[chrisk]

Bailouts may be required, but it needs to come with a number of strings attached.

I wonder if one of the strings attached would be that the money could only be spent on goods and services and not to pay down debt.

The government should take an equity and debt stake. It would dilute but not wipe out the existing holders. After all, the severe downturn is short-term, the mild downturn is more permanent. As business recovers, the government gradually sells off its stake over subsequent years. It avoids the word bailout which is considered moral hazard by Republicans, but recovers the investment with a return, which a Republicans should like.

---

The IRS mailed everyone checks in 2002, I think, as our rebate on the "surplus" (boy, that surplus didn't last long).  And again in 2008, I think.  So they have the capacity to do this.  Mnuchin says they could send out checks in 2 weeks.  ...Hopefully that is not the same 2 weeks within which we were supposed to see a million covid tests.

Anyway, I think as a practical matter it can be done.

Hmm, this paper says the tax cut bill was passed by Congress in the spring of 2001 and tax rebate checks were sent out "beginning in late July and continuing until late September." This suggests somewhere between 3 and 6 months after the legislation was enacted.

And again, that is presumably to households that had filed taxes that year and were eligible for rebates. Not all households file taxes. And sending out checks in Spring 2020 to addresses for tax filing from Spring 2019 risks sending checks to a lot of people who have moved. Moreover, in circumstances such as mine, I am not presently at my tax filing address, and sheltering in place/travel bans would prevent me from getting back there.

Not to mention, are banks operating normal hours right now? Will there be no delays in mail delivery in the next few weeks from workers who self-quarantine or are sick?

I guess I'm not sold that that method will be either fast enough, accurate enough, nor reach everyone eligible.

Don’t send money to everyone . That is mostly wasted. Most Americans are spending less. Spend more significant amounts on the unemployed. They are the ones who are suffering from our governments incompetence. Hong Kong and Tauwan are more tightly integrated with China and they have been only lightly impacted. Korea got off to a bad start but their government swung into action while Trump diddled. Support the unemployed ONLY. Trump is blatantly looking to buy votes. Democrats should withhold support of this move.

[chrisk]

Bailouts may be required, but it needs to come with a number of strings attached.

I wonder if one of the strings attached would be that the money could only be spent on goods and services and not to pay down debt.

The government should take an equity and debt stake. It would dilute but not wipe out the existing holders. After all, the severe downturn is short-term, the mild downturn is more permanent. As business recovers, the government gradually sells off its stake over subsequent years. It avoids the word bailout which is considered moral hazard by Republicans, but recovers the investment with a return, which a Republicans should like.

---

The IRS mailed everyone checks in 2002, I think, as our rebate on the "surplus" (boy, that surplus didn't last long).  And again in 2008, I think.  So they have the capacity to do this.  Mnuchin says they could send out checks in 2 weeks.  ...Hopefully that is not the same 2 weeks within which we were supposed to see a million covid tests.

Anyway, I think as a practical matter it can be done.

Hmm, this paper says the tax cut bill was passed by Congress in the spring of 2001 and tax rebate checks were sent out "beginning in late July and continuing until late September." This suggests somewhere between 3 and 6 months after the legislation was enacted.

And again, that is presumably to households that had filed taxes that year and were eligible for rebates. Not all households file taxes. And sending out checks in Spring 2020 to addresses for tax filing from Spring 2019 risks sending checks to a lot of people who have moved. Moreover, in circumstances such as mine, I am not presently at my tax filing address, and sheltering in place/travel bans would prevent me from getting back there.

Not to mention, are banks operating normal hours right now? Will there be no delays in mail delivery in the next few weeks from workers who self-quarantine or are sick?

I guess I'm not sold that that method will be either fast enough, accurate enough, nor reach everyone eligible.

Don’t send money to everyone . That is mostly wasted. Most Americans are spending less. Spend more significant amounts on the unemployed. They are the ones who are suffering from our governments incompetence. Hong Kong and Tauwan are more tightly integrated with China and they have been only lightly impacted. Korea got off to a bad start but their government swung into action while Trump diddled. Support the unemployed ONLY. Trump is blatantly looking to buy votes. Democrats should withhold support of this move.

[2006alum]

it has nothing to do with the speed of our leaders to anticipate and/or react to the pandemic.  As a society, we went from basic preventable steps to shelter-in-place in very short order. 

Aren't those things related? It seems like countries that started testing, contact tracing, and isolating got way out ahead of it. Countries like the Italy, France, and the US largely dithered for a month while it spread unchecked? It seems like Taiwan, Korea, and Singapore are going to escape much more unscathed than Europe and North America, where testing, contact tracing and isolation have been haphazardly implemented at best.

This country has very few hospital beds, and about 70% are taken up at any one time.  Whether 70% of the population gets infected in six months or 18 months, the numbers needed to be hospitalized will be a strong multiple of our capabilities.  And the Elites are absolutely willing to destroy our economy to go down that path.

Where did you get those estimates? From what I've seen, 6 vs. 18 months makes an incredible difference in terms of hospitalization rates, as these charts nicely illustrate: https://projects.propublica.org/graphics...-hospitals

40% infected over 18 months leaves most hospitals at or near capacity, whereas 40% infected over 6 months leaves nearly the entire country's hospital system at or above 200% capacity.

[2006alum]

it has nothing to do with the speed of our leaders to anticipate and/or react to the pandemic.  As a society, we went from basic preventable steps to shelter-in-place in very short order. 

Aren't those things related? It seems like countries that started testing, contact tracing, and isolating got way out ahead of it. Countries like the Italy, France, and the US largely dithered for a month while it spread unchecked? It seems like Taiwan, Korea, and Singapore are going to escape much more unscathed than Europe and North America, where testing, contact tracing and isolation have been haphazardly implemented at best.

This country has very few hospital beds, and about 70% are taken up at any one time.  Whether 70% of the population gets infected in six months or 18 months, the numbers needed to be hospitalized will be a strong multiple of our capabilities.  And the Elites are absolutely willing to destroy our economy to go down that path.

Where did you get those estimates? From what I've seen, 6 vs. 18 months makes an incredible difference in terms of hospitalization rates, as these charts nicely illustrate: https://projects.propublica.org/graphics...-hospitals

40% infected over 18 months leaves most hospitals at or near capacity, whereas 40% infected over 6 months leaves nearly the entire country's hospital system at or above 200% capacity.

[stupac2]

The concern I have is that lack of money in people's pockets is not the problem at this time.

Probably not what you'd be saying if you were a server or a bartender or a hotel worker or flight attendant etc etc etc.

Plus people like you and me (and I assume most of us on here) might be more likely to get takeout a few times a week if we have that extra $1k or whatever.

Definitely not good phrasing on my part; I did follow it up with "I think the best we can do is try to tie people over for the next few months so that businesses don't go out of business and people can be tided over so that they don't have knock-on effects on the economy".

I think I was trying to make an argument against a broad-based "give every American money" and more towards "let's target individuals who are directly affected by the pandemic" (such as your bartenders, hotel worker, or flight attendant). 

Just to give you an idea, I had started shopping for a car.  That's on hold now, because it isn't urgent and in any case I'm not driving.  That would inject some money into the economy.  Unfortunately, an extra $1000 or even winning the lottery isn't going to be the difference between me buying a car and waiting until this passes.

The good news, such as it is, is that after the pandemic passes, I will be buying that car... unless of course I lose my job because of the recession because of the pandemic.

BC

Targeting takes time that we don't have. It's better to just pump the money out there and accept that some relatively small fraction of the populace won't really need it. (And that would be, what, 10%? Big deal. And don't forget that a lot of high-income people inexplicably live paycheck-to-paycheck as well.)

[stupac2]

The concern I have is that lack of money in people's pockets is not the problem at this time.

Probably not what you'd be saying if you were a server or a bartender or a hotel worker or flight attendant etc etc etc.

Plus people like you and me (and I assume most of us on here) might be more likely to get takeout a few times a week if we have that extra $1k or whatever.

Definitely not good phrasing on my part; I did follow it up with "I think the best we can do is try to tie people over for the next few months so that businesses don't go out of business and people can be tided over so that they don't have knock-on effects on the economy".

I think I was trying to make an argument against a broad-based "give every American money" and more towards "let's target individuals who are directly affected by the pandemic" (such as your bartenders, hotel worker, or flight attendant). 

Just to give you an idea, I had started shopping for a car.  That's on hold now, because it isn't urgent and in any case I'm not driving.  That would inject some money into the economy.  Unfortunately, an extra $1000 or even winning the lottery isn't going to be the difference between me buying a car and waiting until this passes.

The good news, such as it is, is that after the pandemic passes, I will be buying that car... unless of course I lose my job because of the recession because of the pandemic.

BC

Targeting takes time that we don't have. It's better to just pump the money out there and accept that some relatively small fraction of the populace won't really need it. (And that would be, what, 10%? Big deal. And don't forget that a lot of high-income people inexplicably live paycheck-to-paycheck as well.)

[chrisk]

The concern I have is that lack of money in people's pockets is not the problem at this time.

Probably not what you'd be saying if you were a server or a bartender or a hotel worker or flight attendant etc etc etc.

Plus people like you and me (and I assume most of us on here) might be more likely to get takeout a few times a week if we have that extra $1k or whatever.

Definitely not good phrasing on my part; I did follow it up with "I think the best we can do is try to tie people over for the next few months so that businesses don't go out of business and people can be tided over so that they don't have knock-on effects on the economy".

I think I was trying to make an argument against a broad-based "give every American money" and more towards "let's target individuals who are directly affected by the pandemic" (such as your bartenders, hotel worker, or flight attendant). 

Just to give you an idea, I had started shopping for a car.  That's on hold now, because it isn't urgent and in any case I'm not driving.  That would inject some money into the economy.  Unfortunately, an extra $1000 or even winning the lottery isn't going to be the difference between me buying a car and waiting until this passes.

The good news, such as it is, is that after the pandemic passes, I will be buying that car... unless of course I lose my job because of the recession because of the pandemic.

BC

Targeting takes time that we don't have. It's better to just pump the money out there and accept that some relatively small fraction of the populace won't really need it. (And that would be, what, 10%? Big deal. And don't forget that a lot of high-income people inexplicably live paycheck-to-paycheck as well.)

The unemployed will be relatively easy to identify. They may need several $K a month for months. That’s money better spent than giving $1K one-time. People who are employed or retired will be spending less in the coming months.

[chrisk]

The concern I have is that lack of money in people's pockets is not the problem at this time.

Probably not what you'd be saying if you were a server or a bartender or a hotel worker or flight attendant etc etc etc.

Plus people like you and me (and I assume most of us on here) might be more likely to get takeout a few times a week if we have that extra $1k or whatever.

Definitely not good phrasing on my part; I did follow it up with "I think the best we can do is try to tie people over for the next few months so that businesses don't go out of business and people can be tided over so that they don't have knock-on effects on the economy".

I think I was trying to make an argument against a broad-based "give every American money" and more towards "let's target individuals who are directly affected by the pandemic" (such as your bartenders, hotel worker, or flight attendant). 

Just to give you an idea, I had started shopping for a car.  That's on hold now, because it isn't urgent and in any case I'm not driving.  That would inject some money into the economy.  Unfortunately, an extra $1000 or even winning the lottery isn't going to be the difference between me buying a car and waiting until this passes.

The good news, such as it is, is that after the pandemic passes, I will be buying that car... unless of course I lose my job because of the recession because of the pandemic.

BC

Targeting takes time that we don't have. It's better to just pump the money out there and accept that some relatively small fraction of the populace won't really need it. (And that would be, what, 10%? Big deal. And don't forget that a lot of high-income people inexplicably live paycheck-to-paycheck as well.)

The unemployed will be relatively easy to identify. They may need several $K a month for months. That’s money better spent than giving $1K one-time. People who are employed or retired will be spending less in the coming months.

[2006alum]

Incidentally, in 2008 the checks also took at least three months to be sent out from the time the legislation was passed, per a Politico piece comparing today's efforts to the most recent attempt to push cash into the hands of recession-fearing citizens:

In 2008, [Pelosi's] negotiating partner was Bush treasury secretary Henry Paulson Jr., a former Goldman Sachs CEO who also liked to make deals. House Minority Leader John Boehner of Ohio, a conservative Republican who was also at the table, was yet another dealmaker.

The climate did not necessarily seem conducive to compromise. Bush had unilaterally announced a plan to send out checks to most Americans, but not to the working poor. Boehner wanted to stuff the plan with tax breaks for businesses, while Pelosi wanted spending programs for the needy. As the talks began in the House’s “Board of Education” room, the tiny hideaway where Speaker Sam Rayburn used to “educate” members unwise enough to cross him, Boehner groused that the goal was supposed to be economic stimulus, not income redistribution. Pelosi shot back that the actual goal was preventing “your potential recession.”

But it took just two days to unite the room around a simple middle ground: Send out checks of up to $1200 per family plus $300 per child, like Bush wanted, and include the working poor, like Pelosi wanted. She insisted that top earners couldn’t be eligible, and Boehner insisted on a tax break encouraging businesses to buy equipment, but Congress overwhelmingly approved the deal in February, and the checks started going out in May. And Paulson says the bipartisan trust built over those two days was vital to passing the bipartisan $700 billion bank bailout that helped rescue the financial system in the fall.

[2006alum]

Incidentally, in 2008 the checks also took at least three months to be sent out from the time the legislation was passed, per a Politico piece comparing today's efforts to the most recent attempt to push cash into the hands of recession-fearing citizens:

In 2008, [Pelosi's] negotiating partner was Bush treasury secretary Henry Paulson Jr., a former Goldman Sachs CEO who also liked to make deals. House Minority Leader John Boehner of Ohio, a conservative Republican who was also at the table, was yet another dealmaker.

The climate did not necessarily seem conducive to compromise. Bush had unilaterally announced a plan to send out checks to most Americans, but not to the working poor. Boehner wanted to stuff the plan with tax breaks for businesses, while Pelosi wanted spending programs for the needy. As the talks began in the House’s “Board of Education” room, the tiny hideaway where Speaker Sam Rayburn used to “educate” members unwise enough to cross him, Boehner groused that the goal was supposed to be economic stimulus, not income redistribution. Pelosi shot back that the actual goal was preventing “your potential recession.”

But it took just two days to unite the room around a simple middle ground: Send out checks of up to $1200 per family plus $300 per child, like Bush wanted, and include the working poor, like Pelosi wanted. She insisted that top earners couldn’t be eligible, and Boehner insisted on a tax break encouraging businesses to buy equipment, but Congress overwhelmingly approved the deal in February, and the checks started going out in May. And Paulson says the bipartisan trust built over those two days was vital to passing the bipartisan $700 billion bank bailout that helped rescue the financial system in the fall.

[fullmetal]

The federal govt could also take a page from the 2008 auto industry crisis: bailout but for equity, and if/when the airlines recover, the government comes out ahead.  And no more buybacks.

[fullmetal]

The federal govt could also take a page from the 2008 auto industry crisis: bailout but for equity, and if/when the airlines recover, the government comes out ahead.  And no more buybacks.

[OutsiderFan]

Nouriel Roubini absolutely crushes it:
https://youtu.be/sdoROIH9gao

[OutsiderFan]

Nouriel Roubini absolutely crushes it:
https://youtu.be/sdoROIH9gao

[Mick]

it has nothing to do with the speed of our leaders to anticipate and/or react to the pandemic.  As a society, we went from basic preventable steps to shelter-in-place in very short order. 

Aren't those things related? It seems like countries that started testing, contact tracing, and isolating got way out ahead of it. Countries like the Italy, France, and the US largely dithered for a month while it spread unchecked? It seems like Taiwan, Korea, and Singapore are going to escape much more unscathed than Europe and North America, where testing, contact tracing and isolation have been haphazardly implemented at best.

This country has very few hospital beds, and about 70% are taken up at any one time.  Whether 70% of the population gets infected in six months or 18 months, the numbers needed to be hospitalized will be a strong multiple of our capabilities.  And the Elites are absolutely willing to destroy our economy to go down that path.

Where did you get those estimates? From what I've seen, 6 vs. 18 months makes an incredible difference in terms of hospitalization rates, as these charts nicely illustrate: https://projects.propublica.org/graphics...-hospitals

40% infected over 18 months leaves most hospitals at or near capacity, whereas 40% infected over 6 months leaves nearly the entire country's hospital system at or above 200% capacity.

I get my estimates from the same place you did.  40% infected over 18 months -- which is a tall order, I think -- still leaves the coasts and urban centers well over 100%, most in the 200% range.  And that's with just 1/5th of the adults infected being hospitalized, assuming the doctors, PAs, nurses and other medical professionals return and live through that period.

I have no doubt that Kevin Durant will receive treatment.  As for you and me...we'll see.

I also entered my two homes -- Washington DC and Silicon Valley -- and even at the nonsensical 20% infection rate over 18 months, we're over 100% capacity in both places.  At 40%, we're nearly at 400% capacity.  At 60%, we're well over 500% capacity over six months or over 200% capacity at 18 months.

[Mick]

it has nothing to do with the speed of our leaders to anticipate and/or react to the pandemic.  As a society, we went from basic preventable steps to shelter-in-place in very short order. 

Aren't those things related? It seems like countries that started testing, contact tracing, and isolating got way out ahead of it. Countries like the Italy, France, and the US largely dithered for a month while it spread unchecked? It seems like Taiwan, Korea, and Singapore are going to escape much more unscathed than Europe and North America, where testing, contact tracing and isolation have been haphazardly implemented at best.

This country has very few hospital beds, and about 70% are taken up at any one time.  Whether 70% of the population gets infected in six months or 18 months, the numbers needed to be hospitalized will be a strong multiple of our capabilities.  And the Elites are absolutely willing to destroy our economy to go down that path.

Where did you get those estimates? From what I've seen, 6 vs. 18 months makes an incredible difference in terms of hospitalization rates, as these charts nicely illustrate: https://projects.propublica.org/graphics...-hospitals

40% infected over 18 months leaves most hospitals at or near capacity, whereas 40% infected over 6 months leaves nearly the entire country's hospital system at or above 200% capacity.

I get my estimates from the same place you did.  40% infected over 18 months -- which is a tall order, I think -- still leaves the coasts and urban centers well over 100%, most in the 200% range.  And that's with just 1/5th of the adults infected being hospitalized, assuming the doctors, PAs, nurses and other medical professionals return and live through that period.

I have no doubt that Kevin Durant will receive treatment.  As for you and me...we'll see.

I also entered my two homes -- Washington DC and Silicon Valley -- and even at the nonsensical 20% infection rate over 18 months, we're over 100% capacity in both places.  At 40%, we're nearly at 400% capacity.  At 60%, we're well over 500% capacity over six months or over 200% capacity at 18 months.

[OutsiderFan]

Technically this isn't a Covid-19 issue as much as a price war between RU and Saudi, taking advantage of a global crisis to wage war in the oil market.

This is nuts. Oil is now trading at $24!!! That should equate to $.85/gallon at the pump!!!

Shale companies need it to be $40 to break even IIRC.  All these shale companies have been financed by junk bonds. What happens when they default? Hopefully the bond holders aren't teacher's unions, because they won't get paid back for those losses, but at least they'll have cheaper gas for a while!

[OutsiderFan]

Technically this isn't a Covid-19 issue as much as a price war between RU and Saudi, taking advantage of a global crisis to wage war in the oil market.

This is nuts. Oil is now trading at $24!!! That should equate to $.85/gallon at the pump!!!

Shale companies need it to be $40 to break even IIRC.  All these shale companies have been financed by junk bonds. What happens when they default? Hopefully the bond holders aren't teacher's unions, because they won't get paid back for those losses, but at least they'll have cheaper gas for a while!

[2006alum]

Hi folks, I merged the bailouts, recession, and oil & gas threads into one uber-Economic & Financial Effects thread. Now that we have a whole section of the board for this, the potential for thread creep is much greater, and I think it may be helpful to have a smaller number of threads on core topics - for example, discussion about how to get money into the hands of Americans was happening simultaneously in both the bailouts and recession threads. 

Hope this makes sense?

[2006alum]

Hi folks, I merged the bailouts, recession, and oil & gas threads into one uber-Economic & Financial Effects thread. Now that we have a whole section of the board for this, the potential for thread creep is much greater, and I think it may be helpful to have a smaller number of threads on core topics - for example, discussion about how to get money into the hands of Americans was happening simultaneously in both the bailouts and recession threads. 

Hope this makes sense?

[Mick]

And don't forget that a lot of high-income people inexplicably live paycheck-to-paycheck as well.)

Years ago, I worked for a Big Four accounting firm during a recession.  My boss was the Vice Chairman of the firm, and we were talking about compensation adjustments for the partners.  He said the well-paid journeyman partners were the most at risk, because the rainmakers had to be kept whole, or they would depart for other firms.  And they had to keep the young partners whole until at least the fifth year of their partnership, or they would be making less than they did as managers.  

Which meant that there were partners who were going to face reductions of up to 30%.  We had a 10 year partner, #2 in our life sciences practice who was so furious that he bolted for another firm the morning we were to bid for a large pharma company with him as the lead partner.  He spent 18 more years as a partner at the new firm.  My boss told me "He'd just bought a house in Los Altos Hills.  He couldn't afford our reduction."  So he went on to make a sxxt-ton of money for his new firm.

[Mick]

And don't forget that a lot of high-income people inexplicably live paycheck-to-paycheck as well.)

Years ago, I worked for a Big Four accounting firm during a recession.  My boss was the Vice Chairman of the firm, and we were talking about compensation adjustments for the partners.  He said the well-paid journeyman partners were the most at risk, because the rainmakers had to be kept whole, or they would depart for other firms.  And they had to keep the young partners whole until at least the fifth year of their partnership, or they would be making less than they did as managers.  

Which meant that there were partners who were going to face reductions of up to 30%.  We had a 10 year partner, #2 in our life sciences practice who was so furious that he bolted for another firm the morning we were to bid for a large pharma company with him as the lead partner.  He spent 18 more years as a partner at the new firm.  My boss told me "He'd just bought a house in Los Altos Hills.  He couldn't afford our reduction."  So he went on to make a sxxt-ton of money for his new firm.