Coronavirus in the United States - news and thoughts

I don’t think that’s as much partisanship as a legitimate difference in POV. The republicans want to make sure businesses are helped, I agree with them. The reason being that this isn’t a demand crisis, people aren’t going to go to the closed businesses because they now have money. The local bars, restaurants, hotels, and larger corporate chains, airlines, resorts etc will go under without help. And many sooner rather than later because they have leases to pay for, as well as other expenses.
I don’t think a payroll tax holiday is the answer if the simply aren’t paying payroll right now, and I do think the dems forcing provisions against buybacks is a good thing, but these are legitimate concerns that will have massive implications. That’s why I am fine with getting it right.
Short term most utilities have suspended turning service off and Fannie Freddie FHA and VA I think have all suspended foreclosures. But if short term while they get this right if they want to suspend rental evictions too I am fine with that. Then if shelter is taken care of it’s “just” food, which is why I gave to the local food bank the other day. We will get through it. I supported the 2008 bill and support this one, they will get there.

 

today's global numbers

Clock resets 8pm est/000 gmt

Coronavirus Update (Live): 336,075 Cases and 14,613 Deaths from COVID-19 Virus Outbreak - Worldometer

 

Further commentary. Absolutely a must watch. Blunt and exact. And if there is someone here who watches this and doesn't come away with an understanding about how serious this is and what needs to be done, then they need to look in the mirror and question the flaw in their thinking.

 

Here is my issue: Airlines have purchased $51B of stock over the last 10 years. This does not include dividends. After 9/11 the airlines needed a bailout. This is a capital intensive business and developing reserves seems obvious. Now, I am not saying they could plan for covaid and months of being shut down, but they have issued tons of debt (delta has 5x more debt than cash) in these low interest environments, bought back stock, raised dividends and rewarded executives.

Further, large public companies have access to capital. Issue stock - yes, it will hurt. In contrast, small businesses have little access to capital.

I do believe a bailout is necessary but I also believe that some of the worst players should be allowed to fail or every time "something happens", the farmers/auto cos/airlines/banks will line up to get bailed out. Further, I think any company that gets bailed out should be subject to severe restrictions on executive pay, buying back stock, granting dividends, and employment terms.... until they pay the money back. Use public money, you owe the public.

edit - just venting.

 

Based on the amount of money the US govt has spent to keep airlines in business they might as well just nationalize it.

 

I have leaned towards the more pessimistic side through this, but don’t see how this number comes to pass. Especially with a large stimulus.

 

Once again, I do not have trouble with helping businesses but you can do that separately. Don't hold the money for the families up while arguing that part.

 

there is no free capital right now. You may wonder why mortgage rates haven’t gone down more - the short answer is that a main reason is that there aren’t buyers in the secondary market, the government has had to step in. And stocks are even more radioactive right now, If an airline made a stock tomorrow it would go nowhere. You could choose an airline or two to save, but that’s even worse. Short term it’s the government deciding which companies survive, longer term it means higher fares with less competition.
The few companies that have capital are largely holding in cash because they don’t know what they will need for the next few months, every major market is frozen.
No problem with many of your conditions. That was one of the mistakes of 2008 - and again why I want them to do this right. But Fannie and Freddie did have many of those restrictions. They still do.

 

Nigeria Has Chloroquine Poisonings After Trump Praised Drug

 

There is free capital. Uncle Warren sits on 120B. I and many others have a lot of cash we will be looking to deploy (after failing to find any suitable investments for the last 3 years). Part of the problem is the stock market is still over valued as of last Friday on a historical basis. As Buffett did with Goldman Sachs in 2008 - yes, I will bail you out but it is gonna hurt. At some radically lower price, there is a market. And if the equity holders get wiped out? It happens.

A lot of this is me venting b/c I have watched the melt up just like I did in 2008. I have shorted/hedged and then made money when the idiocy collapses (you don't make money when you sell a stock, you make it when you buy). Anyway, I agree that a bailout is necessary but the situation perturbs me and I also don't want to see the same executives who have gotten millions in options bailed out.

 

I was thinking the same thing. Also, they issued those same documents to Costco employees in the Piedmont in North Carolina. A lot of people expecting North Carolina to go into governor ordered lock down soon. Considering I have been hiding out in my home office for 8 days now, I would not mind it if they do a 2-week something to start with.

Interesting note, so far in California and New York, Semiconductor manufacturing has been deemed a "Critical Industry" and those companies have not shut down.....yet. I guess with the health care industry so digitally connected we have to be a "critical industry"?? Seems a bit odd.

 

I understand. It seems too big to be possible. But then all of this seems to be beyond anything that could have been comprehensible

 

The problem is that the parties are distrustful of each other. Democrats aren't going to let the business bailout happen until we get the family bailout, and Republicans won't let the family bailout happen until we get the business bailout. Each party distrusts the other to follow through if it gets what it wants. Basically, they fear that they'll lose their leverage in negotiations.

 

True, and in the meantime, many of those who elect them are left swinging in the breeze.

 

It'll depend. If this thing doesn't peak until the summer, it might well happen. We'll be bouncing in and out of shutdowns. We're nearing 20% of the states shutting down non-essential businesses. Imagine how hard our economy will be hit if the majority or all states are forced to do so for a significant period of time.

 

I'm not defending it. I'm only noting the rationale behind it. I wish our elected officials would act as leaders and public servants, but why start now.

 

Well I am trying to do the math to get there?
What percentage of the average family’s spending is discretionary? I would bet it’s not more than 15 percent on average, the other bills are still having to get paid. And whatever money went to savings will get pulled in for essentials if needed. Plus, some Discretionary spending will go to other things - amazon buys for instance. Even if unemployment spikes to 9% as I saw yesterday, those 9% will still be getting unemployment mostly and some have reserves to pay bills, so that won’t mean a full 9% drop from them.
Businesses will drop in proportion to demand, which is addressed above.
and then throw 1-2 trillion back in, which is 5-10% of GDP and the number just doesn’t seem likely.
I of course could be proven wrong, just don’t see how we get to that. Not to say it won’t be grim, just not that grim.

 

They should at least require airlines to stop charging for checked luggage