The Viral Economy

[Grifman]

I think too much, usually not about happy things.

Well, then, this time was made for you!

[Paingod]

I think too much, usually not about happy things.

Well, then, this time was made for you!

My wife thinks so, too. I keep telling her that my job as an IT Manager requires me to be able to look at least a little ways down the road and plan for disasters. I keep applying it to life in general. I've overreacted to most situations, which means I was pleasantly rewarded for preparations and concerns that proved to unfounded. Now I'm the clear thinker? It's the end times.

Also, super happy today that I didn't get hired to be the IT Manager for an event coordination company three years ago and instead landed in the IT department of a medical firm. At the time I was super annoyed because I was what they were looking for but didn't "click" with the CEO I'd report to. If they had hired me, I'd be in line for unemployment. As it is, I'm not sure how much longer the eye care firm will hold up with just 4 people seeing patients and 6 people working corporate and billing.

Two weeks ago I was pushing my wife to let us buy more stocks of food. Now she's having fewer issues with that each day.

[Blackhawk]

What's scary from my end is what's going to happen when this is over. The job market suddenly getting flooded with millions of workers, all at the same time, while business are reopening left and right. Will it be easier to get a job? Or impossible? Michelle is back in a seasonal job, and needs to start looking for something permanent, probably starting in July or August, or else she'll be out of work in October and we'll be screwed. That puts her job hunt in the middle of the likely rush, and she had huge problems finding anything last year when things were actually good for job hunting.

Why would you be screwed? If out of work, she'll be eligible for regular state unemployment insurance plus $600/week in "enhanced" federal unemployment benefits (which runs for 4 months). I think the state benefits have been extended for an additional 13 weeks. All of that should help.

She wouldn't be eligible (unless the current 'eased rules' are still in effect.) We checked last year.

[em2nought]

Hmmm, I wonder if/how that applies to the owner and sole employee of my own corporation. Can I furlough myself? (I really will be without work after April.)

If you are employee and pay yourself a salary, you should be ok. The real question is about sole proprietors, who don't have a separate corporate entity such they can be considered an employee.

Good thing I can live on canned beans as I only get a 1099. This virus definitely messes with the whole idea of delayed gratification. Work hard your whole life, and then promptly die wasn't exactly how I saw my future.

[El Guapo]

Hmmm, I wonder if/how that applies to the owner and sole employee of my own corporation. Can I furlough myself? (I really will be without work after April.)

If you are employee and pay yourself a salary, you should be ok. The real question is about sole proprietors, who don't have a separate corporate entity such they can be considered an employee.

Good thing I can live on canned beans as I only get a 1099. This virus definitely messes with the whole idea of delayed gratification. Work hard your whole life, and then promptly die wasn't exactly how I saw my future.

Arguably beats working hard and then dying slowly and painfully, I suppose.

[Kraken]

Hmmm, I wonder if/how that applies to the owner and sole employee of my own corporation. Can I furlough myself? (I really will be without work after April.)

If you are employee and pay yourself a salary, you should be ok. The real question is about sole proprietors, who don't have a separate corporate entity such they can be considered an employee.

Good thing I can live on canned beans as I only get a 1099. This virus definitely messes with the whole idea of delayed gratification. Work hard your whole life, and then promptly die wasn't exactly how I saw my future.

Sometimes I question whether it's worth remaining a corporation. It costs me around $1,000 a year and imposes some requirements I wouldn't have otherwise. But I read today that the huge stimulus plan includes this:

The second component is the Paycheck Protection Program, a nearly $350 billion fund that will provide eight weeks of assistance to small businesses that maintain their payroll during the emergency. The loans would be available to companies with 500 or fewer employees, and would include nonprofits, self-employed people, and hotel and restaurant chains with up to 500 workers per location. If the companies maintain payroll for the eight-week period, those loans would be forgiven.

I need to find out what "maintain their payroll" means. I'm not going to lay myself off, but my income depends on revenue -- I can't pay myself without money coming in. If I'm reading that right, this "loan" would enable me to keep paying myself. I gotta think that being a company that pays W-2 wages is going to work in my favor (although I have no idea how it will be administered).

[Smoove_B]

The debate over ending social distancing to save the economy, explained via Ezra Klein on Vox.

Moreover, mass economic suffering poses its own dangers, both physical and political. “Right now, people are stunned by what is happening,” Frances Lee, a political scientist at the University of Maryland, wrote to me in an email. “But they will wake up soon and realize that they have been ruined economically.” When that happens, she worries, it will be “a profound threat to social peace.” Epidemiological models forecast the path of disease, not the stability of societies. Add that into the model and perhaps the cost-benefit analysis changes.

...

“Look, I’m an economist and I am gruesomely comfortable with putting a value on a life,” says Jason Furman, who teaches economic policy at Harvard’s Kennedy School of Government and served as chair of the White House Council of Economic Advisers under Obama. “If it costs one hundred million dollars to save a life, and we have a limited budget, it may not be not worth it. But I think the right model right now isn’t that you’re trading lives off against better economic performance. It’s that if you don’t save those lives, you might have even worse economic performance.”

In closing (and why I'm day-drinking)

An irony of the coronavirus crisis is that if we managed it well, it would likely feel to the public that the sacrifice wasn’t worth it. Politicians don’t get credit for the lives they saved, for the catastrophes they averted, but they do get punished for the pain they cause. An ideal response would make the cost of disease suppression visible even as it lured people into a false sense that the virus’s threat was overstated. As Dr. Anthony Fauci, head of the National Institute for Allergy and Infectious Diseases, put it, “if it looks like you’re overreacting, you’re probably doing the right thing.”

But what we are barreling toward right now is much worse: an inept, fumbling response in which we fully experience the virus’s toll — in which millions die and the economy freezes and we find ourselves dearly wishing we had understood the choices better, and made the hard decisions earlier.

[malchior]

An irony of the coronavirus crisis is that if we managed it well, it would likely feel to the public that the sacrifice wasn’t worth it. Politicians don’t get credit for the lives they saved, for the catastrophes they averted, but they do get punished for the pain they cause. An ideal response would make the cost of disease suppression visible even as it lured people into a false sense that the virus’s threat was overstated. As Dr. Anthony Fauci, head of the National Institute for Allergy and Infectious Diseases, put it, “if it looks like you’re overreacting, you’re probably doing the right thing.”

But what we are barreling toward right now is much worse: an inept, fumbling response in which we fully experience the virus’s toll — in which millions die and the economy freezes and we find ourselves dearly wishing we had understood the choices better, and made the hard decisions earlier.

The worst part is we know the choices, we understand that we need to make the hard choices, and yet our broken politics prevent us from acting as one in strength. When this is done I think we might need to reconsider this compact. If things turn out ok we'll probably avoid the conversation. If things get very bad then we probably need to lean back and think about all the wrongs in our society and figure it out because this is no way to run a nation.

[Smoove_B]

I've been seeing so many more of my professional peers, superiors and academic counterparts saying what I was feeling last week. All of our models, plans, scenarios, etc... tried to account for any number of variables. Not once did anyone ever consider political divide (suppression of science?) was the Achilles heel of our public health infrastructure, and yet, here we are. I haven't seen economic theorists comment on that yet, but maybe their models to account for general political leanings. We apparently made the assumption in public health that political leaders would trust our knowledge/skill/experience and follow our recommendations. Clearly, that's not universal and worse, the leader of the country has been actively acting counter to our efforts. It's like if a skyscraper was burning and the police and fire departments indicated exactly what they needed to stop it from getting worse and the President would say, "I don't think they need that many fire trucks or ladders." It's...unthinkable.

[Paingod]

The problem with planning is that there's no way to predict a lunatic with a Molotov cocktail. I mean, you can try, but you just never know what that will add to any mix.

[LawBeefaroni]

I think it's evident that planning needs to exclude any assistance from the federal government. At least with this administration. It's hard to factor in active opposition from the federal government but that is largely through Trump's twitter and idiotic press conferences. I guess you'd have to include some marketing response to counter whatever idiocy is coming from the WH.

[Kraken]

It hasn't been undeniable before that 40% of the country is under the spell of a personality cult. Their leader is always right, they will do whatever he says, no amount of data or argument can change their minds, and they'll blame whomever their leader scapegoats for the inevitable disaster. We've had indications that this is true before, but never such incontrovertible proof.

[RunningMn9]

I'm a little late to the party, so I'm just reading that wonderfully uplifting article to start this thread today. I'm questioning my decision to return already.

Smoove and I were talking about this over the last few days though, as he tried to scare me with the scale of the public health response as we sit here under a Shelter in Place order in NJ. I'm not an economist, and I'm not a public health expert. I don't know the right way to balance these issues in an optimal fashion. I suspect that nobody does. There are guesses that are more educated than others, but they are guesses. This has never happened before.

A global economy abruptly slamming the brakes, ON PURPOSE? That would seem unthinkable, even six months ago. Who in their right minds would intentionally cause a Recession or even a Depression? When I was trying to understand all of this over the past few weeks, the only thing that could help me manage it was to realize that people are only going to be able to focus on the cost of this, to them and to their communities.

What needs to be understood, to make any sense of that cost, is to understand what you're buying. What do we get for this incredible economic pain? The idea was that we were buying a chance to avoid the collapse of our hospital system. It's not so much about placing a value on grandma's life, and saving it at all cost (although obviously that's a point). This has always been about preventing the collapse of the hospital system due to the characteristics of this particular virus.

As Smoove has pointed out, we don't really have any idea what the actual numbers are. Without widespread testing, we don't know the total number of cases, we don't know the actual mortality rate, we don't know the actual hospitalization rate or critical care rates. How can we have any idea what we are buying without any of that data?

We can look at Italy and Spain and see the strain that is buckling their systems. We can already see similar cracks appearing in NYC hospitals. We have to try to understand that the mortality rates we see now assume one key element - treatment. This is the mortality rate when we can provide extensive ICU care (in some cases for weeks) to the patients that need it. What will the mortality rate be when we can't provide that intensive care? What will the mortality rates be for everything else that needs intensive care when capacity is reached? Car accidents, gun shots, stabbings, strokes, heart attacks, etc.

When the system hits capacity, the mortality rate of everything, across every demographic rises. What is the economic cost of that? I have no idea. I don't have answers to any of this. I'm afraid that no one does.

[Paingod]

I'm questioning my decision to return already.
...
When the system hits capacity, the mortality rate of everything, across every demographic rises. What is the economic cost of that? I have no idea. I don't have answers to any of this. I'm afraid that no one does.

Welcome back. You're agreeing with all of us, just from a slightly different perspective. This isn't in opposition to anyone's thoughts so far. We're all both worried about our immediate health, our loved ones, and where we'll be economically when the rubble settles. I don't think there are any good answers to the economic impact. You let the virus ravage the US and kill off 10% or more of the population to save whatever you can of the economy, or let the economy tank to try and save 10% of the population, knowing that they're going to suffer economically for a long time coming. I throw out 10% assuming the hospitals would be overwhelmed by the 20% of infections that need them and the vast majority of them would die.

The divisive question might be "Do you think Trump has done a good job?"

I think everyone here who's voiced any opinion has said unanimously "No" - not when he fired and didn't replace the pandemic leaders in his admin a year ago, not while it was in China, not from the outset of illness in the US when he tried to say it was under control, not when he tried calling it fake news and a hoax, not when he accused the Democrats of over-inflating it, not when he's refused to actually direct production of essential healthcare items and is letting businesses figure out their own path without guidance, and not when he's laughing at states begging for resources and being denied them. He has squandered every opportunity to try and get ahead of this.

If you think he's been rockin' the talkbox and providing solid leadership, I think we'd all disagree.

[RunningMn9]

I'm questioning my decision to return already.

I just meant that the article scared me to my core, not that I had any issues with any posts subsequently. I was just getting my feet wet by expressing my terror.

And no, I wouldn't exactly describe anything DJT as being anywhere near the same ballpark as solid leadership, no.

[Daehawk]

Myrtle Beach City Council imposes restrictions for hotel bookings; amusements to close

Under the new rules, accommodation businesses in the city including hotels, motels, condo hotels, rental properties and campgrounds can not accept reservations or extend current bookings for any period prior to May 1, effective immediately. The restrictions are subject to modifications.

Existing reservations made for Saturday through April 30 must be rescheduled or canceled, and those staying at such properties must vacate them by noon on Sunday.

Anyone who's lodged in those businesses since March 1 is exempt, though they are instructed not to be joined by visitors.

And all amusements in the city designed to attract or accommodate visitors including theaters, golf courses, moped and golf cart rental businesses, amusement parks and arcades are ordered to close, effective Friday.

[Kraken]

Neither "recession" nor "depression" describe what's happening to the economy now. Those things have different causes, effects, and remedies. We're going to need a new word. How about the Covid Collapse?

[Daehawk]

Trumpocalypse?

[Kraken]

Trumpocalypse?

Nah, that describes everything, and you can't blame Trump directly for the Covid Crash. I guess "crash" applies, so maybe it will be called the Covid Crash or the Great Crash. Fly, my minions, and spread the term! Let's make it go vir--. Eh, never mind.

[gbasden]

I'm questioning my decision to return already.

It's very good to see you back!

[Unagi]

Neither "recession" nor "depression" describe what's happening to the economy now. Those things have different causes, effects, and remedies. We're going to need a new word. How about the Covid Collapse?

How about a Covfefe?

[LawBeefaroni]

Neither "recession" nor "depression" describe what's happening to the economy now. Those things have different causes, effects, and remedies. We're going to need a new word. How about the Covid Collapse?

How about a Covfefe?

COVID Federal Fiasco. CovFeFi.


VIX is down to 57. Indicates a little bit more faith from markets that there's at least some stability.

[Kraken]

Neither "recession" nor "depression" describe what's happening to the economy now. Those things have different causes, effects, and remedies. We're going to need a new word. How about the Covid Collapse?

How about a Covfefe?

COVID Federal Fiasco. CovFeFi.

Brilliant.

[LawBeefaroni]

Conagra had earnings, announced a massive increase in sales due to Covid-19. "Pantry stuffing" it's called. Now I know why there's no more Beefaroni out there.

Conagra now expects fiscal 2020 reported net sales growth to surpass the 10% to 10.5% growth range and adjusted EPS to exceed the guidance for $2.00 to $2.07.

This when a ton of companies are removing guidance altogether due to uncertainty.

Domino's Pizza, who you'd expect to gain, also faces no sports which puts a crimp on sales. No school pizza parties, no birthday parties, no parties at all. More home cooking. But at the same time, huge uptick in deliveries. So they have no idea what it's going to look like.

[Jeff V]

Domino's Pizza, who you'd expect to gain, also faces no sports which puts a crimp on sales. No school pizza parties, no birthday parties, no parties at all. More home cooking. But at the same time, huge uptick in deliveries. So they have no idea what it's going to look like.

From what I see in my 'hood, there's a push to support local business with the love going to non-huge chain places. I guess people don't want to spend their restaurant nights eating in consuming shitty pizza.

Except for the weekly crappy meals for the kids, I'm doing my own cooking every night. Tonight is spicy Korean beef stir fried with shiitake, onions, and jalapeno served over rice.

[LawBeefaroni]

Domino's Pizza, who you'd expect to gain, also faces no sports which puts a crimp on sales. No school pizza parties, no birthday parties, no parties at all. More home cooking. But at the same time, huge uptick in deliveries. So they have no idea what it's going to look like.

From what I see in my 'hood, there's a push to support local business with the love going to non-huge chain places. I guess people don't want to spend their restaurant nights eating in consuming shitty pizza.

Except for the weekly crappy meals for the kids, I'm doing my own cooking every night. Tonight is spicy Korean beef stir fried with shiitake, onions, and jalapeno served over rice.

Not everyone lives in a metro Urban area, Jeff. Some places only have chains. Plus the numbers don't lie.



In other semi-related news, I just donated to 4 gofundmes for neighborhood restaurants and bars that are completely closed.

Our neighborhood org board approved $2K to the local food bank and up to $1500 in gift card purchases for local businesses (that we give away I think?). I don't like the idea of gift cards, it's more like a loan which is OK but if everyone buys them there will still be a point when a restaurant has reduced revenue. We also got an attorney who is willing to do CARES applications for local businesses on a pro bono basis.

[Jeff V]

Not everyone lives in a metro Urban area, Jeff. Some places only have chains. Plus the numbers don't lie.

Just making an observation. Those shitty places exist here and it seems neighbors have no problem patronizing them regularly, they just seem more focused on better things right now. They probably have fewer locations than you think servicing a food desert, which would account for their struggles.

[Kraken]

One hopes that many restaurants will survive on those federally guaranteed loans, especially the one that doesn't have to be repaid if it's used to maintain payroll. They aren't going to survive on takeout business; at best, that will keep a pulse going for a short while. I'm reading stories about people buying $1,000 gift certificates and giving to fundraisers to keep their favorite haunts alive. That's no way to save an industry.

We're getting takeout more often than normal, and choosing locally-owned restaurants, and tipping generously in the hope that it will help. At the same time, I'm painfully aware of the large number of restaurants that have just closed entirely. Maybe the chain outlets will come back; maybe not.

[malchior]

Different angle but at a geopolitical level one has to wonder if the Chinese state banks will take the opportunity to use lower valuations to make tactical takeover or major investment decisions. For example, Shell is valued right now at $140B down from almost $300B...a few weeks ago. Their revenue pre-oil price crash was $340B. That would be trouble but they can target some pretty attractive options in the US if they want to get some bargains.

[LawBeefaroni]

Initial jobless claims: 6.6 million. In a week.

That's 9.9M in two weeks.

A record 6.6 million Americans filed first-time jobless claims last week the Labor Department said Thursday, in a sign the sudden shutdown of a vast swath of U.S. commerce may be just starting to wreak havoc on the economy. That followed 3.3 million claims the prior week.

[malchior]

This was baked in a bit into expectation we heard pre-stimulus but seems a bit steeper. We just had another wave of shelter-at-home orders in some of the red states (e.g. Georgia) so next week will likely be another big week. Anecdotally, the restaurant industry in my area has essentially flat lined. Only the chains seem to be surviving this at this point.

[LawBeefaroni]

This was baked in a bit into expectation we heard pre-stimulus but seems a bit steeper. We just had another wave of shelter-at-home orders in some of the red states (e.g. Georgia) so next week will likely be another big week. Anecdotally, the restaurant industry in my area has essentially flat lined. Only the chains seem to be surviving this at this point.

Some worst case scenarios for April were 5M. Granted that was 10 days ago or so but we're double that.

[malchior]

This was baked in a bit into expectation we heard pre-stimulus but seems a bit steeper. We just had another wave of shelter-at-home orders in some of the red states (e.g. Georgia) so next week will likely be another big week. Anecdotally, the restaurant industry in my area has essentially flat lined. Only the chains seem to be surviving this at this point.

Some worst case scenarios for April were 5M. Granted that was 10 days ago or so but we're double that.

Yeah this is worse than the scenario that Mnuchin proposed pre-stimulus. I did see some of the big hedges had predicted something along these lines tbh (this is what I recall - I think Dalio @ Bridgewater in particular said something along these lines on CNBC). That is why the market might not tank today.

[LawBeefaroni]

This was baked in a bit into expectation we heard pre-stimulus but seems a bit steeper. We just had another wave of shelter-at-home orders in some of the red states (e.g. Georgia) so next week will likely be another big week. Anecdotally, the restaurant industry in my area has essentially flat lined. Only the chains seem to be surviving this at this point.

Some worst case scenarios for April were 5M. Granted that was 10 days ago or so but we're double that.

Yeah this is worse than the scenario that Mnuchin proposed pre-stimulus. I did see some of the big hedges had predicted something along these lines tbh (this is what I recall - I think Dalio @ Bridgewater in particular said something along these lines on CNBC). That is why the market might not tank today.

Dow was set for a ~+250 point open but with the news will go off roughly flat it looks like. +44 right now.

Wonder how many of these jobs aren't coming back. Is this the preamble for UBI?

[malchior]

All bets are off. I do think UBI remains an extreme long-shot. It completely clashes with our value system in the United States. Heck even though this healthcare system is terrible I don't even know if it changes coming out of it. Not as long as the United States remains configured as it is now.

[stessier]

Initial jobless claims: 6.6 million. In a week.

That's 9.9M in two weeks.

A record 6.6 million Americans filed first-time jobless claims last week the Labor Department said Thursday, in a sign the sudden shutdown of a vast swath of U.S. commerce may be just starting to wreak havoc on the economy. That followed 3.3 million claims the prior week.

Any idea what that is on a percentage basis? We were at 3.5% in February - is this closer to 7% now?

[LawBeefaroni]

Initial jobless claims: 6.6 million. In a week.

That's 9.9M in two weeks.

A record 6.6 million Americans filed first-time jobless claims last week the Labor Department said Thursday, in a sign the sudden shutdown of a vast swath of U.S. commerce may be just starting to wreak havoc on the economy. That followed 3.3 million claims the prior week.

Any idea what that is on a percentage basis? We were at 3.5% in February - is this closer to 7% now?

It was 5.8M in Feb at 3.5%. We have added 10M in the last two weeks so...15.8M at least. 10%?

[malchior]

Higher. My back of napkin math:

March 6th numbers: 5787 Unemployed / 158759 Employed = 3.5% rate

April 2nd Estimate: 15800 Unemployed / 148759 Employed = 9.6% rate (and I'm not growing the population so I'd guess ~9.7%)

[stessier]

Thanks - all I could find was Feb at 3.5% and not how many people that actually counted.

[RunningMn9]

That's 9.9M in two weeks.

Am I reading that right? More in the last two weeks than the entire 2008/2009 crisis?