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I mean, actions by the Federal reserve and congress are both part of the system so it's a little unfair to say the system should work without government interve

I mean, actions by the Federal reserve and congress are both part of the system so it's a little unfair to say the system should work without government intervention. Particularly this time around, healthy and well run businesses following reasonable best practices are being decimated. And why shouldn't they? A large percentage of our economy was just shut off. Add in leverage - which isn't inherently a bad thing - and suddenly you have a recipe for disaster with a system wide increase in debtors needing to default. We need government intervention because the free market solution to half of businesses being forced to close, is for those businesses to go under and their employees to starve and their banks get squeezed and so on

jkhdigital 7y ago
> healthy and well run businesses following reasonable best practices A business with zero debt financing would not go bankrupt during this crisis, but they would still have to lay off employees in the meantime, and those employees might "starve" without another source of income. I really, really don't understand the need to bail out companies here. If the problem is a loss of income for the employees, then strengthen unemployment insurance. If the underlying business was sound, then it will start back up again when the crisis is over. If the owners of the business were leveraged and cannot sustain debt payments during the crisis, then they can go into bankruptcy protection and emerge with new ownership.
- helen___keller 7y ago
  > A business with zero debt financing would not go bankrupt during this crisis There are fixed obligations that can exist outside of debt financing. Rent, for example, is one that everybody is familiar with. Anyways, I generally agree that helping the employees is more important than saving the businesses. If a business does die, it hurts some current investor or proprietor and benefits some future investor or proprietor after the crisis is over, with some efficiency lost in between as assets are sold off and eventually bought back up (and probably you get a better off company in the long run as a personal opinion). I'm just saying, it's not necessarily some moral fault that a business doesn't have the structure to survive the a pandemic. This is outside of normal recession-preparation.
  - toufka 7y ago
    I think the current argument is that the fastest, easiest, simplest way to help employees, is to make sure they don't get fired. And the easiest way to do that is to make sure the businesses don't feel the need to fire them (to either cover those fixed obligations, or to plain shut down). Give the businesses 8% more cash (by removing payroll tax), you might allow the business to survive a month-long slump, and not fire anyone. This would seem a good strategy if the issue was simply a month of lost productivity, with an otherwise healthy business. And where the game theory would lend itself towards the business owners knowing this, and so choosing to not fire anyone. And where the 'lost efficiency' of shuffling around ownership would be significantly greater than the short term loss. If those are not true, and the business then fires its employees anyway, it really was just a gift to the business owners, and would be a failure.
jariel 7y ago
" actions by the Federal reserve and congress are both part of the system" Normal actions by the Fed are not tantamount to bailouts. The Fed exists just as much to bail out the rich as it does for anything else. It's a massive and existential form of systematic inequality. 'We need the government to intervene' - ok, but then 'we' also need to take ownership of said companies and allow the feckless investors to eat dirt. Then maybe they can price in risk more effectively, which is what recent market rallies indicate they won't do. Imagine what stock prices would be without the looming guarantee of bailout ...
bjourne 7y ago
You are framing the situation as if there only would be two options; do nothing or pump trillions of dollars into financial markets. But there is a third option. Use those trillions of dollars to take care of the people hurt by the crisis. Provide unemployment benefits and free healthcare to the people affected. The money could also be used to fund a jobs guarantee program. For example, to construct a high-speed rail network or to build homes to solve the homelessness crisis.
- helen___keller 7y ago
  No, I'm not.
afpx 7y ago
So, what are the probable and worst case scenarios? Right now, it's hard to cut through the hyperbole.
- helen___keller 7y ago
  Nobody really knows because the virus itself carries so much uncertainty. That's why market volatility is so high- 2 weeks of lockdown? Two months? A year? Oh it's ending next week? Nobody knows Worst case you can just imagine up some great depression 2.0 where all confidence in the economy is gone and nobody has jobs , or maybe a government so intent on preventing this that it causes hyperinflation. I don't think either of these are particularly likely

jkhdigital 7y ago

> healthy and well run businesses following reasonable best practices A business with zero debt financing would not go bankrupt during this crisis, but they would still have to lay off employees in the meantime, and those employees might "starve" without another source of income. I really, really don't understand the need to bail out companies here. If the problem is a loss of income for the employees, then strengthen unemployment insurance. If the underlying business was sound, then it will start back up again when the crisis is over. If the owners of the business were leveraged and cannot sustain debt payments during the crisis, then they can go into bankruptcy protection and emerge with new ownership.

helen___keller 7y ago
> A business with zero debt financing would not go bankrupt during this crisis There are fixed obligations that can exist outside of debt financing. Rent, for example, is one that everybody is familiar with. Anyways, I generally agree that helping the employees is more important than saving the businesses. If a business does die, it hurts some current investor or proprietor and benefits some future investor or proprietor after the crisis is over, with some efficiency lost in between as assets are sold off and eventually bought back up (and probably you get a better off company in the long run as a personal opinion). I'm just saying, it's not necessarily some moral fault that a business doesn't have the structure to survive the a pandemic. This is outside of normal recession-preparation.
- toufka 7y ago
  I think the current argument is that the fastest, easiest, simplest way to help employees, is to make sure they don't get fired. And the easiest way to do that is to make sure the businesses don't feel the need to fire them (to either cover those fixed obligations, or to plain shut down). Give the businesses 8% more cash (by removing payroll tax), you might allow the business to survive a month-long slump, and not fire anyone. This would seem a good strategy if the issue was simply a month of lost productivity, with an otherwise healthy business. And where the game theory would lend itself towards the business owners knowing this, and so choosing to not fire anyone. And where the 'lost efficiency' of shuffling around ownership would be significantly greater than the short term loss. If those are not true, and the business then fires its employees anyway, it really was just a gift to the business owners, and would be a failure.

jariel 7y ago

" actions by the Federal reserve and congress are both part of the system" Normal actions by the Fed are not tantamount to bailouts. The Fed exists just as much to bail out the rich as it does for anything else. It's a massive and existential form of systematic inequality. 'We need the government to intervene' - ok, but then 'we' also need to take ownership of said companies and allow the feckless investors to eat dirt. Then maybe they can price in risk more effectively, which is what recent market rallies indicate they won't do. Imagine what stock prices would be without the looming guarantee of bailout ...

bjourne 7y ago

You are framing the situation as if there only would be two options; do nothing or pump trillions of dollars into financial markets. But there is a third option. Use those trillions of dollars to take care of the people hurt by the crisis. Provide unemployment benefits and free healthcare to the people affected. The money could also be used to fund a jobs guarantee program. For example, to construct a high-speed rail network or to build homes to solve the homelessness crisis.

helen___keller 7y ago
No, I'm not.

afpx 7y ago

So, what are the probable and worst case scenarios? Right now, it's hard to cut through the hyperbole.

helen___keller 7y ago
Nobody really knows because the virus itself carries so much uncertainty. That's why market volatility is so high- 2 weeks of lockdown? Two months? A year? Oh it's ending next week? Nobody knows Worst case you can just imagine up some great depression 2.0 where all confidence in the economy is gone and nobody has jobs , or maybe a government so intent on preventing this that it causes hyperinflation. I don't think either of these are particularly likely