51–60 of 161 posts
Earlier quoted context omitted.
yes, basic consumer goods didn’t see much inflation. But what about housing, education, even stuff like cars and travel. Of course, other factors are at play too, but abundant “cheap” money certainly increase prices of those
The fact that the most common inflation numbers (AFAIK) don't include real estate makes them worthless.
Earlier quoted context omitted.
You're asking me,(general tax payer) to give you money to ride out the storm, but you get all the private gains in the future while I take the risk now. There is a much more fair way to do this. Firms simply issue new stock and sell it to the market. Firms get the capital they need, the general tax payer isn't holding the bag.
If a business is in a liquidity crunch because they’re shut down and may go bankrupt, their stock is....basically worthless. I don’t think you’ve thought this one through.
Firms are priced based in the long term future profits. By injecting capital immediately, the firms liquidity problems are resolved.
It sounds like you've never heard of convertible preferred shares. Or maybe you have and haven't thought this one though?
Earlier quoted context omitted.
You're asking me,(general tax payer) to give you money to ride out the storm, but you get all the private gains in the future while I take the risk now. There is a much more fair way to do this. Firms simply issue new stock and sell it to the market. Firms get the capital they need, the general tax payer isn't holding the bag.
If a business is in a liquidity crunch because they’re shut down and may go bankrupt, their stock is....basically worthless. I don’t think you’ve thought this one through.
Earlier quoted context omitted.
I agree with the general principle here (that moral hazard is bad; that we should construct an economy in which it's possible to hit "pause" for any number of reasons), but that's not the economy we have. The one we have seems to reward financial engineering, cost-optimized supply chains that are highly vulnerable to even the most minor disruptions, and a general mindset that freaks out at the first sign of trouble.…
Localism is the opposite of the right thing to do. Small, local businesses are the ones that are going under. Large, geographically distributed companies are the most able to survive long-term shutdowns. What we need is more globalization and more redundancy of supply chains, not less. When the virus hits a region we need to be able to shift production of essential goods to other regions, so we need to have manufactu…
This fundamentally misunderstands how businesses work.
If your business has a 5% profit margin, and you're supposed to have enough savings to weather, say, six months of essentially full fixed costs but zero revenue... that means you would need to save a full ten years of profits before ever returning them to shareholders, and if your company is less than ten years old, goodbye.
That's ludicrous.
It's also against the "accumulated earnings tax", where the IRS virtually requires companies to return their earnings to shareholders (via dividends/buybacks) yearly, because they're financially penalized otherwise.
Good management teams aren't supposed to save for pandemics. It's not normal business. Companies in general are unable to buy insurance against it (because there's no insurance company with enough money to pay out). Capitalism is about weeding out the better companies from the worse -- not ones that are arbitrarily more or less hit by an unpredictable global catastrophe.
Letting swathes of companies go bankrupt through zero fault of their own is economic disaster, and neither is there anything remotely fair or capitalistic about it whatsoever.
Well, not really: bailouts punish people and business who incurred costs to operate in a way that would allow them to pause their economic activity for months (cancellable supply/rent/employment contracts, cash reserves, etc.), and favors those who did not do so. In general, a society where it is possible to pause all economic activity at any time is going to be much more robust than one that doesn't, and is going to…
I agree with the general principle here (that moral hazard is bad; that we should construct an economy in which it's possible to hit "pause" for any number of reasons), but that's not the economy we have. The one we have seems to reward financial engineering, cost-optimized supply chains that are highly vulnerable to even the most minor disruptions, and a general mindset that freaks out at the first sign of trouble.…
Let it hurt. Unless investors feel it (and they only feel via the value of their investment), nothing will change, ever. Of course, you'll get plenty of people saying that it's unfair that this time they really have to live with the consequences of their risk management and that we should totally do that, starting tomorrow. But then you'll get the next cries next week when they've done it again.
Mind you, I'm not talking about some restaurant that's more or less getting by without generating large profits, but every company that spent their money on stock buybacks will now have to do the reverse: issue more shares to recapitalize.
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Businesses were never expected to be able to totally shut down for months at a time. It’s not reasonable to suggest that businesses who can’t handle that have been irresponsible or are less deserving of help.
Wimbledon took out a pandemic policy year after year. Turns out they were stupid to do so, they could have invested the insurance premium in the stock market and waited for their bailout.
I'm not sure what sort of bailout they would get either. My firm does not expect a loss of earnings style bailout. I would venture that they did the right thing.
Earlier quoted context omitted.
Businesses were never expected to be able to totally shut down for months at a time. It’s not reasonable to suggest that businesses who can’t handle that have been irresponsible or are less deserving of help.
Wimbledon took out a pandemic policy year after year. Turns out they were stupid to do so, they could have invested the insurance premium in the stock market and waited for their bailout.
Earlier quoted context omitted.
Localism is the opposite of the right thing to do. Small, local businesses are the ones that are going under. Large, geographically distributed companies are the most able to survive long-term shutdowns. What we need is more globalization and more redundancy of supply chains, not less. When the virus hits a region we need to be able to shift production of essential goods to other regions, so we need to have manufactu…
Globalism doesn't really encourage redundant regions – it encourages all production of a certain type of good to be done in a single region and then traded with other regions for maximum efficiency.
For example, globalization is why Toyota manufactures cars and car parts in 18 countries, rather than just in Japan. Under localism, Toyota would only manufacture in Japan.
Well, not really: bailouts punish people and business who incurred costs to operate in a way that would allow them to pause their economic activity for months (cancellable supply/rent/employment contracts, cash reserves, etc.), and favors those who did not do so. In general, a society where it is possible to pause all economic activity at any time is going to be much more robust than one that doesn't, and is going to…
Businesses were never expected to be able to totally shut down for months at a time. It’s not reasonable to suggest that businesses who can’t handle that have been irresponsible or are less deserving of help.
But I agree with you. I don’t even know why we call them “bail outs” in this case. “Crisis operating grants” would be more accurate.