We are so screwed!

[meiroy]

As at 9:36 pm, Dow Jones futures are down 1,045 points. Trump would seem to be trying to beat his record last week of 2,000 points in 20 minutes.

 

 

I think it's time we stop saying Trump this and Trump that.  It should be "the GOP" or the "Trump-led GOP".  This person could not be in this position or remain in this position without the GOP support, his circle of enablers. 

[tede02]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

[TwoCitiesCapital]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

I dunno. I don't need the extra money. But people working at the restaurants a few blocks away might along with the restaurant owner who needs to pay the mortgage.

 

Some sort of immediate income assistance to part time workers and small business owners should be the critical concern. Us salaried folks at large scale employers probably don't have much to worry about yet in that I suspect I'll continue to draw a salary while working from home.

[meiroy]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

I dunno. I don't need the extra money. But people working at the restaurants a few blocks away might along with the restaurant owner who needs to pay the mortgage.

 

Some sort of immediate income assistance to part time workers and small business owners should be the critical concern. Us salaried folks at large scale employers probably don't have much to worry about yet in that I suspect I'll continue to draw a salary while working from home.

 

You forgot all those unemployed and the many that will soon be unemployed.  At this point, it really doesn't matter if those with means will get the extra money.  Just do it.

 

Question is: can you see the GOP do it?  Will they do anything other than corporations' QE?

 

[tede02]

I don't need the money either. But we don't have time scew around with the administration of figuring out who is in need vs. who isn't. Get the money in the public's hands quickly.

[james22]

Jaysis, could we leave the politics out of this for the moment? There'll be time for that later (and in another thread).

 

These are difficult times and there are no easy answers. Is it really impossible to assume Trump and those around him are doing the best they can? You can explain to me later how President Biden or Sanders would have been more successful.

[no_free_lunch]

Jaysis, could we leave the politics out of this for the moment? There'll be time for that later (and in another thread).

 

These are difficult times and there are no easy answers. Is it really impossible to assume Trump and those around him are doing the best they can? You can explain to me later how President Biden or Sanders would have been more successful.

 

I agree. If you want to see the impact of left leaning governments look at Canada and what did Canada really do differently?  They didn't stop travel.  Everything is being done at municipal and provincial level. Just last week Trudeau was pompously lecturing about knee jerk reactions.  Finally now, the whole country is going into lockdown but still all handled provincially . How did we go from knee jerk to this.

 

The correct response would have been to lock down the borders much earlier. However the left was too preoccupied with their image to take such draconian measures and the right dismissed it.  Many mistakes on both sides.

[opihiman2]

Blood bath tomorrow.  Circuit breakers will trip right at the open.  All major banks are now suspending stock buy backs making people question whether they have liquidity issues tied to the repo market.  Hashtag #GFC2 is now trending.  Reserve ratios have been nearly eliminated at all banks, and there are people reporting that there are mini run on the banks by the public -- sounds insane, but now I'm even paranoid if the FDIC will be able to cover my accounts at the bank.  Personally, I know some pretty well off entrepreneurs whose business demand have completely just died off even before the coronavirus.  They are now wondering if they are going to make ends meet by next year.

 

Let's put this all into perspective.  Yield curve inverted meaningfully yoy for a full 2 quarters.  Monetary supply moving averages have also contracted.  World trade was contracting last year, and corporate profits have flattened and were heading for contraction even before this virus hit.  Repo markets were going hay wire in 2018, and no one including the Fed knew why.  This should have been the first clue that there was a lot of financial stress in the system.  We all know the story about corporate debt issuance for stock buy backs, and also how poor the credit quality of a lot of mis-rated corporate BBB's were even on just leverage ratios alone.  What does this all mean?  We were heading for a recession even without the virus.  The Fed thought they could get in front of this, but then we had two black swan type events, and now they are truly fucked. 

 

What I think we're heading for is what should have happened in 2008 without Fed intervention.  Indices are likely to close down past 50%.  I'm glad I went to cash equivalents in 2018. 

[mcliu]

Blood bath tomorrow.  Circuit breakers will trip right at the open.  All major banks are now suspending stock buy backs making people question whether they have liquidity issues tied to the repo market.  Hashtag #GFC2 is now trending.  Reserve ratios have been nearly eliminated at all banks, and there are people reporting that there are mini run on the banks by the public -- sounds insane, but now I'm even paranoid if the FDIC will be able to cover my accounts at the bank.  Personally, I know some pretty well off entrepreneurs whose business demand have completely just died off even before the coronavirus.  They are now wondering if they are going to make ends meet by next year.

 

Let's put this all into perspective.  Yield curve inverted meaningfully yoy for a full 2 quarters.  Monetary supply moving averages have also contracted.  World trade was contracting last year, and corporate profits have flattened and were heading for contraction even before this virus hit.  Repo markets were going hay wire in 2018, and no one including the Fed knew why.  This should have been the first clue that there was a lot of financial stress in the system.  We all know the story about corporate debt issuance for stock buy backs, and also how poor the credit quality of a lot of mis-rated corporate BBB's were even on just leverage ratios alone.  What does this all mean?  We were heading for a recession even without the virus.  The Fed thought they could get in front of this, but then we had two black swan type events, and now they are truly fucked. 

 

What I think we're heading for is what should have happened in 2008 without Fed intervention.  Indices are likely to close down past 50%.  I'm glad I went to cash equivalents in 2018.

 

Are you saying it's great depression time?  :o

[jeffsreng]

Mini crashes lead to a BIG crash.

[meiroy]

Jaysis, could we leave the politics out of this for the moment? There'll be time for that later (and in another thread).

 

These are difficult times and there are no easy answers. Is it really impossible to assume Trump and those around him are doing the best they can? You can explain to me later how President Biden or Sanders would have been more successful.

 

Why is it necessary to assume anything when the facts are clearly out there?  I'm also seeing people assuming all sorts of things about the corona-19 without looking at the data.

 

 

[opihiman2]

Interesting.  I found this article dated Oct 19, 2019:

 

Jim Murren won’t flat-out predict an economic downturn is about to hit the U.S., but the chairman and CEO of MGM Resorts International said the signs are there and he isn’t taking any chances.

 

That is one of many reasons the company agreed last Tuesday to sell Circus Circus Las Vegas to rival casino operator Phil Ruffin for $825 million and struck a sale-leaseback deal for Bellagio with Blackstone Real Estate Income Trust for $4.25 billion.

 

The net proceeds from the transactions – roughly $4.3 billion after taxes – goes directly to MGM’s balance sheet, allowing the casino giant to reduce a portion of its $15 billion in long-term debt and allow the company to focus on “high growth potential” opportunities.

 

“These transactions make us far less vulnerable in any global economic cycle,” Murren told The Nevada Independent a day after the deals were announced. “We’re late in that economic cycle and we need to be prepared for the unforeseen.”

 

Looks like they were seeing an economic slowdown late last year.  Seems like we've got three major shocks happening: late cycle economic slowdown (possible recession), pandemic, and oil price war.  All three hitting at the same time to make for a horrendous recession.

 

Hearing from people in LV that a lot of people are getting laid off.  Especially now that LV is shutting down all hotels / casinos.

[james22]

What I think we're heading for is what should have happened in 2008 without Fed intervention.  Indices are likely to close down past 50%.

 

Very possibly.

 

I'm thinking I've probably been too early nibbling.

[DRValue]

The Fed is scared because liquidity is drying up, as banks are scared to lend to one another.

 

They need to get banks to lend, but banks are not because they don't want to be holding the bag during a bank failure.  That's why repo and swaps markets are going crazy.

 

The Fed is firing their last bullet because THIS IS ALREADY A FINANCIAL CRISIS.  Corporate debt markets have already frozen up, and new issues are barely getting priced, and things are only getting worse.

 

We are looking at the biggest financial crisis in our lifetimes, and it will make 2008 seem like a mild recession.

 

At this rate I'm wondering what's the probability the markets will be shut for a while.  Politically I can see Trump wanting to limit the damage, and reopen in 6-8 week when things are on the upswing.  I don't know the potential downstream impact would be though when trillions of dollars are tied up and can't be used.

 

I thought about the option and need for a market closure for a few weeks, perhaps even until the crisis is over.

 

There are no catalysts until significant progress is made. Relief rallies on lower cases maybe. But this could go on for months.

 

What happens to people drawing on their 401k? Or just in general, how do you deprive people of their money? Just trying to think of what that would actually look like.

It won't happen. Markets were open throughout the GFC. It would be the dumbest move ever. For weeks? It's insanity. The result of that would be a de-rating of EVERY single public company.

 

Public markets exist to  provide liquidity. That's all. You can't decide to allow liquidity only when the markets are going up and cut it off when the markets are going down.

 

Moreover it's not even gonna matter. Derivative markets are gonna stay open and they're gonna trade. They're gonna create derivatives as markers for stocks and they're gonna fiddle with the settlement to make the whole thing work. You'll be surprised how quickly it'll happen. Of course the spreads are gonna blow up.

 

To castanza's point, "regular" people with 401Ks and such will not be able to take part in the party because they will either not know what to do or won't be allowed to do it due to the nature of the instruments. They'll only have access to their money when the "regular" markets open and they're portfolio is worth significantly less.

 

Nice work Sherlock!

 

What I was really pointing to is that I think the only way to stop equity values imploding is a market close.

If they can't do that for whatever reason, market values go one way in a total economic shutdown. The fed won't work.

[stahleyp]

The Fed is scared because liquidity is drying up, as banks are scared to lend to one another.

 

They need to get banks to lend, but banks are not because they don't want to be holding the bag during a bank failure.  That's why repo and swaps markets are going crazy.

 

The Fed is firing their last bullet because THIS IS ALREADY A FINANCIAL CRISIS.  Corporate debt markets have already frozen up, and new issues are barely getting priced, and things are only getting worse.

 

We are looking at the biggest financial crisis in our lifetimes, and it will make 2008 seem like a mild recession.

 

At this rate I'm wondering what's the probability the markets will be shut for a while.  Politically I can see Trump wanting to limit the damage, and reopen in 6-8 week when things are on the upswing.  I don't know the potential downstream impact would be though when trillions of dollars are tied up and can't be used.

 

I thought about the option and need for a market closure for a few weeks, perhaps even until the crisis is over.

 

There are no catalysts until significant progress is made. Relief rallies on lower cases maybe. But this could go on for months.

 

What happens to people drawing on their 401k? Or just in general, how do you deprive people of their money? Just trying to think of what that would actually look like.

It won't happen. Markets were open throughout the GFC. It would be the dumbest move ever. For weeks? It's insanity. The result of that would be a de-rating of EVERY single public company.

 

Public markets exist to  provide liquidity. That's all. You can't decide to allow liquidity only when the markets are going up and cut it off when the markets are going down.

 

Moreover it's not even gonna matter. Derivative markets are gonna stay open and they're gonna trade. They're gonna create derivatives as markers for stocks and they're gonna fiddle with the settlement to make the whole thing work. You'll be surprised how quickly it'll happen. Of course the spreads are gonna blow up.

 

To castanza's point, "regular" people with 401Ks and such will not be able to take part in the party because they will either not know what to do or won't be allowed to do it due to the nature of the instruments. They'll only have access to their money when the "regular" markets open and they're portfolio is worth significantly less.

 

Nice work Sherlock!

 

What I was really pointing to is that I think the only way to stop equity values imploding is a market close.

If they can't do that for whatever reason, market values go one way in a total economic shutdown. The fed won't work.

 

That's the way it should be. Shareholders are taking chances and should bear those responsibilities.

[Castanza]

The Fed is scared because liquidity is drying up, as banks are scared to lend to one another.

 

They need to get banks to lend, but banks are not because they don't want to be holding the bag during a bank failure.  That's why repo and swaps markets are going crazy.

 

The Fed is firing their last bullet because THIS IS ALREADY A FINANCIAL CRISIS.  Corporate debt markets have already frozen up, and new issues are barely getting priced, and things are only getting worse.

 

We are looking at the biggest financial crisis in our lifetimes, and it will make 2008 seem like a mild recession.

 

At this rate I'm wondering what's the probability the markets will be shut for a while.  Politically I can see Trump wanting to limit the damage, and reopen in 6-8 week when things are on the upswing.  I don't know the potential downstream impact would be though when trillions of dollars are tied up and can't be used.

 

I thought about the option and need for a market closure for a few weeks, perhaps even until the crisis is over.

 

There are no catalysts until significant progress is made. Relief rallies on lower cases maybe. But this could go on for months.

 

What happens to people drawing on their 401k? Or just in general, how do you deprive people of their money? Just trying to think of what that would actually look like.

It won't happen. Markets were open throughout the GFC. It would be the dumbest move ever. For weeks? It's insanity. The result of that would be a de-rating of EVERY single public company.

 

Public markets exist to  provide liquidity. That's all. You can't decide to allow liquidity only when the markets are going up and cut it off when the markets are going down.

 

Moreover it's not even gonna matter. Derivative markets are gonna stay open and they're gonna trade. They're gonna create derivatives as markers for stocks and they're gonna fiddle with the settlement to make the whole thing work. You'll be surprised how quickly it'll happen. Of course the spreads are gonna blow up.

 

To castanza's point, "regular" people with 401Ks and such will not be able to take part in the party because they will either not know what to do or won't be allowed to do it due to the nature of the instruments. They'll only have access to their money when the "regular" markets open and they're portfolio is worth significantly less.

 

Nice work Sherlock!

 

What I was really pointing to is that I think the only way to stop equity values imploding is a market close.

If they can't do that for whatever reason, market values go one way in a total economic shutdown. The fed won't work.

 

The fed has no business (imo) controlling equity values. If I'm holding company A and the market gets shut down for one month. What happens to my share value when that company goes to zero when the market is shut down? It becomes way to messy when it's done for any extended period of time. I think they are intending to go all digital as they mentioned it last week.

[SharperDingaan]

As at 9:36 pm, Dow Jones futures are down 1,045 points. Trump would seem to be trying to beat his record last week of 2,000 points in 20 minutes.

 

 

I think it's time we stop saying Trump this and Trump that.  It should be "the GOP" or the "Trump-led GOP".  This person could not be in this position or remain in this position without the GOP support, his circle of enablers.

 

Agreed, but some passing observations first.

 

This is a time when leadership carries the day, and the US doesn't have any.

In the American system the star of the show carries the crown, and the thorns; there are no exceptions. The president hires to fire, the GOP hires the president to fire. We 'the people' hire/fire the GOP, once an election cycle, just the way the founding fathers planned it.

 

The virus will pass, but the economic party of the last decade, is now over. We aren't going to be doing monetary policy, or globalization, the same way anymore. Additionally, a great many people are going to lose their livelihoods, and be in need of a 'new deal'. It was the peoples 'cries for change' that both drove Brexit, and brought Trump to power; and that change is now here.

 

As at 9:44 am the Dow Jones is down 2,250 points, has already tripped a circuit breaker, and may well trip a second by end-of-day.

May we all survive the coming weeks and months.

 

SD

 

 

 

[minten]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

actually, not a bad idea. is there any talk of something like this realistically being implemented right now in the US?

[Castanza]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

I agree, give out a 1-1.5k per month loan at zero percent interest with a 3 year re-payment plan of some type.

[stahleyp]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

I agree, give out a 1-1.5k per month loan at zero percent interest with a 3 year re-payment plan of some type.

 

Or we could let people learn their lessons from overspending and to save?

[Castanza]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

I agree, give out a 1-1.5k per month loan at zero percent interest with a 3 year re-payment plan of some type.

 

Or we could let people learn their lessons from overspending and to save?

 

Paul you know as well that I am generally not in favor of bailouts...however I am also not against some type of safety net for a unique situation like this. The fact is if people are not allowed to go out to their job then there's going to be a lot of fallout.  I'm fine with it as long as there are stipulations on what you can purchase and that it has to be paid back in full. I'd rather see corporations go under than your average Joe contractor who had his jobs canceled for the next 6 months. If the government is going to cause a shutdown and put peoples livelihood at risk then they should also provide a temporary (loan) safety net.

[Dalal.Holdings]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

I agree, give out a 1-1.5k per month loan at zero percent interest with a 3 year re-payment plan of some type.

 

Or we could let people learn their lessons from overspending and to save?

 

Or we could all model ourselves after our commander in chief and never take responsibility for any of our bad decisions in perpetuity. Oops, threw in some politics but can’t help it when we blame ordinary folks for this crisis. As after 2008, the bailouts will flow to the non-ordinary folks while the little guy gets rekt thanks to mentality like this.

[stahleyp]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

I agree, give out a 1-1.5k per month loan at zero percent interest with a 3 year re-payment plan of some type.

 

Or we could let people learn their lessons from overspending and to save?

 

Or we could all model ourselves after our commander in chief and never take responsibility for any of our bad decisions in perpetuity. Oops, threw in some politics but can’t help it when we blame ordinary folks for this crisis. As after 2008, the bailouts will flow to the non-ordinary folks while the little guy gets rekt thanks to mentality like this.

 

Oh, I also don't think the 2008 bailouts should have happened either. I think a big reason that Trump was elected is because of this stuff. I will say that if bailouts are going to happen, then they should happen for ordinary folks before corporations.

[stahleyp]

On the fiscal side, it seems like they need to figure out how to put cash directly into people's pockets. An infrastructure deal isn't going to do anything in this situation. If people can't go to work and pay their bills, that is going to cause a financial crisis. I looked up how many people in the US are 18+. The number is 210 million. Thought experiment, give every American adult $1,000 per month for 3-months to offset fixed expenses. Price-tag, $210 billion per month, or $630 billion total. Given the circumstances, that dollar figure seems very reasonable. The stimulus package passed in 2009 was around $800 billion.

 

P.S. No, I'm not advocating Andrew Yang's UBI.

 

I agree, give out a 1-1.5k per month loan at zero percent interest with a 3 year re-payment plan of some type.

 

Or we could let people learn their lessons from overspending and to save?

 

Paul you know as well that I am generally not in favor of bailouts...however I am also not against some type of safety net for a unique situation like this. The fact is if people are not allowed to go out to their job then there's going to be a lot of fallout.  I'm fine with it as long as there are stipulations on what you can purchase and that it has to be paid back in full. I'd rather see corporations go under than your average Joe contractor who had his jobs canceled for the next 6 months. If the government is going to cause a shutdown and put peoples livelihood at risk then they should also provide a temporary (loan) safety net.

 

No. People are supposed to have emergency funds. You should not count on the government for bailouts - for individuals or businesses.

[minten]

No. People are supposed to have emergency funds. You should not count on the government for bailouts - for individuals or businesses.

 

you think taking the moral high road here (which, one might argue, is a bit harsh on someone with a temp job on minimum wages that now got sacked) is more important than saving the economy? 

maybe i'm being too pragmatic, but if it's ultimately cheaper to give a one-time hand-out so everything around us doesn't crash and burn, then i'll gladly drop my principles and i'm all for it.