SOCIAL DISTANCE – A Randy Rainbow Song Parody

In “Classical” Economics it’s sometimes called “Animal Spirits” though I prefer the simpler and more direct “Greed”.

Hope you’re enjoying your Dead Cat. The Fundamentals haven’t changed a bit (well, except to get worse from both an Epidemiological and Economic standpoint) and Unindicted Co-conspirator Bottomless Pinocchio may have queered the
incipient deal on Stimulus (which even in draft doesn’t look all that attractive).

I dunno, I’m a mere student of Clio, perhaps you would like to listen to a Nobel Laureate Economist instead.

The COVID-19 stimulus can’t be a corporate bail-out. We need a new playbook for relief
by Joseph E. Stiglitz, Salon
March 24, 2020

Three years ago, in an ugly display of pigs feeding at the trough, there was a rush of special interests to take advantage of a secretive tax bill moving quickly through the Senate, with tens of billions of dollars going to certain industries, like real estate. We saw what happened: a short burst of economic growth that turned out to be remarkably weak, given the size of the deficit that it brought about. This year, growth was expected to decline to anemic levels—lower than 2 percent. While the predicted 1 trillion dollar deficits quickly emerged, the promised increases in investment and wages did not, as corporations paid out almost a trillion dollars in share buybacks.

This is all prelude to the current debate over responding to the COVID-19 crisis. Had big business not treated itself so well, it would have had an ample cushion to weather the storm. Had it lived up to its promises of greater investment and higher wages, Americans would have placed greater trust in it; likewise, if it hadn’t resisted giving workers a measly 10 days of sick leave even limited to the crisis itself. Our democracy and economy is at great risk if we respond to COVID-19 by giving money to the loudest and most powerful corporate voices rather than thinking through where funds are most needed. Our fiscal position is at risk if we don’t work out the best way to provide the money. America is a rich country able to run large deficits, but that doesn’t mean that resources are unlimited. Inevitably more money in corporate largesse means less money for those who need it, and more inequality. The well-being of Americans today is at risk if we don’t think carefully about how best to deliver money to those who need it now.

Businesses— like many American airlines— that squandered the opportunity to build up cash reserves should be held accountable. But the costs should be borne by their shareholders, who have already been amply rewarded. Bankruptcy is not the end of the world. Chapter 11 maintains the company but forces the shareholders to pay the price for their mismanagement.

Capital markets won’t be functioning as they normally do, so there is a role for government— to provide funds, convertible bonds and/or loans with warrants, so the government doesn’t just bear the downside risk of the loans not being repaid but participates in some of the upside. There should be no gifts to corporations. And like IMF and World Bank loans, any government bailouts should come with “conditionalities,” such as no buybacks, limited dividends and CEO pay, a promise to keep workers on the job, and better treatment of stakeholders other than shareholders and management—including workers and the environment.

But states are limited by their constitutions from deficit financing. The issue here is not just access to loans, but the very ability to borrow. It is only the federal government that can borrow. The states and localities will need money urgently as their revenues plummet. Without this money, they will be forced to cut back essential programs in education, health, and welfare. There needs to be a massive temporary revenue-sharing program.

The non-profit sector—schools, universities, research institutions, welfare agencies, etc.—are another important part of our economy, no less important because they aren’t organized for the kind of lobbying that big business does. Their endowments have shrunk by a third and contributions will almost surely be down as donors’ incomes dwindle. Universities will be especially hard hit as foreign enrollment steeply declines.

This sector is central to caring for the vulnerable. And where would we be without their insight and research into understanding the virus that is causing such havoc! We can’t jeopardize our future simply because these institutions and organizations make fewer campaign contributions than big corporations.

Fortunately, everybody seems to agree that small businesses and the most vulnerable citizens need extensive help. The loan program for small businesses seems a reasonable way to get money to them quickly— if the Trump administration has the capacity to deliver. But the question of administrative capacity is even more central to delivering money quickly to the tens of millions of Americans who live on the edge.

For decades, there has been an attempt to defenestrate government, to weaken its capacities, and never more so than in the past three years. Do we have any confidence that the government could deliver checks in two weeks, as Trump has said it should? Argentina announced a program for helping every child on Tuesday of last week, and by Friday, every family had the money. I doubt that we could do that. A suspension of evictions, foreclosure, and interest on all debts is a necessary interim measure. Otherwise, with so many credit cards charging usurious interest rates of 20% or more, debts will accumulate rapidly, creating a hole from which the poor may never be able to dig their way out, made all the worse by the 2005 bank-friendly bankruptcy act that makes it so hard for workers to discharge their debts in personal bankruptcy. Other countries, like Denmark, with far more administrative capacity than we, have chosen another route: asking employers to continue paying (a large part) of wages and salaries for employees not to show up at work, to be reimbursed by the government. In effect, the companies are temporarily managing the unemployment insurance program, recognizing scaling up existing programs in the manner required is not feasible— let alone creating an entirely new program.

This economic crisis is different from any other. We can’t use the same playbook. Today, it’s not about stimulus— the problem is not lack of aggregate demand. New problems require new solutions and new priorities. Still, we should learn some lessons from the past: corporate give-aways almost never work.

I’ve worked events like this and it costs an enormous amount of money to postpone them.

At the same time who would want to go or participate? I’ll admit getting to hit on Gymnasts is an attraction.

Japanese prime minister says IOC has agreed to postpone Tokyo Olympics
By Adam Kilgore, Rick Maese, and Simon Denyer, Washington Post
March 24, 2020

Facing heavy global pressure and rising athlete dissent, the International Olympic Committee sharply reversed course Tuesday and agreed with Japanese officials that the Olympics and Paralympics will not take place this summer in Tokyo in the wake of the growing novel coronavirus pandemic. Organizers say they now hope to stage the Games by the summer of 2021.
…
Japanese Prime Minister Shinzo Abe on Tuesday proposed a one-year postponement to IOC leadership, including President Thomas Bach. The IOC quickly agreed the Games would be held about one year after the previously scheduled start date, July 24.

“I have made a proposal of about a year,” Abe said. “President Bach said he agreed 100 percent and we agreed to hold the Olympics by summer 2021.”

Abe said he and Bach had agreed “to cooperate in order to hold the Olympics in the complete form, as a testament to victory over the infection.”

In a joint statement, the IOC and Japan’s Olympic organizing committee said they made the decision “to safeguard the health of the athletes, everybody involved in the Olympic Games and the international community.” Athletes across the world had been calling for the Olympics to be postponed, saying the lack of a decision forced them to continue training at risk to their physical and mental well-being.
…
“In light of the current conditions and for all the athletes, we made a proposal of a postponement of about a year, to hold them securely and safely,” Abe said Tuesday.

Postponing the Games carries massive political, financial and competitive implications. Abe, who had staked extensive political fortune to the success of the Games, said he expects Japan will pull them off.

“As the host country, Japan would like to serve our responsibility thoroughly,” Abe said.

Sunday, IOC President Thomas Bach said it “would still be premature” to decide the fate the Tokyo Games, and as other major sports events and leagues have suspended operations and canceled play, Olympic officials had resisted the call to alter its schedule. They spent the past several weeks weighing options, as athletes and sports federations began voicing their concerns. The chorus only grew after Bach sent a letter to Olympic athletes Sunday, acknowledging for the first time that postponement was a possibility but refusing to make a decision for the next four weeks.

The Canadian Olympic Committee said Sunday it would not send its athletes to compete in Tokyo this summer, delivering a devastating blow to the IOC’s hopes to stick to its schedule. Australia’s national committee also urged its athletes to begin preparing for an Olympics in 2021, and Sebastian Coe, the influential head of World Athletics, the international governing body for track and field, called on the IOC to delay the Summer Games by a year. The national Olympic committees of Brazil and Slovenia had called for a one-year postponement, and Norway had balked at sending its athletes to Japan with the current state of the pandemic.
…
The IOC’s stunning decision is without precedent. While an Olympics has never been postponed, several have taken place later on the calendar, including the 2000 Sydney and 1988 Seoul Games, which both took place in late September, and the 1964 Tokyo and the 1968 Mexico City Games, which took place in October. The modern Olympics, which date to 1896, have been canceled three times (1916, 1940 and 1944) because of world wars.

The bulk of the rest of the piece is a discussion of how much money is involved with a bit of insight into the decision making process.

Welcome to The Breakfast Club! We’re a disorganized group of rebel lefties who hang out and chat if and when we’re not too hungover we’ve been bailed out we’re not too exhausted from last night’s (CENSORED) the caffeine kicks in. Join us every weekday morning at 9am (ET) and weekend morning at 10:00am (ET) (or whenever we get around to it) to talk about current news and our boring lives and to make fun of LaEscapee! If we are ever running late, it’s PhilJD’s fault.

NATO launches airstrikes over Yugoslavia; Exxon Valdez oil spill in Alaska; Elvis Presley inducted into US Army; Cat on a Hot Tin Roof opens on Broadway.

Simple logic dictates that if you cannot even conceive the possibility of leaving a negotiation, then it is preferable never to enter one.

Yanis Varoufakis

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You know, sometimes I get the impression that people don’t appreciate the punniness of my titles, not that this one is particularly deep.

It is of course a play on “Opportunity Cost” which is the price you pay for wrong or in action, as opposed to Milton’s Paradise Lost.

Cody Johnston

Virus Alert

Christmas At Ground Zero

This Is The Life

Welcome to The Breakfast Club! We’re a disorganized group of rebel lefties who hang out and chat if and when we’re not too hungover we’ve been bailed out we’re not too exhausted from last night’s (CENSORED) the caffeine kicks in. Join us every weekday morning at 9am (ET) and weekend morning at 10:00am (ET) (or whenever we get around to it) to talk about current news and our boring lives and to make fun of LaEscapee! If we are ever running late, it’s PhilJD’s fault.

Patrick Henry declares, ‘Give me liberty, or give me death,’ German parliament grants Adolf Hitler dictatorial powers, President Reagan proposes anti-nuke ‘Star Wars’ program, Movie ‘Titanic’ wins 11 Oscars.

There is just one thing I can promise you about the outer-space program – your tax-dollar will go further.

Wernher von Braun

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Dow Be Limit Down, Do Be Do Dow Down.

C’mon, that’s punny.

Just to repeat the mechanics, Futures are limited to a 5% loss. If there are no bids above -5% Trading halts until there is one. In the Market there are Breakers at 7%, 13%, and 20%. 15 Minute Halts at -7% and -13%, Trading Closes for the Day at 20%.

The Limit Down Futures imply an Opening of -600 Points or so which would send the Dow below 19,000 (Friday Close 19,173.98) to the 18,000 level. I’ve said before that there is no technical bottom and if we were at historic Price/Earnings Ratios I think it should be 10,000.

Dow futures drop 500 points, briefly hit ‘limit down’ as investors await a stimulus deal
by Fred Imbert, CNBC
Sun, Mar 22 2020

U.S. stock futures dropped again as Wall Street waits on Washington to agree to an economic stimulus and rescue plan to cushion blow from the coronavirus outbreak.

As of 6:28 a.m. ET, Dow Jones Industrial Average futures dropped more than 500 points. S&P 500 futures were off by nearly 3%. Nasdaq 100 futures declined by 2.6%. The SPDR S&P 500 ETF was off by 3% in premarket trading.

Futures were well off their worst levels of the overnight session. Earlier, futures hit their “limit down” levels, falling 5%. Downside limits to futures contracts are implemented to ensure orderly market behavior once trading hits a certain threshold. No trades below that level are allowed.

A fiscal stimulus bill failed a key procedural Senate vote Sunday as Democrats warned the measure did not do enough to help workers and too much to bail out companies. Earlier, House Speaker Nancy Pelosi had signaled she was not on board with the Republican-version of the stimulus plan, saying: “From my standpoint, we’re apart.”
…
In the U.S., more than 30,000 cases have now been confirmed. New York Gov. Andrew Cuomo said Sunday cases in the state soared to 15,168 over the weekend. That’s more than in France or South Korea.

The outbreak has led the New York Stock Exchange to close its trading floor and temporarily move to all-electronic trading beginning Monday. NYSE expects trading to proceed as normal.

Trump announced Sunday he activated the National Guard in California, New York and Washington state — the three states with the highest reported coroavirus deaths — to curtail the virus’ outbreak.

“Things will get worse before they get better and the markets will continue to reflect that reality,” said Marc Chaikin, CEO of Chaikin Analytics, in a note. “This means that a bottoming process will take more time and probably inflict more damage to equities.”

Stocks suffered their biggest one-week decline since the financial crisis in 2008, with the S&P 500 dropping more than 13%. Those losses put the broad market average more than 32% below its record set on Feb. 19.

Last week ended with all 11 S&P 500 sectors closing more than 20% below their respective 52-week highs. The S&P 500 was also on pace for its worst monthly performance since 1940.
…
Investors have also been rattled by a sharp decline in crude prices. West Texas Intermediate futures fell 29.3% last week, their biggest weekly fall since January 1991. U.S. crude is also more than 66% below its most-recent 52-week high.

One argument you’re going to hear today is that we have to do Something, ANYTHING RIGHT NOW!

As our experience during the 2008 Financial Crash should have taught us it’s important to get these things right.

The McConnell Republican Senate Bill is not that. In addition to other horrifying features it creates a $500 Billion Slush Fund for Mnuchin to spend on anything he wants with no accountability whatsoever. In case you’re confused about the magnitude of that, it’s about 10 Bloombergs or 5 Bezos (post divorce).

Treasury’s power over $500 billion loan program becomes key sticking point in coronavirus aid bill
By Jeff Stein, Washington Post
March 22, 2020

Congressional lawmakers are feuding over a central component of the massive economic relief package being debated by the Senate, a battle that may threaten the enormous emergency aid package while reprising one of the most bitter political fights of the last decade.

The Trump administration and Senate Republicans have called for giving the Treasury Department the authority to disburse hundreds of billions of dollars in emergency federal loans to firms hurt by the economic impact of the coronavirus.

Their initial proposals called for the fund to be worth $208 billion. But after a flurry of lobbying over the weekend, Senate Republicans’ legislation now calls for a $500 billion program that would award loans to states and cities as well as businesses, according to a copy of the most recent GOP proposal.

The provision has become one of the principal logjams in urgent congressional negotiations over emergency help for an American economy facing its worst calamity since the Great Recession, in part because the Treasury Department would have broad discretion over where the money would go. President Trump already has said he wants the money to be used to rescue the cruise ship and hotel industries, making his preferences clear, but at a press conference on Sunday refused to say whether his own hotel properties would apply for the funding.

No conflicts of interest or emoluments there.

“There’s too much money with no oversight,” Sen. Jon Tester (D-Mont.) told reporters Sunday.

Congressional Democrats have demanded the legislation include guardrails to prevent firms that receive the emergency aid from firing their workers or stripping them of their health care, among other asks by labor groups. They also are balking at giving Treasury Secretary Steven Mnuchin so much authority to determine which firms receive the assistance.

Section 4003 of the legislation accounts for $500 billion for “emergency relief and taxpayer protections.” Of that money, $50 billion would go to passenger airlines, $8 billion to cargo airlines, $17 billion for companies deemed important to national security, and $425 billion for businesses, cities and states. The bill doesn’t give much more information than that in terms of who would qualify for loans and loan guarantees, leaving much of it up to Mnuchin.

Congressional aides in both parties say they will not budge on the issue, although top party leaders huddled in emergency meetings Sunday to resolve this impasse and others, and talks remained fluid. Senate Majority Leader Mitch McConnell (R-Ky.) said the Senate would move to vote Monday on the legislation, calling it “pretty solidly bipartisan” despite Democratic anger over the bailout provisions and others.

I dunno Mitch, if you can’t get Tester who can you get? Manchin?

The heated fight over the emergency aid for large businesses revives the long-standing debate over the Wall Street bailouts during the 2008 financial crisis that reshaped American politics. Republicans are forging ahead with a plan they say is necessary to save large parts of the economy from collapse but has garnered fierce criticisms, including from within their own ranks.

When Congress created the $700 billion Troubled Asset Relief Program in 2008, they installed several levels of scrutiny to ensure the money wasn’t abused or misappropriated. For example, it created a group of regulators as well as a group of congressionally appointed experts to examine the funds. Lawmakers also created a special inspector general to investigate wrongdoing, and numerous instances of abuse eventually were uncovered.

“The arguments over attaching strings to government aid to business now reflect the persistent public backlash over the rescues and bailouts of the global financial crisis,” said David Wessel, a senior fellow at the Brookings Institution. “The underlying problem here is the lack of trust, both by the public and among some members of Congress in each other and in the administration.”

The Republican proposal would create limitations on the loans. It would prohibit companies receiving aid from issuing new stock buybacks as long as the loans remain in effect, a provision supported by both Democrats and President Trump. It would limit salary increases for employees who earn more than $425,000 annually for two years. The plan also says firms receiving the federal aid should maintain “existing employment levels as of March 13, 2020 to the extent practicable” before the loans have been paid back.

“Extent Practicable”? That sure didn’t work out for Bobbie Lee (the most overrated General ever) when he told Ewell that on Day 2 at Gettysburg.

Oh, and they lost. Get over it you Racists.

“We are not bailing out the airlines or other industries — period,” Sen. Richard C. Shelby (R-Ala.), chair of the appropriations committee, said in a statement last week. “We are allowing the Treasury Secretary to make or guarantee collateralized loans to industries whose operations the coronavirus outbreak has jeopardized. … This approach strikes an appropriate balance between providing assistance and protecting taxpayers.”

The Senate is advancing a separate, $350 billion measure for smaller firms hit hard by the coronavirus, while Republicans also have agreed to some Democratic demands to shore up safety net programs such as unemployment insurance.

Democratic lawmakers and labor groups say the GOP plan amounts to a “corporate bailout” that could reward business recklessness and hurt workers. Democratic leadership has demanded funding for corporations include protections related to workers, such as ensuring their job security and health care, pensions, and 401(k) contributions, as well as prohibitions on discharging their collective bargaining agreements.

Democratic lawmakers have pushed for forgiveness of the loans if more than 90 percent of company employees are retained. They want provisions mandating employee retention to have legal teeth, complaining the Senate GOP bill has too much wiggle room for companies to cut workers loose. The Treasury Department would have to publish the application criteria for firms within 10 days of passage of the law.

Critics also have expressed alarm over the transparency provisions in the GOP legislation.

Because there is none.

“There is great unhappiness with how they’re trying to advance a proposal that would be great for giant corporations but leave everyone else behind,” Sen. Elizabeth Warren (D-Mass.) told reporters Sunday. “We’re not here to create a slush fund for Donald Trump and his family, or a slush fund for the Treasury Department to be able to hand out to their friends.”

The bill also would require disclosure of the loan recipients within only six months of enactment. Trump administration officials have said they are interested in providing federal assistance to help the cruise, hospitality and oil and gas industries, among others severely hurt by the downturn since the beginning of the outbreak.

Here, let me fix that for you. Where you say “within only”? You mean only after.

Other experts downplayed the risk for malfeasance in a potential Treasury program. The Treasury Department has an inspector general who could probe the administration’s handling of the loans, and companies have a legitimate interest in keeping from their competitors immediate information on whether they have received the aid, said Tony Fratto, a former Treasury and White House official during the George W. Bush administration. Fratto also said there’s an important distinction between the Wall Street banks receiving bailout money after having a role in creating the economic crisis and businesses shuttered by the coronavirus through no fault of their own.

“All of this is going to be public; there is nothing to hide here, and no public interest served in reporting it immediately,” Fratto said. “We are not talking about companies that did something wrong. We are dealing with companies with orders to shut down their business.”

So, if there’s a public order for a company to suspend business, by definition known to everybody, exactly what “legitimate interest in keeping from their competitors immediate information on whether they have received the aid” does it serve?

They already know your doors are shut.

A final note on sheer idiocy. I hear some people are looking to close the Markets, there are many reasons this is a bad idea but one of the main ones is it doesn’t work.

Ever.

All you do is create pent up demand (in this case to Sell) that has to be resolved when you reopen.

If you think that is going to be pretty I think you are sadly mistaken.

Richard is taking the dearth of new material rather hard and e-Sports are no substitute though he’s trying to learn to like them.

Me? I like weird stuff anyway. This is the Finals of the World Professional Darts Championship. I watched it first run on BBC. It’s different.

I happen to play and while I can throw Tons and 180s I don’t because I also hustle by sandbagging my League. I’m rated a 2 which is not particularly good but because it’s based on odd accomplishments like that (my rating actually means I can be counted on to throw about 2 Tons or 80Tons per Match, so not very good at all really) I can keep it artificially low by throwing 98s (T18, T13, 5). The game I like to play is Cricket because I generally hit what I aim at. I keep my targets in the Top Half during League play so that when I’m unmonitored I can go for it.

It’s technically possible to close out a 501 Game in 9 Darts.