Florida's. You're putting hundreds of thousands of employees out of work. And even the big businesses have capital expenses and they're not sitting on 6 months worth of savings. They're going to have to make massive and permanent layoffs that will take years to crawl back from.

I think the issue is, a) We reopen early, transmissions rates rise again, we have to go through another shutdown, let's say that's another month and a half. b) We wait an extra two weeks, things reopen, no cascade in transmissions.

In either case, "Wall street" will do fine, in case (a), "Main street" gets extra dead.

(time spans are made up, but the idea that a relapse would be longer I think is solid)

It is impossible to reopen without Taiwan-style temperature checks & mask requirements outside buildings, contact tracing, large-scale testing, and quarantine enforced by penalty of law (with corresponding support systems - get the police to do something useful and bring people groceries). Anything else and we'll be right back in lockdown inside of a month.

Then this is all pointless because it will take years to retrofit everything with that level of testing and tracing and make it useful in some way as well as enforcing isolation. We might as well open up and suffer the consequences until we have herd immunity even if that means a lot of deaths.

It doesn't sound like a particularly tall order to me. Also, the alternative isn't opening up - which is utterly psychopathic and would kill millions - but continue in lockdown until a vaccine is developed within two years.

You’re forgetting the possibility that a large percentage of the US population is already infected and asymptomatic, in which case the shutdown was ineffective in the first place.

We can’t act on that possibility without data.

That's why we should be conducting random tests on samplings of the populations. This would be a statistics problem.

I absolutely agree, but we’re currently SOL.

No, Wall Street will not do fine. There's real risk of a great depression and a series of bankruptcies and massive layoffs.

Wall street, elite wall street, is licking its chops right now. They have direct access to the virtual printing press, and can manufacture money (debt) whenever they want. The more distressed properties become, the better for them.

Individual investors and low level financial industry employees will be hit hard, but that's not who I'm talking about.

Maybe attitudes are changing? I feel like a few days a go a post like yours would have been downvoted to heck.

You should target a different elite for "not helping the average family feed itself" than gates. Actually, he's more altruistic than that. He helps out the dirt poor African farmers who are far more screwed than Americans are.

https://www.gatesfoundation.org/Media-Center/Press-Releases/...

http://content.time.com/time/world/article/0,8599,1844632,00...

https://reliefweb.int/report/world/uk-aid-partners-gates-fou...

https://www.independent.co.uk/news/world/politics/gates-fund...

Gates is being super tone deaf right now. We don’t need a billionaire telling us what to do. For some reason reddit is eating it up.

He even mentioned Microchipping everyone To prove our vaccine status to be able to enter businesses.

> For some reason reddit is eating it up.

From the AMAs?

You don't get consumer demand back to its old levels by flipping a magic shutdown switch while the virus is still growing.

Competition under our current rules has eliminated the ability of most businesses to save cash or have any real buffer, since they'd lose to the ones that ran month to month right on the edge. Pushing to "end the shutdown" to return things to normal there is a false hope.

> Competition under our current rules has eliminated the ability of most businesses to save cash or have any real buffer, since they'd lose to the ones that ran month to month right on the edge. Pushing to "end the shutdown" to return things to normal there is a false hope.

There is a huge difference between having money to cover declining sales over the course of a year or a few and having enough to cover 0% of sales due to government mandate. I wouldn't expect any company to have the resources to be able to survive a complete zero'ing of revenue for any sustained amount of time.

My argument is that restaurant demand was cratering before the government mandates and the businesses were already doomed at that point. Same thing with conferences and the event business. And air travel. Hotels. Etc... The people putting these policies in place are reacting to the disease, but the fault lies with the disease, not the people.

So then we're balancing "the economy is quite fucked anyway, so might as well try to save as many lives as possible" against "some people are going to die anyway, might as well try to save as much of the economy as possible."

I don't think restaurant demand was cratering before coronavirus? Coronavirus will at some point not be so important, either because it will be eradicated (unlikely) or because we'll stop caring (more likely), and treat it like we treated polio in the 50s, which didn't cause economic disruptions the like of which we see today.

It wasn't cratering before the coronavirus, it was cratering before the official response. Same with toilet paper hoarding.

So claims that we can "stop the shutdown" and "reopen" are naive.

No one said it’s going to be a flip of a switch. It will definitely be a prolonged process, but we already saw what 1 month of a shutdown can do. So we have to realize that being 1 month ahead in restarting everything is precious.

Society has to get used to the paradigm that 50% are asymptomatic and can return to the economy, while at the same time compromising for the other 50% that need to stay home and quarantine. This is the new reality to pragmatically restart things.

Your company should still be remote until end of summer. Businesses should re-open with generous time off for anyone that needs it without laying people off.

> Society has to get used to the paradigm that 50% are asymptomatic and can return to the economy, while at the same time compromising for the other 50% that need to stay home and quarantine.

Nobody knows who they are until they get infected (and sometimes not even then, if they don't present much). 50% of the people going back and half of them having problems would still completely overflow all our healthcare capacity and many of them would die.

The perfect plan would be to massively ramp-up the healthcare system capacity as fast as possible and to fit those that need extra attention to our ability to provide it perfectly. The problems with this are manifold:

- The time the professional help is needed is often a week or more after infection and long after they've been contagious, making planning hard.

- Knowing how people interact and congregate and spread the disease is essentially unknowable when people are actually interacting, so the only way to have any semblance of forecasting ability is to prevent interactions.

- Having surplus capacity by 10% doesn't kill anyone. Having surplus patients you can't handle by 10% means deaths, and at a high percentage rate (I wouldn't be surprised if it's 10% of that cohort or higher). As the capacity ramps up, we're also talking about really large numbers. If we can handle 10 million people in the healthcare system, being off my 10% and having 10% of those die because of it is 100,000 people.

- The spread is not even, there will be hot spots that outstrip local capacity while remote capacity is underutilized.

Right now we have people afraid, but we don't have a massive panic so much, depending on where you are. Once a lot more people start dying, and people around you that you know, then real panic will start, and that might make any economic problems we're seeing now look tame comparatively.

But they won't because they would lose out to any businesses that didn't. Almost like competition is really ill-suited to solving public disasters (as well as a lot of other things).

I think the issue is that when most people think of a "bad week" they mean sales are down 20% or 30%. But no, in this case, the sales are z.e.r.o. It's hard to wrap our heads around if we haven't felt it first hand.

What's really kicking a lot of our "main street" business is that they're more or less seasonal. We're very tourist heavy, so revenue spikes in better weather.

So they expect to have reserves for the winter, and this is almost perfectly timed to arrive just as they were expecting business to increase.

They do prepare for lean times. And they've just had 5 months of lean times. This is not only the worst possible moment for this, it's also quickly writing off the summer season where they'd usually be expected to recoup.

That is incredibly difficult to recoup. Small businesses simply don't have a 1-year "war chest".

I like how when this happens to companies it's not their fault, but when it happens to people everyone starts berating them for not saving/etc.

Like. What?

Our economic system is beyond broken if we expect companies to have less fiscal sensibilities than individuals.

In this case it is not their fault. The government ordered people to stay home and shut the economy down. The government is merely compensating business for its own actions, so people may have jobs to go back to when the restrictions are lifted.

In other cases I would totally agree with you. GM never should have been bailed out, and most of the finance companies and banks should have been allowed to go bust in 2008.

Was GM bailed out? I don't think it was... the original company went bankrupt, the government effectively bought it in bankruptcy to preserve jobs (and US car manufacturing capacity), but I though the original shareholders were left with nothing, so not exactly a bailout.

True. The US government spent 51 billion dollars so the new GM could continue to operate without disruption and continue to pay employees and retirees and took a 61% stake that they eventually sold for 39 billion. So the government lost 12 billion plus the time value of money.

The retirees were lucky that the Democrats were in charge. While a republican may have also provided a bail out, they may have forced a true chapter 11 where the retirees’ pensions are reduced to the federal minimum. The new GM would have emerged without the pension liability.

That’s a clever folksy outlook but the real world doesn’t work like that. Businesses take inputs and produce outputs. They’re not in the business of having 6 months of savings.

Then I guess we shouldn't be in the business of bailing them out.

The only way a bailout is acceptable is if we transfer the ownership of the businesses to the workers who actually produce the value.

Laughs in Apple.

that dichotomy isn't helpful. most of us (bottom 80-90% or so), small businesses (~<$10MM in revenue, low-growth), startups (small-ish but high-growth, negative cash-flow businesses) and the like need leeway to take risks. fault or not, it's reasonable to band together to try to keep these consituents, society, culture and way of life afloat through economic arrest.

the wealthy, large businesses and transnational corporations like to play by ruthless financial rules (particularly against the less powerful) and should be allowed to die by those same rules (or at least sacrifice significantly in exchange for help).

I honestly don't care about small businesses. You want my empathy? Create a co-op.

You may not care about the businesses, but do you care about the people who work for them? Do you care about what they produce?

How is the economy going to continue to work when a huge fraction of the workforce is unemployed and a large chunk of production has stopped?

Maybe it's the push we need.

Workers should own the means of production.

To hear this from somebody who works for Microsoft of all companies. It's too good to be real.

You understand that participating in this system is a necessity for survival.

The fact that I HAVE to participate in it to live is why I'm also speaking out against it.

But sure, irony or whatever.

At most small businesses, owners work alongside their employees.

Then they would have no problem making it a coop.

I've removed my original reply as it was posted out of a place of incredulous anger.

It seems obvious to me, that companies and individuals have different needs, goals and options, as they are quite different entities.

> but when it happens to people everyone starts berating them for not saving/etc.

To me, that does not seem to be a universal truth. It also seems to depend on the situation, how expected the situation is, if it could have been avoided at all, and many more.

You seem to be complaining of a double standard while possibly engaging in one.

Many of my progressive friends have complained loudly when companies keep cash. After all, if they can save they can pay workers more or pay more taxes... after all, a company flush with cash must be putting profits ahead of people and damn those greedy capitalists and all that... The truth is many businesses live a pretty thin margins (mine included) and those that can keep large cash reserves (like Apple) are probably best positioned to weather this storm.

Having said that, even though I sympathize with these businesses, I certainly don't believe they should be bailed out either. The fact is there are many incentives to spend cash and not save. This is true for individuals and businesses.

I'm for bailing out if the govt gives ownership of the business to the workers.

If you're not letting the workers most impacted by this to own the means of their work, then your bailout is useless.

This is an opportunity to, peacefully, transfer ownership of the means of production that are getting destroyed right now back to the workers.

Of course.

"You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before."

A lot of big companies keeping cash do it for tax reasons. If they bring the cash to the US it is taxable in the US. They're really just waiting for the government to reduce the taxes on bringing that money back.

The government already did that (Google the "tax holiday"). And US companies promptly used the money to buy back stock instead of investing in US facilities or employees, which is why it is unlikely it will happen again.

The government has actually done it more than once. After the first time companies started saving up more cash in the expectation that it would happen again.

You must be one of those people who believe that "corporate bailout" is straight up cash, and not an equity-secured loan. Because this is exactly what medium and large companies are getting. How would you like it if federal government took, say, a decent chunk of your brokerage account until you pay back its loan with interest?

It's actually a forgivable loan up to $10 million dollars (capped at actual amount of payroll excluding payroll taxes and withholding, utilities, and rent/mortgage for March, April, and May) that is not backed by anything at all. Generally, as long as you adhere to the conditions of the loan, it will be forgiven.

Source: helped my company apply for one of these "loans."

I'm not sure I understand what your opposition is to at the same time keeping employees above water, and preserving their place of work. It'd seem to me that it's the _workers_ who are getting a bailout here, by design, not corporations. In fact companies with more than 500 employees or above certain revenue threshold aren't even eligible.

The OP is railing against corporations (such as e.g. Boeing) which he/she think are getting trillions for free on taxpayer's dime.

I'm not opposed to that idea. In simply saying that your understanding of the CARES Act loans is wrong.

My understanding is there are several different kinds of loans, which is what I've been trying to point out. So it's conceivable that _your_ understanding of CARES Act loans is wrong. Large companies do not get the kinds of loans that can be "forgiven", and government takes equity stake in them to ensure that the loans are paid back. This is particularly chafing to some since equity prices are in the shitter right now.

I'm aware that there are different types of loans in the CARES Act. But the OP was not referring to the large business loans, they were referring to small business loans. And the comment we were both replying to was mistakenly imputing issues with the large business loans to the OP's comments about small business loans. In your parent reply, you were doing the same--stating that large businesses do not qualify for CARES Act loans, which is wrong, but is also not relevant to any of my comments about the small business loans.

They're literally giving away $10,000 in grants to small businesses right now. Grants. Not loans.

But sure.

Small businesses, mom and pop shops. Not large ones you're presumably railing against.

A lot of businesses are very low margin and that’s ok.

Maybe these companies shouldn't have been having those $5 lattes or avocado toasts.

Socialism for the rich, and rugged individualism for the poor.

There's a saying in Russia, or rather a hope some opposition figures voiced, that one day "the fridge will beat the TV", i.e. the economic mismanagement and poor living conditions (the empty fridge) will overpower the TV (full of propaganda) and the people will become disillusioned with powers that be. Alas, so far it has never happened in Russia (the closest was probably 2011) - there's usually just enough money from the exports and more than enough propaganda.

There's hope that the current situation will end when it becomes dire for millions of newly unemployed and bankrupt, and the fridge will too defeat the lockdown insanity.

The fed gonna keep pumping cash, they didn’t run out of ammo yet. In Smb case they may forgive portion of it just again flatten the curve

> These SBA loans are a bandaid.

Why? They're completely forgiven if they keep their employee.s This isn't really a loan, but free money.

And if the situation stabilizes after a few months then the bandaid will have worked. If there’s a year or two or more of recovery than the bandaid will have adequate (perhaps another will be possible, perhaps not' who knows)

I wish anyone would listen :-(

More like a bandaid on a severed artery.

Well, they shouldn’t have levered up as much as they did. Sorry. Maybe the new owners of the business will make necessary changes to run the business lean and not take out as many loans.

Why do you assume that your local restaurant or book shop has taken out many loans? It might simply be operating on a tiny margin.

Plus it’s not unreasonable for someone setting up a restaurant to take out a loan for the initial fixtures and such as they will be intended to be amortized over several years.

Sure, that is fair. My point is that Bank of America itself would never extend loans to these businesses. It must mean there is some fundamental issue with the economics of the business. This is the same Bank of America that was expert in packaging dogshit BBB bonds. The fact that the latest stimulus bill enables these types of loans means a lot of these businesses that do not have a profitable business model will stay afloat. These are malinvestments enabled by the government. Shitty management will never be punished for their incompetence. Don't you want a world where incompetent managers are punished by the market for their incompetence? I certainly do.

Many were probably running ok in steady state but will die due to all their customers vanishing (For endogenous reasons) unless something happens. And their employees will all become unemployed.

It’s the ultimate in liquidity shocks and is an otherwise uninsurable risk excerpt if the whole economynis used in an attempt to fight it. If I took your attitude where should people live: not in California where earthquakes are more likely than the average, nor the Midwest where tornadoes are, nor near an ocean where storms could happen, nor mountains where landslides can happen.

> If I took your attitude where should people live: not in California where earthquakes are more likely than the average, nor the Midwest where tornadoes are, nor near an ocean where storms could happen, nor mountains where landslides can happen.

There are actuarial models that deal with these types of risks. The bigger risk for a bank is if your business model isn't sound.

A business that doesn't have cash flow for bad times is not a business. There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent. This could easily be fixed with regulation to promote this behavior but currently the priority is to take the profits to the owners.

Your local diner probably doesn't have months worth of cash sitting around. They make food, sell it, pay employees and open the doors the next day. That falls apart pretty quickly if people stop buying their food.

One of my favorite bagel shops is barely making payroll during this shutdown, and only because they are heavily innovating how they keep customers.

They are now offering meal kits, so you get a meal for two to four people in one easy go, they started shipping via USPS, and they are doing local deliveries. They make their own in-house butter, cheese and cream cheese so their kits do fairly well.

They are also increasing what other items they are selling, such as adding bread to their lineup. Which is absolutely fantastic.

But it's still hard for them, with the reduction in people coming in and sitting around they don't get people buying a bunch of coffee or having breakfast and then lunch while chatting. They have had to furlough some of their staff, and I really hope they make it through, because another favorite restaurant of mine is going under, they simply can't afford to keep going, even with a loan that would help pay salaries, there are other contracts and payables due that simply can't be covered with enough loans... loans against what collateral?

One of my favorite bread shops is basically in tears on instagram due to this thing. They've tried a few approaches to improve sales but they're basically closing shop for now.

So lay off the employees, have them collect unemployment. What are your operating costs? Really just the lease on the building. So don't pay the lease for a couple months. Who suffers? The commercial real estate holder. What are they going to do? Lease it to another restaurant while your doors are closed? So the commercial real estate investor loses out on some profit and/or defaults on their commercial mortgage payment to the bank. Now who is suffering? The bank! But what happens when the big banks don't get their real estate loans paid? They can always just put loan payments on hold for a couple of months, and instead of making $300 billion in profits that year, they make only a measly $100 billion.

When it all blows over, the small/medium businesses can re-open and re-hire all of the people back again, and they can all stop taking unemployment. Life continues on as usual.

Why should the average person have to suffer so that these big banks can keep charging interest on their loans every month? Why can't we just legally mandate that they have to put the loans on pause and suck it up like the rest of us?

>What are your operating costs? Really just the lease on the building.

My partner made the same mistake talking about a local small-scale brewery. Talking to the brewer, servicing the equipment loan was one of their biggest monthly expenses and their bank called them to tell them to defer payments for several months. Meanwhile, the landlord (actually a local government agency...) has sat paralyzed unsure what to do.

Also, those commercial real estate holders aren't necessarily rolling around in cash either. So while yes, they should have reserves, that doesn't mean they can necessarily go months or years without a paying tenant in place.

For that matter - the bank I mentioned above that did right by the brewer is a local bank. Not every bank is BofA, Wells Fargo, or Chase. Lots of banks in rural America look an awful lot like George Bailey in It's a Wonderful Life.

>There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent

Can you cite such a time when businesses, especially small, could survive in a competitive market without taking on debt and redirecting profits to the business? Because this hasn't been true ever. Small businesses need every edge they can get to survive, and that means not having gold-laden chests lying around waiting the the 100-yearly plague to come.

Accounting 101: balance sheets, cash flow analysis. Those tools were not created to have interesting graphs and tables to look at but to promote and show explicitly what’s going on behind the scenes. I get that a lot of people just invest on their emotions (like-able CEO; must invest!) but what’s actually happening is they are just taking in debt and passing on the risk (while profiting temporarily and leaving the company exposed naked).

I have tons of friends with small business that own 2-3 personal property, all the luxuries and yet officially the business is in shambles (right now). The attitude is “who cares”, they take the money out and spend it on themselves and just fire everyone. They pass on the risk. That money came from greener days and now employees have to file for unemployment. I guess people see this as normal, but it isn’t and it shouldn’t. Tax-payers are now subsiding those unemployment checks while the profit taking already benefited the owners.

This does not describe most businesses, ever, especially not most small businesses.

Small businesses have always lived relatively hand-to-mouth existences, and the "profits" are usually enough to cover the owner's equivalent of a salary.

> A business that doesn't have cash flow for bad times is not a business. There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent. This could easily be fixed with regulation to promote this behavior but currently the priority is to take the profits to the owners.

This may be what we read about publicly traded firms, but small businesses are in a completely different category. For example, many of them, if they do not take loans to improve their offering, will lose customers to the competition.

There is a huge difference between 'bad times' and having your business eliminated by government mandate.

Even during the recession of 2008, demand didn't go to zero. It is insane to expect anyone, business, individual, or otherwise, to be able to go completely without income for any prolonged period of time.

So Nike is not a business? Cheesecake Factory is not a business? TJMAXX is not a business?

No they are just debtors...once they can't service their debt they are simply insolvent debtors whose assets will be foreclosed on.

Those assets are worth pennies on the dollar to a 3rd party and the liquidation process will cut those pennies in half

A little off topic. I find it really weird that journalists have tried to paint this recession in light of other recessions. It feels like apples and oranges trying to compare the two. We've effectively shut the economy off, yet people still act surprised when 6M apply for unemployment. It feels a bit like putting cake batter in an oven and being surprised that you pull out a cake 45 minutes later.

https://www.gocomics.com/calvinandhobbes/1986/03/12

Sorry, what’s the connection here?

Well, it's a similar metaphor to the cake-batter-in-the-oven one that brink provided, both of which are trying to highlight that it's weird to shut off the economy then being surprised that it resulted in greater unemployment, as if it wasn't obvious that one thing would cause the other.

What jolmg said. Plus, it's one of the best C&H strips ever. If it were up to me, I'd share the link in every comment thread.

I must be very naive, but I also don't understand why general lockdown has to have negative consequences. Couldn't we stop most non essential activities for a few months, feed everyone in the meantime (thanks to the work of essential workers), and just start again exactly like it was before the shutdown?

Lots of industries will not be the same for many years. For example people will not be going back to restaurants like they did. Their habits have changed and many people's attitude to being out with large groups of people is going to be changed forever. Same with tourism.

Many workers will drift into different jobs and for other reasons not return to their former employers. All of their institutional knowledge is gone. Supply lines are broken and will not all turn back on at the same time. Many businesses will not recover from that.

Plenty of economic activity will not be covered by the bailouts and those parts of the economy are now dead forever.

This will definitely hasten retails shift to the web. In 2018 the US had 23.5 sq ft of retail space per person. Most countries are in the 2-5 range. We have already been seeing malls closing as things shift online. This shutdown will definitely speed things up.

https://www.businessinsider.com/retail-apocalypse-is-still-i...

I don’t think we have evidence of permanent changes in consumer behavior from this one way or the other?

All these things will be back to normal by next summer. But as far as this year goes, it’s a wrap.

We’ll be lucky if people goto NYC for the holidays this year, visit Rockefeller Center and the tree, Broadway, etc. The biggest tourist spot in the nation is also the epicenter of the virus now.

No, clothing stores already had a difficult time recently. Now most clothing store just won't ever open again. What will they sale next fall. The spring clothes they just bought now?

I guess the same is true for most other shops too.

Why wont they open again? People will still need clothes. Im not sure what has changed?

Why would you think habits will change because of this?

Exactly, especially the cruise industry. It may not even exist anymore after this.

Until there is a vaccine that has proven effective ... wherever there was business where people gather is either cut 50 to possibly 100%.

Personally, I've stopped getting any carry out (food not prepared by me in which I wash hands many times throughout) and do not go into the grocery store rather pick it up, put it away and wash my hands afterwards. Hopefully I'm going overboard but at this point who knows.

FWIW, it's been shown that you can't transmit the virus through food. Your only risk with takeout is the packaging it comes in.

When we get takeout, I unload it outside into our own containers, using one hand to open the takeout and the other hand to handle my own container. For things I can't transfer, I wipe them with a Clorox wipe.

Then everything gets wiped down again inside, just in case.

It's a bit much, but it's been nice supporting our favorite local restaurants in the hopes that they still exist when this is over.

> it's been shown that you can't transmit the virus through food

Link? I've seen several things saying that there's no evidence it's transmitted via food [1] but nothing that rules it out.

[1] "Currently there is no evidence of food, food containers, or food packaging being associated with transmission of COVID-19. Like other viruses, it is possible that the virus that causes COVID-19 can survive on surfaces or objects." https://www.fda.gov/emergency-preparedness-and-response/coro...

This just means that so far we have not identified it as a significant vector. Not that it's not physically possible.

What u say might be true or might not ..too early to tell. Overall for me and I'm sure others preparing ones own food gives more peace of mind.

Not good for those businesses/the industries surrounding it for sure but this is unprecedented times that I believe changes how we use to live and things enjoyed until there's a proven vaccine.

I don't understand. Why do you need to wash your hands but you can't get it through food?

You touch your face with your hands and you can get it through your mucous membranes (eyes, nose). If it's in food though it goes into your stomach which is too warm and too acidic for the virus to survive.

I don't think what you're asking for has ever been done before in human history. But here are some practical problems:

1. We can't just shut off the economy we need enough to keep running build up medical supply production, keep farms and grocery stores running, etc. This isn't a shutdown but also a reshaping. Those amazon warehouse workers will probably stay their instead of going back to their retail jobs, which were already in jeopardy because of market factors against retail.

2. Independently, the financial system needs to keep cash flowing so businesses can afford the essentials. Being in cryo-stasis isn't free.

3. We may have already acted too slow businesses are already firing people and shutting down. Reopening and rehiring may be too expensive for many low-margin business already. Any delays in restarting one sector of the economy will ripple to others.

4. How long can government rack up the debt propping up the economy? How long will the surpluses last in the economy before we start seeing shortages of non-essential goods that aren't being manufactured right now.

5. Uncertainty. How soon after we get the all clear are people going to leave their houses and carry out their normal business? Even counties with no confirmed corona cases and no lock down orders are seeing decreased economic activity from people staying homes. The airline industry started its death spiral well before the rest of the economy. When do we hit the tipping point for enough people to leave their houses that a restaurant is profitable again? Will we have another wave of corona after we complete this round of lockdowns?

I'm just going to address the economic impacts.

Imagine a company that makes small plastic bits (like straws). Despite a crisis, they still have to pay their rent, and their loans. Because no restaurants are buying straws, revenue drops effectively to zero. The company can't stay afloat, and they have to shut down.

Why aren't loans/rent/mortgages just put on pause? Well then the lenders suffer. Why doesn't the government reimburse the lenders? Well then the taxpayers suffer. It's all interconnected, and somewhere along the way someone is going to suffer somewhat.

Back to the plastics company. Their machines are sold off at half price. Money is spent to remove equipment from the store. Employees who have been trained move on to unemployment or other jobs. All of those things represent an overall loss of capital that has been built up (it's not that black and white, but I'm hand-waving it). Once the economy gets going again, the economy is that much smaller. Those jobs don't exist anymore, and it will take a lot more capital to again build up a similar plastics company. If the owner decides to reopen that plastics company, he'll need new equipment, to train new staff etc etc.

On the other hand, an enormous amount of capital is being built up in other ways. Many people are learning how to work remotely. Many processes are being made more efficient (unnecessary meetings).

Taxpayers don't suffer. The gov can simply print the money and hand it out.

Government money does not come from taxes. It's distressing how few people understand that governments with sovereign currencies literally have a license to print the money they need. There is absolutely no need to borrow money, or even to collect it in taxes before spending it.

The ritual of borrowing is a political choice - which, incidentally, undermines democracy by giving a casting vote on policy to lenders, not voters.

It is not an economic necessity.

The proof is the way that bailouts tends to happen whenever the banking system or a critical strategic industry is on the line. For some reason this only applies to selected industries, and not others.

But inflation! No. The government can set up price controls on profiteering. But besides that, this fresh money is there to keep the economy at a steady state - specifically to avoid a black-hole depression.

Sitting by idly while most of your business base is lost on the far side of that event horizon is far more dangerous than any other risk. Especially in this case, when the lockdown is likely to be fairly short - more than three months, but certainly less than a year.

And it's not as if there are no unexplored options for other productive activity, especially in healthcare.

The real danger is the moral hazard - the political realisation that financial scarcity has always been a deliberate systemic political choice, not an inherent property of an objective financial system.

>But inflation! No. The government can set up price controls on profiteering. But besides that, this fresh money is there to keep the economy at a steady state - specifically to avoid a black-hole depression.

This is flat wrong and deeply ignorant of historical economic reality. A government that simply prints (or digitally creates) more money instead of gaining as much as it can of it from reasonable taxes or borrowing will indeed absolutely create an inflationary spiral that can only be stopeed by stopping these activities. Price controls against "profiteering" will do nothing against this except get a large number of people in legal trouble simply for the "crime" of adjusting their prices to reflect wider economic reality (prices for every single one of their won costs and inputs going up for the same inflationary reasons). Black markets would simply explode and any such price controls would simply be ignored under heavy inflation, and especially under the fantastically destructive conditions of hyper inflation. You have no idea what you're talking about with this statement in particular.

Printing money only leads to inflation if you are full employment/resource utilization. Otherwise the money just facilitates transactions that wanted to occur anyways but didn't have the financial capital to do so; you can always hoover the money back up through taxes afterwards without realizing hyperinflation. Why do you think Japan, Europe, China, US, etc. have been able to print such a significant amount in the last 10 years without the corresponding inflation? Why is the US pushing a 2T stimulus bill without worrying about "how will they pay for it" during a credit crisis today?

You can believe that hyperinflation spirals are a possibility or a forgone reality of magic modern monetary debt creation, and people like Ben Bernanke can believe they can fund debt from thin air which is impossible to default on (his words), and you'd both be right, in part. But just because historically there have been monetary policies which lead to hyperinflation, doesn't mean modern monetary policy for the largest economy in the world is poised to relegate said currency to that of anything less than a central fixture of global monetary significance.

The reason why inflation doesn't happen is the same reason why the stimulus exists in the first place.

Restaurants are suffering from lack of customers? Flooding the market with cheap cash doesn't result in people rushing to the restaurants because they are still at home and the restaurants are closed. Only when that inflated money is actually being spent on scarce goods do we get to see inflation.

If the government pays w/o raising taxes then then taxpayer doesn't suffer, the 'wealth holders' suffer (via inflation), which is exactly the correct thing to have happen. Their wealth 'value' was predicated on a smooth 5% annual growth rate. That isn't going to happen so it should just be worth less. No one really suffers in that case, the system is just corrected to match reality.

Of course this isn't what will happen, the value of the wealthy will be protected at the cost of others sufferring.

("But what about my grandma who's CDs aren't going to be able to cover her retirement expenses, aren't they suffering?" Societal safety nets should cover her living expenses. The rest she's saved should go to luxuries, and yes those luxuries will go down, like everyone else's with excess wealth.)

If you get the injection amount right there won’t be inflation because the amount injected will match the amount usually spent. Under the regime of falling demand, we would expect prices to fall (deflation, ie why the stock market has taken a hit) but if you can inject money now and take it out later, there won’t be a rise in total volume of money shuffling around, so no inflationary pressure

Inflation doesn’t really punish all “wealth holders” just those that hold cash and cash equivalents. Real estate and the stock market should benefit from inflation when it is paired with some growth. Stagflation, however, is just bad for everyone.

This isn’t quite true, because you’re taxed on nominal, not real gains. If I own a share of a company worth $100, and the USD drops in value by 50%, but my perfect inflation hedge of a stock (which they’re generally not) shoots up to $200. I’m not richer in any real sense, and the I still have to pay ~30% tax on the increase in value in CA when I sell it.

Better than holding dollars in that scenario, though.

Absolutely, the theory being the other assets will adjust to their correct value on their own (see: stock market plunge), unless they are propped up by bailouts or whatnot.

I am a "wealth holder" who has been working and saving up to buy a house but still can't afford it. So my money should now be worth even less.

Yep! The only way you get around it is if you 'invested' in something that (a) either gets 'subsidized by law' (rent and other contracts falls into this category, until the law changes), or (b) still can be produced and is in demand during the economic shutdown.

Bingo, but that’s kinda the point.

Cash in the short term is probably a fine idea. But low interest rates are meant to encourage deploying capital into risk investments or consumption with the promise of inflation eating your buying power if you hold cash.

Not sure where capital is being destroyed here.

Someone gets great machines for half price.

Someone gets paid to remove the equipment from the store.

That's pretty much exactly the broken window fallacy.

https://en.wikipedia.org/wiki/Parable_of_the_broken_window

The difficulty is in deciding what needs to "stop". Do you "stop" rent payments when those businesses aren't allowed to operate? If yes, do you "stop" loan payments for landlords who depend on rent to repay loans? What about landlords who only half depend on rent for loan payments?

This is why it's an economic problem - it's easy enough to determine which physical activities need to stop to reduce disease spread. It's much much much harder to untangle the interrelated economic activity and decide where pauses should be made. There isn't a clear delineation between people whose economic activities are unaffected, and those who have been brought to a sudden stop.

> The difficulty is in deciding what needs to "stop". Do you "stop" rent payments when those businesses aren't allowed to operate? If yes, do you "stop" loan payments for landlords who depend on rent to repay loans? What about landlords who only half depend on rent for loan payments?

Someone's going to end up getting left holding the bag, and it's going to suck for them, and it's not going to be fair. Life isn't fair. There's going to be edge cases, and those edge cases won't be dealt with correctly, but we can't let the perfect be the enemy of the good.

I think the ROI on letting shuttered businesses keep existing in limbo is better than the ROI on making sure lenders and landlord-owners get paid... Because the businesses, not the lenders are the engines of the economy.

The current approach to bailouts/economic aid does little but funnel government money directly from taxpayers into the pockets of landlords and lenders. It's miles better than letting everyone starve to death, but it's the least good of the options that we have.

> Someone's going to end up getting left holding the bag, and it's going to suck for them, and it's not going to be fair. Life isn't fair. There's going to be edge cases, and those edge cases won't be dealt with correctly, but we can't let the perfect be the enemy of the good.

I think you underestimate how big the edge case of "landlord" is and exactly how that would play out. There are more than 50 million commercial properties in the United States and most of the owners have loans against those properties. If we don't bail them out, those loans don't get paid, and then the bank doesn't get paid, if the banks don't get paid, they gain a bunch of assets that no one can afford and go belly up, which we already decided in 2008 is not an outcome the system can tolerate.

There's no "buck stops here" that doesn't end with lenders because our system is built in such a way that debt is the leverage we use to build wealth. As long as that is the case, we either have to choose between unwinding the system and a hitting rock bottom that may not be recoverable or bailing people out and spreading the cost via taxes and inflation.

Trying to target the pain to a specific class of people is nearly impossible in our system, it is giant and interconnected and someone will profit off of that, and it will almost never be the "little guy."

Why would nobody buy loans that missed/deferred a few monthly payments during a government-ordered pandemic shutdown?

Lenders charge interest on these loans. This interest is earned, because not all loans are expected to pay back in full.

If this were applied across the board, lenders would probably find it far preferable to a complete collapse, where instead of loans that missed/deferred some payments, they found themselves owning a pile of distressed assets, all at once, in the middle of an economic catastrophe.

> Why would nobody buy loans that missed a few monthly payments during a government-ordered pandemic shutdown?

Because it won't be a few monthly payments, it will be a lot of them, and where are the buyers going to borrow the money from? The banks that have no money because of the defaults?

> The lenders get interest on these loans. This interest is earned, because not all loans are expected to pay back in full.

Sure, but it is also not expected that so many will not be paid back either. You can make an argument that the system needs more buffers for black swan events (which have their own costs), and that is totally fair, but we don't have them and now we have to decide what to do.

I say all of this as someone that was "laid off" last week as part of a contingent workforce for a travel industry business that is likely to get a significant bailout from the federal government. Despite that, they will be unlikely to bring back contract labor for a year or more until their feet are under them again. The whole system is connected and is currently failing, the notion that we're going to come back to anything close to normal in the short term is absurd.

Uncertainty:

- People haven't eaten out for weeks. Will they now make up all those missed restuarant meals?

- Expenses might be made up by intervention, might not. Does everyone get a rent break? What will landlords do? Production has got to be lost somewhere. Who eats the loss?

- Will people and businesses change their minds about what they want to buy after the quarantine? For instance, how many people will decide that remote working is a good idea?

Take toilet paper. There are shortages, so people are learning how to do more with less. Be it just being a bit less wasteful with the tp to ordering and installing a bidet. This creates long term changes that will result in an overall decrease consumption of TP. This has an impact on the market.

Now, if that was all there is, then it wouldn't matter much except maybe a few toilet paper factories would got from operating 16 hours a day to 15 hours a day. But this is applying everywhere. People are having to stretch food. People are having to learn how to cook. People are learning the importance of having a bit more saved up and a bit more non-perishables stockpiled. These factors will result in less restaurant eating and more bulk buying (not even counting continued virus fears).

People are learning how to socialize from within their homes without leaving. This is pushing more people into electronic conversations. People are having to get more indoors, or at least socially distanced, hobbies. More people are reading, playing games, and watching streaming tv. This will lead to long term changes in consuming patterns.

People who have never ordered off amazon or the like are now doing so for the first time, and some of them will continue to do so. People are buying games digitally who would prefer physical, and in turn this will lead to more digital purchases even once physical purchases become an option again (well, more of an option, since you can still purchase and have delivered).

Each and every one of these changes the economy. And yes, over time people should reorganize and we should continue to be on our merry way. But until that reorganization occurs, there will be people being let go and the equivalent reorganized position may not be open for a few months. Or it may require a different skill set and people aren't going to be able to adjust as easily.

You are vastly overestimating the human capacity for seeking comfort and getting back to normal.

People with a small amount of savings will be curtailing spending until that savings is back, so I doubt it. This adds a guaranteed lag time to returning economic activity. The only way to fix this is give a free month or two of rent or mortgage payments (and not tacking those onto the end) which is the same as giving them cash. Worst case would be that people feel the need to save more.

This is after you get over any initial caution of going back to crowded places.

Yes in theory.

No in reality. Because of debt. Those forgone revenue cashflows were going to service debt. So a quarter of no business is existential.

Now, could we try to plug that gap with printed money? Yes! Hence the SBA.

Now whether it's possible to actually get than money with less than 30hrs of work filling out forms, I have yet to hear.

I don't understand. Can't we just turn the fuel supply of a rocket off mid-flight and then turn it on six months later and it would just continue on the same trajectory as before?

There's a lot of very heavy stones that'd need to be moved to make that happen. For a good start, you'd need every single bank to just pause every single loan. And to pass that down the chain, every single landlord to stop charging rent. And between these two basically impossible feats, you've solved a grand total of one problem.

I think we'd need to nationalise every single essential good, and the entire supply chain behind it, and then just .. turn off capitalism for a few months. Just go full on communism for a fixed term. Have the weirdest Christmas party ever, and then just start 2021 like 2020 never happened.

I don't want to call it actually impossible. But I rate our chances of forming a single planetary republic - Star Trek style - in time to actually act against this infection, as more likely. And you can be as naive as you like, but I'm sure you can imagine how minuscule a number that is too.

You can, albeit 70%+ retail businesses no longer exist and their former employees don't have jobs.

Freeze mortgage payments/interest, waive rent - there are lots of ways of dealing with this, and most are all about removing any financial return on capital for the duration.

This is the (horrible) idea that just won’t die.

What do you propose that the parties who are due rent/mortgage payments do? Those payments aren’t simply ‘return on capital’ they pay taxes, utilities, insurance, employees.

A lot of people don’t realize that one person’s debt is another person’s income.

You cut down as much of those as possible (e.g. not making people pay utilities, as many countries/localities have done), treating nonessential employees as laid-off and needing government aid like anyone else, adding tax and insurance-premium holidays.

Lots of places have approached this model very closely; there is almost always some little bit that falls through the cracks, but it's doable.

”Insurance-premium holidays“. You’ve got to be kidding, right? Shortly after that you can expect the insurance companies to institute a “claim paying holiday”.

The payment holiday concept is such a poor solution and mainly seems be proposed by people aiming to ‘punish’ those that they perceive as having more than themselves (landlords, banks, etc.) or by ultra liberal governments trying to appease their constituents. I don’t think you really fathom how much damage this would cause in practice. Our whole economy only works if people/companies meet their obligations.

The much, much simpler solution is bottom-up vs some never ending crazy patchwork of bailouts and payment forgiveness. Give the people money via direct payments and generous unemployment so they can meet their obligations.

Sure, but its not free. In the best of cases that means that everyone elses capital/income is diminished in this grand-national subsidy from A to B.

If you give income to a coffee shop that sells no coffee anymore you are spending your coffee money without getting coffee.

What about landlords living off the rent money? Until now it was a nice way to earn a return.

It's news. As obvious as it may be, it's close enough to unbelievable that it's still sinking in for most people.

I live in Western PA and work with people in NYC. Hard to quantify this, but I felt about a week behind New Yorkers in getting serious about it, and about a week ahead of people around me.

Gotta be harder to not see it at this point, but don't count out the inability of people to comprehend big stuff that doesn't happen in their backyards.

Talking to some friends in the mid-west and some less populated flyover states, there is still a very prevalent sentiment that this is all a coastal big city problem.

>yet people still act surprised when 6M apply for unemployment.

we're just at the first stage of grief - denial. 4 more to go.

The article describes this as a lending program, which is misleading. The SBA Paycheck Protection Program straight-up gives free money to cover small business (less than 500 employees) payroll for 2 months. All the business has to do is not fire anyone in the meantime.

"SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities." [1]

[1] https://www.sba.gov/funding-programs/loans/coronavirus-relie...

The main benefit of these loans is to prevent people from going on unemployment.

Which is easier:

- process 300,000 SBA loans with bank employees and get 25% - 50% back

- process 30,000,000 unemployment insurance filings with state agency employees and get back nothing

This whole ordeal has been pretty enlightening. One of the reasons I have failed to jump into something of my own (consulting, start a business, etc.) is because I am constantly thinking about how to survive the worst case scenario, and I can't come up with a fallback plan I'm happy with. It turns out the vast majority of people who have made the leap don't think about this at all, they just go. Not sure if this will change my behavior going forward, just an observation.

With a scenario this immense, I'm not sure you're all that much more protected in a 9-5 'job' vs being a self-employed consultant. I do agree that many folks jump ahead without too much planning for the future, and... sometimes it works out, sometimes it doesn't. I've been burned a few times in the past, and while I am still self-employed, I've become a lot more cautious and reserved in my operations and personal life.

With this kind of scenario, if you have a 9-5 job, you have a very clear transition to unemployment. If you're a consultant... There is definitely government will and intent to help you, but you're a square peg, and the unemployment offices are still figuring out how to best fit you into a round hole.

I agree. As an employee, you assume some of the same downside as the business owner, and little of the upside. If the business fails, you are out of a job. If the business does well, you might get a small raise.

Well, start an antifragile business. Currently it seems to be Zoom and the like, logistics systems (workforce planning, last-mile delivery planning) and similar that are in bigger demand due to job cuts (harder to do all the work with less people).

The thing now people need the most is the thing you can do.

I mean... you can only remain employed because the government offers a guaranteed insurance program for employment, but doesn't for business. There's no real reason why employment is safer other than government subsidies to appease the masses.

I work a regular job and still have the fear of losing an income. For me, the best way to deal with this fear was to focus on generating some uncorrelated income outside of my job.

The perceived safety of a full time job is a fallacy that many business owners rely upon in order to build their businesses.

The banks are doing everything they can to make it a challenge to file for this program. You can't really blame them since it doesn't make sense for them to be lending given that 4/5 of the amount is likely to be forgiven. This should be done through spa.gov or some other government service.

For BOA you're required to have a lending product in addition to a checking account. While Chase first delayed their roll out and now are only offering a call back (with no details as to when or what they will require). I hear similar things about the disaster loans offered by the Government (not hearing back within 3 days) but at least in that case you can actually file an application. What are you supposed to do if you don't have an account with BOA or Chase? You're at the mercy of whether or not the bank wants your loan on their books. I can't see the upside in doing this through the banks other than to make it a logistical nightmare for small businesses - if anyone has thoughts otherwise I would really like to understand.

I think the logic is that banks can much more rapidly deploy money than can the government (see estimates on the regular stimulus check timeline).

The issue for the banks isn't that the loans will be forgiven, that's fine, they still get an origination fee; the issue is they're liable for validating the info you provide on the application, whereby if there's an issue your loan may in fact not get forgiven, and they're stuck with it.

So you're exactly right, if you already have accounts with the right banks, it's easy enough for them to verify and process the loan. But if you're an outsider, it's much harder.

>I can't see the upside in doing this through the banks other than to make it a logistical nightmare for small businesses - if anyone has thoughts otherwise I would really like to understand.

Financial Institutions are set up already to do Know Your Customer (to prevent fraud).

And they have systems/processes in place to file loans through E-Tran (needed to file a loan with the SBA).

You arent hearing back instantly because FIs are completely overloaded with this and modifying existing loans/mortgages for small businesses and customers.

So what would happen if instead of loan forgiveness the US government decided that for all existing contracts it is currently March 31st and will continue to be March 31st for the next 60 days. At that point a lot of things stop Getting but I would assume a lot of things break as well. The closest thing out there to just stopping time.

Title of news article has since been changed to: "Bank of America says 85,000 small businesses have asked for $22.2 billion in loans since 9 a.m."

I particularly like how the article, given its length, was published at 9.15 AM.

BoA seems to be only letting people with some sort of loan product with them apply.

> “We have to focus on the borrowing clients to make sure we can take care of them,” he said.

This sounds like Bank of America is trying to help their clients that are at a default risk to themselves first, which is a bailout for themselves rather than small businesses at large.

BofA sucks. They won’t give you a COVID-19 SBA loan unless you already have a loan in place with them before February 15th.

I’ll remember that the next time they need my money to bail them out....which will probably be this summer.

Selfish effing management.

The loans are first come first serve.

I belive a lot of folks are simply asking in case they need them.

That doesn't make the need any less massive, I'm just not sure what it is.

Who doesnt want free money?

Yet you wouldn't know it based on the stock market. Apperently all of this is "priced in"

The prevailing belief is still that this will only be a several week ‘pause’ on an otherwise strong economy. Most seem to expect a V-shaped recovery.

This is why I'm still putting money into my investing accounts, but not buying anything. If it's anything other than a V shaped recovery, stocks are going to be hammered, and there'll be even more buying opportunities than there are now.

Certainly not a bad time to have some cash.

Economists have sort of walked back from that as a prevailing belief.

The market has crashed like 25%, so yes it is priced in to some extent. Also, small businesses aren't traded on the stock market, so I think it makes sense that the market wouldn't be affected by this. In the long run, small businesses failing probably helps companies like Amazon and Walmart, which are publicly traded.

Yet even the biggest recent dip sent S&P 500 to levels of say July 2017 when all was super rosy. That doesn't represent the whole market of course but markets now don't really reflect the situation very well.

You can't have a scenario when most folks go into super-saving mode and companies like Amazon or Google maintain their profits. Who the heck would advertise with Google for same prices? I already abandoned non-nencessary shopping (basically food & fuel) for at least few months, Amazon will have to feel this too.

Amazon is making bank on delivery and whole foods. They likely have more business than ever, and are increasing their prices (as they should, they're providing a vital service!).

58,000 businesses are about to get free money. Even if they don't "need" the money, they are cashing in on the deal.

Well duh. The stock market represents some of the companies doing perfectly well right now, like 3M, Amazon, Zoom, Netflix, Costco, Walmart, etc.

Also, why should you even expect the airline industry to be valued less when they in aggregate provide a vital service that would be doing perfectly well were it not for a virus. It makes the most sense to hold and not sell, except for the incredibly weak willed.

It doesn't make a ton of sense to heavily discount the value of a company based on what you believe will be a short term global event.

Stockmarket is like 25% below its ATH weeks ago.

Put another way, it's where it was in August 2017. Do you think that's a bit optimistic, to say that the economic prospects for the S&P 500 are about as good as they were in 2017?

The companies they are now are not the same they were in 2017. They have a lot more knowledge, capital, etc.

i.e. Would you say Tesla is more or less capable of building cars today than they were in 2017?

Unless I’m mistaken, Tesla hasn’t yet met the sustained profitability requirements to join the S&P 500.

Do the companies in the S&P have a lot more capital than three years ago? They certainly have a lot more debt. My screeners for companies in great shape in terms of cash reserves vs debt are turning up a pathetically small number of companies.

My point is that looking at dollars purely nominally is not representative of the economy or the value of a company. Apple might have a stock price of 2017 (they don't but for the sake of argument) but the phones they deliver are not 2017, they are state-of-the-art.

Its not like 1 year of no profits turns a company into 0 value, its about the long term prospects.

In the absence of information there is abundant speculation.

I remember Trump’s “parade of CEOs” speech, and how it was a glaring attempt to goose the market at the end of the week. Nothing of substance was announced, but the market shot up 10%. Pure speculation.

The music will stop playing when Q1 earnings are released and then we’ll see a stampede for the exits.

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