The Nation's Financial Condition

[a fan]

If you watched the debate last night, your $2,000 for someone like me or you or many out here will have to be paid back somewhere, somehow in taxes.

Yes. So what? What do you think all those food workers in Telluride are supposed to live on now that their jobs are gone?

$2000 per person is $300 Billion. That's a big fat nothing.

[Typical Lax Dad]

If you watched the debate last night, your $2,000 for someone like me or you or many out here will have to be paid back somewhere, somehow in taxes.

Yes. So what? What do you think all those food workers in Telluride are supposed to live on now that their jobs are gone?

$2000 per person is $300 Billion. That's a big fat nothing.

Let private industry resolve it.

[LandM]

aFan,
We have had the strikes where restaurants were not open, Immigration day. Been there and done that. Unfazed. We have contributed cash to low income housing....it is a tough place for even a $15 an hour wages. We are accosted by locals who know we only spend 2 months of the year there but we pay our taxes and help the local community anonymously. You can say what you want but eventually people are going to start saying - no more. Can you honestly tell me or others how Bernie Sanders tax plan will work. Yes the roads in Europe are great but at what cost? My mom passed two months ago because my sister made a tough decision not keep her going saving the taxpayer money. Unfortunately tough decisions need to be made and that includes mom's and dad's.

[LandM]

TLD,
I am a capitalist with a big heart. So your post will not work on me nor the calls from Bernie people asking for a donation. You have to move on. My wife went through cancer, all I was told as the caregiver was to keep her moving, get her off the couch and keep her moving. Maybe we should adopt that as a country - keep moving.

[a fan]

You can say what you want but eventually people are going to start saying - no more.

When you say people "are going to say no more"-------airlines are asking for $50Billion bailout. Wanna bet they get it....and my business gets nothing?

And other multinationals will get taxpayer bailouts, just like they did in 08. And small businesses and their employees? Nothing. We'll get nothing.

You can bank on it....


https://www.wsj.com/articles/airlines-s ... Ghh5irflWc

[Typical Lax Dad]

TLD,
I am a capitalist with a big heart. So your post will not work on me nor the calls from Bernie people asking for a donation. You have to move on. My wife went through cancer, all I was told as the caregiver was to keep her moving, get her off the couch and keep her moving. Maybe we should adopt that as a country - keep moving.

Not meant for you. Hope all is well. Was looking forward to seeing an AFA game. Maybe next year.
BTW, I have 0 interest in Bernie unless he is the democratic nominee and if so, I am voting for him. I am pretty sure, you probably know more about him than I do.

[holmes435]

You can say what you want but eventually people are going to start saying - no more.

When you say people "are going to say no more"-------airlines are asking for $50Billion bailout. Wanna bet they get it....and my business gets nothing?

And other multinationals will get taxpayer bailouts, just like they did in 08. And small businesses and their employees? Nothing. We'll get nothing.

You can bank on it....


https://www.wsj.com/articles/airlines-s ... Ghh5irflWc

We may also get the privilege of paying 14 days of sick leave out of our own pockets. Luckily this only affects businesses with 1 to 500 employees as the administration didn't want to hurt big businesses they've been meeting with in secret according to 6ft. So they carved out that loophole. But don't worry, if you have 1-50 employees, you may get a tax credit, most likely a year from now.... maybe. If you can stay in business that long.

I don't know too many businesses in the 1-50 range that can afford to do that and stay open along with a two week or more shut down.

You know what LandM.... NO MORE. I'm tired of Amazon and Oil Companies and other big businesses getting huge subsidies and tax breaks and loopholes and not paying a dime in taxes. I'm tired of lobbyists and money in politics. I'm tired of the BS and hypocrisy that infects Washington, especially on the R side as they are the ones that always say they are looking out for my small business. I'm tired of all the money from the middle and working class trickling upwards.

In the past two decades, Republican policies have been much, much worse for my business and family and country than D's.

[Farfromgeneva]

I am disgusted by the airline industry ask of $50Bn. Aggressive even for them. Mostly having continued to mismanage their business since forever.

[LandM]

aFan,
Lived through the dotcom bust and the credit crisis. Somehow we survived both. As a software company focused on financial institutions in the credit crisis, we paid our bills and those financial folks did not. We had almost 160 employees and I can remember my wife and I dropping off Christmas presents and many a shot to folks we knew were not able to do so. Somehow, we have been fortunate, I credit my wife. Unfortunately, you will not get a TARP bail-out and you will not get a savior coming to the rescue......I get it kinda but not really as the small business person keeps the economy humming not the big guys IMHO. I guess all I can offer is good wishes and times will change and you will be happier at the end of the day.....just keep moving. We are stopping by AFA to see and speak to my best friend who is 6 feet under and then rub plaques of two other friends on the chapel wall then heading to Denver.....hope to meet you.

Holmes, I agree with you and farfromgeneva (interesting that I was just in Geneva yesterday). The little guy gets squeezed and the big boys get a hall pass. But as I thought about it, I would rather have the freedom running my own business then working for the man. My dad never made it to one of my college football games but because of my freedom, I made it to all of my son's college lax games. There are trade-off's. You are correct though, no one should get a hall pass IMHO.

TLD, I hope that you can make the PSU/OSU game.......just need to know if you are coming. We will buy the tix, you pay for the bed and breakfast - $80 a night is cheap and it is nice and well taken care of.....cows wake you up in the morning:D I do feel especially bad for Academy athletes as there is no 5th or 6th year.

[CU88]

I am disgusted by the airline industry ask of $50Bn. Aggressive even for them. Mostly having continued to mismanage their business since forever.

Has anyone seen the justification for $50B from the "airlines"? What could that possibly cover?

[MDlaxfan76]

Market responding positively to the liquidity actions the Fed requested and to the expectation of concrete stimulus actions, loan guarantees, direct payments right away to individuals.

I think they're likely to be doing too little, nevertheless, despite their claims of "going big", but it's a first step.
And that's good.

On the medical side, they still look like deer in the head lights...everything is "never been done before" and "we're doing an incredible job"...

[Farfromgeneva]

The got $6Bn after 9/11 so, ya know, inflation and stuff...never mind that it’s 3x 2018 domestic airline ore tax profitability. (https://www.bts.gov/newsroom/2018-annua ... ncial-data)

[DocBarrister]

I am disgusted by the airline industry ask of $50Bn. Aggressive even for them. Mostly having continued to mismanage their business since forever.

A number of airlines, like American Airlines, used their ample profits in recent years for expensive stock buy back programs. Those programs in no way invested in the companies’ future, nor did they save for a rainy day. Instead, the stock buy back programs raised stock prices leading to ... you guessed it ... higher executive compensation.

Even worse, American Airlines actually ran up $30 billion in debt while earning record profits, since the profits were being used to buy back stock and increase executive compensation rather than paying for much needed capital improvements and other operational costs.

In other words, airline executives have been stealing from the future to line their own pockets.

Give them $50 billion and let’s see how much goes into stock buy back programs. Even if they don’t use the money directly for such programs, money is fungible and such a bail out would free up other funds for such purposes.

That doesn’t mean I oppose a bail out. Just means the government should decide how it’s spent.

DocBarrister

[DocBarrister]

Market responding positively to the liquidity actions the Fed requested and to the expectation of concrete stimulus actions, loan guarantees, direct payments right away to individuals.

I think they're likely to be doing too little, nevertheless, despite their claims of "going big", but it's a first step.
And that's good.

On the medical side, they still look like deer in the head lights...everything is "never been done before" and "we're doing an incredible job"...

Reading multiple estimates that up to one million American jobs will be lost in the next month.

Just take Disney. They are still paying “cast members” employed by the parks, but how long can even a behemoth like Disney keep that up with the parks closed?

Trump and Congress don’t have much time.

DocBarrister

[a fan]

I guess all I can offer is good wishes and times will change and you will be happier at the end of the day.....just keep moving. We are stopping by AFA to see and speak to my best friend who is 6 feet under and then rub plaques of two other friends on the chapel wall then heading to Denver.....hope to meet you.

I appreciate the good wishes, thank you. As for visiting? We're closed, per Governor's order. No can do.

One piece of unasked for advice: when Trump comest to terms with what's going on, he's going to shut down all travel, and seal State borders for non-essential travel. It's not a matter of if....it's a matter of when. So keep that in mind as you are traveling.

[a fan]

Reading multiple estimates that up to one million American jobs will be lost in the next month.

We're WAY past that already. All those shut down food workers?

It's simple. All Trump has to do is drop $2,000 into every taxpayer account. From there, he has to give every mortgage a mortgage holiday for 3 months.....and the full force of the government has to prop up those banks.

That's it. Full stop. He does that? The economy can handle being shut down for two months. He doesn't? The snowballing damage will wreck the economy. Simple.

BTW, if he does that? The airlines won't need a bailout.

[a fan]

Mnuchin FINALLY brings up direct checks to people.

Optimism. Hope it's north of $1,000. It would have a HUGE effect on the economy.

[seacoaster]

A little bit on the proposed airline bailout; note the last little paragraph:

https://www.nytimes.com/2020/03/16/opin ... ilout.html

"For American Airlines, the nation’s largest airline, the mid to late 2010s were what the Bible calls “years of plenty.”

In 2014, having reduced competition through mergers and raised billions of dollars in new baggage-fee revenue, American began reaching stunning levels of financial success. In 2015, it posted a $7.6 billion profit — compared, for example, to profits of about $500 million in 2007 and less than $250 million in 2006. It would continue to earn billions in profit annually for the rest of the decade. “I don’t think we’re ever going to lose money again,” the company’s chief executive, Doug Parker, said in 2017.

There are plenty of things American could have done with all that money. It could have stored up its cash reserves for a future crisis, knowing that airlines regularly cycle through booms and busts. It might have tried to decisively settle its continuing contract disputes with pilots, flight attendants and mechanics. It might have invested heavily in better service quality to try to repair its longstanding reputation as the worst of the major carriers.

Instead, American blew most of its cash on a stock buyback spree. From 2014 to 2020, in an attempt to increase its earnings per share, American spent more than $15 billion buying back its own stock. It managed, despite the risk of the proverbial rainy day, to shrink its cash reserves. At the same time it was blowing cash on buybacks, American also began to borrow heavily to finance the purchase of new planes and the retrofitting of old planes to pack in more seats. As early as 2017 analysts warned of a risk of default should the economy deteriorate, but American kept borrowing. It has now accumulated a debt of nearly $30 billion, nearly five times the company’s current market value.

At no time during its years of plenty did American improve how it treats its customers. Change fees went up to $200 for domestic flights and to $750 for international. Its widely despised baggage fees were hiked to $30 and $40 for first and second bags. These higher fees yielded billions of dollars, yet did not help the airline improve its on-time arrivals, reduce tarmac delays or prevent involuntary bumping. Instead, American’s main “innovations” were the removal of screens from its planes, the reduction of bathroom and seat sizes and the introduction of a “basic economy” class that initially included a ban on carry-on luggage.

In the wake of the coronavirus outbreak, which is wreaking havoc on the airline industry, American Airlines has not yet asked for a bailout — at least not in so many words. Yet after a recent meeting with airline leadership, Larry Kudlow, the director of the National Economic Council, said that “certain sectors of the economy, airlines coming to mind” might require assistance. Treasury Secretary Steven Mnuchin said Wednesday that the airlines, including American, would be “on the top of the list” for federal loan relief.

As the government considers what we, the public, should do for the airlines, we should ask, Just what have they done for us?

The United States economy needs an airline industry to function. The industry is in that sense not a “normal” industry, but rather what was once called a common carrier or a public utility: a critical infrastructure on which the rest of the economy relies. The major airlines know that unlike a local restaurant, they will never be allowed, collectively, to fail completely. In practice, the public has subsidized the industry by providing de facto insurance against hard times in the form of bailouts or merger approvals. And now here we go again.

We cannot permit American and other airlines to use federal assistance, whether labeled a bailout or not, to weather the coronavirus crisis and then return to business as usual. Before providing any loan relief, tax breaks or cash transfers, we must demand that the airlines change how they treat their customers and employees and make basic changes in industry ownership structure.

Beginning with passengers, change fees should be capped at $50 and baggage fees tied to some ratio of costs. The change fees don’t just irritate; they are also a drag on the broader economy, making the transport system less flexible and discouraging what would otherwise be efficient changes to travel plans. We should also put an end to the airlines’ pursuit of smaller and smaller seats, which are not only uncomfortable and even physically harmful, but also foster in-flight rage and make the job of flight attendants nigh unbearable. Finally, we have allowed too much common ownership, permitting large shareholders to take a stake in each of the major airlines, creating incentives to collude instead of compete.

The airlines will argue that their ownership structure, cramped seats, high fees and other forms of customer suffering are necessary to keep prices lower. But after the last decade’s mergers, no one should take that argument seriously. As any economist will tell you, in a market with reduced competition, and common ownership, there is limited pressure to reduce prices. Instead, as we’ve seen, the major airlines charge what they can get away with and spend the profit on stock buybacks and other self-serving enterprises.

The question of what the public should demand from an airline bailout raises questions that transcend the business of flying. The next several weeks will leave behind many economic victims, including nearly every provider of in-person services. Many small retailers, restaurants and other businesses, like caterers or fitness instructors, face grim prospects. Yet it is the economy’s big players, like banks and airlines, that are the best at asking for (and getting) government assistance.

During the last economic crisis, we largely let individuals suffer while helping out the big guys, leaving behind deep resentments that still fester. This time around we should start from the bottom instead of the top."

[Trinity]

The giant cruise companies incorporate overseas to dodge US taxes, flag vessels overseas to avoid US taxes and laws, and pollute without offset. Why should we bail them out?

Senator Sheldon Whitehouse. RI

[Farfromgeneva]

Excepting for when a true direct straight line to national security or common physical infrastructure why should a democratic government bail anyone out?