Coming to the realization that our economic crisis (primarily massive number of newly unemployed) was largely avoidable with a scheme like this vs the PPP loan program and multi-trillion money printing we got instead.
My main point is that the government has done little on the demand side. I think it will be very weak coming out of this.
That assumption is wrong in this context. The employees most affected aren't the ones providing the least value under normal circumstances, they're the ones providing the least value during a quarantine (presumably because they're not working at all), which isn't strongly correlated with providing low value in general. For example, a hotel may have to do layoffs, but that doesn't mean hotels are unproductive/unprofitable in the general case when there isn't a quarantine.
And the likes of hotels may not be the quickest to rebound either. A lot of people are using their vacation time right now, and will have a ton of work to catch up on when they go back and not be in a position to take more time off to travel. Even after people go back to work, they're going to be wary about traveling to hang out in a huge venue with a bunch of strangers for a while.
So what you want is to create a lot of general demand so that former hotel workers can find work doing something else until demand for travel comes back, on top of the workers who had been doing those things already.
The QE / money printing is complicated, but it's worth nothing that Japan has been "printing money" for a long, long time, and QE is a mainstay of Abe-nomics (so the Japan subsidy here is absolutely coupled with aggressive QE). Battling deflation to hit inflation goals is a reasonable goal for a central bank, IMO, but obviously it's not cut and dry.
Banks have zero incentive to monitor these companies because it’s all guaranteed by the government and they’ve all been overpaid for doing simple paperwork.
What was the alternative? Existing unemployment benefits are insufficient for households to pay bills and the PP program at best would have saved a small portion of the overall jobs lost.
The way for the money to have been issued is that each Social Security enrollee be sent funds from the Federal government, irrespective of income or employment status.
Those who have immediate needs would immediately spend. Those that do not would either be forced to invest/deposit the funds or otherwise continue economic consumption by spending.
Either way, the issuing of funds would have been much more efficient and fast than the mishmash of state UI programs and the IRS.
This is the equivalent of all the workers from the top 20-30+ companies in Japan no longer working.
It’s like all the convenience store and restaurant staff suddenly being halved.
If people are banned from working the crisis isn't avoidable in any real sense.
Without shoring up the demand side I’m not seeing how we get to this rosy V shaped recovery the stock market seems to be predicting.
https://www.visualcapitalist.com/the-anatomy-of-the-2-trilli...
The 2 trillion bill included:
$425 for large corporations = 25% of the money $377 for small businesses = 20% of the money (originally excluding the another $484 billion)
$377 + $484 from yesterday = $861 billion for small businesses which is more than double the money for large corporations. Also the large corporations includes $58 billion for airline industry.
I don't see how this is a bad thing at all? Also considering the large corporation includes companies which operate cruise industry, airline industry, travel etc which employs millions of people, should they not be given help?
$861 billion for small businesses and $425 for large is very fair.
1. Cruise companies are registered off shore, do not pay US taxes and do not employ US taxpayers. Their "industry" is exploitative, polluting, and dangerous to public health.
2. Airlines have spent the last 10 years using excess cash to do share buybacks, thus "juicing" their share price and providing tax effective "dividends" to their shareholders while literally not saving for a rainy day.
3. These bailouts have not been tied to the government receiving equity or to any sacrifices/haircuts by existing equity or debt holders. This is unconscionable expenditure of taxpayer funds, socializing losses while privatizing gains.
4. Large corporations already have sufficient lines of credit and other sources of funds. Small businesses are both the primary employers of the majority of the workforce and also the primary location of both supply and demand of consumption in the economy.
I know people who have not left their homes for weeks. Consumer confidence is at absolute historic lows with no clear path to restoring it. This means there is likewise no clear path to a restoration of the parts of the economy which are currently disappearing.
The tools of economic policymakers are mostly ineffective in the current situation. The only way a recovery of any kind will happen, and it will likely be slow, is if people start venturing out of their houses again and looking for places to spend money. The government's role has to start with literally encouraging people to step outside of their front doors and walk around.
Some governments may (involuntarily) do the exact opposite and scare people even more.
In Italy there are countless of rumors amplified by the media that there will be strict and onerous requirements for most activities to be done (such as, clothing shops having to disinfect every single piece that has been tried on, no air conditioning at all costs, use of plexiglas visors in addition to masks for many close-to-face activities...) that will likely a. not restart businesses (because they're on top of all other regulations) and b. scare people so much that they will not like going out of their house (would you even go to buy clothes knowing you can be contaminated by the "plague"?).