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Fed aid program for corporations won't require them to preserve jobs
- salawat 6y agoMirror: http://archive.is/8ZWPY http://archive.is/8ZWPY
- pirocks 6y agohttps://outline.com/rJ9PVJ https://outline.com/rJ9PVJ , b/c archive.is wasn't working for me.
- robocat 6y agoarchive doesn’t work if you use CloudFlare 1.1.1.1 for your DNS because archive screws with CloudFlare DNS requests for their own reasons. Top answer is archive’s side, second answer is CloudFlare’s side: https://webapps.stackexchange.com/questions/135222/why-does-1-1-1-1-not-resolve-archive-is https://webapps.stackexchange.com/questions/135222/why-does-...
- danans 6y ago> In the interview, Mnuchin also said many companies are ceasing stock buybacks and are likely to use the additional capital to retain workers. So they are on the honor system. > Some experts disputed that assertion. “Some companies have ceased buybacks and dividends and some haven’t. We shouldn’t have to keep our fingers crossed,” Gelzinis said. Is there a public list of the companies that took the aid? Absent real restrictions on the loans, the next best option might be a website that shows the amount borrowed by those companies next to any layoffs, dividends, exec bonuses, or share buybacks they did while taking the loans.
- Ididntdothis 6y agoGovernment bailouts should come with very onerous conditions so they are used only as last resort. But I guess 2008 should have taught us that this is not going to happen.
- SAI_Peregrinus 6y agoGovernment bailouts should be in the form of stock purchases. Want a bailout? Government owns part of the company. Want to issue dividends after the bailout? Government gets some. Too many bailouts, and the company is now state-owned.
- Tallasatree 6y agoAnd what happens when you require a bailout because the government forcefully shut down the economy? You need to critically think about what you are offering up as a solution.
- Gibbon1 6y agoI think bailout is the wrong term here. Better term is a jump start.
- linuxftw 6y agoWhat if, and this is crazy, tax payers don't want to invest in companies that didn't save for a rainy day and just let them go bankrupt? Too big to fail was outrageous because it says big businesses rule the world, if you don't like it, suck it.
- SpicyLemonZest 6y agoWhen we were talking about being shut down for 2 weeks, this position made some sense. There are lots of reasons a company might face a 2 week disruption of operations, and it's fair to say an inability to tolerate it represents some real and avoidable fragility. We're now a month and a half in, and some states have committed to broad mandatory shutdowns for another month. "Our business becomes illegal through the end of Q2" is not the kind of rainy day businesses can be reasonably expected to plan for.
- clairity 6y agoi'd buy that argument for small businesses (<~$10MM in revenue), but for larger businesses (>$100MM) in most industries, a 6-month operational cushion isn't usually onerous, especially given the advantageous cost of capital generally afforded large businesses already.
- state_less 6y agoAlso egregious are companies flush with cash who are laying off workers, putting them on unemployment and costing the public hundreds of millions of dollars. Disney is one such company. They do pay unemployment insurance, so I guess they can argue they're collecting on their insurance. MayTheForth be with you, because your Disney paycheck won't be.
- bobwaycott 6y ago> Is there a public list of the companies that took the aid? The latest count I’ve seen today is up to approximately 230 companies who have done so. There are some lists being compiled, but I haven’t found a definitive, complete list of all 230+ companies. From a few days ago, 40 of the companies: https://s-marketwatch-com.cdn.ampproject.org/i/s/s.marketwatch.com/public/resources/images/MW-IE979_public_NS_20200422124002.jpg https://s-marketwatch-com.cdn.ampproject.org/i/s/s.marketwat...
- throwaway122378 6y agoWe need a new plan. Every single job before-covid (BC) is not coming back. Even if we opened the country at 100% tomorrow not every job will come back. There’s a paranoia that’s set into the American psyche that will take years to adjust.
- bilbo0s 6y agoI don't think it's only the American psyche. I'm pretty sure there will be paranoia the world over.
- throwaway122378 6y agoDefinitely. Kept it to America given the article was about the Fed
- asdff 6y agoIt's pretty sad that this is glossed over so much. Plenty of business have folded already, let people go, broke their leases, liquidated what can be liquidated, and whoever held ownership got their portion of the remaining pie. To bring these pieces back together, the lease, the workers, the investors, the money, is impossible. Some of these pieces are no longer in existence, and the economic conditions that enabled the company to form in the first place are no longer present. It's like trying to make a living tree from ash and smoke. Some places have been hit particularly hard. In LA county, only 45% of people have jobs right now: https://www.latimes.com/california/story/2020-04-17/usc-coronavirus-survey https://www.latimes.com/california/story/2020-04-17/usc-coro...
- morsch 6y ago"45% compared with 61% in mid-March" "a significant majority of job losses, 67% nationally, were reported as temporary layoffs"
- sershe 6y agoI'd start with combating the paranoia with numbers and stories that would compare realistic risks. You can even start before the acute pandemic ends, by comparing pandemic-time and post-pandemic numbers for swine flu (yes, even if it's not eventually justified for COVID). Alas, if media circus around plane crashes in any indication, that does't pay. So, we can only hope for lack of informed-ness, apathy and paranoia-fatigue to settle in and solve this particular aspect for us.
- JumpCrisscross 6y agoI doubt the Fed has the legal authority to impose employment-related restrictions on companies.
- onetimemanytime 6y agosure they can impose restrictions...if they want the Govt cash.
- vmception 6y agowhich is why so many Americans are against this specific scenario in lieu of unfettered discretionary use of money but of course if you offer it we'll take it
- sp332 6y agoIt's not a restriction on the jobs, it's a restriction on the loan or even a restriction on conditions under which the loan will be forgiven without being paid back. Edit: Now that I've seen a mirror of the article, this program is about buying bonds that have to be paid back with interest no matter what. Point stands about the conditions being on the buying side though.
- JumpCrisscross 6y ago> it's a restriction on the loan or even a restriction on conditions under which the loan will be forgiven without being paid back I’m not sure the Fed has the power to do something like that. It’s a huge expansion in purview, particularly with adding forgiveness conditions, in which case it’s literally giving free money to private citizens without Congressional authorisation.
- paypalcust83 6y agoWarm, trickle-down economics. The people clearly aren't bothered enough by losing their jobs or receiving pittance consolation prizes, or they would've revolted by now.
- curiousgal 6y agoIronically, the people who I've come to respect recently are the ones protesting the quarantine. Don't get me wrong they are stupid but the fact that they are protesting something they believe is wrong says a lot about the people who have been exploited by the system and did nothing about it.
- paypalcust83 6y agoRebel without a cause, rebel without a clue. Barking up the wrong tree is either virtue-signaling, divide-and-conquered tribalism, a failure of moral courage, and/or a failure of critical-thinking skills. It's easier for most people to make pointless gestures or scapegoat certain groups than attack the root causes of their misery... and there's no strategic thinking involved. The obvious matter for everyone with a net balance sheet less than eight figures is that small segment of society whose greed and entitlement has greatly outpaced their respect and decency towards others and the planet. The vast majority of people are too afraid of the corporate state's militaristic violence potential or too complicit in relative comfort to rock the proverbial boat. In inverted totalitarian societies, you get deplatformed or harassed at airports; in totalitarian societies, 70-some students and teachers get delivered by the police to other criminal gangs for disposal in the hills.
- asdff 6y agoToo depressed and broken at this point.
- paypalcust83 6y agoYourself? If so, don't fall for learned helplessness, my friend. That's a desired endgame for the bastards. All it takes is a million or so people walking over to the seats of power and gently encouraging the particular corrupt officials to voluntarily turn themselves over for jail pending trial. I'm not a fan of mania for hope or future hockeystick progress, but it's the purposeful actions of moral and physical courage of a relative handful of unreasonable people who dent the universe. The worst that can happen is dying without trying; anything else is better than that.
- onetimemanytime 6y agoTo be fair, the Fed is buying corporate bonds, essentially lending them money with interest. Yeah, it helps businesses but then I doubt the Fed will lose any money in the long term.
- mindslight 6y agoThe Fed can't really gain or lose money, as they create or destroy it at will. They're loaning with much lower interest than would be available on the open market, which is a direct subsidy.
- onetimemanytime 6y ago>>They're loaning with much lower interest than would be available on the open market, which is a direct subsidy. Sure the companies benefit, a lot. Warren Buffet might give them loans with 12% a year, the Fed at 3% or whatever. But what does the Fed lose? Nothing, if x% don't pay others will make up for it and USGOV will try to recoup from the failing biz whatever they can. If they go bankrupt or downsize, what does USA gain, other than more unemployed people? So this is great IMO. Lend them money, as long as the money comes back, the Fed can create trillions and trillions.
- chrisco255 6y agoWell when you have the money printer at your fingertips, it really is impossible for you to lose money. But that doesn't mean that what they're doing with the money supply and buying bonds is moral or fair. What they're doing is monetary fascism, where they are picking the winners and losers based on arbitrary criteria. Some companies and industries will get more help than others. Whoever gets the money first will have an advantage over who gets money last. The moral hazards of this interventionism are many. It also means that people who properly hedged for risk, the way capitalism actually works, are getting punished.
- rtkwe 6y agoThere’s two main programs, one is yes buying bonds but the other is a loan backing program for smaller businesses that can’t access the bond market.
- chrisco255 6y agoYou CAN'T preserve jobs, given the economic catastrophe that is occurring. Demand for many products and services have fallen off a cliff. Air travel is but one example. It's not like demand is going to recover overnight for the airline industry. It will take many years to recover. They will have to pare back flights and they will likely have to consolidate carriers in order to remain profitable. Propping up zombie companies does nobody any good. It just leads to capital destruction.
- nostromo 6y agoIf the government has required your legal business to close, you should be compensated for that. Just as if they take your land to build a road, they have to give you the fair market value of the land. Otherwise, if you're not being compensated, you should be free to stay open. These are only "zombie companies" because they've been directly shuttered by the government.
- bilbo0s 6y ago>if they take your land to build a road, they have to give you the fair market value of the land Yeah, well, in Wisconsin under Walker, a lot of our farm families learned the hard way that this is not always the case. (Foxconn). It depends on how badly they want your land. But, yeah, it can be perfectly legal for the government not to pay you fair market value. But to your central point, the government doesn't have to compensate you for anything in an emergency. That's why when criminals rob a bank or Walmart and then hide out in your home unbeknownst to you, the police are free to grenade the place. Perfectly legal for them to leave you the burning hulk of what used to be your house and say, "Don't thank us!" It was an emergency. (Or at least, they'll say it was.)
- chrisco255 6y agoI agree that they should have never been shuttered by the government, but the die has already been cast. They can't undo the damage. What they did is equivalent to a scorched earth economic response to Covid-19. We're going to have to rebuild every industry we hurt. Some of those industries may never come back to the level they were (i.e. cruise ships). There's also fundamental shifts in consumer patterns that are occurring and will continue to occur as a result of economic uncertainty, trade battles with China, price shocks in response to supply / demand shocks, etc. In the U.S. we also need to shift our consumption based economy to become more of a production based one, like we were 40 years ago. That kind of shift doesn't happen overnight.
- abeppu 6y agoWhy does aid for corporations rely so heavily on loans or bonds? If a continuing source of frustration and dysfunction is that profits are privatized and losses are nationalized, and if the issue is that companies need an influx of cash, why do we not ask these companies to sell the federal government a stake? If the companies recover, why shouldn't the public benefit as a result of their investment? The idea that the federal government would take an ownership stake in companies in exchange for this cash infusion seems like it's been a fringe left wing proposal -- but I don't understand why it's fringe.
- CamperBob2 6y agoBecause the notion of government ownership of the means of production is, if not the very definition of leftism, at least a key ingredient. Of course it's not that simple, but it sounds that simple, and these days that's all that matters. People hear "government stake" and they reflexively think Cuba or Venezuela or China, not Germany.
- aaomidi 6y agoAnd yet again, privatized profits, socialized losses.
- Consultant32452 6y agoWords like "aid" or "stimulus" or "relief" are one word arguments. Who doesn't like aid? These are marketing BS words. We need to use more clear language like "economic transfer". This puts us in the right frame of mind to discuss who the money is being transferred from and to. "Pardon me, Average Joe Taxpayer. We noticed you haven't been purchasing any tickets on American Airlines lately. In order to help you with this problem, we're going to take money from you and give it to American Airlines. What's that? No, you won't be getting free flights, you silly goose. We're just going to give them your money and you get nothing in return."
- 0x8BADF00D 6y agoTaxation itself is a form of theft. We never had an income tax in the United States before WW2. It was called the “victory tax” and became the abomination it is today.
- jarsbe 6y agoThe tax burden has been moved from corporations and the upper class to the middle. Perhaps changing that dynamic would be more useful than spouting memes which support your own detriment.
- ethbro 6y ago> We never had an income tax in the United States before WW2. Revenue Act of 1861 Wilson–Gorman Tariff Act (1894) Revenue Act of 1913 (and the Sixteenth Amendment)
- AnimalMuppet 6y ago> Taxation itself is a form of theft. Propaganda. > We never had an income tax in the United States before WW2. There was an income tax during the American Civil War, but it was temporary. Then Congress passed an income tax in 1894, which was ruled unconstitutional in 1895. The 16th Amendment, which made it constitutional, was ratified in 1913. So your history is as shaky as your moral philosophy.
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- craftinator 6y agoMost comments here focus on the question if "who deserves what?". This is a stupid question, as it becomes a tautology revolving around how people define the word "deserves". A more intelligent question is "what should we do to have the best outcome?". Is it better to have more companies around to provide goods, services and jobs, or more people around with stable housing and pocket money to purchase goods and services?
- asdff 6y agoIn an economy driven mostly by consumer spending at the bottom, definitely the latter. This is almost a chicken and egg scenario, but not quite. You can give a company money to hire people and make product X, but it doesn't do you any good if no one has money to buy product X, or most people see X as a luxury and are tightening belts. You can counter this by giving more companies money to hire more people, so that the workers at company producing Y have money to buy product X. Then it becomes difficult to determine what companies to prop up, and which to avoid. Inevitably, who gets propped up are the industry leaders, not the tiny players, and that sector consolidates and contracts. A better approach would be to inject the money directly at the bottom. Let consumers make these picks on which companies are economically productive and should be supported, let the free market sort this out by adding liquidity at the consumer level. 70% of our global economy is driven by consumer spending, not by blue chips paying off their corporate debt.