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.
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.
This is a public health crisis. You have to fix that to start fixing the economy.
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-...
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.
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'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.
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)
Individual investors and low level financial industry employees will be hit hard, but that's not who I'm talking about.
https://www.gatesfoundation.org/Media-Center/Press-Releases/...
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...
He even mentioned Microchipping everyone To prove our vaccine status to be able to enter businesses.
From the AMAs?
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.
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."
So claims that we can "stop the shutdown" and "reopen" are naive.
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.
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.
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".
Like. What?
Our economic system is beyond broken if we expect companies to have less fiscal sensibilities than individuals.
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.
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.
The only way a bailout is acceptable is if we transfer the ownership of the businesses to the workers who actually produce the value.
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).
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?
Workers should own the means of production.
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.
> 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.
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.
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.
"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."
Source: helped my company apply for one of these "loans."
The OP is railing against corporations (such as e.g. Boeing) which he/she think are getting trillions for free on taxpayer's dime.
But sure.
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.
Why? They're completely forgiven if they keep their employee.s This isn't really a loan, but free money.
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.
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.
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.
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?
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?
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.
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.
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.
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.
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.
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.