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US weekly jobless claims jump by 6.6M

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Re: US weekly jobless claims jump by 6.6M

#121

Post by notyourday »

chasd00 wrote: post #117
notyourday wrote: post #103

Earlier quoted context omitted.

Only the part that went into the payroll. So a business owner with no revenue borrowed money he did not need and got saddled with the payments. Oh, and as the vast majority of the loans it is personally guaranteed. Compare this with: Don't get the loan. Shut it down. Not owe more money than the owner would owe already.

"Only the part that went into the payroll" why else would you ask for the loan? the whole point is to keep employees on the payroll while they're under shelter-in-place orders.

Because while payroll is a cost it is not the only cost that a business that no longer has any revenue needs to cover. The maximum amount of a loan is 2.5 times the verified payroll. That's 2.5 months of pay. The rest of costs still need to be paid, except there's zero guarantees that the revenue of a business is going to recover immediately after the stay at home is lifted [it won't immediately recover] and it is unknown when the stay at home would be lifted. Lets presume that all other costs of running a business are added to some other loan. That loan is not 0% and it is personally guaranteed.

This means that by taking this loan and spending it on a payroll for next 2.5 months, the owner of the business in a month number 3 is in a worse position than the owner of the business would have been today if the owner were to simply lay off everyone.

The only winners in this are banks making a percentage of a zero risk loan that can be serviced at an incremental cost of a couple of dollars (electronic payments). It is, frankly, disgusting that the congress yet another time took small business loans as a base and made it a money stream for banks.

Re: US weekly jobless claims jump by 6.6M

#122

Post by miked85 »

notyourday wrote: post #121
chasd00 wrote: post #117

Earlier quoted context omitted.

"Only the part that went into the payroll" why else would you ask for the loan? the whole point is to keep employees on the payroll while they're under shelter-in-place orders.

Because while payroll is a cost it is not the only cost that a business that no longer has any revenue needs to cover. The maximum amount of a loan is 2.5 times the verified payroll. That's 2.5 months of pay. The rest of costs still need to be paid, except there's zero guarantees that the revenue of a business is going to recover immediately after the stay at home is lifted [it won't immediately recover] and it is un…

> This means that by taking this loan and spending it on a payroll for next 2.5 months, the owner of the business in a month number 3 is in a worse position than the owner of the business would have been today if the owner were to simply lay off everyone.

How is that true? The loan is forgiven if it is used to pay employees. Yes there are other costs, but assuming a business doesn't want to just close up shop entirely, keeping their employees would be preferable to losing all employees and their entire business.

Re: US weekly jobless claims jump by 6.6M

#123

Post by notyourday »

miked85 wrote: post #122
notyourday wrote: post #121

Earlier quoted context omitted.

Because while payroll is a cost it is not the only cost that a business that no longer has any revenue needs to cover. The maximum amount of a loan is 2.5 times the verified payroll. That's 2.5 months of pay. The rest of costs still need to be paid, except there's zero guarantees that the revenue of a business is going to recover immediately after the stay at home is lifted [it won't immediately recover] and it is un…

> This means that by taking this loan and spending it on a payroll for next 2.5 months, the owner of the business in a month number 3 is in a worse position than the owner of the business would have been today if the owner were to simply lay off everyone. How is that true? The loan is forgiven if it is used to pay employees. Yes there are other costs, but assuming a business doesn't want to just close up shop entirel…

The revenue for these businesses cratered. It cratered due to government actions. For service businesses or businesses that sell to service businesses the revenue is zero or nearly zero. The reason why the businesses needed X employees before is because to support Y revenue pre-closure X-1 employees were not enough. In order for the the payroll portion of a loan to become a grant a business cannot decrease the number of workers even though it has no revenue to support them. Reductions in payroll costs reduce the forgiven part of the loan. Reduction in a headcount reduces the forgiven part of the loan.

Essentially, in order for a loan to be treated as a business makes the following bet:

"In no more than 2.5 months from the moment the loan is funded the revenue will return to pre-closure levels"

The non-grant part of the loan (or entire loan if it no longer qualifies) must be repaid in 2 years at 1% APR.[0]

The only real play for a small business that is planning on being around for a long time is to get the loan based on the top payroll number, immediately lay everyone off taking 1% APR hit and repay outstanding loans with higher APR. This is only applicable to businesses that have a lot of cash in a bank.

[0] Before Wells Frago/BOA/Chase etc complained to Treasury that they were not going to make enough money to "make it worth for them to do these loans" the repayment terms were 0.5% APR for 10 years.

Re: US weekly jobless claims jump by 6.6M

#124

Post by DuskStar »

ceejayoz wrote: post #119
DuskStar wrote: post #115

Earlier quoted context omitted.

Not like Florida Republicans are the only offenders there. 59% voted in favor of California's "let's check if people are illegal immigrants" amendment back in 1994 [0], but then the incoming Democratic governor refused to defend it in court. (Sure, it may have actually been unconstitutional, but considering it's basically the opposite of 'sanctuary cities'...) Denying the public the benefit of politically inconvenien…

> California's "let's check if people are illegal immigrants" amendment That's a really disingenuous description of an amendment intended to "prohibit undocumented immigrants from using non-emergency health care, public education, and other services". > Sure, it may have actually been unconstitutional... It's funny that this is waved away as a minor issue, as if it weren't a giant difference between the two situation…

I mean, that's a better description than calling it "Save Our State"... but yes, the goal of the amendment was to reduce the services provided to illegal immigrants. Perhaps I should have said "let's check if people are illegal immigrants before providing non-emergency services", but too late to edit now. Whether this is a good idea is very much in question, but that's also the case for letting felons vote.

The "might have been unconstitutional" was a "no, this genuinely might have passed muster in the courts if it was actually defended". What actually happened was that an injunction was placed against implementation of the proposition, and the state never appealed. Probably worth noting that the logic used in the injunction - that it was unconstitutional on the basis that it infringed on the federal government's exclusive jurisdiction over matters relating to immigration - would also (IMO) prevent sanctuary cities from existing, except that inaction is generally (and correctly) privileged above action.

Re: US weekly jobless claims jump by 6.6M

#125

Post by jliptzin »

strict9 wrote: post #24
shartshooter wrote: post #10

we’ve now lost 10% of workforce in three weeks I’m a little surprised it’s not higher. I assumed with bars, gyms, retail, house cleaners (and not to mention wait staff at restaurants) all out of a job indefinitely that those folks made up >10% of the workforce.

It is definitely much higher. Many states' unemployment systems are woefully inadequate. Florida (but probably other states too) intentionally made the unemployment claims system painful/impossible to navigate: > “It wasn’t about saving money. It was about making it harder for people to get benefits or keep benefits so that the unemployment numbers were low to give the governor something to brag about.” https://www.p…

I have more than a few friends trying (and failing) to register for unemployment claims because the websites are jammed up.

Re: US weekly jobless claims jump by 6.6M

#126

Post by [deleted] »

gonzo41 wrote: post #37
twomoretime wrote: post #16

Earlier quoted context omitted.

On the other hand, hasn't a lot of cash outflow been reduced right now too? I feel like we're putting the economy on pause. If we can survive in this state for another 3 or so months, there's a good chance things will quickly return to normal - or at least most companies will survive and start rehiring under a new normal.

Black Swan, 1:100 year event. It makes a lot of sense to spend the kind of money that you'd collect over two years of tax collection in order to support people through this. You can then recover that money over about the next 50 years. I think Australia is trying to do this on the cheap and kinda of stuffing it up. We're going to see a lot of industries collapse. Tourism is dead for 36 months at least and so is the h…

[deleted]

Re: US weekly jobless claims jump by 6.6M

#127

Post by sjg007 »

DuskStar wrote: post #124
ceejayoz wrote: post #119

Earlier quoted context omitted.

> California's "let's check if people are illegal immigrants" amendment That's a really disingenuous description of an amendment intended to "prohibit undocumented immigrants from using non-emergency health care, public education, and other services". > Sure, it may have actually been unconstitutional... It's funny that this is waved away as a minor issue, as if it weren't a giant difference between the two situation…

I mean, that's a better description than calling it "Save Our State"... but yes, the goal of the amendment was to reduce the services provided to illegal immigrants. Perhaps I should have said "let's check if people are illegal immigrants before providing non-emergency services", but too late to edit now. Whether this is a good idea is very much in question, but that's also the case for letting felons vote. The "migh…

You should look at how these clinics are funded.

Re: US weekly jobless claims jump by 6.6M

#128

Post by jliptzin »

geerlingguy wrote: post #4

And yet, stocks continue their quick rebound.

It's a tug of war between two camps:

1. The virus has peaked, we'll start to see global economies open up again, everything will be back to normal soon

2. There will continue to be lots of peaks all around the world for months/years to come, the economy will not resume like it was before, for many years.

Personally I think things will be stagnating for a while until we get a therapeutic or a vaccine.

Re: US weekly jobless claims jump by 6.6M

#129

Post by sjg007 »

ptero wrote: post #118
sjg007 wrote: post #116

Earlier quoted context omitted.

My point is that people claim that the market has already priced in the next 6 months. This is not true.

Next 6 months includes a lot of uncertainty in expectations which is, statistically, priced in. Those expectations may have a distribution which might make for a strange average response. For example, consider a bimodal distribution: 50% +1, 50% -1. The average is zero, but everyone that believes in this distribution believes that zero is highly unlikely. Thus, if there are big benefit for guessing right and little f…

Statistically priced in? Huh? I doubt that.

Re: US weekly jobless claims jump by 6.6M

#130

Post by DuskStar »

sjg007 wrote: post #127
DuskStar wrote: post #124

Earlier quoted context omitted.

I mean, that's a better description than calling it "Save Our State"... but yes, the goal of the amendment was to reduce the services provided to illegal immigrants. Perhaps I should have said "let's check if people are illegal immigrants before providing non-emergency services", but too late to edit now. Whether this is a good idea is very much in question, but that's also the case for letting felons vote. The "migh…

You should look at how these clinics are funded.

Clinics?
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