Where does one sign up for one of these free money loans?
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I’m more corporation friendly than most people here. But it seems easy to say that if you receive federal loans, those loans are senior to all existing debt and that all equity payouts (whether buybacks or dividends) are prohibited while the loan is outstanding.
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It’s fine, money is not a resource.
One consequence of this episode is that it’s forcing people to get back to basic econ 101 and remember that currency is just a convenient tool, but not intrinsically valuable.
Value comes from production and trade, and right now the issue is that we can’t magically compel production with monetary injections if people are quarantined and unable to work for non-liquidity reasons.
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Let’s just try giving businesses a trillion or two before we give up on the magic of money so easily.
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Wow, glanced at my main credit card transactions and we’ve spent half of what we normally do in the last month. This economy is hardcore fucked.
Well, sort of. At some basic level if people have money and needs, that does compel a degree of production. People need staples. They need food, medications, etc. Some of those are currently produced overseas and are not being distributed so we may need to significantly increase domestic production of those things in the coming months, which will help with the unemployment.
We need to keep enough money flowing to keep the wheels turning on the basics, and repatriating some of that production will help.
In the mean time, free markets are probably working as we speak on creative new in-home entertainment. If people have money to spend during the next 3-6 months, even if they’re stuck at home, companies will be working on putting stuff together that creates revenue and it will give people who WFH something to do.
Think sports exhibitions, once we have enough testing to test 24 of the best NBA players and do a 3-on-3 tournament. Think golf exhibitions. Think interactive digital concerts where people sitting on their couch get randomly selected to ask Taylor Swift questions between songs.
There are sectors that cannot really get through this creatively, they will try with sales/discounts, but ultimately a lot of them will shutter for a while… But this is about keeping as much of the economy afloat for as long as possible. To some extent, pumping money in from the bottom up helps prop it up to let some of this play out. If needed, some of this effort could be nationalized and if it came to it, not even the GOP could oppose it… Like if there are food shortages, there would be like 2 senators who opposed nationalizing food supply, and one of them is at home recovering from coronavirus.
Food supply isn’t going to go down because people don’t have enough money. It’s going to go down because we close the border and leave the people who harvest and process food on the other side. Yes, if that goes on long enough American citizens will be working in the fields and processing plants, but again, it won’t be money that puts nationalized food on the table, it will be work.
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I’m curious to see how this shakes out, because I’ve spent more than I usually do I think. Probably by a wide margin. Partially due to prepping, secondarily due to sort of luxury prepping. Like I was planning on buying patio furniture for my terrace in a few weeks, but given what’s going on and the fact that being able to enjoy that space will be pretty important during a lockdown, I got it now… I had pictures sitting around I needed frames for, I needed some stuff around the house, and instead of spreading it out over a few months like I would have, I got it all at once so I knew I’d have it if we shut down for a while.
I just checked and I’ve spent 37.5% more from 3/5 to 3/22 as I spent on average in the last two billing periods, and 9.6% more than I spent over the holidays. Since that’s over about 55% of a month, it’s going to end up being an even bigger increase, but obviously it’s one-time and my spending will be reduced a lot from now until late-May, at least.
I think we’re going to see sales in staples go way up for March, adjacent areas (guns, security, supplies) go way up, non-essential household items go up somewhat, and luxury/leisure/cars/etc go way down.
The long-term is more important, of course, but if we’re just looking at how much damage our economy takes if we fix it quickly with a smart trickle UP stimulus bill, this factors in.
I mean I basically agree, but what I’m saying is that you need to inject that money if people aren’t getting paychecks. Like if we inject $1,500 to every American right now and then expanded unemployment insurance to be like 100% of wages up to 50K/yr and 50% of every dollar after that capped at different levels based on size of family, almost all of that money would flow through the economy and create demand and jobs, starting from basic needs and expanding from there.
I’m pulling numbers out of my ass to illustrate the point, just saying we need to inject money by making sure people who lose their jobs can still care for their needs and spend some money, and that we don’t need to give a single person making 100K a year 100K a year in unemployment.
Essentially, I agree with you on the fundamentals but I think the first step in the process is injecting enough money to grease the wheels and keep them turning. (Followed by enough regulation and government action to guide the economy as needed during this time.)
I think you’re right in that it will help, or at least can’t hurt to inject money (as long as inflation isn’t a problem), but it won’t make up for work that has not been done while the economy is in half speed. The hole being dug will be hard to overcome and the impacts will be very hard to predict. Industries may disappear and people still having some cash may not save them.
It could be the impetus for positive changes where wfh becomes more normal and working 30hrs a week becomes normal and there’s less waste and people’s lives are really better.
Narrator?
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We prepped the month before 
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Regarding the hole being dug, I do think there will be an aspect of painful transition as we come out of this, and the degree to which the wealthy are willing to support propping up the working class to get through it will impact the speed of the recovery. Ironically, I think the more the wealthy are willing to do this, the better for them too due to their personal financial benefit from a quick recovery… I don’t have a ton of faith in that, though, unless it’s done during the crisis when there is the maximum pressure to do so.
As far as the positive chances, I do believe there will be some. Less than there should, but I do think WFH will become more normal once companies realize that they can save a lot of money on office space and achieve similar productivity and more morale. In a way, this is speeding up something that likely would have happened slowly over 15-20 years, which is why I was happy to make some small plays on ZM, WORK, and CTXS… but also why I went for NRZ as a REIT, rather than one focused on commercial real estate. Like, residential real estate might be fucked but will be okay if we get enough stimulus. Commercial real estate is straight up fucked, which is not a bad thing over the next 20-50 years IMO but will cause a lot of short-term pain.
The question is the degree to which we have the political will to mitigate the short-term pain. It’s more complex than most here would think, like it’s not just “lol fuck you” there is a fighting chance… but it’s still a pretty depressing thing to think about because it’s not that far removed from “lol fuck you” level of WAAF.
This is fundamentally different from every recession in our lifetime. Demand and “creating jobs” are not the policy goal. The policy goal is to destroy jobs and reduce demand so that people don’t spread coronavirus by producing and consuming nonessentials. By design, that will cripple GDP, which is a measure of production and consumption. The policy goals are not to protect GDP, but rather:
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to protect the poorest people and make sure they can continue to eat and remain in their homes even if they lose their jobs.
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to protect the economy’s ability to “reboot” when it can and go back to something approximating the old level of productivity.
No one has any clue how to do the second though, so we’re all incredibly fucked.
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Liberating the fuck out of a few more countries is the usual fallback plan.
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I agree, but I think that the way you protect the ability to reboot is by protecting the bottom 90-95%'s economic situation through a combination of direct stimulus (UBI) and/or freezing all rent and loans. We don’t know it’ll work, we can’t prove it’ll work, but it seems like the best option.
Be prepared for this. If we don’t see any relief from the heat, there is likely to be a rent/eviction freeze
Yea if everyone goes without movie theaters, bars, restaurants, concerts, sporting events and all sorts of other leisure types of activities for 6 months to a year, I just don’t see how those things ever recover.