Millions of credit-card customers can’t pay their bills
wsj.com
wsj.com
The question many small business owners (and their employees) are now asking is "Non-essential for who???" Because for millions of people, it's as essential as it gets.
I started out believing lockdowns were necessary, but I've found myself drifting towards believing this is all complete madness, that politicians have failed to draw any distinction between reasonable health precautions in problem areas and unreasonable blanket policies that impose draconian, permanently life-altering measures on everyone. Maybe we really need the scalpel approach rather than the nuclear bomb. And in doing so it's clear that we're inadvertently creating much longer-lasting problems.
https://www.cnbc.com/2020/04/22/she-got-a-paycheck-protectio...
https://www.nytimes.com/interactive/2020/04/23/business/econ...
The $1200 is a 'stimulus' payment going to everyone.
Paying businesses to keep people on payroll may have been a better policy (as the disruption gets longer that changes).
Seems the payment starts decreasing for people earning something like the 70th percentile?
(It's hard to figure because it differs for filing status)
Not sure what the point of this oft-repeated fact is, if not to gas light the trauma out there.
The measure’s improved $600-a-week payments, which run through July, aim to boost that wage replacement rate to 100% for the average worker."
In other words, this is a very temporary measure due to the current crisis, and those on unemployment will be making far less than they would by working in a few months. A short-term duct tape measure to stop the bleeding isn't security.
The usual advice for people who are not on the breadline is to have at least a few months of reserves to spare. It seems we expect our national economies and business owners to operate less prudently than individual households, because we "can't afford" a more robust system.
In fact we're more than capable of creating our own recessions/depressions without a threat. And while there seems to be some legitimate concern for the current victims of this recession/depression, it's interesting how little there was during previous downturns.
This isn't strictly a logical question. We're told that we shouldn't let a crisis go to waste. Our opponents certainly don't.
It helps people not starving, yes, but this is not really compensating. And ridiculous, when you consider "wrestling" was considered "system-relevant". But all the small buisnesses not.
If you don't personally collapse then that helps extend the life of a small independently owned business.
Each of those businesses employed people who relied on those jobs to survive as well as the owners of the businesses themselves. The building owners require those businesses to be running and pay leases and rent so they can pay their employees and so them and their families can have income. Every permanently closed business affects everyone that relies on that business and it's not always obvious how many people rely even on a small mom n pop business existing.
If landlords don't have to pay for themselves, furloughed staff, or rent, keeping a business in suspension seems much more doable.
From first principles, why should the small furniture business be worried about collapse? Little work is getting done, so no employees need to get paid. They don't need to be purchasing more inventory. The remaining true expenses are insurance (catastrophes can still occur), heating, maintenance of the building structure, and the portion of the property tax that goes to infrastructure maintenance.
But under our current system, they've been incentivized to rent the business space from either a landlord or a bank for a hefty payment every month. When cash flows are predictable, this is merely extractive. But now that cash flows have slowed down, it's catastrophic.
The appropriate short-term policy answer is bail outs for small businesses (as well as individuals, as the employees out of work are in the same boat). But the government is outright corrupt, so big businesses received immediate bailouts while small businesses are left scraping for peanuts from a funding structure that was also designed to benefit banks.
The long term policy answer is to raise interest rates to discourage frivolous use of debt. This ranges from merely politically unpalatable (eg when Bush was trying to sell two wars), to downright painful (the payments on existing debt go up). Which then makes for a debt spiral.
By being employed, and by employers being in business. If we had a better system, we'd still have serious issues, and probably far less capacity to react due to the economic drag those kind of systems have.
Even if they opened, would it really help them?
My point is more whether asking whether any significant number of people are buying furniture at all?
But yes, furniture does seem like the kind of purchase that will get deferred when money is tighter.
Given the decline in business, a small furniture store probably wouldn't have a lot of issues with customers maintaining distance. Most furniture stores are not crowded even in normal times. This would probably be true for many other types of retail stores as well. It's not zero risk of course, but nothing in life ever is.
Perhaps some shoppers would make a point of shopping to help out, or just aren't that concerned and want to get out, or want to furnish their new house/apartment that they've been in for the past 6 weeks completely empty.
More people are starting to wonder if there's a viable option between "full lockdown, groceries only" and "free-for-all". Since some states are relaxing restrictions I guess we'll start to find out.
True. They are powerless over their fate at the moment and they can't even begin to move online.
They probably can re-open. The challenge is just going to be on drawing the line. Furniture is ok, but what about Build A Bear or a mattress store?
Easy for many of us. Not always so easy for a small business owner. Even something turn-key like Shopify requires a lot of setup. Plus, you'd likely need to go to the shop to take product photos etc. which would not be permitted travel in some areas.
Even then, with a website up, how do they get any traffic to it? A sign in the window normally might work, but no one is driving by anyway since they assume everything is closed. Buying some ads may work, but now you're incurring even more costs when you're being bled dry already. Word-of-mouth is probably the best you can get. Plus, most people probably aren't going to purchase the kind of furniture you'd get from a boutique shop online - they want to see it, touch it, sit on it.
I've seen small clothing shops out there live streaming their products on Facebook and people buying via comments. I applaud their effort but also wonder how that can ever be enough. These stores exist today pretty much only because people want to buy this stuff in person, otherwise they'd just buy on Amazon.
The wheels need to start turning again sometime. Tax revenue is taking a huge hit which is also going to cripple government's ability to provide help now and in the future. I'm fearful that the economic impacts are going to be much worse and much longer lasting than we can even begin to imagine. I really hope I'm wrong.
Reopening isn't going to save those furniture stores when people fundamentally don't have the money to shop like that.
There's enough confusion around these orders though that I believe some non-essential businesses were operating for curbside pickup anyway.
There's also a drive-in movie theater trying to open up around here but the government is saying no. Decisions like that just anger people because they don't seem to be based on common sense. The risk there is so low that the government would gain a bit of goodwill if they just said "fine, open it up and make sure to follow all guidelines".
This was all a major and obvious side effect from the sweeping lockdowns that few in government considered.
This is a commonly-referenced trope, but it is seldom true. Even if those in government really were as dumb as they pretend, the lobbyists and spooks whose orders they follow are not. The normal economy has been destroyed and vast resources have been given to cronies of the Fed in order to produce the sort of nation we'll be suffering in the decade to come.
Stores that don't sell groceries were never going to pull through this doing well under any scenario. People were always going to radically curtail their going out and spending, one way or another.
So tell me what would have happened in New York if they had not put a lock down into place? Do you seriously believe the number of dead would be similar to what we see at the moment?
The whole reason why the US has now the highest death numbers is because the federal government ignored all warning signs. Maybe if there had been a plan your president would have heeded the advice he was given measures like e.g. In South Korea would have been possible. Once you are on the steep bit of the exponential, the only solution that is left is to pull the emergency break.
Your entire point is ignorant and flawed. Please explain to me how other countries with higher per capita infections screwed up, since your poor grasp of the US federalist system is binding you to proper expectations of what the US Federal government is responsible for.
I noted, from the beginning, that government did not put forward the standard state-apologist economist to rubber-stamp these economic policy decisions, and cleverly disguised the policies as public safety. My suspicion is that not even those guys were willing to go on record attempting to predict what the outcome of these actions will be.
This is just not true whatsoever. E.g. Food supply & medical services are essential. A hat store is non-essential.
Perhaps we should be thinking high risk and low risk instead of essential and non-essential. A hat store with appropriate distancing measures and cleaning protocols is probably low risk.
That said, by saying the economy is more important than people dying, this is not an either or decision. Do you think thousands of extra dead are good for the economy? What about the health workers, by not shutting down you would essentially put them into the situation where they have to deal with a completely overwhelmed health care system, leading to more dead health workers (the primary reason for dead health workers in China and Italy was that they were so overworked and stressed they could not follow best safety practices).
It is not necessary treat people as toddlers. People are already capable of managing risk and will take precautions as they see fit for their situation. Those who are not able to provide for themselves are most often able to find someone within their community to help.
All decisions at this point have significant downsides. There is no clearly correct answer. Politicians are trying to balance those concerns, and they're trying to do so with extremely limited data and awful models (due to the bad data - GIGO). I don't honestly think anyone knows what will really happen with either the virus OR the economy. It's clear they're just guessing and that's really terrifying.
> Unemployed persons were significantly more likely to die than those in a comparator group; the hazard ratio adjusted for age and other covariates was 1.63, showing that unemployment is associated with a 63% higher risk of mortality. The average effect was higher for men than women with an increased risk of 78% compared to 37%, respectively. Unemployed people in their early or mid careers faced an increased risk of 73% and 77%, compared to 25% for those in their late careers. The risk of death was over 70% in the first ten years of follow-up but fell to 42% after that, although the trend was not significant in the final meta-regression model.
[1] https://www.scie-socialcareonline.org.uk/losing-life-and-liv...
And then 3 months later you find out that all of your food supply workers sourced their hats from the hat store and they can't hire more workers because the hat store went out of business. Where did the store get the hats from? Who knows?
Obviously this is a contrived example but just the other day we heard that a flour supplier can't supply enough flour because they don't have enough bags.
Now he has to go through bankruptcy because he was accustomed to the income the hat store generated, so he's decided take a job in a different town where cost of living is lower and the position is lower stress.
There is an essay from Leonard Reed called I, Pencil [1] that, for whatever reason, everybody who doesn't study economics seems to hate. The essay establishes that even the most simple of things, a pencil, is impossible to understand how it comes to be made.
There are over 7 billion people on this planet. If we go with your definition of "essential" and put everyone else permanently out of work, then we will likely rapidly experience the greatest mass-starvation in the history of the planet.
Even just look at some simple things to understand, such as electricity: how is all of that electrical infrastructure paid for? Cut out all of the "non-essential" uses and you will discover the $/Kw-hour is going to skyrocket and consume a very huge chunk of whatever is left of a rapidly evaporating economy. Then what? Start rationing who is to receive electricity even among the "essential" uses? Is having electricity at home as "essential" as having electricity on a food production line? How is any new venture ever supposed to start under these conditions? Could inventors of a technology as revolutionary as the heat pump find a place in this "essential" definition?
All productive activity contributes to the general wealth of civilization. We may consider some podunk furniture shop "non-essential" to our lives, but the wealth it creates ultimately ends up being applied to other parts of the economy. Even when it is only marginally profitable, the fact that it is paying its bills means that wealth is, on net, being created. Even if you don't consider the products as essential, the wealth creation is, which is to say that all jobs are essential.
In a centrally planned economy all supply chains would be stored in one large database and it would be easy to identify all essential supply chains.
Instead going to the grocery store, you report to the central planer what you need. It then creates an errand plan, when you should leave your apartment, when to arrive at the grocery store and when you have to leave the grocery store. Thereby making sure that not too many people are at the store during the same interval.
> In a centrally planned economy all supply chains would be stored in one large database and it would be easy to identify all essential supply chains.
Not really, because the real supply chain in centrally planned economies is black market.
Have you read about the pig farmers in Las Vegas that are having a hard time feeding their pigs because the primary source of food was throwaway from strip buffets? There are many non-obvious interconnections in a complex economy.
The dead cannot rebuild a business.
What does that mean?
I am shocked!
People have been pointing out for years that the FDA's approach is excessively conservative, but the typical response is that they're doing it to save lives, even though there is a point past which being too conservative actually costs lives by keeping life-saving things off the market. This was a prominent example of that actually happening.
The US Surgeon General, on March 28th, was on Twitter insisting that wearing masks was contraindicated unless you're coughing or sneezing, or taking care of someone with a confirmed infection. [0]
He tagged the WHO and CDC, because he was following their advice.
This wasn't deliberately calculated to kill tens of thousands of people and destroy the economy through harsh lockdowns when people started getting really sick. It just... happened to have that effect.
[0]: https://twitter.com/Surgeon_General/status/12440202923658158...
To be clear, I'm certainly not against people wearing face coverings but I'm skeptical it does much good.
> This wasn't deliberately calculated to kill tens of thousands of people
I haven't seen any data on how much more effective masks are (and which masks) than social distancing. As a sibling pointed out, they might give people a sense of immunity, they might cause people to touch their faces more, etc.
In the Bay Area, they became mandatory-ish after new cases peaked. The only reasons to mandate them at that point is to either get people used to wearing them early or because it makes you feel like you're doing something.
Taiwan is where we should be looking for inspiration, with South Korea a close second. Taiwan has been manufacturing 20 million masks a day for their citizens, and has been able to contain the pandemic without shutting down their society.
Granted that they have a water border, and were early and aggressive about contact tracing and so on. But the burden is on those who have wacky theories about moral hazard, or who wish to argue from the authority of the WHO, to demonstrate why their specious violation of common sense should apply.
As for the Bay Area, well, they're not the first government to close the barn door after the horses escape. What would things look like if they hadn't listened to the CDC and WHO for as long as they did?
We'll never know, but more like Taiwan is a reasonable guess.
You can't propagate a droplet to your face by touching a surface and then your mask, if it never lands on that surface to begin with.
I'd really like to do away with this misconception: masks are primarily to prevent transmission, and only secondarily (and it's a distant second) to prevent infection.
Like I said, I used to think it was a good idea, and now I've seen lots of people using the masks.
That should be comprehensive with 100% coverage testing. Due to the asymptomatic nature of the disease, it was widespread before we knew it was here. There was no way to know who should be tested. We needed every single person tested on day 1, and then isolate the infected, to truly get in front of this thing. Anything else would be like trying to stop a hurricane by blowing a box fan against it.
I wouldn't call CDC botching tests "obstruction," but it was probably the most significant failure at the federal level.
The reason why a lot of people can’t pay is not because they won’t have that money eventually but because the state unemployment benefit offices are steeped in bureaucracy and aren’t processing these claims fast enough. Some states make it much harder than others by design. This is a preventable crisis.
And how many of those people won't go to a hospital because they're uninsured now?
Some laid off have benefits for longer.
There are definitely some people in low wage states getting more but that is far from universal even though it’s a standard right-wing talking point.
If you are furloughed you keep all your benefits and still qualify for unemployment
Some companies are paying for healthcare for a period of time post layoffs
When Norway went into lockdown, they predicted a similar problem. We have decent unemployment safety nets here, but the process takes a bit of time and the fear was that the bureaucrats would not be able to process the applications fast enough.
However they rose to the occasion and managed to come up with an online-based solution in 3 days. There's an interesting write-up here[1] (in Norwegian, but Google Translate should do a decent enough job).
A key point was that the legal department managed to find some wiggle room in the rules to allow them to pay out in advance of the application getting officially approved. However there was also some legacy systems to contend with, and of course the web site had to be secure since it had to process our equivalent of social security numbers etc.
The result was that in a few days they processed more applications than they typically do during a normal year, and people got their money.
[1]: https://www.kode24.no/kodenytt/slik-koda-nav-ny-dagpenge-los...
[0] https://nypost.com/2020/04/03/us-government-will-cover-unins...
https://www.politico.com/news/2020/04/20/coronavirus-treatme...
Which is what, exactly? I mean, it sounds like you just want to open that one furniture store because it's low risk and small. OK, I'd get behind that, but that doesn't really fix anything real, does it? Do you argue for opening all retail shops? All restaurants? All places of business?
What about the employees of those businesses we just opened? Do they have to go back to work? What if they have immunocompromised family at home?
And, at the end of the day, when you open all those businesses, are people going to start buying furniture again? Probably not.
Really, people aren't staying home because the government is magically telling them to. If this was really an unrealistic paradigm we'd see rampant cheating, and we don't.
People are staying home because they're scared of dying. You don't fix that by changing the closure rules. You can only fix that by addressing the actual pandemic.
So... maybe you should aim your scalpel at the disease instead? How much have you read about testing regimes? Have you called your congressperson to get this stuff funded?
no, that fear and panic was induced by a combination of political and media fervor where overstating the problem gives them more power, attention, esteem and stature. so taking away that frenzy could also reduce the fear and panic.
No, they are not. There are huge crowds everywhere that gets reopened (or not closed) in CA, WA, FL. My favorite example is when I heard Red Rock Canyon is closed, a few days/weeks before the lockdown in NV, and it turned out to be a closure for one day because of the inability to manage the huge number of visitors on the one-way loop road. Once they closed the loop road for COVID, the trails accessible outside it became so crowded they had to close those too. They started towing cars from trailheads in WA that got crowded despite lack of legal parking, closed signs at the locked trailhead, stay at home order (including huge signs on all the highways).
That is with the media fear-mongering vastly disproportionate to the actual current number of deaths (of which people would supposedly be afraid), and explicit stay at home order, in WA case.
That's definitely state by state, fwiw.
> but I've found myself drifting towards believing this is all complete madness, that politicians have failed to draw any distinction between reasonable health precautions in problem areas and unreasonable blanket policies
Well, yes, I don't think anyone was expecting for a pandemic in the US to end up being handled by slapdash decisions by non-experts and instead have some level of preparation, guidance and coordination from our extensive scientific and public policy experts who had prepared for this situation.
We might still not have masks or unemployment checks, but we'd likely have measured policy sooner and we'd actually be coordinating on things like testing.
> That's definitely state by state, fwiw.
Is it? As an employee of a T10 US retailer, I'm pretty sure we've enacted mandatory social distancing and maximum-customer-in-store policies across all our stores.
Target should be doing more at the corporate level.
> Is it?
I guess the question might better be "should it be?", in which case I'd definitely agree.
They're legally free to enforce whatever policies they want to put in place at their stores.
That they choose not to is their decision.
There doesn't seem to even be a clear goal to the lockdown. Originally it was to flatten the curve so as to not overwhelm medical services. We'd still have the same amount of people infected, but it would be spread out. But many (though not all) hospitals are seeing a decline of cases and even furloughing workers because of lack of activity. So now the argument has turned to we need more testing, but to what end? Tracking and quarantining infected individuals requires much more than simply testing (for instance, look at the problems New York had in tracking just a few cases at the very start of the outbreak), and it's doubtful that we'll be able to contain the outbreak at this advanced stage (it seems like millions have been infected in New York alone).
We should have a clear goal for our actions (especially when they're this destructive!), but it seems like everyone in power is just winging it.
I'm not sure that we can build a health system capable of handling this a second time... I have the feeling that this will just result in the way people work changing.
Essential workers taking more power because we are all forced to acknowledge that they're essential. People able to work remotely doing that much much more. Wearing masks at the grocery. These are things I expect to be long-term, except for the first which has some obvious structural barriers.
https://www.npr.org/sections/goatsandsoda/2020/04/15/8340211...
Individual governments such as the UK have established less restrictive conditions.
The key point is building massive capabilities to test and contact trace so any further outbreak can be contained.
Otherwise we will be lurching from lockdown to lockdown.
Just because the US Federal government is unable to define criteria, because they don’t want to increase the manufacturing of test kits for political reasons doesn’t mean every other government has no clue.
Cite please?
This is the first time I've heard this. Could you expand on what you think these political reasons are?
The lockdowns have come as desperate measures in response to the general confusion and the progression of a deadly epidemic. California is vaguely looking to testing as mechanism for lifting the lockdown. Hopefully, they'll come up with good ideas. The epidemic is still running hot so do have time to think.
Having local authorities improvising isn't the best approach by any means. It's still a better approach than a mob of anti-vaxers, Proud Boys and other right wing types improvising or a president who doesn't know biology improvising, to illustrate the mess we're in.
This mess, however, is one of those situations where it's incumbent on the critic to come up with something actually better that can be implemented rather than whining that a given solution is far from perfect.
Re-opening some things is not a contradiction, as long as you keep the reproduction number <1 you are on a path so that you can contain things. Stricter measures mean you hit them earlier, laxer measures means later but you might not damage the economy as much ... but in any case they said if it flares up again the strict measures come back.
That said permant economic damage will be due to politcial policy choices not due to a two-three month lock down. Consequence of protecting the rentier class instead of businesses and people.
I’m going to make this statement my fb profile picture.
Here in California, our governor has declared that we will do this indefinitely (!) until six criteria are met. Well, I hope they have some really concrete plans to meet them, because I haven't seen any such plans presented to the public. The absolute devastation we are doing to the livelihoods of so many is staggering. What will happen when the tax revenues run dry and the tax base has been reduced by some huge percentage? Coronavirus will still be around when that happens.
The virus is here, and will not be eradicated. Society cannot hibernate like this sustainably, certainly not until a vaccine arrives. I'm all about masks in public, social distancing rules, bans of large gatherings, and lots of resources directed to protecting vulnerable populations. But I'm afraid and convinced that the stay-at-home orders will do far far greater damage to society as a whole than the virus would/will under a more targeted mitigation scheme.
Maybe my fears are overblown because of the recent hit to my mental and physical health. My gym was declared illegal, as was access to all parks in Los Angeles, as was my ability to work in an isolated office without a needy toddler in the room.
None of their approaches place any consideration on the damage caused by the mitigation efforts themselves. Suicides, domestic violence, overdoses, and other negative outcomes are all up and will cost lives.
At what point does the conspiracy theory that much of it is a pure power grab become validated?
Sweden has a strong well being systems. People stays at home every winter during the flu seasons. In any given meeting there are a couple of employees working from home because they may have the flu.
To compare the social protections of Sweden that allow citizens to stay home when sick ALWAYS, not just for the current pandemic, with the USA approach of come-to-work-or-you-are-fired is not reasonable.
The USA should pay more to their employees, have better healthcare coverage, give paid leave, and forbid free lay offs. And then, it would be in a position to postpone, lets see for how long, the shutdowns in a pandemic.
Sweden without lock down: Workplaces -32% New York with lock downs: Workplaces -48%
I have the fear that the same Americans that want the "Swedish approach to CoVid19" are the ones against the social safety nets that has made it possible.
- https://www.gstatic.com/covid19/mobility/2020-04-17_SE_Mobil...
- https://www.gstatic.com/covid19/mobility/2020-04-11_US_New_Y...
I believe you're right about that. The cynic in me thinks Georgia is only 'reopening' to avoid paying more unemployment. Maybe it's my own Swedish ancestry that compels me to want an strong social safety net and a softer lockdown?
Sweden's approach is having a strong social safety net, including for personal health, that makes acting in the way public health requires consistent with personal incentives without mandates. Georgia’s approach is to have neither positive social incentives in the general case not appropriate public health mandates in the absence of those incentives. They aren't similar approaches. Sweden's probably won't be completely disastrous (though their death rate is high, compared to neighboring countries), Georgia's is on track to be. Sweden mostly gets misused as a positive example because of a low known infection rate, but that largely reflects differences in the scale and distribution of testing, not actual prevalence.
I'm thinking: Give it time/we need another solution, because even under lockdown, cases will kick back up.
Illinois went into lockdown March 21, so given the incubation period no effect was expected to be seen until the beginning of April - which is exactly what happened, between the last few days of March and April 13, the growth rate plummeted - from 20-40% to 4-6%.
The drop in new cases during that period made it look like we were past the peak, but since then it's been really stable at 4-6%, so we are coming up on a second peak in the future. That's when I expect the extra capacity will be needed. In absolute numbers, it's already at 3x new cases per day with the slower rate than it was back at the higher rate.
So the later any specific case happens, the better the likely outcome. Multiply that by the number of cases, and it absolutely starts to make a lot of sense to wait to decide until you know more. Certainly the number of patients who come down with it in the Fall will have a lower fatality rate than the very first patients who got it, barring mutation that makes it more lethal for some other reason.
Gathering information takes time so delaying until that information exists isn't the same as winging it.
If you knew that you were at risk and catching the coronavirus would result in your death, would you do so for the sake of the economy?
If I’m weak and can’t survive so be it. Rather me die than everyone else slowly waste away to famine.
When trying to come up with a policy that will help the most, start from first principles, like "people are what we care about; businesses and the economy are there to serve us, not the other way around."
Because...yes, if we don't reopen everything, millions of people are going to be in serious financial trouble.
But if we do reopen everything, millions of people are going to be in serious medical trouble.
If we get tens to hundreds of thousands of people dying in the span of a few weeks, how do you think that will affect the economy? Even leaving aside the psychological and human toll.
Provide for the people. Make sure the truly essential workers (the ones needed to keep us fed, clothed, healthy, and with the lights on) have what they need to be safe and healthy themselves, and then keep the rest of us fed, clothed, and healthy, and keep the lights on, out of the government's purse.
Yes, the people, who are sustained by their businesses. We can go back and forth on this, but it's not a mutually exclusive "only X is essential, not Y."
We can still sustain people for a while without producing the extra that lets us have a luxurious life... we just need to make sacrifices for a bit.
We need to do a better job of spreading that sacrifice around, is the issue.
What we have stopped are things like restaurants and entertainment... there aren't stockpiles involved with those things, we just aren't going out to eat and aren't going out for entertainment. They can start right back up when we end quarantine.
You should be considering the coronavirus essentially a trial run for any future pandemics or disasters we have to deal with, because it's showing how completely unprepared we are for anything that destabilizes our daily lives. We're lucky that covid-19 isn't deadlier because in the case of a far more serious disease with greater repercussions we'd likely be staring down the barrel of extinction with people clamouring to reopen business so they can die.
In scenarios like this the government should be stepping up to support people so that they can restart their lives when necessary. Rugged individualism doesn't work when you encounter a global disaster that requires everyone to work together.
Welcome to capitalism. Nice of you to join us.
> In scenarios like this the government should be stepping up to support people so that they can restart their lives when necessary.
Government gets its income from people. Who have businesses. Or jobs at businesses.
This is NOT infinite, nor remotely large enough.
True.
> nor remotely large enough.
I do not believe this to be true at all. As numerous other people have pointed out, the government can currently borrow money at next to no cost.
Furthermore, there's a very (conceptually; the implementation is fraught) straightforward method of vastly increasing the government's funds without risking massive future debts: Put our taxes back the way they were during the time we were most productive—the period after WWII, where the top marginal brackets were around 90%.
Lol nope. Would rather take my chances with the virus than hand over 90% of my earnings, and I suspect most would agree.
Check it: https://www.politifact.com/factchecks/2015/nov/15/bernie-s/i...
Adjusted for inflation, that 90% rate would only hit individuals making $1.7 million/year. I suspect most people would be just fine with that top rate if it meant they could keep their homes and feed their families.
Very few people have actual “income” over 1.7 million a year. Most people who could bring in that kind of money are smart enough and have the resources to structure things so that they don’t bring that kind of money in W2 type earnings or earnings that would qualify for this kind of tax.
Or they renounce their citizenship and move to Singapore as some have already.
That kind of tax rate is essentially pointless. It’s virtue signaling at its worst.
Then why be against it? Why not say “look, we enacted 90% top marginal rate and it hasn’t helped at all?”
Because driving wealthy people and powerful businessmen out of your nation is obviously going to have bad effects that can't be reversed?
Can you expand on this? Why would you want to put a policy on the books, dealing with its side effects without achieving its objective? You're saying this as if it's obvious; to me, it's anything but.
If you don't recognize that particular ideology, it's one that has murdered millions of people worldwide in every place it's been implemented.
https://www.cnbc.com/2019/11/07/two-democrats-come-up-with-a...
400,000 people dying would be 0.1% of the US population.
I'm fairly sure the economy could abosrb that, particularly given the demographic bias of mortality.
416,000, primarily young men, died in WW2 of a population of 160 million.
And what about the percentage with permanent lung damage?
Or if it mutates? Or recovery immunity does not last more than a year or so?
That's without taking into account that less than half of the population will get infected.
And if you're concerned about short duration of immunity, we shouldn't drag that thing for a year, everyone should get sick faster.
Now concentrate that death toll into 4 months. Or less.
The problem is that merely being locked down is quite unhealthy in many ways. As anecdote, I'm drinking about twice as much, not exercising at all, canceling dental cleanings, and wouldn't go into a medical setting short of something obviously life-threatening. (And indeed, many people with stroke symptoms aren't going to the ER right away, which can easily be life-changing.)
One essay I just saw made the likely-valid point that the risk here is almost entirely concentrated in the population that's 60+ (and a few younger people with unusual medical conditions).
If so, a better plan than shotgunning the entire economy for a year or two may well be to figure out how to specifically protect those who are vulnerable, and let things run their course with the rest.
In any case, if something cannot go on, it will not. No way we'll be locked down in a year, no matter what pie-in-the-sky handouts are distributed.
Covid-19 might be the wake-up call you needed to get your personal maintenance in check. This will drag on and may happen again in the future. No time like today.
Policy needs to be decided on the basis of what people will do, not what they should do.
Thanks for your encouragement.
I'm sorry, but it's simply not good enough to say we can't abide this because you can't manage your own faculties. We're facing a virus that spread around the world in days because of normal social contact. Lasting respiratory and cardiac damage is common and reinfection appears to be possible.
People need to do better. Yeah, we're social beasts and struggle, but that's not a reason to abandon the actual goal here. It's possible to get through this with some support.
Willpower is a trainable life skill. We live in a society that does its level-best to undermine willpower to coerce you into bad purchasing decisions, but this is reversible. But you have to engage. Nobody can do this for you.
It is not enough to mandate belt tightening during a crisis, you must also get out there and give a rousing speech so people will want to tighten their belts.
If you just provide “good” policy, but no framework to make it palatable then you have failed before you started.
But many of today's leaders got where they are by division, not unification. Trump would have to do a pretty serious U-turn. Boris Johnson thinks he's Churchill but half the country hates him.
These are not simple times. I'd wonder if gamification (eg stayed-indoors points) could be used to improve this through soft social pressure but I'd suggest the overlap between people out protesting and ignoring rules are probably not the sort to want to engage with that.
Maybe we need this. A drawn-out decimation to teach future generations about how harmful people who insist on putting themselves ahead of the group can be.
You're hoping for death and destruction just to teach people your lesson? Really??
Personally, I'll be glad to be wrong about everything to avoid that outcome.
Crossing into personal attack is not going to have good effects. Maybe this comment didn't quite do that, but you certainly went there downthread.
Currently in Brussels, where things look quite bad statistically speaking. However, parks are full of people running/exercising/stretching and even walking just to enjoy the sun.
But at scale, lockdown has broken our habits, good and bad. This has a price.
That said, most States have required lockdowns or shelter in place.
In the US system of federalism, the state governors+legislators have much more control over what happens in their state than the President+Congress.
This might be a life-stage or life-style thing, but this is probably the healthiest I've been in a long time. I have to be intentional with all my food, so I'm eating almost literally perfectly (though god do I miss restaurants...), and weed fits isolation or zoom hangouts in the way that alcohol fits in-person social events, and is _way_ healthier. And I've had multiple friends my age (late 20s) guiltily admit that this pace of life just feels a lot healthier mentally.
That isn't to say that the psychological challenges aren't sometimes significant, and I have gone from a 4x/wk gymgoer to struggling a little with consistent exercise. And the example of deferring medical care is a good one. But I just thought I'd share a counter-anecdote to the anecdote driving your assumption that being locked-down is necessarily net unhealthy.
You are totally right. And that's why it's so infuriating that the government has done pretty much exactly the opposite. It has prioritized saving huge businesses and propping up the public markets (stock/bonds/futures/etc).
In my opinion, it would have been a lot more effective to give money directly to people, then let them figure out where and how they need to spend it to get through the crisis. Businesses would then adapt accordingly to survive, or fail if they couldn't. But at least then most people would be ok.
Now inequality is going to be worse than ever. People that already had a lot of money got saved and now can keep making loads of money, while the people that really needed saving, pretty much got abandoned instead.
I'm in agreement with you for financial crises in general (with caveats), but this doesn't apply here. The usual ability of individual spenders to direct their money to the businesses that they'd like to sustain is limited, because the nature of the pandemic response has caused an oddly-shaped crater in consumer demand. As a simple example: deferring teeth cleaning for a couple of months is an extremely rational decision right now, but under your plan, every dentist in the country would go out of business. I don't think this implies that dentists are non-essential, in the same way that sharp drops in airline and public transit usage don't render those services inessential.
Like a chemical compound, a lot of the value of a business is contained not in the capital or human capital per se, but in the connections between its constituent parts: a business is nothing more than a structure that produces utility for the landlord, the business owner, the employees, the suppliers, the customers, etc. If you suddenly bring that machine to a hard stop, all of those actors get hurt (the employees often most of all).
The GP comment is obviously correct that businesses are not entities whose welfare we need to focus on maximizing as a terminal goal. But they are critical structures through which the welfare of pretty much every citizen is maximized, not just business owners. In the same way that sustaining police departments or hospitals isn't motivated at saving those institutions per se, but at sustaining the value they produce for citizens, sustaining businesses is part of how we sustain the welfare of every citizen.
This is why the SBA/PPP are so valuable: they provide relief for those who would otherwise be laid-off, but do so in the form of salaries from a business that otherwise would have gone under. Not only are individual citizens able to keep paying their bills, but they're able to retain their relationship with their employer (losing a job has far more costs than just the foregone salary). And obviously this is in conjunction with things like the expansion in unemployment benefits, so that those who have been laid off and are unconnected to a business have a safety net as well.
I've heard that argument before but people never clarify how it will affect the economy. Can you clarify?
Personally I don't know how deaths of 80-year old people (on average, like in Italy) can possibly affect the economy in any serious way, especially compared to the disastrous damage from lockdowns.
You're also discounting the hunger and a lifetime of poverty and misery created by these lockdowns for millions of young people who are not susceptible to that disease.
In a given town, X people will contract the virus. Y of those will die of complications. Z of those people will die without hospitalization. So if you keep the rate of people contracting the virus under a rate of Z people, you can avoid EXTRA deaths due to overwhelming the hospitals.
Had the response in the US been early and holistic, it’s possible we could have avoided national stay at home orders and instead used social distancing to avoid overwhelming the hospitals. But the nation didn’t. So to avoid MORE deaths, sty at home orders were issued.
Again, to repeat, the reason for staying home is to prevent overwhelming hospitals and more people dying. The same amount of people will die (roughly) whether we stay at home or not.
And it’s not just 80 year olds. I’ve seen more 30 year olds on ventilators than I ever need to see again.
Can you enumerate these people/jobs, and the stuff they need?
I feel I'm slowly coming around to be against lockdowns. I used to think things similar to what you wrote, but I've also been following supply chain news over the past two months. And I keep seeing things like:
- There's a shortage of yeast and flour in stores not because there's a shortage of actual yeasts and flour, but because there's a shortage of store-sized packaging for them. If you want to buy 50 kilos of flour in one bag, there's plenty of that on the market.
- At one point the UK was worried that delivering food into stores will slow down because the UK was running out of cardboard, as people order more while garbage collection for recycling halted. I haven't seen anything on that topic for a while, so maybe it was resolved.
- Recently, it was said that US food production may face problems because of shortage of carbon dioxide. The path here is that shenanigans with oil prices and closing down of various industries caused the plants producing, among other things, carbon dioxide, to shut down.
I'm just waiting for the first stories along the line of "critical sector X is rapidly losing manufacturing capacity as they run out of spare parts for some doodad Y, which are unavailable because they're manufactured by Z, which was deemed non-critical business".
For better or worse, we ended up with complex and deeply interconnected supply chains that nobody seems to have traced properly, so critical industries keep experiencing unexpected and non-obvious issues. This situation doesn't lend itself to shutting down arbitrary pieces of economy.
The suicide rate this year is greater than the COVID death rate.
The correct response is aggressive testing and tracing. As the data shows, this worked fine for S Korea: https://www.ft.com/coronavirus-latest
Until our number of active cases gets within our test-and-trace capacity, shelter-in-place orders are the only option (aside from mass sickness and death, of course). Models suggest we're getting there, some states sooner than others: https://www.npr.org/sections/health-shots/2020/04/25/8440886...
You're right that another egregious failure was in financial support of workers and small business owners. Again, that was a giant federal mistake. There's no long-term need for most of these businesses to close; it's just that they don't individually have the capacity to weather this downturn. But systemically we have the capacity, and long term it will be way more effective to get existing businesses through this than to force a bunch of bankruptcies.
Still, the point I'm trying to make is even if you're lucky to get mild to no symptoms, you don't know if that will be you. What if you are one of the unlucky ones who gets severely wiped out?
For every restaurant with a waiter who gets dangerously sick, would that restaurant close down? Would people not eat there anyway, even if the owner kept it open?
Even if there's no lockdown, there is still going to be lots of wreckage from this. All this "shelter-in-place" is doing is exposing how bad our safety net is, and how unprepared our governments are in managing widespread panic.
But remember, the lockdowns didn't appear as a "good", a sensible approach, they simply became a last-ditch, necessary approach when the Federal entities and institutions in charge of dealing with stuff basically failed.
And that's the thing, the pandemic prevention team was fired to save money - think of it. But overall, anything devoted to emergency conditions has been fair game 'cause it wasn't paying it's way.
So when the desperate measures went into place, there weren't resources to do them sanely and sensibly. There wasn't time to think about it. The influence of the larger corporate entities intent on profits remained huge.
The economy has been constructed as a machine without an off-switch over the last twenty years. And this isn't a matter of production processes but a matter of finance. Machines can be stopped and restarted, it may cost some resources but very technically achievable. Things are most working even now.
The specific structures driving the situation are the integration of large capital structures and government. The ideal situation of a bond holder is government that have no way to suspend payments, no mechanism or will stop the machine because stopped machine will stop fixed payments.
And that's the thing, we're clinging desperately to this final, ill-conceived "STOP!" because there is a strong urge in various circles to get things going no matter the cost and it's clear the cost would be high.
The other challenge is on the consumer side: Even if you can legally open as an "essential" business, you're going to need a certain degree of volume to operate. As a retail store, you're beholden to how "safe" consumers feel shopping in your store, and right now evidence suggests most people want to limit non-essential trips.
It's going to be: You work, you don't. This is ridiculous.
The former is so far and away more important than the latter it should not even be a debate.
Re: Human Well Being
1. The danger of this disease is completely unappreciated
There are children dying now, relatively young, low risk people having strokes, many extremely rapid progressions with no explanation, and evidence of absolutely unprecedented long term/permanent damage in organs of survivors. Every single medical person seeing this disease up close is terrified of it.
2. We don't know what reasonable health precautions are
Here I define "reasonable" as- not have every trip to a public space be a game of Russian Roulette.
We are still finding out how the disease spreads, how it acts in the body, what the impacts are- while working through all sorts of fictional reporting from early outbreak centers. We have speculative assertions about immunity, but little concrete evidence. We are very, very far from having a solid, simple, conveyable understanding of what behaviors to engage in in what circumstances, what behaviors not to, and what to do upon possible exposure that is not essential what is being done in "lockdown."
3. We don't have reasonable health governance
In the US we are seeing not only the complete breakdown of rational behavior on the part of the federal government, but also the rise of mafioso behavior in using law enforcement to disrupt normal medical supply delivery.
4. We are a long way from reliable, preventative protocol
Despite all the dollars and efforts going into these efforts it takes time to build up sufficient proof and understanding. 9 women cannot work together to produce a baby in a month.
This is an absolutely unprecedented-in-modern-history human disaster. It is not in any way contained. We are only maybe coming to the end of the beginning.
From an accounting welfare perspective-
The problem businesses and individuals are facing are very simple-
Contractual dollar flows, set up during "normal" times, are largely still expected in these absolutely not normal times.
There is no mechanism to suspend these contracts, no collection of them, no standardization, no understanding of the implications of suspensions other than widespread financial badness.
The flows have to be maintained.
Having the source of all dollars mint them to maintain these flows for an extended period is not hard from a policy perspective, not hard from an implementation perspective, not hard even from a financial system implication perspective.
Maintaining lockdown with a central bank balance sheet funded UBI is the only answer.
It should be so blindingly obvious.
In what are is this? Target in the bay area at least has lines with social distancing indicated by line waiting markers on the ground six feet apart, and employees enforcing this.
Since enacting social distancing, closures, etc we have two bits of good news: a) outside of NYC (half of the US cases), no one was overwhelmed and b) the infection -> hospitalization rate is way lower than projected.
Either one of those make the case that we can loosen things a little. School shouldn't go back into session, dance clubs shouldn't open, but going shopping for "non-essentials" should be considered as long as patrons can respect social distancing policies and the stores are sanitizing things well.
There are still risks no matter what but there is no "risk free" situation in reality.
I have heard stories directly from business owners of getting the rules changed hour-to-hour via their state level lobbyists or other backchannels to officials.
When all this shakes out, it's going to be quite a wealth transfer, that's for sure. I just wish it hadn't ended up squeezing out (and continuing to squeeze) so many people who worked so tremendously hard to get where they are. The real losses here will be small businesses. It's a real tragedy.
I'm not saying that credit card companies should lend at prime, but I feel that reducing rates for existing balances to 10 or even 15% could make a huge difference to a lot of people.
American Express sent me an email a month ago talking about it being a "difficult time" and nothing is more important to them than their customers "health and safety" but all they can offer is telling me that call volumes are really high so I should manage my account online. That's not really that helpful, sorry!
[1] https://www.thebalance.com/average-credit-card-interest-rate... [2] https://moneywise.com/a/what-is-the-prime-rate
And startups are the worst... hardly a day goes by without an app telling me "we <3 you" or "you're looking nice today." Ugh, no, stop please.
We literally have a government that is supposed to help us manage these crises. That's what it's for -- blessings of liberty, domestic tranquility, general welfare, all that stuff. We have a government to do for all of us what we can't do for ourselves.
And it won't.
I agree. A lot of companies seem to be using this as a marketing opportunity. Any excuse to send spam.
Apple Card and Bank of America have both allowed me to defer payments. Apple was actually first for me, way back in the early days of March. And it's allowed two deferments so far.
Those will be the accounts I keep open when this is all over. The rest can DIAF.
their answer was "we are not offering any rate reductions at this time" followed by them slashing my credit limit 3 days later.
I'm disgusted at their behavior. It was something they didn't have to do but they did anyway because they simply could. When I can, that's the first card I'm going to cancel.
That's some fucked up shit... that probably dropped your credit score a couple of points too (just because of utilization)
Not a happy customer.
"Make sure you have a beneficiary on file"
perfect timing.
https://www.cnbc.com/2019/03/19/70-percent-of-people-with-cr...
Obviously, it will be more because of COVID, but the details aren't yet available.
2. I wish WSJ would just let me pay for the article. I don't read them enough to get a $20 subscription, but would I pay $2 to read that? yes.
Netflix for News is something that is urging to be invented.
Edit: I’m talking about Apple News+. I looked it up - it seems like News+ includes only the last 3 days of articles but other than that there doesn’t seem to be any other restriction. I could be wrong though.
2. But also yes, if it’s like trying to deal with a NYTimes subscription, break out the fax machine.
Ehh seems like we skipped over the "Netflix" aggregator stage for news and went straight to the distributed content model for each news source.
I think if Netflix for News is coming, even more newspapers will have to close or just end up copy&pasting news from AP and Reuters.
It might still be useful if you could get a wide range of publications other than the big ones. But then I suspect that you'd be hard put to get $10-$20/month out of people for a subscription that doesn't include the paywalled pubs that are usually posted here.
Was on HN back in March ( https://news.ycombinator.com/item?id=22482329 )
But yet, why these bypass paywalls even work is because they discriminate on who gets free and who pays. This tool wouldn't work if everyone had to pay.
And alas, rip score. Already at -2 in 15 minutes. And I was sharing something that was no less shared on HN. Dang needs to do something about this damned -1 brigades with no comments. (And I know you couldn't downmod cause you responded.)
That isn't how News+ is supposed to work. I can't afford 17 different $16/mo subscriptions. (example price is actually my local newspapers fee)
Paying for the article would allow the GP to read the article and see that
My initial assessment was incorrect. I assumed it was about people not paying balances. It is actually about people not paying minimums, i.e. they can't even carry their debt, yet alone pay it off.
We are potentially looking at the very real risk of starvation in this country if this things is stretched out and the federal government continues to limit its direct aid to citizens. States are looking at the very real risk of completely running out of funds to pay unemployment and McConnell has indicated he is fine letting them go bankrupt over it because it weakens the unions.
Rent and Credit cards are just the beginning, Car payments and mortgages are next.
We need a very real UBI that goes to everyone regardless of income to get individuals through this. A UBI also guarantees people have money when this passes to allow for individuals to go out and pump money into businesses trying to stand up again.
Its one thing to fret about the US debt, but at the moment we are looking at the potential for a great depression. When this is all over, mint a few trillion dollar coins and pay it off. If the dollar drops for a while its not necessarily a bad thing.
Very unlikely for the U.S. Food is very cheap, it just happens that prices in the U.S. are inflated because of transportation, branding and the millions of middle men in between. To give you an idea, where I live, 1Kg of pasta costs $0.4 and grains are mostly imported from the US. Rice costs $0.53 and it is imported from Asia.
You can survive on Pasta and vegetables for less than $1, and the U.S. is producing it dirt cheap.
Just for my own peace of mind, I started saving enough to be without work for a year or so, use a debit card instead of a credit card and rent. Here in Germany, this is more common than in other places, but still, I wouldn't even want to live with constant debt on my shoulders.
So I would be interested to know would happen here.
For far lower returns. With reduced demand, there's not much for that extra money to do. To the extent investment drives growth it's when it goes into innovation (R&D) or if businesses have demand but are capital constrained (and I suspect even that's more like speeding up than creating growth, exactly—you just get 5% growth now instead of 2.5% over two years, or whatever). Sure maybe you could spend it on advertising and marketing but all that can do is get us back to "people spend too much".
Savings rates have been inching up ever since bottoming out around 2005.
Household debt (latest): https://data.oecd.org/chart/5VU6
You can play with the charts to plot trends for as long as the OECD have data for each value. The position of the US isn't great, but it isn't terrible either.
That's why I find the idea of this system collapsing frankly quite amusing. Actually I hope for a complete break down of our economy. It's a perverted monster which deserves to go down.
Don't be so sure.
WHO pays for that?
Is there a free lunch?
In addition, who is paying for the trillions we are pumping into boeing and the airlines right now. We always have money for war and well connected companies but never have enough funding for basic human decency.
Yes, the US spends ridiculous amounts on the military (though on the other hand: that military is what gives them global dominance, which also is worth a lot of money), but just cutting that back won't give you a European style safety net. You'll have to increase taxes by a lot for everyone making more than the median, increase sales tax etc, essentially: pay more, not just reshuffle what you pay now.
I already pay a large portion of my check towards health insurance, so does my employer. Route those funds towards Universal Healthcare. We can just call them taxes.
This should not really be an argument. We are discussing whether it is appropriate for us to pay a bit more on taxes or to allow people to die. I fall into the more taxes side of the debate.
I have good health insurance right now. Maybe a little TMI so be warned. I took my 7 year old kid to get something looked at a little over a year ago. He was experiencing burning when he urinated. They measured the flow of his urine and took a look at his genitals. Whole thing took ~15 minutes. I am still getting bills for it. Turns out he just needed to go to the bathroom more. Every couple months I get another bill for ~$40 for some other doctor or company. Its crazy. The whole system is designed to bleed people.
And make no mistake: Germany's public health system works only because of our parallel private insurance system. Doctor's can't run their offices with public insurance patients, because the amounts they can bill are strictly limited per quarter. They make the money they need to survive on the private insurance patients that pay ~2.5 times as much and will pay per visit/procedure, not per quarter.
Of course, this also creates a two-tier system with the private insurances getting the good treatment and everyone else having to wait quite a while to get an appointment, not getting quite a few treatments (e.g. eye glasses, unless you're basically legally blind).
You're on HN, so you're most likely a skilled knowledge worker. You'll be greeted with open arms in Europe. Vote with your feet, give it a try. I don't believe that you'll see substantial change in the US, too many people (regular people too!) profit from the individualist approach.
As far as moving to another country, I have no need to, I make a large amount of money here and can afford the health care bills. I want the change for people that are not as advantaged as I am. I am willing to pay more so that they can get it.
As far as change in the US happening soon, I don't know. I think we are at an inflection point with more and more people desiring a change. People are losing their jobs right now and with it their health insurance. The election will potentially be a referendum on increased publicly available insurance.
The US healthcare system is a mess, I don't disagree. I don't believe there are any cheap & easy options to change it however. The grass is always greener on the other side of the Atlantic, but sometimes that's just because tales of success are spread around the world while the problems stay in the local news.
It also inflates health care cost, because the doctors use the private insurances to finance investments in expensive equipment. Talk to someone with private insurance, they essentially have fight off all sort of unnecessary tests even if they go in to get a flu vaccine. And no not every doctor needs an MRI in their practices. Also many other European countries have functioning health care without private insurances, which disproves the point they are necessary.
I have private insurance, and I've never had to fight off anything. The main difference is that I'll usually get an appointment on short notice and my provider pays for my glasses and good dental work.
And you're absolutely right, they aren't necessary for any system to exist, but they are necessary for this system to exist at this price. If doctors didn't pay the rent with private patients, they'd go bankrupt.
and that excludes the knock-on effects of encouraging economic risk-taking resulting from a functioning safety net.
As for the encouraged economic risk-taking: we'd see that in Europe, wouldn't we? We don't. Maybe putting a damper on how much of the reward for taking the risk you get to keep decreases the willingness to take it in the first place.
We're seeing pretty similar effects: multi-generational poverty, very low social mobility (lower than in the US according to some studies). We're just "keeping the social peace" by doing more redistribution, it does not appear to change anything beyond the immediate redistribution.
It's the idiology of trickle down economics that somehow instilled the concept of high taxes for the richest are bad, even though it was never based on evidence (just some handwaving theory why it should work) and in fact has been proven again and again to not work.
So yes short answer make the rich pay their fair share.
Just look at my post about Youtube censoring COVID19 from yesterday.
I continue to post because among the 1000 downvotes, there's one person who emails me and we start on a great relationship together!
That 1 person makes all the noise and "You're posting too fast. Please slow down. Thanks." - which is what happens when you post highly flagged comments that stops you posting on here anything at all for hours on end, essentially silencing you, worth it :)
While we're paying high taxes here in Denmark (about 38-50% income tax depending on your bracket), we don't spend a lot of money on things like health insurance like you do in US.
In a country where a medical bill can bankrupt you or you need to work x3 min wage jobs to get by, it's hardly surprising that it's the case. Saving up $500 / month is out of reach for a significant number of Americans. So debt is the only way to do basic things such as car repairs or handle emergency expenses.
You can even see this with the COVID response, where European countries are paying 80% of salaries, whereas in the US you get a flat $1200 check, once. The entire system is just skewed towards the wealthy.
There's no charity state here. Just pay for insurance, you can have that as well.
It’s the same as choosing invests - risk (stocks) is better than low risk (bonds) for most people. If you can tolerate risk you should if you want more returns.
I think that's OP's point. Every word in this sentence is subjective. Throwing around concepts like leverage debt and risk exposure is a way only a mid/well-off person would frame the discussion.
For the other 80% of the US, this statement is madness.
This is only be true because the US government keeps borrowing from the future to inflate today. But I agree, you don’t bet against the house, and the house is dead set on making sure asset values stay high.
This only helps those who cannot read or write spreadsheets, don't understand cashflow or otherwise are not aware of finance 101.
Credit is a tool and knowing and putting leverage to use is critical to success in life.
I save an average of 5% and sometimes upto 25% of my expenses through the judicious use of credit card rewards and promotions. Credit card companies are willing to take losses to have me as a customer and sign me up.
> how mad it is that as a society it's normal if not encouraged to live on debt or one or two paychecks away from being broke
This is a design parameter and not a coincidence.
A majority of current work is busy work - if the people doing it had some savings, they would stop doing that busy work.
The employer knows it, the employee knows it and they continue to do it.
Encouraging "money in, money out" keeps the hamster wheel rolling and the economy pumping money through the system.
No, they are desperate to pretend they've shored up a failing business model, and so they must constantly lure in more potential victims. You are temporarily subsidized by these schemes, but don't come crying to us when you end up behind the curve in confusing and changing credit terms.
I agree with your claims about busy work and hamster wheels.
In the US what happens is the card company says to Bob's Hardware, you must accept all our cards or you can't accept any cards, and our "Premium Reward" card has 7% interchange fee so when Jimmy presents his "Premium Reward" card for a $1000 purchase, the card company takes $70 of that. Jimmy gets $50 and he think he's a genius for having this card. The hardware store needs to raise prices for all customers to allow for people like Jimmy. So when Sarah, whose crappy job barely is enough to live on buys a product that would be $500 the store charges $540. Sarah's card only has an interchange fee of $10 and Sarah gets none of that, but the shop owner is legally prohibited from charging Jimmy more than Sarah and they're legally prohibited from refusing Jimmy's card unless they also refuse Sarah's.
Uhm technically yes, but functionally no.
When gas was routinely $3.5/gal in SoCAL (where I live), credit price used to be $3.5/gal and cash price $3.4/gal.
My credit card gives me straight 5.2% cash back on purchases at the pump.
I hence pay $3.3/gal - still less than the cash price of $3.4/gal.
Just a quick search here in Sweden the "best ones" totes zero interest for 45 days, one has about 0.4% cashback if you book flights with them, probably regular flights and not combined with other promotions.... Can't be bothered to dig in. All have much much higher fees regarding atm withdrawals and global purchases compared to debit cards.
Other tries to have "10% off using the promotion store at this online store" whatever that means. Probably stuff you never needed in the first place.
I respond to those 10% aggressively. I can assure you those 10% off at Walmart is used to purchase durable, essential goods. Those 10% off at Advanced Auto Parts are used to purchase parts for my 98 Toyota Camry that I love to maintain myself and has 270k miles on it. There is no reason why anyone here cannot replicate this when I can.
Companies are always going to try to squeeze out those inefficiencies. This is a place markets will fail, so it's somewhere for governments to step in. Maybe that means government stockpiles, maybe it means governments pay companies to have excess inventory of certain critical products.
It's the same for personal finances. It's actually inefficient for people to save for a rainy day because everyone has a rainy day fund when only 5% of people need it in a given year. This is where you want to have a strong social safety net so that people can spend.
I don't think the situation's "mad," it's just that the US has a weak social safety net and people are encouraged to spend.
I get why it’d be inefficient to store inventory, but why is it inefficient to save? You get paid for it and you’d want to have money lying around anyways for retirement.
I know in the US, how much debt you have has zero bearing on your ability to qualify for welfare programs, but savings can negatively impact your ability to qualify. So owing less doesn't qualify you for more aid, but having too much savings can screw you out of benefits in an emergency situation.
Some countries have programs that provide health benefits just because you exist. In the US, a lot of our benefits programs are "needs based," which means you have to qualify for aid and one of those qualifications is that you don't have savings because as little as $2000 in the bank can disqualify you.
I don't think it's as one dimensional as the above comment seems to suggest. But I bet there are inherent incentives in the US to not bother to save for various reasons. It would be interesting to see that investigated in earnest.
When you apply, you basically swear this is true to the best of knowledge and if it isn't you can be accused of fraud and potentially charged with criminal activity, or just have the money taken back in some cases. (My knowledge of the system is limited, but I was on food stamps for a while. Having something like $2000 in savings can disqualify you, iirc.)
This is misleading.
Yes, unsecured credit cards (there also exists secured credit cards which do have an attached collateral) do not have a collateral but stating "lenders have little recourse" is false.
They can collect the debt and make your life a living hell just like the hospital you went to to address your injured elbow charged you $25k for and hounds you to this day, garnishing your wages and putting liens on your property.
> Banks including Citigroup Inc., Discover and Synchrony are shutting down credit cards that haven’t been used in a while or lowering spending limits. The companies say they were taking these measures before the pandemic as a way to lessen risk. But those moves could also leave some borrowers without access to credit just when they need it most.
This is more concerning.
Since a certain class of borrowers are being unable to honor their obligations, other class of borrowers who had opened credit lines, planning ahead, to tap into exactly during such times will now be left without access to that what they had planned for in the past.
This now puts a short squeeze on people who could plow through these hard times and puts them at risk of falling into the class of people who are in absolute duress.
Does not do good to any one.
I would rather have the lenders continue to keep the accounts for borrowers with excellent credit history open and unaffacted.
Except credit score is not indicative of risk in this situation. Entire categories of jobs no longer exist so everyone who is a waiter is now a major risk.
True, but the credit history (not score) is a good proxy of the willingness for the borrower to settle their debt once the situation improves.
The recession taught financial institutions that for many people, especially older ones, that is an "if" in many cases.
But your point is well taken. However when I worked for a financial institution, the history was not really considered. It was assumed to be factored into the score.
I would appreciate the specifics. You can email them to me if you want. Handle at gmail.
In my personal experience, the history is absolutely considered when the risk to lender is high.
$50k unsecured loan? Sure. 780+ score? Good to go.
When I apply for a $250k loan from a lender with billions of dollars in reserve, they look at cashflow and the score. If I have a 780+ score on the day they pulled the score, I qualify for preferred rates.
When I apply for a $250k loan from a local credit union with a few million in reserve, they look at income and the history. Even if managed to have a 780+ score on the day they pulled the score, my little games from 90 days before to game the FICO model draws scrutiny and my rates are normalized to rates sans if I didn't play those games (which I dont anymore because the local credit union has the best deal always).
There's no such thing as a reliable limit through a big issuer. This is doubly true if someone has been chasing CLIs through "luv" (getting credit limit increases by clicking the "request limit increase" button on issuer web sites, often called the "luv button"). The only reliably stable limits are through small issuers who have much tighter rules and a much less intricate risk model.
Also, on this:
> other class of borrowers who had opened credit lines, planning ahead, to tap into exactly during such times will now be left without access to that what they had planned for in the past.
> This now puts a short squeeze on people who could plow through these hard times and puts them at risk
All I can say is absolutely do not rely on credit being there as a backstop. That's what cash savings are for. Yes, it's easy for me to say "just save six months of expenses!" and I'm not trying to call you wrong, so much as get a head start on the next class in the School of Hard Economic Knocks.
The only people who can rely on credit being there are people like that ex-Amazon engineer whose tweet I've been seeing passed around these past couple of weeks. He pulled $250k out of a HELOC on some investment property in Seattle he's been trying to sell, "just to have the cash." He likely already has so much cash or short-term equivalents to his name, that added $250k is less out of need and more out of strategy. That class of investor will always have credit available; most of the rest of us will see it pulled at the worst possible time.
My thoughts:
> Credit issuers, particularly unsecured credit card issuers, have been calling back lines every time there's even a whiff of an economic downturn since time immemorial
I have an aggregate mid six figure credit line excluding mortgages. Have been through this and the last two recessions.
Never had a $1 drop in CL: I choose who I build realtionships with very closely. Infact, I have had CLIs happen during "good times", without me reaching out . One lender even did a CLI without even notifying me (they usually email or mail you "good news!") - the only reason I noticed is because I like to look at my statements manually every billing period.
There is no Bank of America, Citibank or any of that retail nonsense in my basket of credit mix. Majority of them are in geographically diversified credit unions
Finance 101.
> absolutely do not rely on credit being there as a backstop. That's what cash savings are for
cash is an asset class but it's extremely expensive and a liability for me.
cash causes me headaches. Even with my 3% APY bank accounts (people seem to believe there are none of them in the US which is untrue!) after effort and inflation, I barely break even.
I have to track it, protect it try and ensure it does not loose value too much. I have to visit local branches when I need to take it out or deposit it.
Credit is awesome. In the U.S., it's really cheap and consumer lines of credit have extremely strong protections.
I purchased a $500 phone from Best Buy because they had a special promotion that required me to purchase their gift cards. They would not allow me to purchase gift cards using my premier credit card, so I used cash.
A year later, the phone died. I had 0 recourse.
Had I purchased it with my Amex, all I would have to pay is a $50 processing fee, if at that. I would, at worst, get refunded by Amex, the fair value of the phone at that time.
In my few interactions with Amex, I wouldn't be surprised if they just credited me $500.
> There is no Bank of America, Citibank or any of that retail nonsense in my basket of credit mix. Majority of them are in geographically diversified credit unions
You have already figured out what I meant by issuers with different risk profiles, so you're ahead in the credit "game" for sure. My largest credit lines are also with credit unions and they've not fluctuated once through three economic dips. That's not so much bragging--I'll never achieve a six-figure CL with any of them--as it is a data point. The large issuers have their purposes and I have credit lines through them, just not the ones I use for more long-term planning.
As for this:
> cash causes me headaches. Even with my 3% APY bank accounts (people seem to believe there are none of them in the US which is untrue!) after effort and inflation, I barely break even.
> I have to track it, protect it try and ensure it does not loose value too much. I have to visit local branches when I need to take it out or deposit it.
I think you are conflating cash as an investment and cash as an asset. You're right that it comes with a cost, but with that cost you (in currencies like EUR, JPY, and USD) are buying stability. Cash absolutely is not a viable growth investment but diversification means you have a stable block of cash on which you can fall back.
The emergency fund is not an investment; the most risk it should ever see are perhaps well-insured municipal/state government bonds. I have my emergency fund parked in two different online savings accounts paying about 2% interest each. Yes, I wind up behind relative to inflation over a long enough period of time but it's worth it to me to know that money will always be there and immediately accessible.
(Also, for what it's worth, moving money electronically in the States has gotten easier. I have set up two of my credit union credit cards as bill pay destinations on both of my emergency fund savings accounts. If I need to use the emergency fund, I simply put the charge on a credit card and pay it from the emergency fund account instead of my regular account. No branches involved.)
> Credit is awesome. In the U.S., it's really cheap and consumer lines of credit have extremely strong protections.
This is true, but that's not what I mean when I talk about emergency funds and that's not what I thought you were getting at when you referred to the reducing of credit lines for people who thought they were getting them to plan ahead and use in lean times. Credit is a tool, one with a somewhat slimy handle, but it's not a good tool in an economic downturn because that's when it will break the fastest.
I have a handful of 0% credit lines in use at the moment for just this reason; if they're going to give me money to use for free on something I'd have done anyway, I'm damn sure going to use it. I also have money to pay them off in short order squirreled away just in case I need to extinguish that debt in a hurry.
Would love to connect with you as now I'm outright jealous!
The best offer I have had Q1 2020 is 21 months 0% BT with 3% BT fee but only if I suffer a hard inquiry. OTHERWISE it's 12 mo, 5% BT fee.
This is essentially a 22 (21 + 1) months 0% loan with an effective 7% processing fee (I have to pay ~3% to create the credit card charge on my 2% cash back card, pay 3% to the processor for their troubles and another 3% BT fee)
> That's not so much bragging--I'll never achieve a six-figure CL with any of them--as it is a data point
I did want to clarify that I stated I have an aggregate mid six figure credit line excluding mortgages.
I do not have a six-figure CL with any one of them, not even near. I also don't wish to have one because it would likely be rated as a charge card instead of a revolving line which would negatively affect my scores.
> Also, for what it's worth, moving money electronically in the States has gotten easier
Not if the objective is to gain access to hard cash.
Even with my relationship with the institutions, the most I can withdraw in cash is $1500/day. During economic downturns, the ATMs run dry - you know this.
... and any place that allows me to use a debit/ATM card accepts a credit card as well! Let those sweet credit card rewards pour in.
> but it's not a good tool in an economic downturn because that's when it will break the fastest
My objection is your use of "not a good tool in an economic downturn".
Here's my point:
During economic downturns, relief is provided. Saw it in 2008, 2010, 2018, 2020.
I have recieved notifications from two of my credit card issuers that they are willing to offer me 0% payment plans - and all I have to do is press a button agree to pay a fixed, principal only monthly payment.
Who would offer such a fantastic deal outside an economic downturn?
THERE'S absolutely 0 reason for me to tap into the 1.75% CD I have at Ally. I was lucky to get that on the very Friday, the day after which the Fed published their effectively 0% policy.
I go on with my life taking advantage of 0% payment plans while my "emergency cash" makes me money (although at a terrible 1.75%, which after effort and inflation is NET NEGATIVE! I hate cash with a vengance!)
I hate cash. It's a liability, a headache.
What I really love is positive cashflow. Now that really gets me perky
Let's connect and happy weekend!
I'm one of those people. I have an account that started at 2.2%, and is currently earning 1.8% or so. I thought that was the best I could do without locking up my savings in long-term CDs.
Can you share any info on this?
So I think I have a reasonable suggestion for you: look into credit unions that are looking to hand out business loans.
In my experience, it's less risky than investing directly into said business (honestly that's where you make the most money!) and you're backed by the NCUA upto $250k per account
If you’re planning ahead consists of opening up credit lines via credit cards for your household finances, then you’re going to have a bad time. Credit from credit cards can be revoked at any time, and it makes no sense that credit card companies would be willing to lend in riskier markets.
If that's the exclusive and only back up, yes.
A financialy savvy person will mix both credit and debt classes for their situation.
There is no one true answer in engineering and this is financial engineering.
If you dont drive a car, you probably won't die in a car crash. However, you're less likely to get exposed to opportunities than a person who does drive a car.
Part of the stimulus bill increases unemployment benefits by $600/week. For a lot of lower wage earners this is probably more than they currently make.
If people are having difficulty paying it’s because their unemployment application is stuck in some office and not being processed fast enough. A totally preventable crisis.
It often pays to do business locally with smaller businesses for situations just like this. They're a bit more "human".
I heard some wild numbers a few months ago but they might be outdated.
Interest charged to people who do not pay down balances is the primary way the banks behind CCs (not Visa, mc, etc, they just take tiny slices of every transaction) have a business.
Meanwhile payday lenders will let you borrow $1000 for 3 months. You have to pay back $500 each month and if you can't pay it off within three months you will have to pay additional fees. That is basically a 500% APR.
There is no need to hate credit card companies. They are doing a perfectly fine job. They obviously have higher rates than regular loans simply because buying something with your credit card doesn't require approval from the company. When you apply for a regular loan it is often tied to a specific purchase that can be repossessed or directly increases your income and therefore ability to repay the loan.
For mine, interest starts accruing from the date of purchase for each purchase, except if you pay your new balance in full in the first statement. Generally the bank calculates it on a daily basis.
You should read your account agreement to figure out how your bank calculates this. Mine is here on page 11: https://www.chase.com/content/feed/public/creditcards/cma/Ch...
It is still not fully clear when does the settlement happen? At the end of each month, with a ~1.5% interest applied on the negative balance?
Now you can see that for reasonably well off people credits cards offer a nice interest-free float. For example you make a large purchase of $1000 on January 15, but your statement gets produced on February 10 with a due date of March 4. Et voilà you can pay for that $1000 on March 4 with zero interest.
Not judging articles behind paywalls, but it would be nice to have an easy indicator on HN for such articles.
[Paywall] Millions of Credit-Card Customers Can’t Pay Their ...
^ would have been a more useful title.
If there’s a tag at least I’d know to avoid it to start. As many others have mentioned, there’s no pay-per single article option, this would obviously be a very different situation if that was the case.
The answer is: if there's a workaround, it's ok. Users usually post workarounds in the thread. This is in the FAQ at https://news.ycombinator.com/newsfaq.html and there's more explanation here: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu.... Note https://news.ycombinator.com/item?id=10178989 from 5 years ago.
Paywalls suck, but HN would suck worse without NYT, WSJ, Economist, etc., articles, so workarounds are what we're stuck with until the publication industry gets its act together the way music eventually did.
The reason can be found in the FAQ:
"It's ok to post stories from sites with paywalls that have workarounds. ... But please don't post complaints about paywalls. Those are off topic."
Why don't we have tests? Other countries have tests.
Just as much as we need to protect lives, we can’t drive desperate people up against a wall. Everyone in a WFH Silicon Valley bubble should pop their heads out and over to middle America for awhile to see how bad it’s quickly becoming.