The insanity is that people pushing to reopen the economy are being called shills for wall street.

Elite wall street doesn't care when the economy reopens. They are gonna get bailed out by the Fed no matter what, and the worse it is on main street, the more assets they can buy up at distressed prices.

Main street is getting absolutely wrecked right now: barbers, restaurants, mom & pops, etc. Gates can sit in his multi-million dollar compound and talk about how we are gonna have to shut the entire country down for the summer. He is going to be fine, sure. But until he starts talking about how he is helping the average family feed itself he's just an impossibly out of touch elite, and, what is worse, potentially talking his own book.

I think the more substantial critique of this position is that the option to reopen the economy is a fantasy. The notion that we're all going to go out and start going to restaurants again amidst stories of people dying in hospital hallways for lack of medical equipment is ridiculous.

We have already seen the outcomes for countries skeptical of the lockdown strategy, they have paid dearly for it, and the worse is yet to come.

Exactly. I sure as hell am not going out to eat or sending my kids back to school or... anything I can possibly avoid until I feel safe doing so.

This is a public health crisis. You have to fix that to start fixing the economy.

To put this in perspective, NYC is projected to run out of ventilators early next week[1]. That means if you catch it now and need ICU, there's no medical equipment to save you.

Whether government mandated or not, people are gonna stay the fuck home because they don't want themselves or their parents to die in a hallway.

[1] https://www.nytimes.com/2020/04/02/nyregion/coronavirus-new-...

> The notion that we're all going to go out and start going to restaurants again amidst stories of people dying in hospital hallways for lack of medical equipment is ridiculous.

It's not as ridiculous as you think. Most people would just go about their lives and risk the disease because most people will be okay. If people weren't forced/threatened to quarantine, they wouldn't. If the nba season wasn't canceled, people would still attend the games. Same with baseball games, comedy clubs, concerts, etc.

The question is the cost-benefit analysis. What is lost and what is gained via the lockdown/shutdown and whether it is worth it.

Some would go, but I think it’d be a worst case middle ground where activity is slowed enough to keep us in a depression but not enough to slow the growth of the virus

You gotta come to a compromise, a middle ground. Especially since a vaccine is at least 13 months out. We cannot continue this. And the problem with this disease is it's got this asynchronous transmission. It's shutting down entire nations, but not all regions are equally affected. And so, we may get this situation where NYC hits its peak in 2-4 weeks but then Dallas gets their peak in 2 months but then San Diego gets their peak in 4 months but then Phoenix gets their's in October and so on. This is how it's playing out across the globe. You can require masks in public. You can strongly encourage the elderly to stay home. You can shut down public transportation. You can go to 50% occupancy in restaurants and theaters. But you can't commit economic suicide. It will kill more people in the long run than the disease does.

> The insanity is that people pushing to re-open the economy are being called shills for wall street.

I don't know where you're hearing this. I think people generally understand that SMBs are getting fucking wrecked by this.

The argument against has nothing to do with Wall Street. It has to do with there being a pandemic and keeping people away from each other. We re-open too soon, people die and this gets even worse.

We _should_ be talking about how businesses weather the storm. But conversations about re-opening the economy are not simply "do we want to stay closed and help rich people or do we care about the little guy."

> I don't know where you're hearing this.

I've seen this sentiment on Twitter. What happens is that, as with any concept that gets put through that digital meat-grinder, it gets simplified beyond all meaning. In this case people read it as "Republicans are suggesting we should sacrifice vulnerable lives to the economy". And when they see "the economy", they read it as "the rich". "The rich think we should sacrifice our lives for their pocketbooks" is obviously an inflammatory idea, and therefore it spreads. Small businesses never enter the conversation.

Nevermind the fact that big businesses are about to go bankrupt too. The airline industry is in trouble. Deep trouble. The tourism industry alone is huge and completely decimated right now. Disney World is shut down. Universal. Beaches shut down. Entire regional economies are built on tourism, like Florida's. You're putting hundreds of thousands of employees out of work. And even the big businesses have capital expenses and they're not sitting on 6 months worth of savings. They're going to have to make massive and permanent layoffs that will take years to crawl back from.

I think the issue is, a) We reopen early, transmissions rates rise again, we have to go through another shutdown, let's say that's another month and a half. b) We wait an extra two weeks, things reopen, no cascade in transmissions.

In either case, "Wall street" will do fine, in case (a), "Main street" gets extra dead.

(time spans are made up, but the idea that a relapse would be longer I think is solid)

It is impossible to reopen without Taiwan-style temperature checks & mask requirements outside buildings, contact tracing, large-scale testing, and quarantine enforced by penalty of law (with corresponding support systems - get the police to do something useful and bring people groceries). Anything else and we'll be right back in lockdown inside of a month.

Then this is all pointless because it will take years to retrofit everything with that level of testing and tracing and make it useful in some way as well as enforcing isolation. We might as well open up and suffer the consequences until we have herd immunity even if that means a lot of deaths.

It doesn't sound like a particularly tall order to me. Also, the alternative isn't opening up - which is utterly psychopathic and would kill millions - but continue in lockdown until a vaccine is developed within two years.

You’re forgetting the possibility that a large percentage of the US population is already infected and asymptomatic, in which case the shutdown was ineffective in the first place.

We can’t act on that possibility without data.

That's why we should be conducting random tests on samplings of the populations. This would be a statistics problem.

I absolutely agree, but we’re currently SOL.

No, Wall Street will not do fine. There's real risk of a great depression and a series of bankruptcies and massive layoffs.

Wall street, elite wall street, is licking its chops right now. They have direct access to the virtual printing press, and can manufacture money (debt) whenever they want. The more distressed properties become, the better for them.

Individual investors and low level financial industry employees will be hit hard, but that's not who I'm talking about.

Maybe attitudes are changing? I feel like a few days a go a post like yours would have been downvoted to heck.

You should target a different elite for "not helping the average family feed itself" than gates. Actually, he's more altruistic than that. He helps out the dirt poor African farmers who are far more screwed than Americans are.

https://www.gatesfoundation.org/Media-Center/Press-Releases/...

https://www.gatesfoundation.org/Media-Center/Press-Releases/...

http://content.time.com/time/world/article/0,8599,1844632,00...

https://reliefweb.int/report/world/uk-aid-partners-gates-fou...

https://www.independent.co.uk/news/world/politics/gates-fund...

Gates is being super tone deaf right now. We don’t need a billionaire telling us what to do. For some reason reddit is eating it up.

He even mentioned Microchipping everyone To prove our vaccine status to be able to enter businesses.

> For some reason reddit is eating it up.

From the AMAs?

You don't get consumer demand back to its old levels by flipping a magic shutdown switch while the virus is still growing.

Competition under our current rules has eliminated the ability of most businesses to save cash or have any real buffer, since they'd lose to the ones that ran month to month right on the edge. Pushing to "end the shutdown" to return things to normal there is a false hope.

> Competition under our current rules has eliminated the ability of most businesses to save cash or have any real buffer, since they'd lose to the ones that ran month to month right on the edge. Pushing to "end the shutdown" to return things to normal there is a false hope.

There is a huge difference between having money to cover declining sales over the course of a year or a few and having enough to cover 0% of sales due to government mandate. I wouldn't expect any company to have the resources to be able to survive a complete zero'ing of revenue for any sustained amount of time.

My argument is that restaurant demand was cratering before the government mandates and the businesses were already doomed at that point. Same thing with conferences and the event business. And air travel. Hotels. Etc... The people putting these policies in place are reacting to the disease, but the fault lies with the disease, not the people.

So then we're balancing "the economy is quite fucked anyway, so might as well try to save as many lives as possible" against "some people are going to die anyway, might as well try to save as much of the economy as possible."

I don't think restaurant demand was cratering before coronavirus? Coronavirus will at some point not be so important, either because it will be eradicated (unlikely) or because we'll stop caring (more likely), and treat it like we treated polio in the 50s, which didn't cause economic disruptions the like of which we see today.

It wasn't cratering before the coronavirus, it was cratering before the official response. Same with toilet paper hoarding.

So claims that we can "stop the shutdown" and "reopen" are naive.

No one said it’s going to be a flip of a switch. It will definitely be a prolonged process, but we already saw what 1 month of a shutdown can do. So we have to realize that being 1 month ahead in restarting everything is precious.

Society has to get used to the paradigm that 50% are asymptomatic and can return to the economy, while at the same time compromising for the other 50% that need to stay home and quarantine. This is the new reality to pragmatically restart things.

Your company should still be remote until end of summer. Businesses should re-open with generous time off for anyone that needs it without laying people off.

> Society has to get used to the paradigm that 50% are asymptomatic and can return to the economy, while at the same time compromising for the other 50% that need to stay home and quarantine.

Nobody knows who they are until they get infected (and sometimes not even then, if they don't present much). 50% of the people going back and half of them having problems would still completely overflow all our healthcare capacity and many of them would die.

The perfect plan would be to massively ramp-up the healthcare system capacity as fast as possible and to fit those that need extra attention to our ability to provide it perfectly. The problems with this are manifold:

- The time the professional help is needed is often a week or more after infection and long after they've been contagious, making planning hard.

- Knowing how people interact and congregate and spread the disease is essentially unknowable when people are actually interacting, so the only way to have any semblance of forecasting ability is to prevent interactions.

- Having surplus capacity by 10% doesn't kill anyone. Having surplus patients you can't handle by 10% means deaths, and at a high percentage rate (I wouldn't be surprised if it's 10% of that cohort or higher). As the capacity ramps up, we're also talking about really large numbers. If we can handle 10 million people in the healthcare system, being off my 10% and having 10% of those die because of it is 100,000 people.

- The spread is not even, there will be hot spots that outstrip local capacity while remote capacity is underutilized.

Right now we have people afraid, but we don't have a massive panic so much, depending on where you are. Once a lot more people start dying, and people around you that you know, then real panic will start, and that might make any economic problems we're seeing now look tame comparatively.

But they won't because they would lose out to any businesses that didn't. Almost like competition is really ill-suited to solving public disasters (as well as a lot of other things).

I think the issue is that when most people think of a "bad week" they mean sales are down 20% or 30%. But no, in this case, the sales are z.e.r.o. It's hard to wrap our heads around if we haven't felt it first hand.

What's really kicking a lot of our "main street" business is that they're more or less seasonal. We're very tourist heavy, so revenue spikes in better weather.

So they expect to have reserves for the winter, and this is almost perfectly timed to arrive just as they were expecting business to increase.

They do prepare for lean times. And they've just had 5 months of lean times. This is not only the worst possible moment for this, it's also quickly writing off the summer season where they'd usually be expected to recoup.

That is incredibly difficult to recoup. Small businesses simply don't have a 1-year "war chest".

I like how when this happens to companies it's not their fault, but when it happens to people everyone starts berating them for not saving/etc.

Like. What?

Our economic system is beyond broken if we expect companies to have less fiscal sensibilities than individuals.

In this case it is not their fault. The government ordered people to stay home and shut the economy down. The government is merely compensating business for its own actions, so people may have jobs to go back to when the restrictions are lifted.

In other cases I would totally agree with you. GM never should have been bailed out, and most of the finance companies and banks should have been allowed to go bust in 2008.

Was GM bailed out? I don't think it was... the original company went bankrupt, the government effectively bought it in bankruptcy to preserve jobs (and US car manufacturing capacity), but I though the original shareholders were left with nothing, so not exactly a bailout.

True. The US government spent 51 billion dollars so the new GM could continue to operate without disruption and continue to pay employees and retirees and took a 61% stake that they eventually sold for 39 billion. So the government lost 12 billion plus the time value of money.

The retirees were lucky that the Democrats were in charge. While a republican may have also provided a bail out, they may have forced a true chapter 11 where the retirees’ pensions are reduced to the federal minimum. The new GM would have emerged without the pension liability.

That’s a clever folksy outlook but the real world doesn’t work like that. Businesses take inputs and produce outputs. They’re not in the business of having 6 months of savings.

Then I guess we shouldn't be in the business of bailing them out.

The only way a bailout is acceptable is if we transfer the ownership of the businesses to the workers who actually produce the value.

Laughs in Apple.

that dichotomy isn't helpful. most of us (bottom 80-90% or so), small businesses (~<$10MM in revenue, low-growth), startups (small-ish but high-growth, negative cash-flow businesses) and the like need leeway to take risks. fault or not, it's reasonable to band together to try to keep these consituents, society, culture and way of life afloat through economic arrest.

the wealthy, large businesses and transnational corporations like to play by ruthless financial rules (particularly against the less powerful) and should be allowed to die by those same rules (or at least sacrifice significantly in exchange for help).

I honestly don't care about small businesses. You want my empathy? Create a co-op.

You may not care about the businesses, but do you care about the people who work for them? Do you care about what they produce?

How is the economy going to continue to work when a huge fraction of the workforce is unemployed and a large chunk of production has stopped?

Maybe it's the push we need.

Workers should own the means of production.

To hear this from somebody who works for Microsoft of all companies. It's too good to be real.

You understand that participating in this system is a necessity for survival.

The fact that I HAVE to participate in it to live is why I'm also speaking out against it.

But sure, irony or whatever.

At most small businesses, owners work alongside their employees.

Then they would have no problem making it a coop.

I've removed my original reply as it was posted out of a place of incredulous anger.

It seems obvious to me, that companies and individuals have different needs, goals and options, as they are quite different entities.

> but when it happens to people everyone starts berating them for not saving/etc.

To me, that does not seem to be a universal truth. It also seems to depend on the situation, how expected the situation is, if it could have been avoided at all, and many more.

You seem to be complaining of a double standard while possibly engaging in one.

Many of my progressive friends have complained loudly when companies keep cash. After all, if they can save they can pay workers more or pay more taxes... after all, a company flush with cash must be putting profits ahead of people and damn those greedy capitalists and all that... The truth is many businesses live a pretty thin margins (mine included) and those that can keep large cash reserves (like Apple) are probably best positioned to weather this storm.

Having said that, even though I sympathize with these businesses, I certainly don't believe they should be bailed out either. The fact is there are many incentives to spend cash and not save. This is true for individuals and businesses.

I'm for bailing out if the govt gives ownership of the business to the workers.

If you're not letting the workers most impacted by this to own the means of their work, then your bailout is useless.

This is an opportunity to, peacefully, transfer ownership of the means of production that are getting destroyed right now back to the workers.

Of course.

"You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before."

A lot of big companies keeping cash do it for tax reasons. If they bring the cash to the US it is taxable in the US. They're really just waiting for the government to reduce the taxes on bringing that money back.

The government already did that (Google the "tax holiday"). And US companies promptly used the money to buy back stock instead of investing in US facilities or employees, which is why it is unlikely it will happen again.

The government has actually done it more than once. After the first time companies started saving up more cash in the expectation that it would happen again.

You must be one of those people who believe that "corporate bailout" is straight up cash, and not an equity-secured loan. Because this is exactly what medium and large companies are getting. How would you like it if federal government took, say, a decent chunk of your brokerage account until you pay back its loan with interest?

It's actually a forgivable loan up to $10 million dollars (capped at actual amount of payroll excluding payroll taxes and withholding, utilities, and rent/mortgage for March, April, and May) that is not backed by anything at all. Generally, as long as you adhere to the conditions of the loan, it will be forgiven.

Source: helped my company apply for one of these "loans."

I'm not sure I understand what your opposition is to at the same time keeping employees above water, and preserving their place of work. It'd seem to me that it's the _workers_ who are getting a bailout here, by design, not corporations. In fact companies with more than 500 employees or above certain revenue threshold aren't even eligible.

The OP is railing against corporations (such as e.g. Boeing) which he/she think are getting trillions for free on taxpayer's dime.

I'm not opposed to that idea. In simply saying that your understanding of the CARES Act loans is wrong.

My understanding is there are several different kinds of loans, which is what I've been trying to point out. So it's conceivable that _your_ understanding of CARES Act loans is wrong. Large companies do not get the kinds of loans that can be "forgiven", and government takes equity stake in them to ensure that the loans are paid back. This is particularly chafing to some since equity prices are in the shitter right now.

I'm aware that there are different types of loans in the CARES Act. But the OP was not referring to the large business loans, they were referring to small business loans. And the comment we were both replying to was mistakenly imputing issues with the large business loans to the OP's comments about small business loans. In your parent reply, you were doing the same--stating that large businesses do not qualify for CARES Act loans, which is wrong, but is also not relevant to any of my comments about the small business loans.

They're literally giving away $10,000 in grants to small businesses right now. Grants. Not loans.

But sure.

Small businesses, mom and pop shops. Not large ones you're presumably railing against.

A lot of businesses are very low margin and that’s ok.

Maybe these companies shouldn't have been having those $5 lattes or avocado toasts.

Socialism for the rich, and rugged individualism for the poor.

There's a saying in Russia, or rather a hope some opposition figures voiced, that one day "the fridge will beat the TV", i.e. the economic mismanagement and poor living conditions (the empty fridge) will overpower the TV (full of propaganda) and the people will become disillusioned with powers that be. Alas, so far it has never happened in Russia (the closest was probably 2011) - there's usually just enough money from the exports and more than enough propaganda.

There's hope that the current situation will end when it becomes dire for millions of newly unemployed and bankrupt, and the fridge will too defeat the lockdown insanity.

The fed gonna keep pumping cash, they didn’t run out of ammo yet. In Smb case they may forgive portion of it just again flatten the curve

> These SBA loans are a bandaid.

Why? They're completely forgiven if they keep their employee.s This isn't really a loan, but free money.

And if the situation stabilizes after a few months then the bandaid will have worked. If there’s a year or two or more of recovery than the bandaid will have adequate (perhaps another will be possible, perhaps not' who knows)

I wish anyone would listen :-(

More like a bandaid on a severed artery.

I recommend the "Money as Debt" series on youtube https://www.youtube.com/watch?v=2nBPN-MKefA

Well, they shouldn’t have levered up as much as they did. Sorry. Maybe the new owners of the business will make necessary changes to run the business lean and not take out as many loans.

Why do you assume that your local restaurant or book shop has taken out many loans? It might simply be operating on a tiny margin.

Plus it’s not unreasonable for someone setting up a restaurant to take out a loan for the initial fixtures and such as they will be intended to be amortized over several years.

Sure, that is fair. My point is that Bank of America itself would never extend loans to these businesses. It must mean there is some fundamental issue with the economics of the business. This is the same Bank of America that was expert in packaging dogshit BBB bonds. The fact that the latest stimulus bill enables these types of loans means a lot of these businesses that do not have a profitable business model will stay afloat. These are malinvestments enabled by the government. Shitty management will never be punished for their incompetence. Don't you want a world where incompetent managers are punished by the market for their incompetence? I certainly do.

Many were probably running ok in steady state but will die due to all their customers vanishing (For endogenous reasons) unless something happens. And their employees will all become unemployed.

It’s the ultimate in liquidity shocks and is an otherwise uninsurable risk excerpt if the whole economynis used in an attempt to fight it. If I took your attitude where should people live: not in California where earthquakes are more likely than the average, nor the Midwest where tornadoes are, nor near an ocean where storms could happen, nor mountains where landslides can happen.

> If I took your attitude where should people live: not in California where earthquakes are more likely than the average, nor the Midwest where tornadoes are, nor near an ocean where storms could happen, nor mountains where landslides can happen.

There are actuarial models that deal with these types of risks. The bigger risk for a bank is if your business model isn't sound.

A business that doesn't have cash flow for bad times is not a business. There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent. This could easily be fixed with regulation to promote this behavior but currently the priority is to take the profits to the owners.

Your local diner probably doesn't have months worth of cash sitting around. They make food, sell it, pay employees and open the doors the next day. That falls apart pretty quickly if people stop buying their food.

One of my favorite bagel shops is barely making payroll during this shutdown, and only because they are heavily innovating how they keep customers.

They are now offering meal kits, so you get a meal for two to four people in one easy go, they started shipping via USPS, and they are doing local deliveries. They make their own in-house butter, cheese and cream cheese so their kits do fairly well.

They are also increasing what other items they are selling, such as adding bread to their lineup. Which is absolutely fantastic.

But it's still hard for them, with the reduction in people coming in and sitting around they don't get people buying a bunch of coffee or having breakfast and then lunch while chatting. They have had to furlough some of their staff, and I really hope they make it through, because another favorite restaurant of mine is going under, they simply can't afford to keep going, even with a loan that would help pay salaries, there are other contracts and payables due that simply can't be covered with enough loans... loans against what collateral?

One of my favorite bread shops is basically in tears on instagram due to this thing. They've tried a few approaches to improve sales but they're basically closing shop for now.

So lay off the employees, have them collect unemployment. What are your operating costs? Really just the lease on the building. So don't pay the lease for a couple months. Who suffers? The commercial real estate holder. What are they going to do? Lease it to another restaurant while your doors are closed? So the commercial real estate investor loses out on some profit and/or defaults on their commercial mortgage payment to the bank. Now who is suffering? The bank! But what happens when the big banks don't get their real estate loans paid? They can always just put loan payments on hold for a couple of months, and instead of making $300 billion in profits that year, they make only a measly $100 billion.

When it all blows over, the small/medium businesses can re-open and re-hire all of the people back again, and they can all stop taking unemployment. Life continues on as usual.

Why should the average person have to suffer so that these big banks can keep charging interest on their loans every month? Why can't we just legally mandate that they have to put the loans on pause and suck it up like the rest of us?

>What are your operating costs? Really just the lease on the building.

My partner made the same mistake talking about a local small-scale brewery. Talking to the brewer, servicing the equipment loan was one of their biggest monthly expenses and their bank called them to tell them to defer payments for several months. Meanwhile, the landlord (actually a local government agency...) has sat paralyzed unsure what to do.

Also, those commercial real estate holders aren't necessarily rolling around in cash either. So while yes, they should have reserves, that doesn't mean they can necessarily go months or years without a paying tenant in place.

For that matter - the bank I mentioned above that did right by the brewer is a local bank. Not every bank is BofA, Wells Fargo, or Chase. Lots of banks in rural America look an awful lot like George Bailey in It's a Wonderful Life.

>There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent

Can you cite such a time when businesses, especially small, could survive in a competitive market without taking on debt and redirecting profits to the business? Because this hasn't been true ever. Small businesses need every edge they can get to survive, and that means not having gold-laden chests lying around waiting the the 100-yearly plague to come.

Accounting 101: balance sheets, cash flow analysis. Those tools were not created to have interesting graphs and tables to look at but to promote and show explicitly what’s going on behind the scenes. I get that a lot of people just invest on their emotions (like-able CEO; must invest!) but what’s actually happening is they are just taking in debt and passing on the risk (while profiting temporarily and leaving the company exposed naked).

I have tons of friends with small business that own 2-3 personal property, all the luxuries and yet officially the business is in shambles (right now). The attitude is “who cares”, they take the money out and spend it on themselves and just fire everyone. They pass on the risk. That money came from greener days and now employees have to file for unemployment. I guess people see this as normal, but it isn’t and it shouldn’t. Tax-payers are now subsiding those unemployment checks while the profit taking already benefited the owners.

This does not describe most businesses, ever, especially not most small businesses.

Small businesses have always lived relatively hand-to-mouth existences, and the "profits" are usually enough to cover the owner's equivalent of a salary.

> A business that doesn't have cash flow for bad times is not a business. There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent. This could easily be fixed with regulation to promote this behavior but currently the priority is to take the profits to the owners.

This may be what we read about publicly traded firms, but small businesses are in a completely different category. For example, many of them, if they do not take loans to improve their offering, will lose customers to the competition.

There is a huge difference between 'bad times' and having your business eliminated by government mandate.

Even during the recession of 2008, demand didn't go to zero. It is insane to expect anyone, business, individual, or otherwise, to be able to go completely without income for any prolonged period of time.

So Nike is not a business? Cheesecake Factory is not a business? TJMAXX is not a business?

No they are just debtors...once they can't service their debt they are simply insolvent debtors whose assets will be foreclosed on.

Those assets are worth pennies on the dollar to a 3rd party and the liquidation process will cut those pennies in half