I don’t understand this stuff. Politicians have directly ordered closures. If your bottom falls out from under you because you were playing fast and loose that seems inherently different than being told from above “you just cease your main method of generating revenue until we tell you otherwise.”
You're asking me,(general tax payer) to give you money to ride out the storm, but you get all the private gains in the future while I take the risk now.
There is a much more fair way to do this. Firms simply issue new stock and sell it to the market. Firms get the capital they need, the general tax payer isn't holding the bag.
This is the solution. Have the firms issue stock and the government purchase the stock. Obviously make it ultra-preferred with no one else getting preference before the government gets paid.
If firms don't like that deal, they can either get their own funding from the private markets or go out of business.
I don't want my tax dollars supporting million dollar executive salaries and bonuses for executives and management that I think are doing a questionable job. Are we going to have the government dictate salary and bonus reductions and maximums too?
If a business is in a liquidity crunch because they’re shut down and may go bankrupt, their stock is....basically worthless. I don’t think you’ve thought this one through.
If they're worthless, then after the government bails them out, the government should own them. If the government doesn't want to keep ownership, then redistribute the shares to taxpayers (aka "the people") as helicopter money.
Actually you’re right, that should work for businesses with shares. If people are willing to invest. But how would this work in a liquidity crunch? That was the situation we were in. Everyone was moving to cash.
What about non-incorporated businesses? That’s the bulk of small business ordered to shut down.
I find it interesting that this entire thread seems to be about fairness. Whether something is fair to corporations/people really shouldn't be the point. It should be about keeping people alive and having a functioning/prosperous economy. I'd much rather have that than a "fair" economy.
The problem is that during good times, the narrative switches to not regulating "private" enterprise. The financial schemers extract wealth under the guise of "earning" it, while it's all justified by saying that the market will regulate itself.
Yes, not doing a bailout would be imprudent. But this is apparently the only time we get any say. When we don't get to reform irresponsible business/fiscal practices in good times, but they have us over the barrel in bad times, the predictable outcome is spite.
The question is who is making sacrifices, and who will be prospering, and who will be dying.
A 2.2 trillion dollar check was just signed with the american tax payer's name on it. That is money could have gone to retirements, heath-care, and schools. It is reasonable to be concerned that it go to an equal or better purpose, and not to buy a second yachts for bankers.
Nothing about raising capital prevents a functioning economy.
The point is that people have been conditioned to believe we must use public money to save private interests.
If you want long term functioning markets, shareholders have to hold the bag. Otherwise the Bernie Sanders crowd will get bigger and bigger...and rightfully so. And eventually the system will topple via revolution (political or otherwise).
GP is making the point that in this case, the government caused the insolvency of these businesses in significant part through authoritarian closures, not through the irresponsibility of those running the business. Therefore the government (taxpayers) owe them recompense to make them whole.
The shutdown is the government’s fault, period. The damage it is causing is far worse than what would have happened if the government had started taking action in January and ramped up testing capacity. Instead the government did close to nothing and now the lockdowns are the last resort.
Other countries handled this better. South Korea and Taiwan are good examples of countries that ramped up testing and did not need to shut down society.
Shutdowns are not inevitable. They are a result of government failure, and the government should compensate businesses that it orders to shut down.
Disagree. There’s no guarantee earlier government action would have eliminated the need to shut down businesses or ban gatherings. I do think more should be done to support workers. $1200 single payments are not even peanuts.
We know for a fact that some countries didn't need to shut down. Again, South Korea and Taiwan are examples. They are also denser than the United States, and less wealthy, and closer to the source of the virus outbreak. Yet they handled it much better.
By contrast, the United States is less dense than those countries, significantly farther away from China, the richest country in the world, and had months to prepare.
I find it unconvincing that the United States could not have rolled out broad testing and tracing if it had started back in January when the virus was known to be a threat. Even if you're right and all it did was buy time before an inevitable shutdown, shortening the shutdown would have hugely helped to limit the economic damage.
I don’t agree with this perspective. The cost of keeping bars open, for instance, is much higher on society as a whole because of how it would lead to the virus spreading. I don’t see how that makes the public responsible to help these businesses.
When your business does well, you reap the benefits, not me. The belief is you’re entitled to it, because you’re the one who took the risk. So how is it now that we allow you to risk public safety or otherwise we take on the risk and give you grants or cheap loans?
