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Looking at this from the perspective of a business


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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.”

 
 

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

 

 
 
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 by Magox
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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?

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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.

 

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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.  

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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.  

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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.

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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.

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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?

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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"

 

 

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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.

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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.

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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.

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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.

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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? 

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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.

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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?

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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? 

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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.

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