The Virus Used as an Excuse for a Bailout

[Highndry]

In the USA, I believe they have conveniently used the virus as an excuse for a massive bailout of the banks and the economy which were already faltering well before this virus was even known. All the way back in September, the FED was having to shovel hundreds of billions into the REPO market to shore up lending between banks. So we know there were dire problems then. The Class 8 truck market has been weak for more than a year, and falling. Consumer auto loan delinquencies were already the highest ever, and household, corporate and public debt is at its highest ever. They used this virus as an excuse when the whole shebang was already melting down, and people fell for it. I am not saying the virus does not exist, I am saying the virus was merely the excuse when the problems are much, much deeper.

Edited April 6, 2020 by Highndry

[Ellener]

4 hours ago, Highndry said:

In the USA, I believe they have conveniently used the virus as an excuse for a massive bailout of the banks and the economy which were already faltering well before this virus was even known. All the way back in September, the FED was having to shovel hundreds of billions into the REPO market to shore up lending between banks. So we know there were dire problems then. The Class 8 truck market has been weak for more than a year, and falling. Consumer auto loan delinquencies were already the highest ever, and household, corporate and public debt is at its highest ever. They used this virus as an excuse when the whole shebang was already melting down, and people fell for it. I am not saying the virus does not exist, I am saying the virus was merely the excuse when the problems are much, much deeper.

Don't know what you are talking about? I live in the US and this didn't happen.

[Art_Critic]

In my state unemployment claims are up 990%, that isn't some made up scenario.

Most Businesses are shut down and many are gone and will never open up again, that isn't some made up scenario.

In NY up to 800+ people a day are dying, that isn't some made up scenario.

I wouldn't consider the SBA loans for payroll protection a bailout for banks, these companies within 10 days went from the best times to the worst possible numbers in their history my company has work right but will have none in about 2 weeks but I still have employees that need to have a paycheck, that isn't some made up scenario.

To me if this was Myth Busters I would call this myth busted

 

 

 

[schlumpy]

It's very likely that the unscrupulous took advantage of this crisis to slip into the bill some candy for themselves, their backers and last but mostly least - their constituents. It's the way things are done. They claim that loans will be paid back which is probably true, it's just that the returned money will not reduce the debt but be allocated somewhere else. Once they free up funds they don't use the unused money to pay down debt. That's our children's problem.

[Highndry]

8 hours ago, Ellener said:

Don't know what you are talking about? I live in the US and this didn't happen.

It would appear you need to wake up. Do you even know what the REPO market is? Didn't think so.

[Highndry]

7 hours ago, Art_Critic said:

In my state unemployment claims are up 990%, that isn't some made up scenario.

Most Businesses are shut down and many are gone and will never open up again, that isn't some made up scenario.

In NY up to 800+ people a day are dying, that isn't some made up scenario.

I wouldn't consider the SBA loans for payroll protection a bailout for banks, these companies within 10 days went from the best times to the worst possible numbers in their history my company has work right but will have none in about 2 weeks but I still have employees that need to have a paycheck, that isn't some made up scenario.

To me if this was Myth Busters I would call this myth busted

 

 

 

I think you missed my point. The economy was already melting down before the virus hit. They would never have been able to get all of that bailout money for big business without the virus. The virus turned out to be a perfect cover for them to craft what will turn out to be the biggest ripoff of US taxpayers in our lifetimes.

I would love to hear the explanation for how all of these mega corporations can go from the best times in history to needing a massive bailout in 2 weeks time. Doesn't pass the sniff test.

Edited April 6, 2020 by Highndry
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[Gaeta]

28 minutes ago, Highndry said:

The virus turned out to be a perfect cover for them to craft what will turn out to be the biggest ripoff of US taxpayers in our lifetimes.

Trump has no problem giving huge amounts of money to big corporations, I don't see why they'd need a 'virus' to get more cash from him. 

[Highndry]

8 minutes ago, Gaeta said:

Trump has no problem giving huge amounts of money to big corporations, I don't see why they'd need a 'virus' to get more cash from him. 

This isn't about Trump. He did not craft the legislation, Congress did, specifically the attorneys of the corporate lobbyists. That's how all legislation is drafted these days.

[Gaeta]

20 minutes ago, Highndry said:

This isn't about Trump. He did not craft the legislation, Congress did, specifically the attorneys of the corporate lobbyists. That's how all legislation is drafted these days.

Where do you get your facts? 

Here is something for you to read.

https://www.nytimes.com/2019/12/30/business/trump-tax-cuts-beat-gilti.html

 

[Highndry]

1 hour ago, Gaeta said:

Where do you get your facts? 

Here is something for you to read.

https://www.nytimes.com/2019/12/30/business/trump-tax-cuts-beat-gilti.html

 

This thread is specifically about the bailout. You are going off topic.

Edited April 6, 2020 by Highndry

[Gaeta]

29 minutes ago, Highndry said:

This thread is specifically about the bailout. You are going off topic.

My point is, if they want a bailout, they don't need a virus.

[mark clemson]

3 hours ago, Highndry said:

I think you missed my point. The economy was already melting down before the virus hit.

I'm confused. What are you basing this claim on?

Believe we had between 2 and 3% annual GDP growth. Not enough for Trump, but Greenspan would have been fine with it.

Where do you get the "meltdown" claim from?

[chillii]

Don't really now much about the US politics but saw a lot of clips where Trump was very proud of how well the economy was going and ran through a lot of stats , sounded like it was booming along to me.  So was it really doing that well or , the way Trump seemed to talk no one even needed bailing ? But eh as l say l don't know much about it or the real nitty gritty.

l'd imagine though the idea at a time like this would be near insane from the outside looking in and at what other countries and now you guys are going through. All this stuff is way to big and way too serious for bs right now.

Edited April 6, 2020 by chillii

[Kitty Tantrum]

Never let a crisis go to waste!

The virus is real, but I sincerely believe that most of the hysteria is baseless and agenda-driven.

We're going to fall massively short of projected deaths and hospitalizations. They'll chalk it up to social distancing and quarantine efforts, which is silly because people are still gathering and mingling and crowding together, just in different places than before. From what I've witnessed in MY community, both social AND resource-gathering behaviors have become MORE risky rather than less risky.

My overall take on it is still "better safe than sorry" - but I'm very skeptical to say the least.

I hope I'm wrong, because I hate the idea of the government using the virus to push an agenda - but it's MORE THAN POSSIBLE. It wouldn't exactly be a principally NEW tactic in the playbook of any government ever.

I hope I'm RIGHT, because I hate the idea of so many people actually getting sick and dying - but of course that is ALSO still a possibility.

Just gotta wait and see.

[Highndry]

Debt does not equal wealth. The economy was expanding because of the biggest credit bubble in history. Household debt - highest in history. Corporate debt - highest in history. Government debt - highest in history. I mentioned Class 8 truck sales because shipping is a bellwether of the economy. They have been tanking for over a year. I mentioned the skyrocketing auto loan default rates because that is another sign of the sickness within. I mentioned the REPO market problems because the banks stopped trusting each other again - the same thing that preceded the last meltdown.

The problem is debt. It can never be paid back. So the defaults started, well before this virus arrived on the scene. Then the government stepped in with all sorts of programs and schemes to try to prop this up, as if the virus was the only reason. Sure, the virus exacerbated the problems, but didn't cause them. Without all of this debt, the system would have been more able to withstand a shock. Now it can't, and the whole thing is going to unravel, even with all this stimulus. It's not about protecting people, it's about handing out life vests to the preferred individuals before the ship goes down. Just watch and see.

[schlumpy]

2 hours ago, Kitty Tantrum said:

Never let a crisis go to waste!

The virus is real, but I sincerely believe that most of the hysteria is baseless and agenda-driven.

We're going to fall massively short of projected deaths and hospitalizations. They'll chalk it up to social distancing and quarantine efforts, which is silly because people are still gathering and mingling and crowding together, just in different places than before. From what I've witnessed in MY community, both social AND resource-gathering behaviors have become MORE risky rather than less risky.

Just gotta wait and see.

Thank you Kitty for laying it all out in a very sensible fashion. Everything you said I've also observed or come to the same conclusions but you put it so much more succinctly. Like you said: we can argue now but the truth will come later.

[mark clemson]

16 hours ago, Highndry said:

Debt does not equal wealth. The economy was expanding because of the biggest credit bubble in history. Household debt - highest in history. Corporate debt - highest in history. Government debt - highest in history.

The problem is debt. It can never be paid back.

Hmm. While those things are probably true or at least close, the GDP was also at the highest in history at around 20T. So it was at least somewhat proportional (I'll let economists argue about what's the "right" level of debt/GDP). 

Like you I am of the philosophy that debt is economic poison and should be reduced, not increased, when times are good. However, there are other who see it differently - leverage up "while the getting's good". Sometimes it works like a charm and you get that business going nationally or that bigger house you always dreamed of, and sometimes it blows up in your face.

All that said, COVID has undoubtedly changed the game for now and, despite what the stock market is doing today (most likely in anticipation of the disease slowing and another 2 - 4 T in handouts/gov't support) my personal opinion is it is likely to look at lot like 2009-2011 fairly soon and at least for a while. So yes, there is likely to be people losing their homes, businesses going under, etc, at least for a while. Personal/business debt will certain exacerbate that problem.

As far as US sovereign debt goes, we're sort of in uncharted territory. The rules of yesteryear don't necessarily apply as it's possible for the gov't to owe huge quantities to the federal reserve, rather than external/hostile creditors. Also, without gold backing, they can literally (if necessary) print the money, not that there aren't probable consequences to doing that. None of this means that it's impossible for "the system to collapse", but we are in a different world than we were prior to the 1980's when Stockman and Reagan cooked up this new way of doing things.