3 ms·

> COVID-19 isn't the fault of an airline or hotel company Airlines spent a decade doing stock buybacks, some with past bailout money. The amount they spent on

> COVID-19 isn't the fault of an airline or hotel company Airlines spent a decade doing stock buybacks, some with past bailout money. The amount they spent on buybacks is just about exactly how much they want from the US bailout. SXSW didn't buy pandemic insurance. They'll be asking for a bailout. These companies need to go through bankruptcy and loss of equity so that they can behave as properly functioning entities in a capitalist system. Anything else is -again- socialism for the rich. Yes, corporations are rich people. Undisputably so. We should not bail them out. Let them go into receivership. If they aren't liquid, let the US re-capitalize them in return for equity, and then sell the shares over 5-10 years to return it to the public market. Make capitalism work and get rid of the enormously unjust moral hazard that is a lot of why capitalism is so broken right now.

crazygringo 7y ago
Buybacks are returning money to investors, same as dividends. When companies make profits that's literally what they're supposed to do. Look up the Accumulated Earnings Tax -- the IRS will actually tax companies to penalize them from holding onto profits. They're not supposed to hold on to profits, and no company is expected to set aside a year's worth of revenue in case of a global pandemic. That money is the shareholders', which is why buybacks return it to them as soon as it's made. And you can't buy pandemic insurance generally, because no insurance company can cover "Acts of God" at a scale that will bankrupt the insurance company. It is absolutely dumb and counterproductive policy to let companies, no matter if they employ 10,000 people or 10, to go bankrupt because of a global pandemic no business could or should reasonably foresee. "Moral hazard" is a very specific term you are using incorrectly here. It refers to exceptionally and intentionally risky behavior by banks (usually) that the government deems "too big to fail". But airlines and other companies did not take overly risky behavior. So there's no moral hazard in this case. There is zero evidence that companies like airlines, hotels or cruise ships were not "properly functioning". I don't know why you think they were improper or deserve to be punished. But there's no basis for it.
- jhayward 7y ago
  > you can't buy pandemic insurance generally Wimbledon has been buying pandemic insurance for 24 years. $2 million per year. They're going to be paid by their insurer about $141 million.[1] There is a whole industry of re-insurance that exists to insure high-consequence, low-probability events, such as natural disasters, war, and pandemic. SXSW didn't buy pandemic insurance. Why on earth should they be made whole for their bad decisions? The airlines made bad decisions that put their stockholder's equity at risk. There is no reason that now, having received $50 billion or so in profit from buybacks we should give them another $50 billion, while leaving their employees penniless. Moral hazard is exactly the right term. It describes a perverse incentive to cause someone else to incur expense for your benefit without any benefit to them in return. Improperly planning for pandemic, when everyone, and I do mean everyone who does risk analysis believed that one was inevitable, particularly after SARS, MERS, and Ebola, is BAD PLANNING that equity holders should bear the responsibility for. They took the risk, reaped some profits, now it's time to take the losses. Anything else is simply socialism for the rich, and something worse than laissez-faire capitalism for everyone else. [1] https://www.usatoday.com/story/sports/tennis/2020/04/09/wimbledon-pandemic-insurance-policy-payout-141-million/5123987002/ https://www.usatoday.com/story/sports/tennis/2020/04/09/wimb...

crazygringo 7y ago

Buybacks are returning money to investors, same as dividends. When companies make profits that's literally what they're supposed to do. Look up the Accumulated Earnings Tax -- the IRS will actually tax companies to penalize them from holding onto profits. They're not supposed to hold on to profits, and no company is expected to set aside a year's worth of revenue in case of a global pandemic. That money is the shareholders', which is why buybacks return it to them as soon as it's made. And you can't buy pandemic insurance generally, because no insurance company can cover "Acts of God" at a scale that will bankrupt the insurance company. It is absolutely dumb and counterproductive policy to let companies, no matter if they employ 10,000 people or 10, to go bankrupt because of a global pandemic no business could or should reasonably foresee. "Moral hazard" is a very specific term you are using incorrectly here. It refers to exceptionally and intentionally risky behavior by banks (usually) that the government deems "too big to fail". But airlines and other companies did not take overly risky behavior. So there's no moral hazard in this case. There is zero evidence that companies like airlines, hotels or cruise ships were not "properly functioning". I don't know why you think they were improper or deserve to be punished. But there's no basis for it.

jhayward 7y ago
> you can't buy pandemic insurance generally Wimbledon has been buying pandemic insurance for 24 years. $2 million per year. They're going to be paid by their insurer about $141 million.[1] There is a whole industry of re-insurance that exists to insure high-consequence, low-probability events, such as natural disasters, war, and pandemic. SXSW didn't buy pandemic insurance. Why on earth should they be made whole for their bad decisions? The airlines made bad decisions that put their stockholder's equity at risk. There is no reason that now, having received $50 billion or so in profit from buybacks we should give them another $50 billion, while leaving their employees penniless. Moral hazard is exactly the right term. It describes a perverse incentive to cause someone else to incur expense for your benefit without any benefit to them in return. Improperly planning for pandemic, when everyone, and I do mean everyone who does risk analysis believed that one was inevitable, particularly after SARS, MERS, and Ebola, is BAD PLANNING that equity holders should bear the responsibility for. They took the risk, reaped some profits, now it's time to take the losses. Anything else is simply socialism for the rich, and something worse than laissez-faire capitalism for everyone else. [1] https://www.usatoday.com/story/sports/tennis/2020/04/09/wimbledon-pandemic-insurance-policy-payout-141-million/5123987002/ https://www.usatoday.com/story/sports/tennis/2020/04/09/wimb...