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

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

#411

Post by edanm » Sat, Mar 21, 2020, 1:17 PM UTC

digitaltrees wrote: post #112

senordevnyc wrote: post #49

Earlier quoted context omitted.

1) Hedge funds didn’t crash the market. There’s just no evidence for that. The market crashed because there’s enormous uncertainty and people would rather be liquid while they wait to see what happens vs losing a huge percentage of their wealth. 2) Businesses exist to make a profit for their shareholders. Yes, they should have some retained earnings as a rainy day fund, but some of these companies are losing 75-100%…

Business does not have to be structured as a Corporation with limited liability. That is a privilege allowed by the sovereign power of the people through an elected government. If companies don’t behave responsibly they should lose that privilege and the owners could be held liable for debt and these kinds of mistakes personally. The fetishized obligation to shareholders and ONLY shareholders is not some holy pronoun…

> If companies don’t behave responsibly they should lose that privilege and the owners could be held liable for debt and these kinds of mistakes personally.

What mistakes? Is it a mistake to not keep a rainy day fund that will allow a company to weather a once-in-a-hundred-years shutdown of the entire economy? If this turns out to last a year, will you think it's a mistake that companies didn't keep a year's worth of reserves?

Especially since we're talking about SMBs here. Your local electrician, who has a staff of 3, should keep enough money saved up to pay all staff for the next year just in case?

You're saying a bunch of buzzwordy slogans kind of like "limited liability is bad" or "obligation to shareholders was invented by Friedman", but not dealing with the actual facts on the ground or the current catastrophe.

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

#412

Post by sjg007 » Sat, Mar 21, 2020, 1:29 PM UTC

sokoloff wrote: post #386

sjg007 wrote: post #384

Earlier quoted context omitted.

You could buy gift cards for future service at these bars and restaurants. The business gets cash now and you get a discount.

If they remain open. That might be about a coin-flip on average at this point. As a moral issue, we are choosing to continue to pay our every-other-week house cleaner to not clean our house. Everyone else is getting paid iff they provide current goods/services. We have our own financial survival to look out for until more is clear about the economic outlook.

I mean this is what unemployment and governments are for. To insure losses in the extreme. We should have policies and procedures where a 2-4 week or month lockdown doesn’t destroy you financially. That gives the economy and people time to adjust.

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

#413

Post by nomad1987 » Sat, Mar 21, 2020, 1:55 PM UTC

kingaillas wrote: post #165

TheSpiceIsLife wrote: post #65

Earlier quoted context omitted.

Why should anyone be punished for failing to plan for a black swan event? Black swan events are unpredictable and outside of what is normally expected.

I'm not even that old and this is the 3rd black swan event in the last 2 decades: terrorist attacks of 9/11/2001, financial meltdown in 2008-2009, and this 2020 global pandemic. There were also 3 other localized outbreaks (SARS in 2003, Swine Flu in 2009, MERS in 2012) so that to me sounds like we were 3 viral mutations away from this being the 4th global pandemic in 20 years. If we're structuring business and our ec…

The gains inbetween these events far outweigh the cost of the bailout no?

Those who prepare well (3-6 months of reserves) will be ok, other businesses will need to perish to teach others a lesson.

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

#414

Post by wegs » Sat, Mar 21, 2020, 2:09 PM UTC

m_ke wrote: post #200

This wouldn't be such an economic disaster if the government had their shit together and acted fast. All they had to do: 1. Freeze mortgages, rents and interest for 90 days. 2. Send everyone checks for around $2,000 a month, let people choose to cash them if they need to, correct for it on 2021 tax returns based on your income. Avoid having small businesses shut down and lay everyone off, call it a vacation and give…

This would cause hyperinflation and a massive redistribution of wealth. Coastal people can't live on $2000. Airlines still go under.

Plan B: https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3Sjhs...

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

#415

Post by gdubs » Sat, Mar 21, 2020, 2:10 PM UTC

Like a plane crash, there's a moment where the error is realized. Someone says 'oh sh!t' on the flight recorder when they realize the error, and that there's no time left to correct. Yet enough time remains to wait.

That's what this month has felt like. The grave error, in my opinion, was refusing to take dramatic action early on. We couldn't tolerate any economic slowdown, so dice were rolled, and here we are. Add in the (criminal) failure of testing in the United States...

It's been a week and you see plenty of calls to 'think of the economy', and put an end to the shelter-in-place. One week. But like I keep saying, this isn't a binary choice. It's not clear that we could just 'chose the economy' at this point, because of the path that was chosen weeks ago – which is a narrower, far more dangerous path, to both the global health, and the economy. Short-term thinking at its worst.

But this is not a literal plane crash. The majority of us will live. It's about the kind of world we want on the other side of this. What we need now is global cooperation to share knowledge and resources. We need people to come to their senses so we can make smart decisions and make sure we don't throw out our constitutional rights in the process. We need as much urgency in bailing out the millions of people who are already losing their jobs, as there is for the airlines that spent the vast majority of profits on buying back their stock.

There's cognitive dissonance at play. "This can't really be the situation we're in?" Well, it is. This path was chosen. Now we need to buckle-up and learn rapidly from the mistakes we've made.

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

#416

Post by wegs » Sat, Mar 21, 2020, 2:11 PM UTC

vsareto wrote: post #409

nnx wrote: post #316

Earlier quoted context omitted.

Pausing all financial obligations seems so obvious, why hasn't it been done and barely in the public discourse yet?

It's essentially a nuke. It's pausing revenue in a lot of situations. Some of that revenue then goes on to pay other workers.

It is pausing a lot of revenue, but it's also pausing the need for that revenue.

It's also not pausing all revenue. If I order something from Amazon, everyone gets revenue. And if Google decides not to furlough employees but get a 3-month lead in R&D, it's not pausing employee revenue.

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

#417

Post by smileysteve » Sat, Mar 21, 2020, 2:28 PM UTC

mrfusion wrote: post #62

faitswulff wrote: post #18

Earlier quoted context omitted.

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…

It should take quite a while (several weeks) to see the effects of any actions. Anyone who just caught it has a bit of time Before it gets severe.

Roughly a minimum of 10 days; 5 days for symptoms to appear, 5 days for tests to come back from those showing symptoms.

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

#418

Post by Fjolsvith » Sat, Mar 21, 2020, 2:30 PM UTC

AntonStratiev wrote: post #368

marvin wrote: post #360

Earlier quoted context omitted.

Not to mention complications. Little is known yet, but there are indications that some surviving patients get permanent lung damage. Especially when intensive care is not available. Imagine having 30 million 40-year-olds who will be short of breath for the rest of their lives.

There is no need to imagine, we have the forecasts from the Imperial College report: https://www.imperial.ac.uk/media/imperial-college/medicine/s... There are 40 million 40-somethings in the USA, you're proposing that 100% of them will have lung damage. Let's imagine that 80% of the population is infected, that 80% of cases are symptomatic, and that 80% of the 4.90% of hospitalised cases (this 4.90 is direct from the…

> Where is the war-scale drive to eliminate fossil-fueled vehicles and power generation?

Might as well just shut the economy down to eliminate that.

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

#419

Post by barbs » Sat, Mar 21, 2020, 2:32 PM UTC

dang wrote: post #331

barbs wrote: post #197

Earlier quoted context omitted.

> I've long been a loser and social outcast. Gee, I wonder why...

This comment breaks the site guidelines and you've done that elsewhere recently too. Would you please review https://news.ycombinator.com/newsguidelines.html and stick to the rules when posting here? Personal attacks are particularly not ok.

Apologies. I've been trying to combat tension and anxiety in my household regarding COVID-19 and I guess I lost my patience reacted poorly to negativity online. Will reign it in and think more before posting, if at all.

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

#420

Post by mercutio2 » Sat, Mar 21, 2020, 2:36 PM UTC

digitaltrees wrote: post #339

airstrike wrote: post #306

Earlier quoted context omitted.

> They are the distribution of profit to owners of a business. So are buybacks

No they are not. They reduce the amount of equity and raise the stock price but unless the share holder sells there is no real gain. That’s not to say buy backs don’t convey possible value but it’s not accurate to say they are the distribution of profit any more than if the company bought stock of another company (like yahoo buying alibaba stock) or a piece of equipment. In all cases the company has value reflected o…

You have made dozens of posts repeating this argument. It’s just mathematically inaccurate. Modulo taxes, in liquid markets, existing shareholders are compensated identically with share buybacks and with reinvested dividends.

If you wouldn’t have chosen to reinvest your dividends, you can sell a fraction of your shares to achieve the same effect.

You may think there are social or cultural reasons why one return of capital is preferable to another (I can’t tell, you haven’t made any of those arguments as far as I can see), but mathematically, a return of capital is cash in existing shareholder hands, and there’s no difference between the two approaches.

Share buybacks have an impact on taxes paid, but we have a system where people are encouraged to minimize taxes, so you’d need to make an argument about tax rates for that to make sense.

It’s true that changing the number of shares for the same size pot of money has an impact on share based compensation schemes, but that’s an argument about not liking share based compensation.