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>The economic shock was caused in part by a government-imposed shutdown of economic activity in response to a pandemic. No, the economic shock was caused by bu

>The economic shock was caused in part by a government-imposed shutdown of economic activity in response to a pandemic. No, the economic shock was caused by businesses being over leveraged and not having cash reserves. I keep hearing how this was the greatest economy the World has ever seen, how good could it really be if businesses are existing paycheck to paycheck? >Which is why another aid package will probably be passed in July. Exactly why taxpayers and not businesses should have received the lion share of the bailout funds. >businesses had to exist prior to February 15, 2020 Look up shelf corps or ready corps. There is rampant fraud with respect to the PPP loans, including by law makers, none of them will end up in jail.

throwawaygh 6y ago
> No, the economic shock was caused by businesses being over leveraged and not having cash reserves. A lot of these businesses didn't have much cash reserve because they were launched by ordinary folks and operate in industries where the profit margins are razor thin. If you're running the local pub, there's simply no opportunity to build up capital reserves that can survive a several-month-long shutdown. Even cutting payroll down to a minimum, rent, utilities and minimal maintenance is expensive. I don't think there's a reasonable argument to be made that wiping out the current owners of bars, coffeeshops, garages, gyms, etc. is going to result in more resilient or more competent locally owned businesses in the long term. I just don't buy that there's a massive amount of well-capitalized individuals ready to run bars/coffeeshops/garages/etc. better than the current owners. That said, there is a critical mass of super well-capitalized and competent restaurant/bar/coffeeshop management machines, which can take over if all those local businesses fail. The effect of the policy you're suggesting would be the walmartification of the last remaining outposts of local ownership in most economies.

throwawaygh 6y ago

> No, the economic shock was caused by businesses being over leveraged and not having cash reserves. A lot of these businesses didn't have much cash reserve because they were launched by ordinary folks and operate in industries where the profit margins are razor thin. If you're running the local pub, there's simply no opportunity to build up capital reserves that can survive a several-month-long shutdown. Even cutting payroll down to a minimum, rent, utilities and minimal maintenance is expensive. I don't think there's a reasonable argument to be made that wiping out the current owners of bars, coffeeshops, garages, gyms, etc. is going to result in more resilient or more competent locally owned businesses in the long term. I just don't buy that there's a massive amount of well-capitalized individuals ready to run bars/coffeeshops/garages/etc. better than the current owners. That said, there is a critical mass of super well-capitalized and competent restaurant/bar/coffeeshop management machines, which can take over if all those local businesses fail. The effect of the policy you're suggesting would be the walmartification of the last remaining outposts of local ownership in most economies.