6 ms·

Coming to the realization that our economic crisis (primarily massive number of newly unemployed) was largely avoidable with a scheme like this vs the PPP loan

by tempsy 7y ago

Coming to the realization that our economic crisis (primarily massive number of newly unemployed) was largely avoidable with a scheme like this vs the PPP loan program and multi-trillion money printing we got instead.

teruakohatu 7y ago
10 millions laid off workers in Japan IS an economic crisis regardless. This is the equivalent of all the workers from the top 20-30+ companies in Japan no longer working.
- Aeolun 7y ago
  Except these are mostly part-time or irregular workers. It’s like all the convenience store and restaurant staff suddenly being halved.
aaronblohowiak 7y ago
BoJ’s money printer has been going since well before cv19. They pioneered central banks buying ETFs (its even called Japanification..) I don’t believe the crisis would have been avoidable since salaries are only one part of the economy (ex:how does debt work?)
- tempsy 7y ago
  The V shaped recovery is going to depend on rebounding consumer demand. Not convinced a lot of jobs will come back as soon as things reopen, and even if you have a job will you actually feel confident enough to spend as you did before? My main point is that the government has done little on the demand side. I think it will be very weak coming out of this.
  - lowdose 7y ago
    It all depends on how big that 10% is contributing to the GDP. Let's assume the least profitable employees are effected the most and thus have to absorb the largest unemployment hit. Than the percentage of the economy actually effected has to be a fraction of of the increase in unemployment.
    - AnthonyMouse 7y ago
      > Let's assume the least profitable employees are effected the most and thus have to absorb the largest unemployment hit. That assumption is wrong in this context. The employees most affected aren't the ones providing the least value under normal circumstances, they're the ones providing the least value during a quarantine (presumably because they're not working at all), which isn't strongly correlated with providing low value in general. For example, a hotel may have to do layoffs, but that doesn't mean hotels are unproductive/unprofitable in the general case when there isn't a quarantine. And the likes of hotels may not be the quickest to rebound either. A lot of people are using their vacation time right now, and will have a ton of work to catch up on when they go back and not be in a position to take more time off to travel. Even after people go back to work, they're going to be wary about traveling to hang out in a huge venue with a bunch of strangers for a while. So what you want is to create a lot of general demand so that former hotel workers can find work doing something else until demand for travel comes back, on top of the workers who had been doing those things already.
attilakun 7y ago
Is Bank of Japan not going to print money to finance this?
- tempsy 7y ago
  If you’re going to print money then spend it on the people to shore up demand, rather than prop up companies where the demand will never be there or come back post lockdown. Without shoring up the demand side I’m not seeing how we get to this rosy V shaped recovery the stock market seems to be predicting.
  - busymom0 7y ago
    I am looking at the breakdown here of the 2 Trillion billion. Note that this excludes the phase 3.5 which was passed yesterday which includes another $484 billion for small businesses: https://www.visualcapitalist.com/the-anatomy-of-the-2-trillion-covid-19-stimulus-bill/ https://www.visualcapitalist.com/the-anatomy-of-the-2-trilli... The 2 trillion bill included: $425 for large corporations = 25% of the money $377 for small businesses = 20% of the money (originally excluding the another $484 billion) $377 + $484 from yesterday = $861 billion for small businesses which is more than double the money for large corporations. Also the large corporations includes $58 billion for airline industry. I don't see how this is a bad thing at all? Also considering the large corporation includes companies which operate cruise industry, airline industry, travel etc which employs millions of people, should they not be given help? $861 billion for small businesses and $425 for large is very fair.
    - tempsy 7y ago
      The PPP loan program is ripe for moral hazard. Zero accountability. Banks have no incentive to spend time to underwrite because it’s all guaranteed by the government (e.g. fraud, gaming the forgiveness period, extracting assets and bankrupting company). Would be surprised if there were more business using the money in earnest to save jobs than not.
    - rswail 7y ago
      The reasons that the cruise and airline companies should not be bailed out are: 1. Cruise companies are registered off shore, do not pay US taxes and do not employ US taxpayers. Their "industry" is exploitative, polluting, and dangerous to public health. 2. Airlines have spent the last 10 years using excess cash to do share buybacks, thus "juicing" their share price and providing tax effective "dividends" to their shareholders while literally not saving for a rainy day. 3. These bailouts have not been tied to the government receiving equity or to any sacrifices/haircuts by existing equity or debt holders. This is unconscionable expenditure of taxpayer funds, socializing losses while privatizing gains. 4. Large corporations already have sufficient lines of credit and other sources of funds. Small businesses are both the primary employers of the majority of the workforce and also the primary location of both supply and demand of consumption in the economy.
bpodgursky 7y ago
The PPP loan program was actually pretty close to this, if executed well and funded sufficiently (obviously, it wasn't). The unemployment benefit extension and hack (unemployment + $600) was the real critical mistake that we'll spend a long time fixing. The QE / money printing is complicated, but it's worth nothing that Japan has been "printing money" for a long, long time, and QE is a mainstay of Abe-nomics (so the Japan subsidy here is absolutely coupled with aggressive QE). Battling deflation to hit inflation goals is a reasonable goal for a central bank, IMO, but obviously it's not cut and dry.
- tempsy 7y ago
  I’m not convinced there’s any adequate oversight with the PPP program though at all. Massive moral hazard problem with owners gaming it long enough to have it forgiven or declare bankruptcy after spending it recklessly and then laying people off after the minimum 8 week period anyway. I’m sure there’s also a massive fraud problem with people just spinning up fake companies and payroll statements to get free money. Banks have zero incentive to monitor these companies because it’s all guaranteed by the government and they’ve all been overpaid for doing simple paperwork.
- coffeevradar 7y ago
  >The unemployment benefit extension and hack (unemployment + $600) was the real critical mistake that we'll spend a long time fixing. What was the alternative? Existing unemployment benefits are insufficient for households to pay bills and the PP program at best would have saved a small portion of the overall jobs lost.
  - bpodgursky 7y ago
    Ideally, basically what Japan is doing. Don't try to discriminate on company, don't make it complex, just cut a check to keep employees on the payroll. There's no dumb drama over "who gets the loans", if all employers do.
  - Izkata 7y ago
    The extra $600 being a flat country-wide amount was the mistake here: https://www.cnbc.com/2020/04/22/she-got-a-paycheck-protection-loan-her-employees-hate-her-for-it.html https://www.cnbc.com/2020/04/22/she-got-a-paycheck-protectio...
roenxi 7y ago
Somewhat. The economic part of the crisis is that people aren't working to create valuable things and experiences. How the support to keep people fed and sheltered is handled is critically important but it is trying to spread the burden of the crisis rather than providing an opportunity to mitigate it. If people are banned from working the crisis isn't avoidable in any real sense.

by tempsy 7y ago

teruakohatu 7y ago

10 millions laid off workers in Japan IS an economic crisis regardless. This is the equivalent of all the workers from the top 20-30+ companies in Japan no longer working.

Aeolun 7y ago
Except these are mostly part-time or irregular workers. It’s like all the convenience store and restaurant staff suddenly being halved.

aaronblohowiak 7y ago

BoJ’s money printer has been going since well before cv19. They pioneered central banks buying ETFs (its even called Japanification..) I don’t believe the crisis would have been avoidable since salaries are only one part of the economy (ex:how does debt work?)

tempsy 7y ago
The V shaped recovery is going to depend on rebounding consumer demand. Not convinced a lot of jobs will come back as soon as things reopen, and even if you have a job will you actually feel confident enough to spend as you did before? My main point is that the government has done little on the demand side. I think it will be very weak coming out of this.
- lowdose 7y ago
  It all depends on how big that 10% is contributing to the GDP. Let's assume the least profitable employees are effected the most and thus have to absorb the largest unemployment hit. Than the percentage of the economy actually effected has to be a fraction of of the increase in unemployment.
  - AnthonyMouse 7y ago
    > Let's assume the least profitable employees are effected the most and thus have to absorb the largest unemployment hit. That assumption is wrong in this context. The employees most affected aren't the ones providing the least value under normal circumstances, they're the ones providing the least value during a quarantine (presumably because they're not working at all), which isn't strongly correlated with providing low value in general. For example, a hotel may have to do layoffs, but that doesn't mean hotels are unproductive/unprofitable in the general case when there isn't a quarantine. And the likes of hotels may not be the quickest to rebound either. A lot of people are using their vacation time right now, and will have a ton of work to catch up on when they go back and not be in a position to take more time off to travel. Even after people go back to work, they're going to be wary about traveling to hang out in a huge venue with a bunch of strangers for a while. So what you want is to create a lot of general demand so that former hotel workers can find work doing something else until demand for travel comes back, on top of the workers who had been doing those things already.

attilakun 7y ago

Is Bank of Japan not going to print money to finance this?

tempsy 7y ago
If you’re going to print money then spend it on the people to shore up demand, rather than prop up companies where the demand will never be there or come back post lockdown. Without shoring up the demand side I’m not seeing how we get to this rosy V shaped recovery the stock market seems to be predicting.
- busymom0 7y ago
  I am looking at the breakdown here of the 2 Trillion billion. Note that this excludes the phase 3.5 which was passed yesterday which includes another $484 billion for small businesses: https://www.visualcapitalist.com/the-anatomy-of-the-2-trillion-covid-19-stimulus-bill/ https://www.visualcapitalist.com/the-anatomy-of-the-2-trilli... The 2 trillion bill included: $425 for large corporations = 25% of the money $377 for small businesses = 20% of the money (originally excluding the another $484 billion) $377 + $484 from yesterday = $861 billion for small businesses which is more than double the money for large corporations. Also the large corporations includes $58 billion for airline industry. I don't see how this is a bad thing at all? Also considering the large corporation includes companies which operate cruise industry, airline industry, travel etc which employs millions of people, should they not be given help? $861 billion for small businesses and $425 for large is very fair.
  - tempsy 7y ago
    The PPP loan program is ripe for moral hazard. Zero accountability. Banks have no incentive to spend time to underwrite because it’s all guaranteed by the government (e.g. fraud, gaming the forgiveness period, extracting assets and bankrupting company). Would be surprised if there were more business using the money in earnest to save jobs than not.
  - rswail 7y ago
    The reasons that the cruise and airline companies should not be bailed out are: 1. Cruise companies are registered off shore, do not pay US taxes and do not employ US taxpayers. Their "industry" is exploitative, polluting, and dangerous to public health. 2. Airlines have spent the last 10 years using excess cash to do share buybacks, thus "juicing" their share price and providing tax effective "dividends" to their shareholders while literally not saving for a rainy day. 3. These bailouts have not been tied to the government receiving equity or to any sacrifices/haircuts by existing equity or debt holders. This is unconscionable expenditure of taxpayer funds, socializing losses while privatizing gains. 4. Large corporations already have sufficient lines of credit and other sources of funds. Small businesses are both the primary employers of the majority of the workforce and also the primary location of both supply and demand of consumption in the economy.

bpodgursky 7y ago

The PPP loan program was actually pretty close to this, if executed well and funded sufficiently (obviously, it wasn't). The unemployment benefit extension and hack (unemployment + $600) was the real critical mistake that we'll spend a long time fixing. The QE / money printing is complicated, but it's worth nothing that Japan has been "printing money" for a long, long time, and QE is a mainstay of Abe-nomics (so the Japan subsidy here is absolutely coupled with aggressive QE). Battling deflation to hit inflation goals is a reasonable goal for a central bank, IMO, but obviously it's not cut and dry.

tempsy 7y ago
I’m not convinced there’s any adequate oversight with the PPP program though at all. Massive moral hazard problem with owners gaming it long enough to have it forgiven or declare bankruptcy after spending it recklessly and then laying people off after the minimum 8 week period anyway. I’m sure there’s also a massive fraud problem with people just spinning up fake companies and payroll statements to get free money. Banks have zero incentive to monitor these companies because it’s all guaranteed by the government and they’ve all been overpaid for doing simple paperwork.
coffeevradar 7y ago
>The unemployment benefit extension and hack (unemployment + $600) was the real critical mistake that we'll spend a long time fixing. What was the alternative? Existing unemployment benefits are insufficient for households to pay bills and the PP program at best would have saved a small portion of the overall jobs lost.
- bpodgursky 7y ago
  Ideally, basically what Japan is doing. Don't try to discriminate on company, don't make it complex, just cut a check to keep employees on the payroll. There's no dumb drama over "who gets the loans", if all employers do.
- Izkata 7y ago
  The extra $600 being a flat country-wide amount was the mistake here: https://www.cnbc.com/2020/04/22/she-got-a-paycheck-protection-loan-her-employees-hate-her-for-it.html https://www.cnbc.com/2020/04/22/she-got-a-paycheck-protectio...

roenxi 7y ago

Somewhat. The economic part of the crisis is that people aren't working to create valuable things and experiences. How the support to keep people fed and sheltered is handled is critically important but it is trying to spread the burden of the crisis rather than providing an opportunity to mitigate it. If people are banned from working the crisis isn't avoidable in any real sense.