
Don’t bail out the cruise industry - nobita
https://www.theverge.com/2020/3/23/21187076/cruise-line-industry-bailout-trump-coronavirus-us-companies-tax
======
unwind
I'm not from the US, but I don't even understand the basic premise.

If these companies avoid paying taxes by not being registered/incorporated in
the US, how could they possibly be eligible for help from the US government?

That just seems like a contradiction, like a huge case of having your cake and
eating it.

~~~
jjeaff
Carnival Cruises is headquartered in Miami. They register their ships in other
countries for various reasons. One of which is taxes. But the company itself
is based in the US.

~~~
bradleyjg
The pay no taxes.

 _Carnival Corp and Norwegian both posted negative income tax expenses — that
is, they received more in refunds or deductions than they paid or set aside
for taxes — with Carnival reporting an income tax expense of $71 million and
Norwegian reporting an $18.9 million tax benefit._

They don’t contribute to the public fisc in good times, they should have no
call on it when times are tough.

~~~
jjeaff
So like Amazon? Have they never paid taxes? Because that quote seems to be
referring to a single year?

~~~
deelowe
They pay a ton income tax and sales tax.

~~~
93po
What do they pay sales tax on that makes any material difference? And what's
their income tax as a percentage of revenue?

------
edejong
The cruise industry is one of the most polluting and damaging industries in
the world. It ruins cities worldwide. Their ships are petri-dishes for
disease, spreading it directly into our vital cities. They are blocking
perfect vistas of the sea. They are ruining local sea life and are spreading
non-native species. Their exhaust fumes are extremely detrimental to local air
quality in cities. The swarms of tourists are detrimental to local hotels and
restaurants, since the swarms only buy souvenirs but lack incentive to spend
big money on dining.

And all of that without paying taxes.

Let them go bust. Almost nobody is missing them.

~~~
kolleykibber
To list a few positives.

Europe maybe not, but places like Honduras would be worse off without them.

The industry and shipyards are advancing technology in ways that other
industries do not. New ships use LNG, batteries and renewables. A carbon
neutral cruise ship is not too far away.

The intensive childcare offered allows parents who cannot otherwise get such
services to relax.

Pixar's Wall-e was prescient in that most people would choose to live this
way.

The demand for cruises is not going to go away.

~~~
bradleyjg
> The demand for cruises is not going to go away.

In that case why the need for a bailout? If they are viable businesses either
as is or after reorganization in bankruptcy, then what’s the issue that needs
solving by the government? That the very rich owners and lenders lost money
and wish they hadn’t?

~~~
ftvy
You could say the same thing about airlines, but no one is arguing about
whether airlines are a necessary component of the economy.

I don't support a bailout for cruise lines, but I also don't support a bailout
for airlines or any industry.

This pandemic crisis is being exploited on all fronts, and the first thing
that everyone is going for is money. There is a lot of FUD being spread around
as cause to bailout special interests, and that's a short term solution for a
long term problem. It will only make things worse and more difficult in the
end to correct the current problems at hand.

The focus shouldn't be on where to be spending money right now. The focus
should be on developing proper procedures that at best prevents the next
pandemic or at worst controls and minimizes its effect.

~~~
fpoling
Like a saying, don't bail out corporations so shareholders learn. Bail out
people so they can can quickly start new businesses.

~~~
mschuster91
> Like a saying, don't bail out corporations so shareholders learn.

I agree with you for self-inflicted problems (such as the financial crisis, or
a lack of general funds).

Requiring all corporations to hold enough cash for 6 months of runway with 0
income however? That's an extreme requirement on which most if not all
companies would fail.

~~~
bradleyjg
That’s not necessarily the case. They’d have to either have that cash on hand
_or_ be able to raise it in the debt or equity markets. If these are long term
viable businesses, I don’t see why they shouldn’t be able to do just that.
Doesn’t seem like any are trying because they’d rather get a government
handout.

Fair weather capitalists.

~~~
mschuster91
> or be able to raise it in the debt or equity markets

The debt/equity markets are beyond fucked at the moment. Relying on them is
what led the financial industry to the 2008 crisis and it certainly won't be a
good idea to rely on them in future pandemics.

> Fair weather capitalists.

The entire point of governments in a capitalist system is to deal with stuff
that is too big for companies and individual people to handle - which a
pandemic certainly is.

~~~
bradleyjg
The markets are liquid, the government is making sure of that. They might not
have the pricing that companies think they deserve, but such is life.

------
ummwhat
Better idea. They want a bailout? Sure. Turn all your ships to hospital ships
for the next year. You won't miss them anyway.

One of these ships is basically a 10 floor high city block that can sustain
itself off grid for over two weeks. Surely we have a good use for that.

~~~
ransom1538
"Turn all your ships to hospital ships"

Dear God no. Please don't create a covid19 death ship. Covid19 has proven to
be a ruthless killer on recycled air systems. It would be impossible to screen
for the virus - it would certainly find it's way on board.

~~~
pjc50
In that case, the best use might be the "isolate mild cases" approach:
everyone who tests positive goes on the ship, even (especially) if they don't
have symptoms. If they deteriorate to severe, move them to a real hospital.
This has been a big part of the Wuhan campaign.

~~~
Donald
Repeated exposure makes covid-19 cases worse.

~~~
barry-cotter
I doubt that. It’s more likely to depend on the viral load you’re exposed to.
Being a nurse with inadequate PPE intubating someone and being exposed to
large quantities of COVID _once_ will give the virus a head start, whereas
running through a cough cloud and just barely getting enough to infect you
five times over the course of an hour will give your immune system a head
start.

------
echelon
I had a thought earlier today that might fix the economic situation, but it's
extremely bold.

If the world congregates and places blame on the CCP for asking us to keep our
borders open while knowing all along how contagious and deadly this virus was,
that's criminally negligent. Maybe even malicious.

The behavior of the CCP after the virus spread internationally is equally
alarming. They threatened to shut off access to medicines manufactured in
China, placed blame on Italy and the US for the virus' origin, and shut down
European and US travel to China.

Defaulting on debt is bad. But what if every nation collectively "cancelled"
their debt to China? China would protest, but given the circumstance it
doesn't seem like a credit downgrade would be necessary if this were taken as
repayment for damages caused.

If we owe zero to China, we can then lend all of that money to businesses and
individuals impacted. Pay off domestic debts.

I really like the idea of "cancelling Chinese debt". Now someone please tell
me how this couldn't work. Would they retaliate? Would they consider it an act
of war?

(I shouldn't have to say this, but I harbor no ill will towards the Chinese
people. I love Chinese culture and studied Mandarin in college. I dislike the
CCP and their actions.)

~~~
OscarCunningham
How much of the US debt owned by China is held by the Chinese government
rather than Chinese citizens?

~~~
barry-cotter
The huge majority of it. The Chinese Central Bank has to buy _a lot_ of
T-bills to keep the ¥/$ exchange rate where they want it. And the domestic
finance market in China is very highly regulated to maintain capital controls;
I’d be surprised if you can even buy T-bills outside Hong Kong and Macau.

------
mulm
I don’t think we should bail out any bigger industry without requiring them to
create buffers for the next crisis. We bailed them out in 2008, that’s fair,
but if they sent all their profit to their shareholders instead of preparing
for the next crisis then let their share holders bail them out.

I’m European though, so I may be more of a social democrat than most
Americans.

~~~
beojan
Bailing them out is OK, but it should be through the government buying equity
in those companies (essentially partial or complete nationalization).

~~~
nordsieck
> Bailing them out is OK, but it should be through the government buying
> equity in those companies (essentially partial or complete nationalization).

Additionally, I think the government should be buying equity at a steep
discount - something reasonable but not disastrous like 67%.

~~~
chii
> buying equity at a steep discount

the gov't "loans" should be the same as the amount of equity obtained. For
example, if the book value of the company is $100 , and the debt is $80 (so
they need a loan of $80 to cover their debts), then the bailout will dilute
all existing shareholders 80%.

------
busterarm
The cruise ships send millions of dollars of US tourists' money every year to
countries in the US sphere of influence that they would otherwise never fly
and visit.

It's not a bailout for the cruise industry. It's a bailout for nearly every
island nation in this hemisphere. We keep the tourism money flowing and
they'll keep flowing exported raw materials and food.

~~~
atlasunshrugged
That's only true if you believe that there isn't some fundamental part of this
business that is profitable and market forces won't eventually lead to new
cruise companies popping back up in the future

~~~
busterarm
In times of crisis, that's not what we care about, we care about uninterrupted
supply chain.

Yes, I agree the system should not be that fragile, but for now it is.

~~~
yellowapple
In this case, I'd say we'd be better off letting that fragility run its
course.

Very few (if any) Americans depend on the existence of the cruise industry to
make a living or otherwise survive in our society. For the ones who do, it'd
be cheaper to give them individual "bailouts". Cruise ships contribute jack
all to the national or global supply chain except as consumers of it; letting
cruise lines fail means more capacity on that supply chain for things that
actually do matter (especially in times of crisis).

Even bank bailouts have a better value proposition, and that's saying
something.

~~~
busterarm
Tourism is an import/export like any other.

Trade imbalances aren't good for economies and eventually lead to wars 100% of
the time. Read about the Opium Wars if you want a textbook example of this.

------
hannob
I think there should be a much bigger discussion about bailouts. There
currently seems to be a feeling that an industry that struggles deserves a
bailout by default.

Why don't we have a discussion about which industry provides important
services to society? And particularly how helpful it is likely to be in the
larger crisis we have looming over us - climate change - and which won't go
away? It seems like the absolute worst idea to bail out high carbon
industries, and that's not just true for cruise ships, but also for airlines
and many others.

------
WalterBright
I went on a cruise ship once. Was very bored. I was so bored I tried to wangle
a tour of the engine room (after all, I'm an engineer) but no way said the
captain. The food was nice. The captain avoided a big storm. I figured if I
ever went on a cruise again it would be an a much smaller boat. After all, who
doesn't want an oar thrust in their hands and have someone yell "ramming
speed!" at them? "We keep you alive to serve this ship! Row well, and live!"
and all. Much more fun than the gift shops and roulette wheels.

When I was a kid we crossed the Atlantic in the SS United States. For a kid,
that was a blast, especially when we steamed through a huge storm. Wowsa! I'm
sad to see the rusty hulk it has become.

~~~
lb1lf
The Hurtigruten is a coastal freighter cum cruise line traversing the
Norwegian coast between Bergen in the south and Kirkenes near Murmansk up
north, making loads of stops underway to on- and offload cargo and passengers.

The Norwegian coast can be quite rough in the wintertime - a friend of mine is
the steward on one of the ships, and she assures me every winter there are
numerous passengers who insist on being dressed up in full survival kit and
quite literally being tied to the mast - to experience the full wrath of a
winter storm from a safe position.

To each his own. It probably isn't boring, at least. :)

~~~
WalterBright
Do they make the passengers walk the oars, too?
[https://youtu.be/8SW6a1z_hUk?t=112](https://youtu.be/8SW6a1z_hUk?t=112)

------
nojvek
Bailouts are very unfair and undemocratic. I can understand for Boeing where
the military absolutely depends on them and if a war were to start, being able
to build planes is essential.

But Carnival cruises, who cares if they go under? another one will prop up
with a better business model that is sustainable.

Every company should be able to weather a couple of months if they rode the
bull for the best 11 years of stock rise in history. If your executives fucked
it up, too bad. You can get a low interest loan, but no free bailout money.

------
rsynnott
I'm bemused that anyone would even _consider_ bailing out the cruise industry,
of all things. Like, what is the "in favour of" argument?

~~~
ekimekim
The campaign donations those companies gave you last election.

------
UweSchmidt
A market based solution would be investors buying struggling companies at a
discount, or companies using their reserves that they have built based on
normal risk management.

Bailout money should be used to help people during unemployment.

~~~
nemo44x
I mainly agree with this. Companies living paycheck to paycheck should sell
equity. The US government should set aside money to buy into these new equity
offerings.

For non-public and small business there can be funds set aside to help them.

And then yes, simply increase unemployment distributions for the time bring to
80% previous income for a couple months.

------
pippy
The article missed another point: they're competing with US based tourism.
Every person who chose to go on a cruise didn't visit a US city and spend
money there.

~~~
wideasleep1
On the Caribbean and Mexico cruises we've taken, we spent a few days before
and after in the US ports Fort Lauderdale and San Diego, so it is common for
both same-day flyers and short term stay visitors to embark.

------
RivieraKid
Why do bailouts at all instead of letting them go bankrupt? Bankruptcy doesn't
mean that people lose their jobs, it means that investors / lenders lose
money.

~~~
chii
bankruptcy does mean the people who worked there would lose their jobs. They
will have to be re-employed, if the new buyer of the assets sold to cover the
debts, decides to continue running a cruise liner. This certainly takes some
time, and in the interim, all the employees will be fired (or at least, not
paid).

If the gov't bails out the cruise liners, they may be able to force them to
continue paying the employees in the intrim, and so "save" them from being
unemployed and "save" welfare. The gov't can also end up owning equity in the
business (which is not a bad thing - it's basically extra income for the
state/treasury in the future).

------
xiphias2
Tourists from cruise ships destroy nice vacactions.

Many hundreds of people come on the streets in groups, go throught the streets
loudly and fast to take photos, than go back to the ship.

People who _really_ go to these places and spend money for staying and try to
blend in to have a peaceful vacation can't.

~~~
Bnshsysjab
Your comment seems like the statement of someone with an axe to grind rather
and lacks factual evidence.

~~~
lb1lf
-I used to live in a small town (Aalesund, Norway, pop. of town centre - 10,000 or so).

It is a popular port for cruise ships doing the Norwegian coast. I assure you,
during summer season one could have 2-4 vessels in port - effectively a DoS
attack on town.

Getting from A to B on foot was nearly impossible, forget any shopping or café
visits - a town built for 10,000 suddenly had twice as many people in the
streets. Go figure.

While the cruise tourists leave a little cash behind, it is much less per head
than, say, camper van tourists do.

I didn't mind all that much - but I can see valid reasons for not wishing to
have a cruise entourage come crashing down on your hometown on a regular
basis.

------
troydavis
Other threads debate the merits of cruises and/or bailouts, but this specific
idea has a unique challenge: there may not be a viable market for cruises
until COVID is at least treatable, if not preventable. The CDC’s guidance is
to “defer all cruise travel worldwide”[1] and that may not change until
treatment exists - particularly for those over 50-60. 51% of 2019 passengers
were over 50[2].

Cruise ships manage to contain norovirus[3], but we’ve seen how different the
consequences are when NCoV is present on a cruise ship.

[1]: [https://wwwnc.cdc.gov/travel/notices/warning/coronavirus-
cru...](https://wwwnc.cdc.gov/travel/notices/warning/coronavirus-cruise-ship)
[2]: [https://www.cruise1st.co.uk/blog/cruise-holidays/how-old-
is-...](https://www.cruise1st.co.uk/blog/cruise-holidays/how-old-is-the-
average-cruise-passenger/) [3]:
[https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm](https://www.cdc.gov/nceh/vsp/pub/norovirus/norovirus.htm)

------
timwaagh
If you guys are handing out bailouts I'd like one too. I don't pay any taxes
in the US and I don't do anything particularly useful. I can guarantee that
absolutely zero US jobs will be saved by bailing me out. I am not bankrupt and
I don't need the money. I think I'd therefore be an excellent candidate to
receive a bailout. Let's say five billion should be sufficient.

------
manigandham
There's no easy solution to a once in-a-century pandemic. The most important
issue is economic continuity.

It's better to prop up companies and industry for the short term if it means
thousands of people continue receiving a paycheck and can afford to live.

Suddenly laying off all those people while companies and vendors collapse will
lead to major cascading effects that can be far more disastrous.

------
nhebb
In case anyone is not aware, the planned relief for companies in the private
sector is in the form of loans, not cash giveaways

~~~
michaelt
You don't think a loan to a company on the brink of bankruptcy is a cash
giveaway?

Well, it would be nice if you're right...

------
fulafel
Puzzling that the CO2 issue is buried far in the list of grievances. Does this
reflect the reporter's priorities or more widely the Verge's or the
readerships?

------
tobltobs
When the cruise industry gets a bailout, it is not to save the cruisers but
the financial corporations, which have been financing this madness.

------
voisin
Why would you ever bail out an industry that is not essential to society?

~~~
effingwewt
One thing I've had nailed home during this fiasco is that almost all
businesses consider themselves essential, even at the possible cost of their
employee's lives. We have call centers doing cold call sales trying to call
themselves essential.

------
LatteLazy
Bailouts not not won't effect the long term size of the industry.

------
battery_cowboy
What do you call a cruise ship full of lawyers at the bottom of the sea?

~~~
spiritplumber
A start

------
battery_cowboy
Fuck em, they flag in other countries so they don't pay taxes, but also
because they can treat employees like slaves, pollute using bunker fuel, and
generally fuck over the world.

Fuck em.

~~~
Reason077
Airlines also pollute and dodge taxes. But love them or hate them, it's hard
to argue that airlines don't play a critical role. The broader economy would
suffer badly if they were to fail.

Cruise ships, however, do not. They are purely recreational and the economy
would not fall apart if they were to go. They also share some of the blame for
spreading Covid-19 in the first place!

~~~
netrus
> The broader economy would suffer badly if they were to fail

Why? The planes are not going anywhere. If airlines fail, someone will be able
to buy them at a discount. They will need to hire pilots and cabin crews.
Shareholders in airlines will be hit - as it should be.

~~~
usrusr
That's even more true with cruise ships. That industry will be effectively
bailed out one way or the other, the other is banks eating the losses after
bankruptcy and new companies starting out with lower debt after taking over
the assets at firesale prices.

But that only strengthens the point of the article: the optics of an actual
bailout would be so much worse and the outcome would only really differ for
shareholders.

~~~
bradleyjg
It’s not even banks, they don’t lend at those scales, it’s bondholders. Let
them take their lumps. If investors wanted government guarantees they could
have bought sovereign debt instead.

------
better0uts1d3
And of course, they avoid paying taxes by sailing under other countries' flags

------
blackrock
Let it die. They provide no useful service to society.

Maybe the replacements will create an ethical, sustainable, and
environmentally friendly business instead.

------
mynameishere
Man, I hate how people have all kinds of "reasons" why industry X shouldn't be
bailed out. Uh, no. _Nobody_ should be bailed out, as a general principle.

~~~
kkdaemas
This is a very short sighted view. Police forces cannot maintain order in the
event of massive unrest and the best way to prevent this is to keep people
above the poverty line and the death rates low. Desperation leads to upheaval.

