This only sounds meaningful when you take it out of context. Leading up to that it was quite clear the government had effectively mandated for Disney to stop doing business. One day a business, one day not. It was on a trajectory to zero.
It only had a good day after the government decided “maybe it will be less damaging to the economy to float all of the existing companies through this huge pause rather than let them all collapse and have everyone lose their retirement and their job simultaneously”.
The same for cruises, airlines, hotels, restaurants, museums, concert halls, doctors offices, etc. All sane businesses one day worthy of investment, the next day not.
There really aren’t parallels to what happened in 08 here. In 2008 it was a single sector imploding that happened to be the one with its tentacles wrapped around everything else. With Covid everything was failing because everything stopped.
Well leading up to 2008 the banks were making record profits and had record high stock prices. However, they were under funded, over leveraged and couldn’t absorb their losses.
Similarly, in 2020 nearly all publicly traded companies were trading at all time highs, but in reality they were all significantly overvalued and the businesses themselves were all significantly over leveraged.
You are focused on the difference in the cause of the losses, rather than the historic valuations completely detached from business fundamentals (i.e. the bubbles), and the governmental responses to prop up bubbles. Taxpayer funds shouldn’t have gone to financing foreclosures and acquisitions for failing banks and they shouldn’t have gone to the Fed to propping up businesses record high stock prices.
> “maybe it will be less damaging to the economy to float all of the existing companies through this huge pause rather than let them all collapse and have everyone lose their retirement and their job simultaneously”.
The irony is you are using the very same political justification for the government response to the banks in 2008, and it only highlights my point how people will be all to happy to say thank you for allowing us to bailout your failing business and return it to record high stock prices.
This would seriously hamper COVID / airborne viruses.
Why worry about ventilation and masking - particularly in schools - when one could spend that time looking at data showing who is actually at risk, and how to protect them.
Spoiler: for this pandemic at least, the risk group simply isn't healthy children. Or indeed healthy young adults. Or maybe even anyone healthy under say 45[0]
Our 8 year old had a PCR-confirmed Covid infection three weeks ago, as far as we know that's the first case in our immediate family. He's not vaccinated.
For him, it represented a four-hour headache. No fever, no sore throat, no cough. He's finally been allowed to go back to school this week.
Isn't this why we developed vaccines? To reduce the risk of serious illness?
"Every year around 600,000 people die in the UK. The Imperial College team estimates that if the virus went completely unchallenged, around 80% of people would be infected and there would be around 510,000 deaths.
So, roughly speaking, we might say that getting COVID-19 is like packing a year’s worth of risk into a week or two. Which is why it’s important to spread out the infections to avoid the NHS being overwhelmed."[0]
Once we've vaccinated a large proportion of the at-risk groups, then the risk of overwhelming the hospitals drops. Then life can, and should, get back to normal.
[0] https://wintoncentre.maths.cam.ac.uk/news/how-much-normal-ri...
On the other hand I was also considering what our politicians did to the society keeping them locked up in their rooms and not training their immune systems on a regular basis which usually happens with normal interaction.
Probably because of their massively successful streaming service that was perfectly placed to pick up the slack. They also have one of the deepest content libraries around so production stoppage hurts them less than competitors like Amazon, Netflix, AppleTV.
To drive it home, Disney had record revenue in 4Q2021, driven by streaming and parks revenue [1]. Maybe it’s you who had it wrong?
[1] https://www.marketwatch.com/story/disney-stock-soars-after-r...
You are cherry picking an article from Q42021 that references park revenue, whereas I gave a very specific example of their record single day gains in company history which occurred while the parks were closed in 2020.
As to Disney+ streaming service it launched in 2020 but the Disney+ lost $2.8B in fiscal 2020, the same period of time it’s parks were closed and park losses total about $7B, and yet during this period it saw it’s record single day stock price gains in history. That record day was a direct result of the Fed and taxpayer money, not record theme park revenue (it was record losses) nor Disney+ which was a brand new division and recording its own multibillion dollar losses.
At the time Disney+ was losing money, but the pandemic and the bailout were indicators that the steaming business would take off (it did). Their huge content backlog had them perfectly placed to manage a production shutdown. There’s also the 21st Century Fox acquisition that was Closed in 2019 and gave them more content.
If investors expected future earnings to grow more than current losses (which were already priced in by the market), then it isn’t wild for the stock to bounce. A year later, their earnings pretty much prove it.
We could also go into the calculations of why the value of recurring revenue (streaming subscribers) is much higher than the value of non-recurring revenue (park visits).
Well of course Disney future theme park earnings were going to increase from zero. You aren’t considering the actual E/P ratio.
Pre-Covid Disney both stock price was a at all time high and their E/P ratio was at an all time high (about 22, where usually an 18 is considered over priced).
Those “investors” you suggest were the Fed using taxpayer money buy and prop up the stock price. With the Fed money Disney stock price once again reached a new all time high price and a P/E ratio over 90, meaning the Fed was bailing out shareholders at a historic high of $90+ to $1 earned, where an average publicly traded company should be closer to 13-14.
This isn't how investors think. If you know that future earnings are going to increase from zero due to outside circumstances (COVID, in this case), why would you base your analysis on past earnings? The past earnings don't matter, especially when you admit that they were heavily influenced by COVID.
$1 of recurring revenue from subscriptions (Disney+) is worth more than $1 spent at a Disney theme park. The recurring revenue costs less to service and is more predictable going forward. This is why businesses (like Adobe, Apple, Disney, etc.) have been working to shift revenue towards subscriptions over one-time purchases.
> Those “investors” you suggest were the Fed using taxpayer money buy and prop up the stock price. With the Fed money Disney stock price once again reached a new all time high price and a P/E ratio over 90, meaning the Fed was bailing out shareholders at a historic high of $90+ to $1 earned, where an average publicly traded company should be closer to 13-14.
It feels like you are working backwards to try and find the nefarious actions you are so positive about. The Fed deciding to bailout companies and consumers obviously helped businesses (especially consumer facing businesses, like Disney). The entire stock market exploded when it was announced.
The P/E ratio of the entire S&P 500 spiked from around 20-25x to 40-45x due to Fed and Congressional actions [1]. Average publicly traded companies do not trade at 13-14x P/E, and low interest rates for decades have made that a fact. That said, Disney isn't a traditional company because their investments and growth in streaming make them look more like a growth stock. Which is, again, reinforced by their record revenue numbers.
Again Disney was double that at 90 after the FED began buying Disney stock/bonds using taxpayer funds and pumped it to an ATH.
> It feels like you are working backwards to try and find the nefarious actions you are so positive about.
It’s all public record, the stock was tanking, after the FED began to directly prop up Disney the stock price reached a new ATH in 2021 at which point executives/insiders, including the Chairman, began to sell sending the price downward from ATH and leaving the FED holding the bag. Despite your claims of Disney behind a growth stock the Chairman liquidated something like 50% of his holdings.
Anyway I’m not here to debate the merits of the Disney stock price. The FED shouldn’t be getting taxpayer funds much less buying Disney stock/bonds, it’s corporate welfare, and when the stock price is propped up to an ATH with taxpayer funds and the Chairman and other executives sell out it’s a golden parachute. Like I said people look back on 2008 and think taxpayers should thank the banks, and similarly people (presumably like you) will think taxpayers should thank companies like Disney that were bailed out by taxpayers.
This is false. There is no doubt that, while there was a short recession in early-mid 2001, there was a general economic expansion, not a recession, after that; to the extent that housing market was exploited to paper over something, it was the unusually top-loaded distribution of the benefits of that expansion, where the bottom 3 income quintiles and the fourth quintile was basically flat, with the gains concentrated in a fair small segment at the top, which it covered by (non-sustainably) paying for continued debt-fueled lifestyle improvements for groups that weren't seeing real income gains.
That’s one long sentence.
The thing is it’s impossible to decouple any economic expansion from 2000-2008 from the trillions of dollars that flooded into the economy during that period as a direct result of the artificial housing prices and newly available debt.
I agree with you though to the extent that any actual wealth that was generated was concentrated to the top, it always is. There hasn’t been real income gains for the working class in about 50 years, but the explosion in household and consumer debt in that time is incontrovertible from about $300B in 1970 to $11.5T in 2010.
The fact that this debt isn't paid by us but rather by the working class, is how we get away with this scheme. After all, those who work for a living, those who spend almost all of their money, unable to save it for the sake of subjugating society, spending it just to live their life, using it as the medium of exchange so many postulate it to be, do not have any significant savings to speak of and would not significantly benefit from any reward that is proportional to how much they own.
I must remind everyone that the Greece financial crisis was actually a bank bailout program for German banks. After all, savings are the holy cow of the rich. If you take something away that didn't exist, in proportion to how much the real world lost, you are a communist.
If you can't touch the savings and the savings keep growing, the economy must grow in lock step with the savings. Endless growth is just a subsidy to endless savers since you can't tell them to stop.
Ah yes, people are just flocking to buy roubles as an inflation hedge, and there's definitely no war on.
The US has just about 4 times more gold reserves than Russia and more than double that of Germany in 2nd.
Nowhere does it say that Russia has the largest gold reserves on the planet.
Meanwhile:
https://www.statista.com/statistics/267998/countries-with-th...
I'm a US/UK citizen, I'm not arguing a pro Russia position here just talking realpolitik and geo politics.
Here's a Russian position which arguably gives away that gold and currency control is central to their positions http://thesaker.is/natos-internal-gold-war/
There are endless articles elsewhere questioning whether there really is any gold in Fort Knox etc because gold reserves are the king in the geopolitical chess games
Now that we're down to claims about the US lying about its gold reserves I'm afraid I have to check out.
There is this inherent contradiction that people are angry that the money supply grows because they save, while themselves demanding high interest rates like 5% to let their money compound over time.
If you limit the money supply and demand high interest, that interest must circulate from lender back to the borrower. The money supply is $100. I lend out $100 and demand $105 back. The borrower pays me the full $100 back. Where does he get the $5 to pay interest? The easy answer is that I spend $5 of the money he paid to me. He then has $5 and pays off the entire loan.
What if I lend out the $5 to him instead? The money supply rose by $5. Letting money compound over time by reinvesting/lending the interest will let the money supply grow exponentially and in principle there is nothing wrong with that, if I, the lender, eventually spend off all the interest income I earned because then the whole thing settles and all debt including interest is gone.
Now, there is a problem here. Why doesn't that spending phase set in? Why does the money supply keep growing until the system collapses? Because of an artificial interest rate floor of 0% on cash. The saver has the option of refusing to lend out his money or spend it and wait until an inevitable recession sets.
During deflation, the value of money goes up. This is terrible for debt contracts. If you rented a Prius 2010 knowing you have to return Prius in the same condition but instead you return a 2020 Prius you would expect the rental company to compensate you for returning the car in an even better condition.
With debt it doesn't work that way, since you can just hold cash with 0% interest. Imagine if the car dealer had a <current_year> Prius that automatically upgrades to the latest year. You are expected to pay interest on top and bring a 2022 Prius because the dealership could just let the Prius sit in a garage and go up in value.
This is because of the inherent contradiction of being able to own a store of value. A store of value can only ever be a contract between two parties. The mythical self upgrading Prius doesn't exist in the real world. Someone has to promise to manufacture the 2020 Prius in exchange for you giving him the 2010 Prius. Deflation on a fixed debt contract is the equivalent of demanding a 2022 Prius when a 2020 Prius was agreed upon. The borrower never promised a 2022 Prius so it is only natural that he ends up defaulting through no fault of his own.
When the money supply increases in that way, while it does not immediately create inflation, as the new money will be stored in investments and those investments rising in value are not considered inflation, as soon as the down-turn occurs, that money, being liquid, becomes inflation.
So when you create money through artificially low interest rates that goes to rent-seeking, you are creating inevitable inflation in the future.
Because that is what happens with other countries. The only reason US gets a free pass is because the dollar is a global currency which is sought by everyone.
When's the last time a high yield savings account made 5%? Or even matched inflation?
People are angry that they are punished by thr fed for trying to save money for a rainy day.
Rainy day funds should approximately track inflation. There are plenty of assets that have been good havens over the past decade. It’s odd to expect real gains on a rainy day fund.
Though generally I don’t think it’s for a private entity such as the Federal Reserve to be given taxpayer money and have the power to increase the money supply, it makes a private bank a de facto 4th branch of government with powers to coin money reserved by the Constitution to the Government by the people for the people.
The housing market didn’t “snap back” rather two unprecedented tax payer stimulus packages totaling just shy of $2T were given to the banks to finance millions of foreclosure cases and allow the entire industry to consolidate. That $2T resulted in the longest bull market in history, as well as the biggest transfer/consolidation of wealth in history.
It was unprecedented until the “stimulus packages” during Covid which is probably closer to a total of $7-8T, so far, once the federal reserve leveraging is included. Once again the policy response during this crisis was designed to benefit corporations and the wealthy. One of my favorite things to highlight was that following the Fed receiving taxpayer funds to prop up the stock market Disney had their greatest single day stock gains in history all while every single theme park, hotel and cruise ship were indefinitely shutdown and every single movie production was indefinitely suspended.
The very same way people look back and excuse the banks for their culpability for the financial meltdown resulting in “the Great Recession”, and even more bizarrely argue to some extent that taxpayers should thank the banks for allowing the taxpayers to bail them out (ie finance their foreclosure cases and major bank acquisitions)…its clear the people have once again been conned by politicians and are stupid enough that we will be reading future articles about how 2020-20?? wasn’t a stock market bubble and wasn’t inflation and that the people will once again be thanking politicians and the federal reserve for robbing them.