Effect of economic crisis on America’s small businesses [slides] • Hacker News Board

Re: Effect of economic crisis on America’s small businesses [slides]

#21

Post by danieltillett » Sat, Mar 21, 2020, 2:25 AM UTC

maxerickson wrote: post #17

danieltillett wrote: post #10

It is time to declare war. We need to move to a war economy and get on with what needs to be done.

What does that even mean?

Congress declares war. Think WWII.

Edit. Thanks to the wonders of HC I can’t reply to you so I have edited this post. The declaration of war is symbolic in one way, but it captures what needs to be done. The entire economy needs to be swung around to getting this pandemic under control as quickly as possible.

Once war is declared we can start conscripting people to do the things that need to be done like enforce curfews, do door to door testing, build hospitals, keep people fed, etc, etc.

We are going to end up at this point anyway, so we might as well do it now and save lives and the economy.

Re: Effect of economic crisis on America’s small businesses [slides]

#22

Post by marta_morena_23 » Sat, Mar 21, 2020, 2:25 AM UTC

dijit wrote: post #3

The slides by themselves do not speak a compelling narrative to me, so I think I’m missing something fundamental or not understanding. Small businesses (all, businesses) will suffer quite badly, but if your company cannot continue operating because its shut/slowed down for 2 weeks then it’s likely that your business was running on a knifes edge and /any/ shock would have killed it. Arguing that many people have done…

" then it’s likely that your business was running on a knifes edge and /any/ shock would have killed it."

Welcome to... life? This is how America or even the world works. Most people live on knife's edge. One missed paycheck? Homelessness just got its greasy hands on you. Two missed paychecks? Go pack what you have left... Most business are not any different, especially those run by regular people.

In my family we have a quite successful business in the sense that the person running it, has quite a fancy lifestyle and can afford it. But you have to realize that most business have terrible margins. Our family business has maybe a margin of 10%. That means, for every 10.000$ you take home before taxes every month, your business has running expenses of about 100.000$ per month. Now restaurants are all closed... Nobody will buy your stuff anymore, but your employess still need to get paid. So now you have those 100.000$ monthly costs and not a single dime coming in... There is no reasonable expectation to save this much buffer.

In short, even business that run extremely well, will die within A MONTH, if all expenses continue and no income is generated. This is why I think what they are doing for this petty virus is quite insane. They are destroying the middle class for some "theoretical" projection that might not even play out the way they think. What is guaranteed though is that businesses will die in troves and the economy and middle class with it.

Re: Effect of economic crisis on America’s small businesses [slides]

#23

Post by codingslave » Sat, Mar 21, 2020, 2:25 AM UTC

alexpetralia wrote: post #19

codingslave wrote: post #7

The stock market is largely collapsing because: 1.) Hedge funds levered up their capital 5 - 15x to make more money, then got caught with their pants down. So they all panic sold at once, crashing the market. 2.) CEOs of large corporations used cash to buy back their stock, inflating the stock price, and depleting their cash reserves. So now those same companies are on the brink of collapse, causing the credit market…

Did you miss the part about small businesses?

Everything is related. Imagine if the market only dropped a bit, large companies could support their employees, the credit markets wouldnt require massive trillion dollar spending. Supporting small businesses would be a walk in the park.

Re: Effect of economic crisis on America’s small businesses [slides]

#24

Post by Narkov » Sat, Mar 21, 2020, 2:26 AM UTC

codingslave wrote: post #7

The stock market is largely collapsing because: 1.) Hedge funds levered up their capital 5 - 15x to make more money, then got caught with their pants down. So they all panic sold at once, crashing the market. 2.) CEOs of large corporations used cash to buy back their stock, inflating the stock price, and depleting their cash reserves. So now those same companies are on the brink of collapse, causing the credit market…

I'm not disagreeing with you but is it illegal for a CEO to be bad at their job?

Re: Effect of economic crisis on America’s small businesses [slides]

#25

Post by CamperBob2 » Sat, Mar 21, 2020, 2:26 AM UTC

maxerickson wrote: post #17

danieltillett wrote: post #10

It is time to declare war. We need to move to a war economy and get on with what needs to be done.

What does that even mean?

Traditionally it implies sacrifice, on both the individual and collective levels, to achieve a larger goal or to fight an existential threat. But American civilians haven't really been called upon to sacrifice anything in wartime since WWII.

It won't be long before there's no one left alive who remembers mandatory rationing, price and wage controls, and production mandates.

Re: Effect of economic crisis on America’s small businesses [slides]

#26

Post by forkexec » Sat, Mar 21, 2020, 2:27 AM UTC

I was just talking to my mechanic by text at middlefield & n shoreline at the Arco on the southwest corner, just across 101 from the Googleplex. He may have to permanently close his business and get a regular job because his landlord will demand rent when there are no customers.

A similar situation is happening to Louis Rossmann who doesn't have business interruption insurance because they require flood insurance and weasel out of covering disasters.

Another situation is Michael Moore's nonprofit movie theaters won't be reimbursed to pay or govt pay their employees' salaries, and building lease/rent.

Also, tip-based workers are screwed too.

Only 20% of workers are getting some money, with a little promise of temporary UBI to some people.

And then the government has the gall to offer interest-bearing loans instead of no interest loans and grants? WTF!

The situation is there will be people working to put food on the table sick or not, and riots if people aren't made whole. The US economy will crash and burn for decades if this isn't handled correctly by clawing back some of the tens of trillions the MIC, corporations, and the rich stole from the little guys and regular folks.

Re: Effect of economic crisis on America’s small businesses [slides]

#27

Post by Skunkleton » Sat, Mar 21, 2020, 2:27 AM UTC

Narkov wrote: post #24

codingslave wrote: post #7

The stock market is largely collapsing because: 1.) Hedge funds levered up their capital 5 - 15x to make more money, then got caught with their pants down. So they all panic sold at once, crashing the market. 2.) CEOs of large corporations used cash to buy back their stock, inflating the stock price, and depleting their cash reserves. So now those same companies are on the brink of collapse, causing the credit market…

I'm not disagreeing with you but is it illegal for a CEO to be bad at their job?

It’s illegal to be bad at many jobs in certain ways. Companies need more regulation that results in personal accountability.

Re: Effect of economic crisis on America’s small businesses [slides]

#28

Post by toomuchtodo » Sat, Mar 21, 2020, 2:27 AM UTC

faitswulff wrote: post #18

lettergram wrote: post #2

One thing that really horrified me was how quickly people threw away the economy. Unfortunately, this virus is highly contagious (to the point that the vast majority of countries won’t contain it) and fairly lethal. We don’t actually know how lethal, but it appears 1%-3%, but without widespread testing we wouldn’t know. At the moment, we just reduced our GDP by 30%-50% in regions under quarantine. Think about that fo…

As a counterpoint, Illinois just ordered residents to shelter-in-place after closing schools and restaurants a week ago and our new cases of COVID-19 aren't accelerating upward as of today. This model also predicts far fewer deaths with shelter-in-place rules: https://covidactnow.org/state/IL As governor Pritzker said: "I fully recognize I am choosing between saving people's lives and saving people's livelihoods, but…

The problem will be how long the shelter in place can be maintained; as long as you have folks coming in infected from other states, once the mass quarantine is lifted, outbreaks will flare up.

This only ends with a vaccine and enough people recovered after infection we arrive near enough herd immunity. Until then this will have to burn through populations. Regardless, I can appreciate and support Pritzker’s response, and efforts to “flatten the curve”. It’s an unfortunate situation with no clear path to success.

Re: Effect of economic crisis on America’s small businesses [slides]

#29

Post by SpicyLemonZest » Sat, Mar 21, 2020, 2:28 AM UTC

codingslave wrote: post #23

alexpetralia wrote: post #19

Earlier quoted context omitted.

Did you miss the part about small businesses?

Everything is related. Imagine if the market only dropped a bit, large companies could support their employees, the credit markets wouldnt require massive trillion dollar spending. Supporting small businesses would be a walk in the park.

It's not really possible for the market to drop only a little bit in response to half the economy shutting down. Stock prices are an expectation of future cash flows, so they have to drop on news that a huge chunk of those future cash flows are cancelled.

Re: Effect of economic crisis on America’s small businesses [slides]

#30

Post by maxerickson » Sat, Mar 21, 2020, 2:28 AM UTC

booleandilemma wrote: post #6

lettergram wrote: post #2

One thing that really horrified me was how quickly people threw away the economy. Unfortunately, this virus is highly contagious (to the point that the vast majority of countries won’t contain it) and fairly lethal. We don’t actually know how lethal, but it appears 1%-3%, but without widespread testing we wouldn’t know. At the moment, we just reduced our GDP by 30%-50% in regions under quarantine. Think about that fo…

New Yorker here. From what I see through my window, my fellow New Yorkers still don’t “get it”. I see clusters of people hanging out and families going for leisurely walks. If this keeps up the number of infections - and deaths - will only increase. Last week my brother suggested instead of working from home I work from a Starbucks. I feel like people don’t understand how serious this is and it’s really bothering me.

There's nothing wrong with people that are living together going for a walk together, it won't particularly increase their exposure.

People should cooperate and keep distance, but it's not a big deal to just be outside a reasonable distance from small numbers of other people.