Steamtrain
3 of a Kind
Invest in chips and chip designers.
pure profit
pure profit
Coronavirus and the economy. (1 Viewer)
- Thread starter Señor Tony
- Start date
slisk250
Straight Flush
Here is a list of the little guys that this will absolutely crush:
All of the hawkers that work professional sports and racing. Thousands of people not working. Their lost income is happening now. What benefits do workers have that bring your coke to your courtside seat? - Not a damn thing.
Any small business owners, bars, restaurants, hot dog stands, parking lot attendants... anything near the stadiums that survive with the huge crowds. They are screwed until the shut down ends...then will the stands be filled?
Airlines will begin laying people off or reducing hours
Hotel staff?
Restaurant staff except for delivery service
and could go on and on and on...
Since most Americans don't have enough in savings to miss a couple pay checks...well...spending stops. None of these people could give a rats ass about the stock market. They don't own stocks.
Polochris
Flush
I work in the mortagage industry, and we are BUSY!!!! Breaking records actually. Now is the time to refi!!
ekricket
Royal Flush
They also don’t give a rats ass about poker chips or computers or websites.
Who are we supposed to be mad at here, I don’t understand.
slisk250
Straight Flush
OP thread is about Corona and economy. Pokerchips, computers or websites have nothing to do with it. You listed some businesses you think will do well. I agree with a few of those. I gave a list of those who will not do well. Sad that this will really hit the little guy and that seems lost.
If the focus here is the stock market, I'd say there are other things that will impact the economy a bunch more.
ekricket
Royal Flush
Nothing is lost, people are aware that there is suffering and that it will be a long road to recovery, both medically and financially for a lot of people. But not every post has to say
“people are suffering, how dare you plan rationally”.
slisk250
Straight Flush
You are missing my point, carry on.
Polochris
Flush
Big Jilm
4 of a Kind
Yeah, I will likely be signing come closing pending any unicorn rates that I can't refuse. I will be saving $22,680 in PMI and $8,937 in interest over just 10 years by doing the refi.......nearly $32k in savings, I'M IN!!
DrStrange
4 of a Kind
It isn't just the airlines, many of the publicly traded companies have spent their cash on buying back stock - effectively decapitalizing the businesses.
Why would they do this? Buying back stock raises the price, at least in the short run. This is intensely profitable to senior managers who's compensation is based on stock options. From an investor's point of view, higher stock prices are better than taxable dividend income. Also, holding a horde of cash makes a company more vulnerable to hostile takeover where their own cash horde would be used to buy them out.
This decapitalization makes the company more financially fragile. During good times, this extra risk tends to reward shareholders. But, what about troubled times? Then we see higher chances of bankruptcy or forced sales. As might be imagined, we are headed into some bad times. The businesses that didn't keep prudent reserves, or didn't at least secure firm lines of credit are going to suffer. And in truth they should suffer some sort of consequence. This includes the shareholders and the bond holders. Excess greed needs to be tempered with the fear of adverse consequences.
Sadly, the workers and perhaps the customers are also "lashed" to the ship. This creates a problem, often deftly exploited by the investment class. We might be ok with the shareholders losing out, but feel differently about the workers and customers. The political class is often happy to justify a bailout "for the workers!" that just happens to save the owners and managers.
In the 2008 - 2010 Great Recession the US government bailed out the auto industry. But this time, the government got something back. The bailout included paying the government back with a psudo-equity instrument. I think this is a good model to follow now.
Companies were lavished with something like a trillion dollars in tax cuts two years ago. Mostly this money was spent on stock buy backs, one time bonuses, mergers and special payments to owners. OK, now said companies are in dire straights, hold out needy hands hoping for a bail out. I hope the government is going to get some "skin" from the needy companies while they pass out another trillion dollars to help salvage critical businesses.
As a tax payer, I HATE getting freerolled. Taking excess risk during normal times and boom times pays off and when things turn south businesses turn to the government for money to save them from the consequences. In 1980, the savings and loan industry was devastated by too many "banks" who took insured deposits and made high risk / high reward investments. If things went well, management and shareholders made very good returns. When things went bad, the taxpayers paid off the insured depositors. Heads you win, tails the taxpayers lose.
I hope we have learned a lesson. If a company needs to be saved, fine let's give them a hand BUT the taxpayer get's a piece of the company in exchange. And we don't need to save every business. Some of them need to fail. If the economy needs someone to fill that void, the free market will ensure a new player will emerge.
Greed needs to be tempered with fear -=- DrStrange
Why would they do this? Buying back stock raises the price, at least in the short run. This is intensely profitable to senior managers who's compensation is based on stock options. From an investor's point of view, higher stock prices are better than taxable dividend income. Also, holding a horde of cash makes a company more vulnerable to hostile takeover where their own cash horde would be used to buy them out.
This decapitalization makes the company more financially fragile. During good times, this extra risk tends to reward shareholders. But, what about troubled times? Then we see higher chances of bankruptcy or forced sales. As might be imagined, we are headed into some bad times. The businesses that didn't keep prudent reserves, or didn't at least secure firm lines of credit are going to suffer. And in truth they should suffer some sort of consequence. This includes the shareholders and the bond holders. Excess greed needs to be tempered with the fear of adverse consequences.
Sadly, the workers and perhaps the customers are also "lashed" to the ship. This creates a problem, often deftly exploited by the investment class. We might be ok with the shareholders losing out, but feel differently about the workers and customers. The political class is often happy to justify a bailout "for the workers!" that just happens to save the owners and managers.
In the 2008 - 2010 Great Recession the US government bailed out the auto industry. But this time, the government got something back. The bailout included paying the government back with a psudo-equity instrument. I think this is a good model to follow now.
Companies were lavished with something like a trillion dollars in tax cuts two years ago. Mostly this money was spent on stock buy backs, one time bonuses, mergers and special payments to owners. OK, now said companies are in dire straights, hold out needy hands hoping for a bail out. I hope the government is going to get some "skin" from the needy companies while they pass out another trillion dollars to help salvage critical businesses.
As a tax payer, I HATE getting freerolled. Taking excess risk during normal times and boom times pays off and when things turn south businesses turn to the government for money to save them from the consequences. In 1980, the savings and loan industry was devastated by too many "banks" who took insured deposits and made high risk / high reward investments. If things went well, management and shareholders made very good returns. When things went bad, the taxpayers paid off the insured depositors. Heads you win, tails the taxpayers lose.
I hope we have learned a lesson. If a company needs to be saved, fine let's give them a hand BUT the taxpayer get's a piece of the company in exchange. And we don't need to save every business. Some of them need to fail. If the economy needs someone to fill that void, the free market will ensure a new player will emerge.
Greed needs to be tempered with fear -=- DrStrange
Exactly. We shouldn't be shocked when companies do what our government allows and even encourages them to do. At the very least, taxpayers should get a piece of the business valued at the same amount of their tax breaks. But first, the highly paid execs should be required to repay their bonuses for three years. As long as these guys escape unscathed on a personal level, they won't change.
Jake14mw
Flush
My wife works hourly and we're uncertain for her going forward. I cancelled an appointment we had for today to get some work done on our furnace. Just an example of how this will affect almost all businesses, not just the obvious ones like travel, hospitality, restaurants.
aaronroch
3 of a Kind
My haircut got canceled, as did my appointment for new glasses.
The busses were still running today, but were very nearly empty, I presume because the hourly service workers that they are normally full of did not have work to go to today.
Sooooo many impacts...
(Not saying we don’t need to take these measures: we do! I just really hope we “bail out” those folks who weren’t on the bus today. They really need it.)
The busses were still running today, but were very nearly empty, I presume because the hourly service workers that they are normally full of did not have work to go to today.
Sooooo many impacts...
(Not saying we don’t need to take these measures: we do! I just really hope we “bail out” those folks who weren’t on the bus today. They really need it.)
Currently staying at the Hilton Miami Beach. Today the local government announced the closing of restaurants and bars. Talking to the food and beverage manager at the hotel. They are suspending breakfast, room service only. Bar still open, but take away.
Talking to the bartender a few hours later. She was just let go. 30 days minimum without a job or paycheck. I tipped her $200. It's all that I had. These folks are going to be hit the hardest. The cost of the cure is going to be more expensive than the disease.
Talking to the bartender a few hours later. She was just let go. 30 days minimum without a job or paycheck. I tipped her $200. It's all that I had. These folks are going to be hit the hardest. The cost of the cure is going to be more expensive than the disease.
EventHorizonVII
Two Pair
Definitely the story I've seen with many folks today. I've had to explain to my kids why businesses do that, especially restaurants with razor-thin margins. Work sent us home today, I wasn't there anyway but I had to drive there and get a few items to work full time telecommute.
We have been sharing every food pantry helping we can along with helping buy groceries for families in need.
Tarheel4Life
3 of a Kind
Best post I’ve seen on this situation with the airlines and other businesses that bought back stock.
Delta Air Lines is a big employee in the area where I’m from (Southern US) and about a decade ago they actually filed bankruptcy so they could reprioritize their debt and come out of bankruptcy to buy Northwestern Airlines. There wasn’t really a need to file Chapter 7. They did it out of greed, and I was one of the creditors that got stiffed when they did so.
Help the people, but when it comes to these big publicly held companies and VCs that over leveraged themselves and didn’t learn their lessons 12 years ago - let the bodies hit the floor.
Didn't they also shaft their employees (pension plans, IIRC).
Tarheel4Life
3 of a Kind
I don’t recall, but it wouldn’t surprise me. I know some people that still work there and they pine for the 90s when it was a different kind of place.
Tarheel4Life
3 of a Kind
Munchkin (spell check but I’m not fighting it anymore) said today that unemployment could reach 20%. Those are insane numbers. We’re going to look back at 2019 as the good ‘ole days for many reasons.
...If nothing is done. Both parties are actually working well together (so far) to get ahead of this.
Click the link.
Mnuchin warns senators lack of action could result in 20% unemployment rate, source says
slisk250
Straight Flush
spell check knows more than we think
slisk250
Straight Flush
So let's do our homework. The only power you have is at the ballot box. See which politicians supported all the policies that allow companies to free roll us. Then vote.
We need a room full of Katie Porters!
SteveHNo96
Flush
California ordered all bars and restaurants shut down today, St. Patrick's Day, the biggest day of the year for 15 days. It's out of control. I was SO looking forward to having a tasty corned beef sandwich.
slisk250
Straight Flush
Murphy's at Seal Beach is the best when they open early morning on March 17 - RIP bars...
SteveHNo96
Flush
The hardest part is every Wednesday since I came back to California I would go to the Tilted Kilt and get me a plate of boneless wings and fries and it would be super cheap because they're half-price. This is the first Wednesday in 17 months that I didn't get to go. It makes me sad.
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