Looking at this from the perspective of a business

[Magox]

I know that the majority of this board is against racking up more debt to the nation.  And I won't get into my thoughts at this time on the national debt and the clear advantages that we have as a nation in regards to that.

 

So my focus on this particular topic is Trump's push for another $2 Trillion for infrastructure.

 

 

Quote

 

President Trump said Tuesday that a $2 trillion infrastructure package should be part of Congress’s next response to the coronavirus pandemic, reviving a 2016 campaign pledge to ramp up construction projects despite public health guidance that Americans should stay home and isolated to the greatest extent possible.

Citing extraordinarily low interest rates that have reduced the cost of federal borrowing, Trump said on Twitter that now “is the time” to push forward with an infrastructure package in response to the severe economic downturn caused by the coronavirus that causes the disease covid-19. Numerous House Democrats have also discussed in recent weeks advancing infrastructure legislation as part of their response to the coronavirus pandemic.

“With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill,” Trump wrote on Twitter. “It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4.”

 

Donald J. Trump

 

✔@realDonaldTrump

 

 

With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill. It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country! Phase 4

 

168K

10:48 AM - Mar 31, 2020

Twitter Ads info and privacy

 

 

 

I think many of us saw Trump's presser yesterday.  The amount of people that may die could be really high.  The economic damage that this downturn is going to cause is going to be devastating.  There will be companies that don't make it out of this, that will permanently go out of business.  Yes, at some point those companies will be replaced but the longer we are shutdown the more companies that will be in this group.  This will not be a V sort of recovery that within a year we will be where we were before this happened.  At least not as the way things are looking now.  The $2.2 Trillion will provide some relief but the economic damage will be much greater than that.   

 

The important thing is that very little of this is because of bad business practices.  

 

With all that said, Trump is actually right here.  Improving Infrastructure is a function of a government and it is something that has been on his and the Democrats agenda for a while.  There is no better time to borrow money than right now.  Interest rates are below .25%.  That is unbelievably low and since most of this debt is pushed out to long-term treasury bonds, the cost to service this debt is very low.

 

So if you were a business owner, and you just went through a down turn and you needed to go to the bank to get a loan.  And this loan would help you beef up your staff and improve and purchase new equipment that would have had to have been purchased anyway, wouldn't you just borrow as much as you possibly could considering that the interest rates are near 0%?

 

You'd be helping by providing more jobs and getting your business back to order as quickly as possible. 

 

The concept remains for the government, we are in a deep hole and each day that passes by that hole gets deeper.  This is a time where government can step in and help with relief to its citizens and improve the infrastructure with better roads, bridges etc.   

 

As far as I'm concerned, all the things that government was planning on doing or likely to have been doing at some point, they may as well appropriate that now.  The government will never have interest rates as low as they are now and it only makes good business sense to borrow now while rates are this low.

 

 

 

Edited April 1, 2020 by Magox

[Foxx]

nothing personal... but to begin with, the idea that the US government has to pay itself interest is ludicrous to it's core.

 

if we weren't the world's reserve, is there any doubt that we wouldn't have Weimar'ed back around '10 or so?

Edited April 1, 2020 by Foxx

[Doc]

I'd be all for it...if most of the money weren't going to be wasted.  Unless we get China to pay for it...

[IDBillzFan]

2 minutes ago, Magox said:

So if you were a business owner, and you just went through a down turn and you needed to go to the bank to get a loan.  And this loan would help you beef up your staff and improve and purchase new equipment that would have had to have been purchased anyway, wouldn't you just borrow as much as you possibly could considering that the interest rates are near 0%?

 

My answer is 'no' but my business is a little different than most because my billables are based on production from my programmers. We price the programming for a project, get an order, and bill on deliverable milestones during the course of the project.

 

If I have a slowdown in business, as I have right now, and I take on debt -- even at 0% -- it doesn't do me any good if I don't have revenue coming in at the time to pay down the debt while also taking care of my regular receivables. The debt will just remain there unless there is a significant jump in billables, which is not anything we count on in my business. The reason for this is my coders are very specialized and very expensive (average salary about $120K plus bennies), and there are not a lot of them in the world who are good. I can't just add three more coders when times are good, and the learning curve is too long to try and train someone new. The way forward for us is to grown slowly while working on ways to improve our margins.

 

That said, under most business models, 0% is free money and if I could use that money to prepare for a ramp up, I'd do it in a heartbeat.

 

[Magox]

2 minutes ago, Doc said:

I'd be all for it...if most of the money weren't going to be wasted.  Unless we get China to pay for it...

 

That's the rub.  Efficiency from government in many aspects are not optimum.  With that said I'd rather have someone who knows how to cut red tape and Trump is someone who could do that.

 

Keep in mind, infrastructure improvements is a government function.  

[RochesterRob]

12 minutes ago, Magox said:

I know that the majority of this board is against racking up more debt to the nation.  And I won't get into my thoughts at this time on the national debt and the clear advantages that we have as a nation in regards to that.

 

So my focus on this particular topic is Trump's push for another $2 Trillion for infrastructure.

 

 

 

 

I think many of us saw Trump's presser yesterday.  The amount of people that may die could be really high.  The economic damage that this downturn is going to cause is going to be devastating.  There will be companies that don't make it out of this, that will permanently go out of business.  Yes, at some point those companies will be replaced but the longer we are shutdown the more companies that will be in this group.  This will not be a V sort of recovery that within a year we will be where we were before this happened.  At least not as the way things are looking now.  The $2.2 Trillion will provide some relief but the economic damage will be much greater than that.   

 

The important thing is that very little of this is because of bad business practices.  

 

With all that said, Trump is actually right here.  Improving Infrastructure is a function of a government and it is something that has been on his and the Democrats agenda for a while.  There is no better time to borrow money than right now.  Interest rates are below .25%.  That is unbelievably low and since most of this debt is pushed out to long-term treasury bonds, the cost to service this debt is very low.

 

So if you were a business owner, and you just went through a down turn and you needed to go to the bank to get a loan.  And this loan would help you beef up your staff and improve and purchase new equipment that would have had to have been purchased anyway, wouldn't you just borrow as much as you possibly could considering that the interest rates are near 0%?

 

You'd be helping by providing more jobs and getting your business back to order as quickly as possible. 

 

The concept remains for the government, we are in a deep hole and each day that passes by that hole gets deeper.  This is a time where government can step in and help with relief to its citizens and improve the infrastructure with better roads, bridges etc.   

 

As far as I'm concerned, all the things that government was planning on doing or likely to have been doing at some point, they may as well appropriate that now.  The government will never have interest rates as low as they are now and it only makes good business sense to borrow now while rates are this low.

 

 

 

  Maybe not bad business practice but everybody including government and business leaders encouraged the public at large to junk personal savings back in the 1990's for the sake of a short term economic "high."  Now most people are caught between a rock and a hard place to maintain their life as they knew it.  I don't know that the deficit matters anymore at this point in time because we left our old world behind just days ago.  We will be forced to embrace a new world in terms of incentive to work and save whether we like it or not.  The alternative is to let anarchy be wide spread complete with looting and killing.  

[Magox]

2 minutes ago, IDBillzFan said:

 

My answer is 'no' but my business is a little different than most because my billables are based on production from my programmers. We price the programming for a project, get an order, and bill on deliverable milestones during the course of the project.

 

If I have a slowdown in business, as I have right now, and I take on debt -- even at 0% -- it doesn't do me any good if I don't have revenue coming in at the time to pay down the debt while also taking care of my regular receivables. The debt will just remain there unless there is a significant jump in billables, which is not anything we count on in my business. The reason for this is my coders are very specialized and very expensive (average salary about $120K plus bennies), and there are not a lot of them in the world who are good. I can't just add three more coders when times are good, and the learning curve is too long to try and train someone new. The way forward for us is to grown slowly while working on ways to improve our margins.

 

That said, under most business models, 0% is free money and if I could use that money to prepare for a ramp up, I'd do it in a heartbeat.

 

 

And you are right, at the end of the day without demand it doesn't matter how cheap the money is it won't make a difference.  

 

This relief package that was recently passed was not a "stimulus" bill, it was a relief bill to help make partially whole what was lost.

 

And what was lost will not be made fully whole by this $2 trillion dollar relief bill.  But it will help lessen the depth of the hole that we will suffer.

 

This infrastructure idea is an essential need.  There are countless studies that show improved roads etc leads to more efficiency and $$'s.

 

And as I have stated, infrastructure enhancements is a function of government, so we aren't talking about something else.

 

AND, it is a form of demand.  It's not the answer to solving our problems but think of it as a kick start.  There would be construction jobs, construction materials etc that would be purchased and created.  It's these sort of kick start measures that can help an economy moving.   

 

I don't know if people truly realize how deep this hole is going to be.  We can snap back to full employment quicker than the 2008 downturn, but the 2008 downturn had structural issues.  Demand side economics helped on the margins but the problems were structural in nature.  

 

This downturn is worse and less sever than the 2008 down turn.  The hole is going to be MUCH MUCH deeper.  But the issues aren't structural, a good old Demand side economic stimulus can definitely get us right back on track.  I'm not advocating that it makes the country hole, it just needs to accelerate the recovery.  If you accelerate the recovery, less people will suffer for shorter periods of time.

[Magox]

17 minutes ago, Foxx said:

nothing personal... but to begin with, the idea that the US government has to pay itself interest is ludicrous to it's core.

 

if we weren't the world's reserve, is there any doubt that we wouldn't have Weimar'ed back around '10 or so?

 

I'm not arguing this.

 

But, that is how it is.  The government pays back Treasury bond holders, so whomever that may be are the ones that get paid.  And the U.S has not shown one inkling that it cannot repay its debt.  When you see issues like you saw Greece or Argentina with their debt defaults, it wasn't because of the amount of debt they had accumulated, it was because they couldn't repay the cost of servicing that debt or at least the fear of that.

 

 

 

The U.S right now at this moment is going to have a tremendous shortfall in revenues, that will bounce back whether we do stimulus bills or not.  But what an effective stimulus plan would do is quicken the recovery, get the economy back on track sooner and more importantly help out millions of people get employed and/or businesses get lifted.

 

In regards to your second point.  What's the point of making that argument.  That's like saying Chicago Bulls only won those NBA titles because of Michael Jordan.

 

We have the US dollar, and there is nothing remotely close to replacing that at this point in time.

[Tiberius]

Nancy Pelosi will come up with an infrastructure plan. The gas and oil industry won’t like it, but sure, she will come out with one 

[RochesterRob]

6 minutes ago, Magox said:

 

And you are right, at the end of the day without demand it doesn't matter how cheap the money is it won't make a difference.  

 

This relief package that was recently passed was not a "stimulus" bill, it was a relief bill to help make partially whole what was lost.

 

And what was lost will not be made fully whole by this $2 trillion dollar relief bill.  But it will help lessen the depth of the hole that we will suffer.

 

This infrastructure idea is an essential need.  There are countless studies that show improved roads etc leads to more efficiency and $$'s.

 

And as I have stated, infrastructure enhancements is a function of government, so we aren't talking about something else.

 

AND, it is a form of demand.  It's not the answer to solving our problems but think of it as a kick start.  There would be construction jobs, construction materials etc that would be purchased and created.  It's these sort of kick start measures that can help an economy moving.   

 

I don't know if people truly realize how deep this hole is going to be.  We can snap back to full employment quicker than the 2008 downturn, but the 2008 downturn had structural issues.  Demand side economics helped on the margins but the problems were structural in nature.  

 

This downturn is worse and less sever than the 2008 down turn.  The hole is going to be MUCH MUCH deeper.  But the issues aren't structural, a good old Demand side economic stimulus can definitely get us right back on track.  I'm not advocating that it makes the country hole, it just needs to accelerate the recovery.  If you accelerate the recovery, less people will suffer for shorter periods of time.

  I don't see how we are going to jump back to pre-virus employment levels in the short term even with an infrastructure stimulus.  As you said the 2008 had a few narrow focuses in the economy but this time just about everybody across the board will be affected.  I am not against an infrastructure stimulus but it will not cure close to all of the ills in the economy at present and what is ahead in the next 30-60 days.

2 minutes ago, Tiberius said:

Nancy Pelosi will come up with an infrastructure plan. The gas and oil industry won’t like it, but sure, she will come out with one 

  Why?  Is Pelosi flying her broom around the US at mach 3 to stimulate wind energy?

[Magox]

1 minute ago, Tiberius said:

Nancy Pelosi will come up with an infrastructure plan. The gas and oil industry won’t like it, but sure, she will come out with one 

 

She will have hers, the Senate will have theirs and then Trump/Mnuchin will have one.

 

I'm not sure one will get passed because I see everyone outside of Trump/Mnuchin trying to get in their pet projects or in the Republicans case trying to severely limit it.  This is going to be a much tougher and contentious negotiation than the Relief Bill.  Nancy got very little what she wanted out of the Relief bill, she will look to exert herself. 

 

Senate Republicans will push back hard.  Meanwhile Trump will be like "Pass Something Now"

 

 

[Magox]

2 minutes ago, RochesterRob said:

  I don't see how we are going to jump back to pre-virus employment levels in the short term even with an infrastructure stimulus.  As you said the 2008 had a few narrow focuses in the economy but this time just about everybody across the board will be affected.  I am not against an infrastructure stimulus but it will not cure close to all of the ills in the economy at present and what is ahead in the next 30-60 days.

  Why?  Is Pelosi flying her broom around the US at mach 3 to stimulate wind energy?

 

There are so many variables involved the most important being how quickly we can begin phasing back the workforce and at what utility rate.  

 

Every day that we are in this shut down mode is every day that businesses are killed and/hobbled.  

 

I was thinking that we would begin phasing in some of the workforce by May, now I'm not so sure of that.

[Orlando Tim]

31 minutes ago, Magox said:

 

That's the rub.  Efficiency from government in many aspects are not optimum.  With that said I'd rather have someone who knows how to cut red tape and Trump is someone who could do that.

 

Keep in mind, infrastructure improvements is a government function.  

I will agree that Trump is the best president in quite a while at cutting red tape but I think you might not realize how totally inefficient the Federal Government is at almost everything. I would not be for more debt by an government body that has shown such a lack of ability to stop spending when things are good.

[RochesterRob]

5 minutes ago, Magox said:

 

There are so many variables involved the most important being how quickly we can begin phasing back the workforce and at what utility rate.  

 

Every day that we are in this shut down mode is every day that businesses are killed and/hobbled.  

 

I was thinking that we would begin phasing in some of the workforce by May, now I'm not so sure of that.

  Let's ponder a couple of scenarios.  A casino such as Del Lago is only going to staff based on business they actually see coming through the door.  If business is running 50 percent of normal the whole contingent of employees who were on the payroll before the virus shutdown will not be called back during that time.  There will still be people at home who were employed by Del Lago but are not bringing in a paycheck.  A home improvement contractor is only going to have people on the payroll that can actually bring in income for the business.  If 25-30 percent of that contractor's orders are cancelled then that contractor is going to have layoffs relative to the downturn in business.

[IDBillzFan]

30 minutes ago, Magox said:

And as I have stated, infrastructure enhancements is a function of government, so we aren't talking about something else.

 

AND, it is a form of demand.  It's not the answer to solving our problems but think of it as a kick start.  There would be construction jobs, construction materials etc that would be purchased and created.  It's these sort of kick start measures that can help an economy moving.   

 

I don't know if people truly realize how deep this hole is going to be. 

 

It's impossible for me to even pretend I know the size of the hole we're about to go down.

 

I suspect we're going to do everything we can to keep as many people moving forward as possible, and I have no problem if infrastructure is one of those avenues, especially with Trump driving it. The Recovery Act made me puke my shorts, and I am full-throttle against anything that wasteful again.

[Tiberius]

20 minutes ago, Magox said:

 

She will have hers, the Senate will have theirs and then Trump/Mnuchin will have one.

 

I'm not sure one will get passed because I see everyone outside of Trump/Mnuchin trying to get in their pet projects or in the Republicans case trying to severely limit it.  This is going to be a much tougher and contentious negotiation than the Relief Bill.  Nancy got very little what she wanted out of the Relief bill, she will look to exert herself. 

 

Senate Republicans will push back hard.  Meanwhile Trump will be like "Pass Something Now"

 

 

She is working on the next one already. A bill needs to be passed because the economic angst is real and coming hard. Mitch is already complaining about it because, let's face it, his real constituents are his big donors and they are not running out of money or feeling the pain. 

12 minutes ago, Buffalo Timmy said:

I will agree that Trump is the best president in quite a while at cutting red tape but I think you might not realize how totally inefficient the Federal Government is at almost everything. I would not be for more debt by an government body that has shown such a lack of ability to stop spending when things are good.

What red tape has he cut? 

[Orlando Tim]

2 minutes ago, Tiberius said:

She is working on the next one already. A bill needs to be passed because the economic angst is real and coming hard. Mitch is already complaining about it because, let's face it, his real constituents are his big donors and they are not running out of money or feeling the pain. 

What red tape has he cut? 

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.forbes.com/sites/waynecrews/2018/01/03/the-six-ways-trump-has-cut-red-tape-so-far/amp/&ved=2ahUKEwiZppb87cfoAhVChOAKHQO4AFkQFjABegQIBRAB&usg=AOvVaw1I5t_ia_tEqBiacNgK7gWJ&ampcf=1

 

Google is your friend when you ask questions that are meant to come off as smart but just show your ignorance. BTW I did not take any of the conservative websites that list even more.

[Magox]

4 minutes ago, IDBillzFan said:

 

It's impossible for me to even pretend I know the size of the hole we're about to go down.

 

I suspect we're going to do everything we can to keep as many people moving forward as possible, and I have no problem if infrastructure is one of those avenues, especially with Trump driving it. The Recovery Act made me puke my shorts, and I am full-throttle against anything that wasteful again.

 

We'll see how effective the Relief bill will eventually be.  But what is it exactly that you are against in it?  Are we talking about these miniscule pet projects such as the $25 Million for the Arts deal?   I say miniscule from a relative basis.

 

Money was provided to state and local governments.  I don't see how there is anything wrong with that.  There was over $100 Billion given to hospitals.

 

There was $350 Billion for small businesses with strings attached, where they had to keep all their employees still employed.

 

There was $500 Billion for Big Business.  It's not the hotels, airlines and other big businesses fault, they needed a lifeline.  This isn't like the banking crisis of 2008 where we bailed out banks that had these crazy business practices.  This is not a moral hazard issue which was my main argument against the bank bailout bill.  Even though now rethinking it, in principle I am still against that bill but it was a necessary evil.

 

I would like to understand why you are so vehemently against the Relief Bill?

[Tiberius]

6 minutes ago, Buffalo Timmy said:

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.forbes.com/sites/waynecrews/2018/01/03/the-six-ways-trump-has-cut-red-tape-so-far/amp/&ved=2ahUKEwiZppb87cfoAhVChOAKHQO4AFkQFjABegQIBRAB&usg=AOvVaw1I5t_ia_tEqBiacNgK7gWJ&ampcf=1

 

Google is your friend when you ask questions that are meant to come off as smart but just show your ignorance. BTW I did not take any of the conservative websites that list even more.

That's great, I guess. Can you just specifically name, say, three rules that were changed and what they were? That was all mostly just vague numbers, like a quote from this WH (lies?) that they were at a 22-1 ratio for cutting rules. No vague rules, just a rule that changed something and what it is? 

[RochesterRob]

16 minutes ago, Tiberius said:

She is working on the next one already. A bill needs to be passed because the economic angst is real and coming hard. Mitch is already complaining about it because, let's face it, his real constituents are his big donors and they are not running out of money or feeling the pain. 

What red tape has he cut? 

  The only couple of things that Pelosi is working on is trying to get rid of Trump and creating leftist economic fantasies for her district of nuts in SF.  She is useless to 99 percent of the US.

[IDBillzFan]

4 minutes ago, Magox said:

 

We'll see how effective the Relief bill will eventually be.  But what is it exactly that you are against in it?  Are we talking about these miniscule pet projects such as the $25 Million for the Arts deal?   I say miniscule from a relative basis.

 

Money was provided to state and local governments.  I don't see how there is anything wrong with that.  There was over $100 Billion given to hospitals.

 

There was $350 Billion for small businesses with strings attached, where they had to keep all their employees still employed.

 

There was $500 Billion for Big Business.  It's not the hotels, airlines and other big businesses fault, they needed a lifeline.  This isn't like the banking crisis of 2008 where we bailed out banks that had these crazy business practices.  This is not a moral hazard issue which was my main argument against the bank bailout bill.  Even though now rethinking it, in principle I am still against that bill but it was a necessary evil.

 

I would like to understand why you are so vehemently against the Relief Bill?

 

First, just to correct, I referenced the Recovery Act that Obama passed, not the Relief Bill. The Recovery Act laundered too many kickbacks to donors and it was a schittshow.

 

That said, I find things like the Kennedy Center to be a bad look, especially when we see they got millions of dollars, but pretty much put everyone on furlough. I do understand it's relative. In fact, as much as I hate taking on federal debt, I do like the forgivable part of the small business loans. Based on why I described above, THAT works directly to my favor ASSUMING the money can get to us quickly enough. As I'm sure you know, most of us don't have much time.

 

But we could extend it further than eight weeks of forgivable loan if we took the 25M the Kennedy Center and the other slush items and pointed them to more Small Business payroll and operations help. It's just unfortunate that this is the way government works.

 

On my end, I've met with each of my employees in an effort to keep everyone on board and, putting my George Bailey into the mix, discussed what each of them needs bare minimum just to get by for the next three months so we can keep going with their bennies. That's still a tough number, but I'm trying to buy as much time as possible until the loan hits. Otherwise, we go full austerity to my partner and me until we can bring them back on.

[Orlando Tim]

10 minutes ago, Tiberius said:

That's great, I guess. Can you just specifically name, say, three rules that were changed and what they were? That was all mostly just vague numbers, like a quote from this WH (lies?) that they were at a 22-1 ratio for cutting rules. No vague rules, just a rule that changed something and what it is? 

Off the top of my head he has allowed small businesses to join together to buy health insurance as one entity, I also know in Florida that the laws have changed as far as population density to be more flexible with an area.

[Tiberius]

1 minute ago, Buffalo Timmy said:

Off the top of my head he has allowed small businesses to join together to buy health insurance as one entity, I also know in Florida that the laws have changed as far as population density to be more flexible with an area.

Ummm...ok! 

[Orlando Tim]

1 minute ago, Tiberius said:

Ummm...ok! 

I appreciate you admitting your ignorance on the subject. It takes a big man to go from condescending to accepting his complete inferiority.

[Magox]

10 minutes ago, IDBillzFan said:

 

First, just to correct, I referenced the Recovery Act that Obama passed, not the Relief Bill. The Recovery Act laundered too many kickbacks to donors and it was a schittshow.

 

That said, I find things like the Kennedy Center to be a bad look, especially when we see they got millions of dollars, but pretty much put everyone on furlough. I do understand it's relative. In fact, as much as I hate taking on federal debt, I do like the forgivable part of the small business loans. Based on why I described above, THAT works directly to my favor ASSUMING the money can get to us quickly enough. As I'm sure you know, most of us don't have much time.

 

But we could extend it further than eight weeks of forgivable loan if we took the 25M the Kennedy Center and the other slush items and pointed them to more Small Business payroll and operations help. It's just unfortunate that this is the way government works.

 

On my end, I've met with each of my employees in an effort to keep everyone on board and, putting my George Bailey into the mix, discussed what each of them needs bare minimum just to get by for the next three months so we can keep going with their bennies. That's still a tough number, but I'm trying to buy as much time as possible until the loan hits. Otherwise, we go full austerity to my partner and me until we can bring them back on.

 

Got ya!

 

That all makes sense!  Every bit of it

[Tiberius]

Just now, Buffalo Timmy said:

I appreciate you admitting your ignorance on the subject. It takes a big man to go from condescending to accepting his complete inferiority.

You are full of it, just stop while you are behind 

[Magox]

40 minutes ago, RochesterRob said:

  Let's ponder a couple of scenarios.  A casino such as Del Lago is only going to staff based on business they actually see coming through the door.  If business is running 50 percent of normal the whole contingent of employees who were on the payroll before the virus shutdown will not be called back during that time.  There will still be people at home who were employed by Del Lago but are not bringing in a paycheck.  A home improvement contractor is only going to have people on the payroll that can actually bring in income for the business.  If 25-30 percent of that contractor's orders are cancelled then that contractor is going to have layoffs relative to the downturn in business.

 

I get that.  There is no magic panacea.  It will help speed the recovery some, but it's essentially just pain pills to make the recovery more tolerable from a human suffering standpoint.  We shouldn't discount that.  They are citizens and they are suffering.

[B-Man]

5 minutes ago, Magox said:

 

I get that.  There is no magic panacea.  It will help speed the recovery some, but it's essentially just pain pills to make the recovery more tolerable from a human suffering standpoint.  We shouldn't discount that.  They are citizens and they are suffering.

 

 

Thanks for this thread.

 

I have a lot of experience in 65 years, but economics has always been a tough subject for me.

 

 

 

PS: thanks for not responding to the bickering children in the thread.

 

 

 

.

[Warren Zevon]

I own a seasonal business and will not take a loan to open up early and pay my employees for April through whenever when I will not be able to do business. Luckily all my employees except one (Full time - still getting paid) are part time and understand why I have not opened.

[Foxx]

1 hour ago, Magox said:

 

I'm not arguing this.

 

But, that is how it is.  The government pays back Treasury bond holders, so whomever that may be are the ones that get paid.  And the U.S has not shown one inkling that it cannot repay its debt.  When you see issues like you saw Greece or Argentina with their debt defaults, it wasn't because of the amount of debt they had accumulated, it was because they couldn't repay the cost of servicing that debt or at least the fear of that.

 

 

 

The U.S right now at this moment is going to have a tremendous shortfall in revenues, that will bounce back whether we do stimulus bills or not.  But what an effective stimulus plan would do is quicken the recovery, get the economy back on track sooner and more importantly help out millions of people get employed and/or businesses get lifted.

 

In regards to your second point.  What's the point of making that argument.  That's like saying Chicago Bulls only won those NBA titles because of Michael Jordan.

 

We have the US dollar, and there is nothing remotely close to replacing that at this point in time.

i will answer your second portion first because it bears directly upon the first.

 

i make the argument that we print money at the press of a keystroke, because we do and have for quite a number of years now. there is no underlying asset of which the value is based upon. it is a faith based valuation, nothing more. as such, it is an inflationary supply not deflationary. we came off the gold standard in '33 and completely severed any link between gold and the dollar in '71. as a result, we have slowly and as time passes, with a greater alacrity discovered that there is nothing really stopping us from just printing it as needed. of course, we have to do on the downlow so that the sheep don't get an understanding of just what is going on. the other countries of the word are quite aware of what's going on and this is why Russia, China and a good number of other countries would love to replace the USD. they just can't get their ***** together enough (because they sure as hell don't trust each other enough) to do so. the day will come though, probably quicker than anyone thinks and when it does, a world of hurt awaits the American populace.

 

all of which directly bears upon the first statement i made.

 

your analogy is way off.

 

paying back bond holders? lol. i don't think i should even have to point out how the whole thing is a sham.

 

wait till the Cypriot Haircut is bandied about, don't fall for it. don't fall for NIRP either.

Edited April 1, 2020 by Foxx

[Magox]

1 minute ago, Foxx said:

i will answer your second portion first because it bears directly upon the first.

 

i make the argument that we print money at the press of a keystroke, because we do and have for quite a number of years now. there is no underlying asset of which the value is based upon. it is a faith based valuation, nothing more. as such, it is an inflationary supply not deflationary. we came off the gold standard in '33 and completely severed any link between gold and the dollar in '71. as a result, we have slowly and as time passes, with a greater alacrity discovered that there is nothing really stopping us from just printing it as needed. of course, we have to do on the downlow so that the sheep don't get an understanding of just what is going on. the other countries of the word are quite aware of what's going on and this is why Russia, China and a good number of other countries would love to replace the USD. they just can't get their ***** together enough (because they sure as hell don't trust each other enough) to do so. the day will come though, probably quicker than anyone thinks and when it does, a world of hurt awaits the American populace.

 

your analogy is way off.

 

paying back bond holders? lol. i don't think i should even have to point out how the whole thing is a sham.

 

wait till the Cypriot Haircut is bandied about, don't fall for it. don't fall for NIRP either.

 

Let's just say that I disagree with what you said.  But I understand where you are coming from.

[/dev/null]

2 hours ago, Doc said:

I'd be all for it...if most of the money weren't going to be wasted.  Unless we get China to pay for it...

 

China won't pay for it.  But I wonder how much of this $2T will be used to buy goods and material from the regime responsible for starting this clusterf*ck

[Orlando Tim]

4 hours ago, Tiberius said:

You are full of it, just stop while you are behind 

Once again where was I wrong? I said he cut red tape I gave you two examples that impacted my direct circle of friends and you won? 

[IDBillzFan]

10 minutes ago, Buffalo Timmy said:

Once again where was I wrong? I said he cut red tape I gave you two examples that impacted my direct circle of friends and you won? 

 

There's a strong wind blowing and you're pissing in it.

 

Tibs is just going to run you around and around until you can't possibly fathom that someone could be that intentionally stupid. So you'll go another round or two and then at one point you will stop, read, and realize that yes, someone could be that intentionally stupid and his name is Tiberius.

 

Save yourself the trouble. Put him on ignore like most everyone else.

[Orlando Tim]

10 minutes ago, IDBillzFan said:

 

There's a strong wind blowing and you're pissing in it.

 

Tibs is just going to run you around and around until you can't possibly fathom that someone could be that intentionally stupid. So you'll go another round or two and then at one point you will stop, read, and realize that yes, someone could be that intentionally stupid and his name is Tiberius.

 

Save yourself the trouble. Put him on ignore like most everyone else.

I have never done ignore but I am about to figure it out.

[KRC]

11 hours ago, Buffalo Timmy said:

I have never done ignore but I am about to figure it out.

 

It definitely improves the experience. Get rid of the noise.

[Magox]

As is being discussed in another thread, 

Just to add more context to the L, W, V and Nike Swoosh recoveries:

 

V - Recovery

 

The likelihood of a V shaped recovery is virtually Nil.    A V shaped recovery means that the economy will be right where it left off before the downturn within a short-time period of let's say less than a year.  The reason why we won't see a complete V is because there will be businesses that will be permanently closed.   And although at some point those businesses will be replaced, that doesn't take place overnight. Here is a report out of Michigan where they estimate 1/3 of all restaurants will permanently close.  

 

Quote

 

"We’ve been using the number one-third, if this will be as prolonged as it feels like it's going to be," Winslow said, citing the projected number of restaurants that could close permanently. "We don’t know that for sure yet. But the longer it goes, the higher that number is going to be.

"One-third of restaurants — you’re getting into 6,000-location territory. That’s kind of hard to wrap your head around. Six thousand businesses are going to close as a result of this. ... And through no fault of their own."

The MRLA estimates that Michigan's hospitality industry employed almost 600,000 people and accounted for $40 billion in annual sales.

But that was before COVID-19.

 

 

Which is why I am saying that the longer it takes to get people back to work, the more of these sort of businesses that will be permanently closed which thereby means it takes longer to recover back to pre CoronaVirus downturn.

 

W - Recovery

 

Quote

 

 

 

 

Basically what would need to happen here is that we relax the social distancing measures either too soon or the effectiveness of controlling the outbreak once we begin to phase in the workforce gets out of hand, therefore leading the economy to dip right back down again.  

 

L - Recovery

 

Quote

 

 

For me this is the likely bad case scenario.  Where we begin to phase in the workforce beyond June.  That's not to say that you would have a profound L shape if we began in July, but the further we push it out and the more stringent the Social distancing policies post "flattening the curve" and phasing in the workforce, the more that L shape takes place.  It just basically means that we dug a really deep hole and lots of businesses will be permanently shuttered or seriously impaired and it takes time to get the country back to whole after such a deep downturn.  Which is why the Relief bill was so important, at least in theory.   That bill was so that many of these small businesses and corporations can either retain their workforce or rehire them almost immediately.

 

Nike Swoosh Recovery
 

Quote

 

 

 

For me this is the optimistic case.  I think it's 50% chance this, 40% chance L shaped, 5% V shaped and 5% W shaped.

 

The Nike Swoosh is where we get to begin phasing in the workforce relatively soon, hopefully by June.  Where the curve has been flattened in just about all places in the country.  And all the measures that are needed to contain future outbreaks are in place with solid social distancing policies and the economy snaps back initially and then takes about another year after the initial snap back to get back to whole. Most likely around 18 months or so.

 

 

 

Which leads me to the Infrastructure Bill.  The more EFFECTIVE Stimulus that can be added by the Federal government, the quicker the recovery will be.  Which means millions of more people will go through less suffering.  And there is no better time to borrow that money than now.  That is a fact.  The interest rates will never be as low as they are today....If there ever was a time to borrow a fukton of money to make the economy whole, now is that time.

[RochesterRob]

12 minutes ago, Magox said:

As is being discussed in another thread, 

Just to add more context to the L, W, V and Nike Swoosh recoveries:

 

V - Recovery

 

The likelihood of a V shaped recovery is virtually Nil.    A V shaped recovery means that the economy will be right where it left off before the downturn within a short-time period of let's say less than a year.  The reason why we won't see a complete V is because there will be businesses that will be permanently closed.   And although at some point those businesses will be replaced, that doesn't take place overnight. Here is a report out of Michigan where they estimate 1/3 of all restaurants will permanently close.  

 

 

Which is why I am saying that the longer it takes to get people back to work, the more of these sort of businesses that will be permanently closed which thereby means it takes longer to recover back to pre CoronaVirus downturn.

 

W - Recovery

 

 

Basically what would need to happen here is that we relax the social distancing measures either too soon or the effectiveness of controlling the outbreak once we begin to phase in the workforce gets out of hand, therefore leading the economy to dip right back down again.  

 

L - Recovery

 

 

 

For me this is the likely bad case scenario.  Where we begin to phase in the workforce beyond June.  That's not to say that you would have a profound L shape if we began in July, but the further we push it out and the more stringent the Social distancing policies post "flattening the curve" and phasing in the workforce, the more that L shape takes place.  It just basically means that we dug a really deep hole and lots of businesses will be permanently shuttered or seriously impaired and it takes time to get the country back to whole after such a deep downturn.  Which is why the Relief bill was so important, at least in theory.   That bill was so that many of these small businesses and corporations can either retain their workforce or rehire them almost immediately.

 

Nike Swoosh Recovery
 

 

 

For me this is the optimistic case.  I think it's 50% chance this, 40% chance L shaped, 5% V shaped and 5% W shaped.

 

The Nike Swoosh is where we get to begin phasing in the workforce relatively soon, hopefully by June.  Where the curve has been flattened in just about all places in the country.  And all the measures that are needed to contain future outbreaks are in place with solid social distancing policies and the economy snaps back initially and then takes about another year after the initial snap back to get back to whole. Most likely around 18 months or so.

 

 

 

Which leads me to the Infrastructure Bill.  The more EFFECTIVE Stimulus that can be added by the Federal government, the quicker the recovery will be.  Which means millions of more people will go through less suffering.  And there is no better time to borrow that money than now.  That is a fact.  The interest rates will never be as low as they are today....If there ever was a time to borrow a fukton of money to make the economy whole, now is that time.

  With the Swoosh you are assuming creditors will be willing to grant credit readily.  I worry that creditors will be very wary of granting credit to anything that they perceive as being shaky which could be most of the economy in their eyes.  So does the government twist private lending institutions into making loans?  Does the government get into the credit business wholesale and the taxpayers assume the risk of default?  Maybe it is just me but my thought is that swoosh believers are working in a vacuum without understanding the economy in a broad sense.

[Magox]

2 minutes ago, RochesterRob said:

  With the Swoosh you are assuming creditors will be willing to grant credit readily.  I worry that creditors will be very wary of granting credit to anything that they perceive as being shaky which could be most of the economy in their eyes.  So does the government twist private lending institutions into making loans?  Does the government get into the credit business wholesale and the taxpayers assume the risk of default?  Maybe it is just me but my thought is that swoosh believers are working in a vacuum without understanding the economy in a broad sense.

 

So that is an interesting point you bring up.  There is a huge difference though between a regular business loan and a loan under this program.

 

Everything is 100% backed up by the federal government.  And does have leveraging capabilities through the federal reserve.    

 

In essence, there will be some bad loans that will never be repaid and that will be taken as a loss from the federal government and of course there will be good loans that will be repaid.  Interest rates for borrowers will be anywhere between .5% - no more than 4%.   If it's under the (PPP) then they essentially get a grant that will pay for 250% of their payroll that could be used for payroll, mortgage/rent, utilities.

 

My hunch is that they will take a similar approach to the $1200 stimulus check and unemployment insurance programs they are enacting.  Which is that they know that some of this money is not going to go to places that actually need it, but since there is an urgency to get the money out there as quickly as possible they are bypassing these inefficiencies and just pretty much putting the money in a snowblower and blasting it full tilt to get money in people's hands.

 

I understand that the sound of that is horrible.  Waste of money etc.  The problem is that if they were to fine tune that and tailor it to get into people's hands that most need it, it would take much longer to identify those people and effectively get it into their hands, which of course leads to much more human suffering and a worse off economy.

 

 

So to circle back to what I was saying, I think the banks are going to have a clear directive from Secretary Mnuchin to get this money out quickly.  They won't be looking at creditworthiness nearly as much and will provide the banks and lending institutions clear criteria for the lenders.  If they meet that criteria, the money goes out on that same day.  Keep in mind, the government is backing it.  Banks have virtually no risk.

 

So I do think that the money will go out in record speed.

[RochesterRob]

9 minutes ago, Magox said:

 

So that is an interesting point you bring up.  There is a huge difference though between a regular business loan and a loan under this program.

 

Everything is 100% backed up by the federal government.  And does have leveraging capabilities through the federal reserve.    

 

In essence, there will be some bad loans that will never be repaid and that will be taken as a loss from the federal government and of course there will be good loans that will be repaid.  Interest rates for borrowers will be anywhere between .5% - no more than 4%.   If it's under the (PPP) then they essentially get a grant that will pay for 250% of their payroll that could be used for payroll, mortgage/rent, utilities.

 

My hunch is that they will take a similar approach to the $1200 stimulus check and unemployment insurance programs they are enacting.  Which is that they know that some of this money is not going to go to places that actually need it, but since there is an urgency to get the money out there as quickly as possible they are bypassing these inefficiencies and just pretty much putting the money in a snowblower and blasting it full tilt to get money in people's hands.

 

I understand that the sound of that is horrible.  Waste of money etc.  The problem is that if they were to fine tune that and tailor it to get into people's hands that most need it, it would take much longer to identify those people and effectively get it into their hands, which of course leads to much more human suffering and a worse off economy.

 

 

So to circle back to what I was saying, I think the banks are going to have a clear directive from Secretary Mnuchin to get this money out quickly.  They won't be looking at creditworthiness nearly as much and will provide the banks and lending institutions clear criteria for the lenders.  If they meet that criteria, the money goes out on that same day.  Keep in mind, the government is backing it.  Banks have virtually no risk.

 

So I do think that the money will go out in record speed.

  Even with guarantees banks are held to standards in terms of making sound loans.  A board of directors will want to know that they will not be held to any penalties in making loans that are not sound by traditional standards.  Penalties that could include fines and/or imprisonment.  Also, with the general economy twisting in the wind a couple trillion dollars will dissipate rather soon given what modern businesses are valued at.  News this morning that impacts WNY'rs is in quite a few instances milk is not being picked up from dairy farms.  This is a loss of income plus nearly all dairies have commercial debt that they now will have great difficulty servicing.  Who gives the OK in the federal government to roll loans over indefinitely which is a violation of maintaining loan quality in normal times?  Let dairies fail and the value of assets falls greatly reducing the solvency of other remaining dairies.  In my mind "W"s and swooshes are all cubicle talk by people who have no idea as to how the economy functions outside a classroom looking at non-realistic variables.