13 ms·

Don’t bail out the cruise industry

370 points by nobita 7y ago

battery_cowboy 7y ago
Fuck em, they flag in other countries so they don't pay taxes, but also because they can treat employees like slaves, pollute using bunker fuel, and generally fuck over the world. Fuck em.
- Reason077 7y ago
  Airlines also pollute and dodge taxes. But love them or hate them, it's hard to argue that airlines don't play a critical role. The broader economy would suffer badly if they were to fail. Cruise ships, however, do not. They are purely recreational and the economy would not fall apart if they were to go. They also share some of the blame for spreading Covid-19 in the first place!
  - netrus 7y ago
    > The broader economy would suffer badly if they were to fail Why? The planes are not going anywhere. If airlines fail, someone will be able to buy them at a discount. They will need to hire pilots and cabin crews. Shareholders in airlines will be hit - as it should be.
    - deleted 7y ago
      [deleted]
    - usrusr 7y ago
      That's even more true with cruise ships. That industry will be effectively bailed out one way or the other, the other is banks eating the losses after bankruptcy and new companies starting out with lower debt after taking over the assets at firesale prices. But that only strengthens the point of the article: the optics of an actual bailout would be so much worse and the outcome would only really differ for shareholders.
      - bradleyjg 7y ago
        It’s not even banks, they don’t lend at those scales, it’s bondholders. Let them take their lumps. If investors wanted government guarantees they could have bought sovereign debt instead.
  - bradleyjg 7y ago
    Are the regular capital markets closed to the airlines? Even after all the turmoil Delta’s market cap is more than $14B. Just as they bought back shares in good times, now that they have a need for cash on hand they can sell new shares.
  - Cthulhu_ 7y ago
    At least you could argue [citation needed] that the airlines play a bigger role in the US economy than cruise ships. I mean their intent is to ferry people (and their money) away from the US, both in the fare (which goes to tax havens and rich people's pockets) and the money people spend in foreign tourist areas.
    - iguy 7y ago
      The airline equivalent of the cruise lines would be large foreign carriers, which happen to fly to the US. It would be obvious madness for the US Govt. to give anything at all to Emirates or Ethiopian, for instance. Whereas Delta & friends have a large footprint in the US, lots of jobs, lots of purely US service. Still not obvious whether they deserve help, but they are clearly very different organizations.
  - ced 7y ago
    it's hard to argue that airlines don't play a critical role. What critical industry will suffer if air travel suddenly becomes much more rare?
    - usrusr 7y ago
      Cruises! (I'm only pretending to have missed the "critical" before "industry", of course you are completely right)
    - deleted 7y ago
      [deleted]
unwind 7y ago
I'm not from the US, but I don't even understand the basic premise. If these companies avoid paying taxes by not being registered/incorporated in the US, how could they possibly be eligible for help from the US government? That just seems like a contradiction, like a huge case of having your cake and eating it.
- iguy 7y ago
  It's pretty crazy. They should, of course, feel free to petition the government of Liberia for help.
- jjeaff 7y ago
  Carnival Cruises is headquartered in Miami. They register their ships in other countries for various reasons. One of which is taxes. But the company itself is based in the US.
  - busterarm 7y ago
    Indeed, there's a bustling maritime law industry in the state of Florida that would die if the cruise industry were to fail or leave.
    - markdown 7y ago
      Are you arguing that we should bail out the cruise industry to save the lawyers?
      - foxyv 7y ago
        I think there is a missing /s
  - bradleyjg 7y ago
    The pay no taxes. Carnival Corp and Norwegian both posted negative income tax expenses — that is, they received more in refunds or deductions than they paid or set aside for taxes — with Carnival reporting an income tax expense of $71 million and Norwegian reporting an $18.9 million tax benefit. They don’t contribute to the public fisc in good times, they should have no call on it when times are tough.
mulm 7y ago
I don’t think we should bail out any bigger industry without requiring them to create buffers for the next crisis. We bailed them out in 2008, that’s fair, but if they sent all their profit to their shareholders instead of preparing for the next crisis then let their share holders bail them out. I’m European though, so I may be more of a social democrat than most Americans.
- beojan 7y ago
  Bailing them out is OK, but it should be through the government buying equity in those companies (essentially partial or complete nationalization).
  - nordsieck 7y ago
    > Bailing them out is OK, but it should be through the government buying equity in those companies (essentially partial or complete nationalization). Additionally, I think the government should be buying equity at a steep discount - something reasonable but not disastrous like 67%.
    - beojan 7y ago
      If the company is on the brink of bankruptcy, its stock is going to be close to worthless anyway.
    - chii 7y ago
      > buying equity at a steep discount the gov't "loans" should be the same as the amount of equity obtained. For example, if the book value of the company is $100 , and the debt is $80 (so they need a loan of $80 to cover their debts), then the bailout will dilute all existing shareholders 80%.
- pas 7y ago
  There are different kinds of bail outs. The US bail outs that bought the bad stuff from the banks and slowly sold them off as the market allowed made a nominal profit. (TARP recovered funds totalling $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6% and perhaps a loss when adjusted for inflation.) The other kind is what the central bank does, basically quantitative easing, just providing low interest loans to financial institutions - and basically to the government too (by buying US Treasury bonds on the open market). And then it becomes the banks' job to determine who to give loans to, and if they make bad calls eventually they will lose a lot of equity, so there market forces usually help separating the worse from the less bad.
busterarm 7y ago
The cruise ships send millions of dollars of US tourists' money every year to countries in the US sphere of influence that they would otherwise never fly and visit. It's not a bailout for the cruise industry. It's a bailout for nearly every island nation in this hemisphere. We keep the tourism money flowing and they'll keep flowing exported raw materials and food.
- atlasunshrugged 7y ago
  That's only true if you believe that there isn't some fundamental part of this business that is profitable and market forces won't eventually lead to new cruise companies popping back up in the future
  - busterarm 7y ago
    In times of crisis, that's not what we care about, we care about uninterrupted supply chain. Yes, I agree the system should not be that fragile, but for now it is.
    - yellowapple 7y ago
      In this case, I'd say we'd be better off letting that fragility run its course. Very few (if any) Americans depend on the existence of the cruise industry to make a living or otherwise survive in our society. For the ones who do, it'd be cheaper to give them individual "bailouts". Cruise ships contribute jack all to the national or global supply chain except as consumers of it; letting cruise lines fail means more capacity on that supply chain for things that actually do matter (especially in times of crisis). Even bank bailouts have a better value proposition, and that's saying something.
      - busterarm 7y ago
        Tourism is an import/export like any other. Trade imbalances aren't good for economies and eventually lead to wars 100% of the time. Read about the Opium Wars if you want a textbook example of this.
pippy 7y ago
The article missed another point: they're competing with US based tourism. Every person who chose to go on a cruise didn't visit a US city and spend money there.
- Bnshsysjab 7y ago
  Not really it means they spent time on a boat not a plane. If anything a boat to some nearby island beats flying to somewhere geographically remote because the money will be less likely to flow back via tourists visiting from the opposite direction.
- wideasleep1 7y ago
  On the Caribbean and Mexico cruises we've taken, we spent a few days before and after in the US ports Fort Lauderdale and San Diego, so it is common for both same-day flyers and short term stay visitors to embark.
xiphias2 7y ago
Tourists from cruise ships destroy nice vacactions. Many hundreds of people come on the streets in groups, go throught the streets loudly and fast to take photos, than go back to the ship. People who really go to these places and spend money for staying and try to blend in to have a peaceful vacation can't.
- Tade0 7y ago
  Venice a prime example of this problem.
- Bnshsysjab 7y ago
  Your comment seems like the statement of someone with an axe to grind rather and lacks factual evidence.
  - lb1lf 7y ago
    -I used to live in a small town (Aalesund, Norway, pop. of town centre - 10,000 or so). It is a popular port for cruise ships doing the Norwegian coast. I assure you, during summer season one could have 2-4 vessels in port - effectively a DoS attack on town. Getting from A to B on foot was nearly impossible, forget any shopping or café visits - a town built for 10,000 suddenly had twice as many people in the streets. Go figure. While the cruise tourists leave a little cash behind, it is much less per head than, say, camper van tourists do. I didn't mind all that much - but I can see valid reasons for not wishing to have a cruise entourage come crashing down on your hometown on a regular basis.
  - xiphias2 7y ago
    That's true. But the number of upvotes are evidence that I'm not the only person experiencing this. I love to travel, but I try to stay at least 10 days on any place I go to and learn a bit of the local language and customs. For that I really need the airlines to work, but if they get more expensive, I understand, and will just make longer vacations at less places.
- busterarm 7y ago
  And municipalities let them come because volume, volume, volume. Those tourist destinations cater to them more than they cater to you.
edejong 7y ago
The cruise industry is one of the most polluting and damaging industries in the world. It ruins cities worldwide. Their ships are petri-dishes for disease, spreading it directly into our vital cities. They are blocking perfect vistas of the sea. They are ruining local sea life and are spreading non-native species. Their exhaust fumes are extremely detrimental to local air quality in cities. The swarms of tourists are detrimental to local hotels and restaurants, since the swarms only buy souvenirs but lack incentive to spend big money on dining. And all of that without paying taxes. Let them go bust. Almost nobody is missing them.
- Bnshsysjab 7y ago
  I’ve always been curious about that, why do cruise ships always get hit with gastro? I rarely hear about it but when I do it’s on a cruise ship.
  - lb1lf 7y ago
    -Thousands of passengers from all over the world, (comparatively) cramped quarters, HVAC systems push air from cabin to cabin without sterilisation, buffets where hundreds handle the same serving utensils...
    - Reason077 7y ago
      > "HVAC systems push air from cabin to cabin without sterilisation" I suspect this is actually a bigger part of it than people realise. I've been in very modern hotels that clearly had issues with their HVAC design as smells (bathroom smells... yuck!) from other rooms infiltrated through the ventilation ducts. I imagine this issue could be worse in a cruise ship given the small size of the cabins.
  - BrentOzar 7y ago
    > why do cruise ships always get hit with gastro? Everybody uses the same touch points, all day long. Most get their food from the same buffet line, touch the same food, the same drink dispensers, sit down at the same tables (which aren't cleaned often enough), sit on the same deck chairs at the pool, hold on to the same railings on the stairways (especially since the boat is moving), etc., etc. They're all packed into the same space, making the same movements every day (room, to the stairs/elevator, to the buffet, to the stairs/elevator again, to the pool, to the stairs/elevator, etc.) Any virus that makes it to any common touch point is going to infect everybody in a matter of hours.
nhebb 7y ago
In case anyone is not aware, the planned relief for companies in the private sector is in the form of loans, not cash giveaways
- michaelt 7y ago
  You don't think a loan to a company on the brink of bankruptcy is a cash giveaway? Well, it would be nice if you're right...
- rsynnott 7y ago
  A loan at non-market rates is essentially a cash giveaway, though a smaller one than if you just give the cash directly.
ummwhat 7y ago
Better idea. They want a bailout? Sure. Turn all your ships to hospital ships for the next year. You won't miss them anyway. One of these ships is basically a 10 floor high city block that can sustain itself off grid for over two weeks. Surely we have a good use for that.
- CaptainZapp 7y ago
  Where do you take the doctors, nurses and paramdics to staff those ships? There is already a massive shortage in competent medical personal. Add to this that cruise ships are notoriously bad in containing viruses. Before we had this massive mess there were regular noro virus outbreaks on cruise ships. ASo no, I don't think that's a good idea.
- iguy 7y ago
  This didn't go so well with the Diamond Princess. Cruise ships seem like terrible sanitary environments at the best of times. Motels on the other hand are great, they have separate rooms each with its own windows & AC, and really simple plumbing.
- ransom1538 7y ago
  "Turn all your ships to hospital ships" Dear God no. Please don't create a covid19 death ship. Covid19 has proven to be a ruthless killer on recycled air systems. It would be impossible to screen for the virus - it would certainly find it's way on board.
  - dredmorbius 7y ago
    There are numerous non-covid medical conditions which could benefit. Though whether or not recreational cruise ships could be reasonably repurposed, and staffed, in time is a bit of a stretch.
  - sjg007 7y ago
    The army core of engineers would have to heavily modify them. We do have hospital ships. I am not sure it'd be possible though to get negative pressure in the HVAC.. maybe.
WalterBright 7y ago
I went on a cruise ship once. Was very bored. I was so bored I tried to wangle a tour of the engine room (after all, I'm an engineer) but no way said the captain. The food was nice. The captain avoided a big storm. I figured if I ever went on a cruise again it would be an a much smaller boat. After all, who doesn't want an oar thrust in their hands and have someone yell "ramming speed!" at them? "We keep you alive to serve this ship! Row well, and live!" and all. Much more fun than the gift shops and roulette wheels. When I was a kid we crossed the Atlantic in the SS United States. For a kid, that was a blast, especially when we steamed through a huge storm. Wowsa! I'm sad to see the rusty hulk it has become.
- lb1lf 7y ago
  The Hurtigruten is a coastal freighter cum cruise line traversing the Norwegian coast between Bergen in the south and Kirkenes near Murmansk up north, making loads of stops underway to on- and offload cargo and passengers. The Norwegian coast can be quite rough in the wintertime - a friend of mine is the steward on one of the ships, and she assures me every winter there are numerous passengers who insist on being dressed up in full survival kit and quite literally being tied to the mast - to experience the full wrath of a winter storm from a safe position. To each his own. It probably isn't boring, at least. :)
  - WalterBright 7y ago
    Do they make the passengers walk the oars, too? https://youtu.be/8SW6a1z_hUk?t=112 https://youtu.be/8SW6a1z_hUk?t=112
- retSava 7y ago
  Must say your comment sounds quite poetic to me. Sorry for OT/meta.
UweSchmidt 7y ago
A market based solution would be investors buying struggling companies at a discount, or companies using their reserves that they have built based on normal risk management. Bailout money should be used to help people during unemployment.
- nemo44x 7y ago
  I mainly agree with this. Companies living paycheck to paycheck should sell equity. The US government should set aside money to buy into these new equity offerings. For non-public and small business there can be funds set aside to help them. And then yes, simply increase unemployment distributions for the time bring to 80% previous income for a couple months.
mynameishere 7y ago
Man, I hate how people have all kinds of "reasons" why industry X shouldn't be bailed out. Uh, no. Nobody should be bailed out, as a general principle.
- yellowapple 7y ago
  I'd say actual people should by all means be bailed out. Anything less just punishes poor people for being poor. I'd be willing to extend that to small businesses, too, for similar reasons. Multi-million (let alone billion) dollar corporations, however, are not in a comparable situation, and re: them I fully agree with your take. If they accept bailouts, they should be prepared to also accept "We the People" democratically controlling them as publicly-owned cooperatives; the moment you depend on taxpayer money for your existence is the moment you forfeit the "right" to anything but taxpayer ownership.
- kkdaemas 7y ago
  This is a very short sighted view. Police forces cannot maintain order in the event of massive unrest and the best way to prevent this is to keep people above the poverty line and the death rates low. Desperation leads to upheaval.
battery_cowboy 7y ago
What do you call a cruise ship full of lawyers at the bottom of the sea?
- yellowapple 7y ago
  Progress?
- spiritplumber 7y ago
  A start
RivieraKid 7y ago
Why do bailouts at all instead of letting them go bankrupt? Bankruptcy doesn't mean that people lose their jobs, it means that investors / lenders lose money.
- fastball 7y ago
  Because apparently we want to make sure investors don't suffer at the expense of the taxpayer / rest of the population.
- chii 7y ago
  bankruptcy does mean the people who worked there would lose their jobs. They will have to be re-employed, if the new buyer of the assets sold to cover the debts, decides to continue running a cruise liner. This certainly takes some time, and in the interim, all the employees will be fired (or at least, not paid). If the gov't bails out the cruise liners, they may be able to force them to continue paying the employees in the intrim, and so "save" them from being unemployed and "save" welfare. The gov't can also end up owning equity in the business (which is not a bad thing - it's basically extra income for the state/treasury in the future).
rsynnott 7y ago
I'm bemused that anyone would even _consider_ bailing out the cruise industry, of all things. Like, what is the "in favour of" argument?
- Red_Leaves_Flyy 7y ago
  Crony capitalism?
- ekimekim 7y ago
  The campaign donations those companies gave you last election.
- c22 7y ago
  I guess allowing them to fail could lead to their large derelict vessels littering up the ocean?
tobltobs 7y ago
When the cruise industry gets a bailout, it is not to save the cruisers but the financial corporations, which have been financing this madness.
hannob 7y ago
I think there should be a much bigger discussion about bailouts. There currently seems to be a feeling that an industry that struggles deserves a bailout by default. Why don't we have a discussion about which industry provides important services to society? And particularly how helpful it is likely to be in the larger crisis we have looming over us - climate change - and which won't go away? It seems like the absolute worst idea to bail out high carbon industries, and that's not just true for cruise ships, but also for airlines and many others.
- deleted 7y ago
  [deleted]
echelon 7y ago
I had a thought earlier today that might fix the economic situation, but it's extremely bold. If the world congregates and places blame on the CCP for asking us to keep our borders open while knowing all along how contagious and deadly this virus was, that's criminally negligent. Maybe even malicious. The behavior of the CCP after the virus spread internationally is equally alarming. They threatened to shut off access to medicines manufactured in China, placed blame on Italy and the US for the virus' origin, and shut down European and US travel to China. Defaulting on debt is bad. But what if every nation collectively "cancelled" their debt to China? China would protest, but given the circumstance it doesn't seem like a credit downgrade would be necessary if this were taken as repayment for damages caused. If we owe zero to China, we can then lend all of that money to businesses and individuals impacted. Pay off domestic debts. I really like the idea of "cancelling Chinese debt". Now someone please tell me how this couldn't work. Would they retaliate? Would they consider it an act of war? (I shouldn't have to say this, but I harbor no ill will towards the Chinese people. I love Chinese culture and studied Mandarin in college. I dislike the CCP and their actions.)
- OJFord 7y ago
  Assuming you don't want to start a war, it relies on them not 'protesting' too much. It also relies on not needing to borrow again in the foreseable future, and probably not on good terms when you do (decades down the line). Trying to arrange 'every nation collectively' doing so sounds like a risky exercise in getting everybody to agree to your plan, and not side with China instead and make your (and anybody who did agree's) situation even worse. Strictly worse than just firing up the printers, IMO.
- OscarCunningham 7y ago
  How much of the US debt owned by China is held by the Chinese government rather than Chinese citizens?
  - barry-cotter 7y ago
    The huge majority of it. The Chinese Central Bank has to buy a lot of T-bills to keep the ¥/$ exchange rate where they want it. And the domestic finance market in China is very highly regulated to maintain capital controls; I’d be surprised if you can even buy T-bills outside Hong Kong and Macau.
blackrock 7y ago
Let it die. They provide no useful service to society. Maybe the replacements will create an ethical, sustainable, and environmentally friendly business instead.
troydavis 7y ago
Other threads debate the merits of cruises and/or bailouts, but this specific idea has a unique challenge: there may not be a viable market for cruises until COVID is at least treatable, if not preventable. The CDC’s guidance is to “defer all cruise travel worldwide”[1] and that may not change until treatment exists - particularly for those over 50-60. 51% of 2019 passengers were over 50[2]. Cruise ships manage to contain norovirus[3], but we’ve seen how different the consequences are when NCoV is present on a cruise ship. [1]: https://wwwnc.cdc.gov/travel/notices/warning/coronavirus-cruise-ship https://wwwnc.cdc.gov/travel/notices/warning/coronavirus-cru... [2]: https://www.cruise1st.co.uk/blog/cruise-holidays/how-old-is-the-average-cruise-passenger/ https://www.cruise1st.co.uk/blog/cruise-holidays/how-old-is-... [3]: https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm
LatteLazy 7y ago
Bailouts not not won't effect the long term size of the industry.
better0uts1d3 7y ago
And of course, they avoid paying taxes by sailing under other countries' flags
timwaagh 7y ago
If you guys are handing out bailouts I'd like one too. I don't pay any taxes in the US and I don't do anything particularly useful. I can guarantee that absolutely zero US jobs will be saved by bailing me out. I am not bankrupt and I don't need the money. I think I'd therefore be an excellent candidate to receive a bailout. Let's say five billion should be sufficient.
nojvek 7y ago
Bailouts are very unfair and undemocratic. I can understand for Boeing where the military absolutely depends on them and if a war were to start, being able to build planes is essential. But Carnival cruises, who cares if they go under? another one will prop up with a better business model that is sustainable. Every company should be able to weather a couple of months if they rode the bull for the best 11 years of stock rise in history. If your executives fucked it up, too bad. You can get a low interest loan, but no free bailout money.
manigandham 7y ago
There's no easy solution to a once in-a-century pandemic. The most important issue is economic continuity. It's better to prop up companies and industry for the short term if it means thousands of people continue receiving a paycheck and can afford to live. Suddenly laying off all those people while companies and vendors collapse will lead to major cascading effects that can be far more disastrous.
voisin 7y ago
Why would you ever bail out an industry that is not essential to society?
- effingwewt 7y ago
  One thing I've had nailed home during this fiasco is that almost all businesses consider themselves essential, even at the possible cost of their employee's lives. We have call centers doing cold call sales trying to call themselves essential.
fulafel 7y ago
Puzzling that the CO2 issue is buried far in the list of grievances. Does this reflect the reporter's priorities or more widely the Verge's or the readerships?

370 points by nobita 7y ago

Fuck em, they flag in other countries so they don't pay taxes, but also because they can treat employees like slaves, pollute using bunker fuel, and generally fuck over the world. Fuck em.

Reason077 7y ago
Airlines also pollute and dodge taxes. But love them or hate them, it's hard to argue that airlines don't play a critical role. The broader economy would suffer badly if they were to fail. Cruise ships, however, do not. They are purely recreational and the economy would not fall apart if they were to go. They also share some of the blame for spreading Covid-19 in the first place!
- netrus 7y ago
  > The broader economy would suffer badly if they were to fail Why? The planes are not going anywhere. If airlines fail, someone will be able to buy them at a discount. They will need to hire pilots and cabin crews. Shareholders in airlines will be hit - as it should be.
  - deleted 7y ago
    [deleted]
  - usrusr 7y ago
    That's even more true with cruise ships. That industry will be effectively bailed out one way or the other, the other is banks eating the losses after bankruptcy and new companies starting out with lower debt after taking over the assets at firesale prices. But that only strengthens the point of the article: the optics of an actual bailout would be so much worse and the outcome would only really differ for shareholders.
    - bradleyjg 7y ago
      It’s not even banks, they don’t lend at those scales, it’s bondholders. Let them take their lumps. If investors wanted government guarantees they could have bought sovereign debt instead.
- bradleyjg 7y ago
  Are the regular capital markets closed to the airlines? Even after all the turmoil Delta’s market cap is more than $14B. Just as they bought back shares in good times, now that they have a need for cash on hand they can sell new shares.
- Cthulhu_ 7y ago
  At least you could argue [citation needed] that the airlines play a bigger role in the US economy than cruise ships. I mean their intent is to ferry people (and their money) away from the US, both in the fare (which goes to tax havens and rich people's pockets) and the money people spend in foreign tourist areas.
  - iguy 7y ago
    The airline equivalent of the cruise lines would be large foreign carriers, which happen to fly to the US. It would be obvious madness for the US Govt. to give anything at all to Emirates or Ethiopian, for instance. Whereas Delta & friends have a large footprint in the US, lots of jobs, lots of purely US service. Still not obvious whether they deserve help, but they are clearly very different organizations.
- ced 7y ago
  it's hard to argue that airlines don't play a critical role. What critical industry will suffer if air travel suddenly becomes much more rare?
  - usrusr 7y ago
    Cruises! (I'm only pretending to have missed the "critical" before "industry", of course you are completely right)
  - deleted 7y ago
    [deleted]

unwind 7y ago

I'm not from the US, but I don't even understand the basic premise. If these companies avoid paying taxes by not being registered/incorporated in the US, how could they possibly be eligible for help from the US government? That just seems like a contradiction, like a huge case of having your cake and eating it.

iguy 7y ago
It's pretty crazy. They should, of course, feel free to petition the government of Liberia for help.
jjeaff 7y ago
Carnival Cruises is headquartered in Miami. They register their ships in other countries for various reasons. One of which is taxes. But the company itself is based in the US.
- busterarm 7y ago
  Indeed, there's a bustling maritime law industry in the state of Florida that would die if the cruise industry were to fail or leave.
  - markdown 7y ago
    Are you arguing that we should bail out the cruise industry to save the lawyers?
    - foxyv 7y ago
      I think there is a missing /s
- bradleyjg 7y ago
  The pay no taxes. Carnival Corp and Norwegian both posted negative income tax expenses — that is, they received more in refunds or deductions than they paid or set aside for taxes — with Carnival reporting an income tax expense of $71 million and Norwegian reporting an $18.9 million tax benefit. They don’t contribute to the public fisc in good times, they should have no call on it when times are tough.

mulm 7y ago

I don’t think we should bail out any bigger industry without requiring them to create buffers for the next crisis. We bailed them out in 2008, that’s fair, but if they sent all their profit to their shareholders instead of preparing for the next crisis then let their share holders bail them out. I’m European though, so I may be more of a social democrat than most Americans.

beojan 7y ago
Bailing them out is OK, but it should be through the government buying equity in those companies (essentially partial or complete nationalization).
- nordsieck 7y ago
  > Bailing them out is OK, but it should be through the government buying equity in those companies (essentially partial or complete nationalization). Additionally, I think the government should be buying equity at a steep discount - something reasonable but not disastrous like 67%.
  - beojan 7y ago
    If the company is on the brink of bankruptcy, its stock is going to be close to worthless anyway.
  - chii 7y ago
    > buying equity at a steep discount the gov't "loans" should be the same as the amount of equity obtained. For example, if the book value of the company is $100 , and the debt is $80 (so they need a loan of $80 to cover their debts), then the bailout will dilute all existing shareholders 80%.
pas 7y ago
There are different kinds of bail outs. The US bail outs that bought the bad stuff from the banks and slowly sold them off as the market allowed made a nominal profit. (TARP recovered funds totalling $441.7 billion from $426.4 billion invested, earning a $15.3 billion profit or an annualized rate of return of 0.6% and perhaps a loss when adjusted for inflation.) The other kind is what the central bank does, basically quantitative easing, just providing low interest loans to financial institutions - and basically to the government too (by buying US Treasury bonds on the open market). And then it becomes the banks' job to determine who to give loans to, and if they make bad calls eventually they will lose a lot of equity, so there market forces usually help separating the worse from the less bad.

busterarm 7y ago

The cruise ships send millions of dollars of US tourists' money every year to countries in the US sphere of influence that they would otherwise never fly and visit. It's not a bailout for the cruise industry. It's a bailout for nearly every island nation in this hemisphere. We keep the tourism money flowing and they'll keep flowing exported raw materials and food.

atlasunshrugged 7y ago
That's only true if you believe that there isn't some fundamental part of this business that is profitable and market forces won't eventually lead to new cruise companies popping back up in the future
- busterarm 7y ago
  In times of crisis, that's not what we care about, we care about uninterrupted supply chain. Yes, I agree the system should not be that fragile, but for now it is.
  - yellowapple 7y ago
    In this case, I'd say we'd be better off letting that fragility run its course. Very few (if any) Americans depend on the existence of the cruise industry to make a living or otherwise survive in our society. For the ones who do, it'd be cheaper to give them individual "bailouts". Cruise ships contribute jack all to the national or global supply chain except as consumers of it; letting cruise lines fail means more capacity on that supply chain for things that actually do matter (especially in times of crisis). Even bank bailouts have a better value proposition, and that's saying something.
    - busterarm 7y ago
      Tourism is an import/export like any other. Trade imbalances aren't good for economies and eventually lead to wars 100% of the time. Read about the Opium Wars if you want a textbook example of this.

pippy 7y ago

The article missed another point: they're competing with US based tourism. Every person who chose to go on a cruise didn't visit a US city and spend money there.

Bnshsysjab 7y ago
Not really it means they spent time on a boat not a plane. If anything a boat to some nearby island beats flying to somewhere geographically remote because the money will be less likely to flow back via tourists visiting from the opposite direction.
wideasleep1 7y ago
On the Caribbean and Mexico cruises we've taken, we spent a few days before and after in the US ports Fort Lauderdale and San Diego, so it is common for both same-day flyers and short term stay visitors to embark.

xiphias2 7y ago

Tourists from cruise ships destroy nice vacactions. Many hundreds of people come on the streets in groups, go throught the streets loudly and fast to take photos, than go back to the ship. People who really go to these places and spend money for staying and try to blend in to have a peaceful vacation can't.

Tade0 7y ago
Venice a prime example of this problem.
Bnshsysjab 7y ago
Your comment seems like the statement of someone with an axe to grind rather and lacks factual evidence.
- lb1lf 7y ago
  -I used to live in a small town (Aalesund, Norway, pop. of town centre - 10,000 or so). It is a popular port for cruise ships doing the Norwegian coast. I assure you, during summer season one could have 2-4 vessels in port - effectively a DoS attack on town. Getting from A to B on foot was nearly impossible, forget any shopping or café visits - a town built for 10,000 suddenly had twice as many people in the streets. Go figure. While the cruise tourists leave a little cash behind, it is much less per head than, say, camper van tourists do. I didn't mind all that much - but I can see valid reasons for not wishing to have a cruise entourage come crashing down on your hometown on a regular basis.
- xiphias2 7y ago
  That's true. But the number of upvotes are evidence that I'm not the only person experiencing this. I love to travel, but I try to stay at least 10 days on any place I go to and learn a bit of the local language and customs. For that I really need the airlines to work, but if they get more expensive, I understand, and will just make longer vacations at less places.
busterarm 7y ago
And municipalities let them come because volume, volume, volume. Those tourist destinations cater to them more than they cater to you.

edejong 7y ago

The cruise industry is one of the most polluting and damaging industries in the world. It ruins cities worldwide. Their ships are petri-dishes for disease, spreading it directly into our vital cities. They are blocking perfect vistas of the sea. They are ruining local sea life and are spreading non-native species. Their exhaust fumes are extremely detrimental to local air quality in cities. The swarms of tourists are detrimental to local hotels and restaurants, since the swarms only buy souvenirs but lack incentive to spend big money on dining. And all of that without paying taxes. Let them go bust. Almost nobody is missing them.

Bnshsysjab 7y ago
I’ve always been curious about that, why do cruise ships always get hit with gastro? I rarely hear about it but when I do it’s on a cruise ship.
- lb1lf 7y ago
  -Thousands of passengers from all over the world, (comparatively) cramped quarters, HVAC systems push air from cabin to cabin without sterilisation, buffets where hundreds handle the same serving utensils...
  - Reason077 7y ago
    > "HVAC systems push air from cabin to cabin without sterilisation" I suspect this is actually a bigger part of it than people realise. I've been in very modern hotels that clearly had issues with their HVAC design as smells (bathroom smells... yuck!) from other rooms infiltrated through the ventilation ducts. I imagine this issue could be worse in a cruise ship given the small size of the cabins.
- BrentOzar 7y ago
  > why do cruise ships always get hit with gastro? Everybody uses the same touch points, all day long. Most get their food from the same buffet line, touch the same food, the same drink dispensers, sit down at the same tables (which aren't cleaned often enough), sit on the same deck chairs at the pool, hold on to the same railings on the stairways (especially since the boat is moving), etc., etc. They're all packed into the same space, making the same movements every day (room, to the stairs/elevator, to the buffet, to the stairs/elevator again, to the pool, to the stairs/elevator, etc.) Any virus that makes it to any common touch point is going to infect everybody in a matter of hours.

nhebb 7y ago

In case anyone is not aware, the planned relief for companies in the private sector is in the form of loans, not cash giveaways

michaelt 7y ago
You don't think a loan to a company on the brink of bankruptcy is a cash giveaway? Well, it would be nice if you're right...
rsynnott 7y ago
A loan at non-market rates is essentially a cash giveaway, though a smaller one than if you just give the cash directly.

ummwhat 7y ago

Better idea. They want a bailout? Sure. Turn all your ships to hospital ships for the next year. You won't miss them anyway. One of these ships is basically a 10 floor high city block that can sustain itself off grid for over two weeks. Surely we have a good use for that.

CaptainZapp 7y ago
Where do you take the doctors, nurses and paramdics to staff those ships? There is already a massive shortage in competent medical personal. Add to this that cruise ships are notoriously bad in containing viruses. Before we had this massive mess there were regular noro virus outbreaks on cruise ships. ASo no, I don't think that's a good idea.
iguy 7y ago
This didn't go so well with the Diamond Princess. Cruise ships seem like terrible sanitary environments at the best of times. Motels on the other hand are great, they have separate rooms each with its own windows & AC, and really simple plumbing.
ransom1538 7y ago
"Turn all your ships to hospital ships" Dear God no. Please don't create a covid19 death ship. Covid19 has proven to be a ruthless killer on recycled air systems. It would be impossible to screen for the virus - it would certainly find it's way on board.
- dredmorbius 7y ago
  There are numerous non-covid medical conditions which could benefit. Though whether or not recreational cruise ships could be reasonably repurposed, and staffed, in time is a bit of a stretch.
- sjg007 7y ago
  The army core of engineers would have to heavily modify them. We do have hospital ships. I am not sure it'd be possible though to get negative pressure in the HVAC.. maybe.

WalterBright 7y ago

I went on a cruise ship once. Was very bored. I was so bored I tried to wangle a tour of the engine room (after all, I'm an engineer) but no way said the captain. The food was nice. The captain avoided a big storm. I figured if I ever went on a cruise again it would be an a much smaller boat. After all, who doesn't want an oar thrust in their hands and have someone yell "ramming speed!" at them? "We keep you alive to serve this ship! Row well, and live!" and all. Much more fun than the gift shops and roulette wheels. When I was a kid we crossed the Atlantic in the SS United States. For a kid, that was a blast, especially when we steamed through a huge storm. Wowsa! I'm sad to see the rusty hulk it has become.

lb1lf 7y ago
The Hurtigruten is a coastal freighter cum cruise line traversing the Norwegian coast between Bergen in the south and Kirkenes near Murmansk up north, making loads of stops underway to on- and offload cargo and passengers. The Norwegian coast can be quite rough in the wintertime - a friend of mine is the steward on one of the ships, and she assures me every winter there are numerous passengers who insist on being dressed up in full survival kit and quite literally being tied to the mast - to experience the full wrath of a winter storm from a safe position. To each his own. It probably isn't boring, at least. :)
- WalterBright 7y ago
  Do they make the passengers walk the oars, too? https://youtu.be/8SW6a1z_hUk?t=112 https://youtu.be/8SW6a1z_hUk?t=112
retSava 7y ago
Must say your comment sounds quite poetic to me. Sorry for OT/meta.

UweSchmidt 7y ago

A market based solution would be investors buying struggling companies at a discount, or companies using their reserves that they have built based on normal risk management. Bailout money should be used to help people during unemployment.

nemo44x 7y ago
I mainly agree with this. Companies living paycheck to paycheck should sell equity. The US government should set aside money to buy into these new equity offerings. For non-public and small business there can be funds set aside to help them. And then yes, simply increase unemployment distributions for the time bring to 80% previous income for a couple months.

mynameishere 7y ago

Man, I hate how people have all kinds of "reasons" why industry X shouldn't be bailed out. Uh, no. Nobody should be bailed out, as a general principle.

yellowapple 7y ago
I'd say actual people should by all means be bailed out. Anything less just punishes poor people for being poor. I'd be willing to extend that to small businesses, too, for similar reasons. Multi-million (let alone billion) dollar corporations, however, are not in a comparable situation, and re: them I fully agree with your take. If they accept bailouts, they should be prepared to also accept "We the People" democratically controlling them as publicly-owned cooperatives; the moment you depend on taxpayer money for your existence is the moment you forfeit the "right" to anything but taxpayer ownership.
kkdaemas 7y ago
This is a very short sighted view. Police forces cannot maintain order in the event of massive unrest and the best way to prevent this is to keep people above the poverty line and the death rates low. Desperation leads to upheaval.

battery_cowboy 7y ago

What do you call a cruise ship full of lawyers at the bottom of the sea?

yellowapple 7y ago
Progress?
spiritplumber 7y ago
A start

RivieraKid 7y ago

Why do bailouts at all instead of letting them go bankrupt? Bankruptcy doesn't mean that people lose their jobs, it means that investors / lenders lose money.

fastball 7y ago
Because apparently we want to make sure investors don't suffer at the expense of the taxpayer / rest of the population.
chii 7y ago
bankruptcy does mean the people who worked there would lose their jobs. They will have to be re-employed, if the new buyer of the assets sold to cover the debts, decides to continue running a cruise liner. This certainly takes some time, and in the interim, all the employees will be fired (or at least, not paid). If the gov't bails out the cruise liners, they may be able to force them to continue paying the employees in the intrim, and so "save" them from being unemployed and "save" welfare. The gov't can also end up owning equity in the business (which is not a bad thing - it's basically extra income for the state/treasury in the future).

rsynnott 7y ago

I'm bemused that anyone would even _consider_ bailing out the cruise industry, of all things. Like, what is the "in favour of" argument?

Red_Leaves_Flyy 7y ago
Crony capitalism?
ekimekim 7y ago
The campaign donations those companies gave you last election.
c22 7y ago
I guess allowing them to fail could lead to their large derelict vessels littering up the ocean?

tobltobs 7y ago

When the cruise industry gets a bailout, it is not to save the cruisers but the financial corporations, which have been financing this madness.

hannob 7y ago

I think there should be a much bigger discussion about bailouts. There currently seems to be a feeling that an industry that struggles deserves a bailout by default. Why don't we have a discussion about which industry provides important services to society? And particularly how helpful it is likely to be in the larger crisis we have looming over us - climate change - and which won't go away? It seems like the absolute worst idea to bail out high carbon industries, and that's not just true for cruise ships, but also for airlines and many others.

deleted 7y ago
[deleted]

echelon 7y ago

I had a thought earlier today that might fix the economic situation, but it's extremely bold. If the world congregates and places blame on the CCP for asking us to keep our borders open while knowing all along how contagious and deadly this virus was, that's criminally negligent. Maybe even malicious. The behavior of the CCP after the virus spread internationally is equally alarming. They threatened to shut off access to medicines manufactured in China, placed blame on Italy and the US for the virus' origin, and shut down European and US travel to China. Defaulting on debt is bad. But what if every nation collectively "cancelled" their debt to China? China would protest, but given the circumstance it doesn't seem like a credit downgrade would be necessary if this were taken as repayment for damages caused. If we owe zero to China, we can then lend all of that money to businesses and individuals impacted. Pay off domestic debts. I really like the idea of "cancelling Chinese debt". Now someone please tell me how this couldn't work. Would they retaliate? Would they consider it an act of war? (I shouldn't have to say this, but I harbor no ill will towards the Chinese people. I love Chinese culture and studied Mandarin in college. I dislike the CCP and their actions.)

OJFord 7y ago
Assuming you don't want to start a war, it relies on them not 'protesting' too much. It also relies on not needing to borrow again in the foreseable future, and probably not on good terms when you do (decades down the line). Trying to arrange 'every nation collectively' doing so sounds like a risky exercise in getting everybody to agree to your plan, and not side with China instead and make your (and anybody who did agree's) situation even worse. Strictly worse than just firing up the printers, IMO.
OscarCunningham 7y ago
How much of the US debt owned by China is held by the Chinese government rather than Chinese citizens?
- barry-cotter 7y ago
  The huge majority of it. The Chinese Central Bank has to buy a lot of T-bills to keep the ¥/$ exchange rate where they want it. And the domestic finance market in China is very highly regulated to maintain capital controls; I’d be surprised if you can even buy T-bills outside Hong Kong and Macau.

blackrock 7y ago

Let it die. They provide no useful service to society. Maybe the replacements will create an ethical, sustainable, and environmentally friendly business instead.

troydavis 7y ago

Other threads debate the merits of cruises and/or bailouts, but this specific idea has a unique challenge: there may not be a viable market for cruises until COVID is at least treatable, if not preventable. The CDC’s guidance is to “defer all cruise travel worldwide”[1] and that may not change until treatment exists - particularly for those over 50-60. 51% of 2019 passengers were over 50[2]. Cruise ships manage to contain norovirus[3], but we’ve seen how different the consequences are when NCoV is present on a cruise ship. [1]: https://wwwnc.cdc.gov/travel/notices/warning/coronavirus-cruise-ship https://wwwnc.cdc.gov/travel/notices/warning/coronavirus-cru... [2]: https://www.cruise1st.co.uk/blog/cruise-holidays/how-old-is-the-average-cruise-passenger/ https://www.cruise1st.co.uk/blog/cruise-holidays/how-old-is-... [3]: https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm

LatteLazy 7y ago

Bailouts not not won't effect the long term size of the industry.

better0uts1d3 7y ago

And of course, they avoid paying taxes by sailing under other countries' flags

timwaagh 7y ago

If you guys are handing out bailouts I'd like one too. I don't pay any taxes in the US and I don't do anything particularly useful. I can guarantee that absolutely zero US jobs will be saved by bailing me out. I am not bankrupt and I don't need the money. I think I'd therefore be an excellent candidate to receive a bailout. Let's say five billion should be sufficient.

nojvek 7y ago

Bailouts are very unfair and undemocratic. I can understand for Boeing where the military absolutely depends on them and if a war were to start, being able to build planes is essential. But Carnival cruises, who cares if they go under? another one will prop up with a better business model that is sustainable. Every company should be able to weather a couple of months if they rode the bull for the best 11 years of stock rise in history. If your executives fucked it up, too bad. You can get a low interest loan, but no free bailout money.

manigandham 7y ago

There's no easy solution to a once in-a-century pandemic. The most important issue is economic continuity. It's better to prop up companies and industry for the short term if it means thousands of people continue receiving a paycheck and can afford to live. Suddenly laying off all those people while companies and vendors collapse will lead to major cascading effects that can be far more disastrous.

voisin 7y ago

Why would you ever bail out an industry that is not essential to society?

effingwewt 7y ago
One thing I've had nailed home during this fiasco is that almost all businesses consider themselves essential, even at the possible cost of their employee's lives. We have call centers doing cold call sales trying to call themselves essential.

fulafel 7y ago

Puzzling that the CO2 issue is buried far in the list of grievances. Does this reflect the reporter's priorities or more widely the Verge's or the readerships?