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Fed to inject $1.5T to prevent ‘unusual disruptions’ in markets (cnbc.com)
248 points by aazaa 18 days ago | hide | past | web | favorite | 349 comments



As the joke goes, a trillion here a trillion there and pretty soon you're talking about some real money!

But in seriousness, the next week is a critical time in the world. I remember sitting in an airport when news of Lehman Brothers collapse was flashing on the TV screens. I'm reminded of that time.

We learned later about how Hank Paulson got down on one knee and begged Nancy Pelosi to go along with is plan to save the economy. In retelling of that period, it's clear that the world's top economists felt we were perilously close to a full-blown disaster – trucks not bringing goods into cities, things grinding to a halt, etc.

Remember that when you see bold proposals in the coming days.

As I've commented over the past few weeks, I think we've missed critical steps in fighting coronavirus. The lack of testing will maybe turn out to be one of the biggest scandals of my lifetime.

My personal belief is that – at least in the United States – we did everything we could to prevent a short-term economic slowdown and instead we're on the verge of something much longer, much deeper.

But if there were ever a time for us not to be partisan and tribal, it's now. We blew the past few weeks. We can't afford to blow any more. We really do need to come together, globally, but particularly here in the US to try and agree on the right next steps. We need to act boldly, now.


I'm sure you'll get partisan political comments, but you're correct. I will note that I don't agree with "we" doing anything... our government is rather thoroughly insulated from the will of the citizens of the US by its own design.

The dysfunction in our government is due to years of slow decay that have culminated in the present situation. This crisis will hopefully force enough people to realize the problem exists and its scope that we can finally take steps to correct the issue.

Electing a different party won't help, because we still have the electoral college, voter suppression, unlimited corporate donations, the spoils system, seniority in the legislature, and partisan judges on the supreme court. The Democrats are Corrupt and the GOP is corrupt. The two party system and first past the post have to go. We need to amend the constitution to avoid the situation recurring in the future.

People are about to die because our president is a fool, and the fact that he's still in charge is the fault of all of us who voted or didn't vote over the past half century.

In all honesty, I don't see anything in the government changing for this crisis... they can't change. Lots of people are going to get sick and die, and hopefully in the aftermath people will finally be angry enough to repair our country.

Assuming there are enough of us left.


We can start by not having a president that continues to peddle disinformation in a time of national crisis. I don't remember any other president in my lifetime being this factually incorrect this many times. Also as a matter of fact both sides are not at the same level in terms of corruption (number of criminal indictments and convictions) in modern white house administrations.


I agree, but corruption doesn't necessarily imply illegal. A lot of these people could be involved in setting the rules that they then place themselves above of. That's corruption, but not illegal.


> People are about to die because our president is a fool, and the fact that he's still in charge is the fault of all of us who voted or didn't vote over the past half century.

This point of view is sobering. I am tired of people thinking that replacing a politician with another would solve every problem.


> The lack of testing will maybe turn out to be one of the biggest scandals of my lifetime.

If I had to choose one thing that should change right now, it is this. Aggressive testing of everyone, starting with contact persons, persons travelling from high risk areas and then basically everyone. Would allow a much better understanding of the situation and make any measures way more effective.

Other than that, the measures taken seem reasonable based on the situation when they ware taken (for expectations, refer to testing).


Except we can't test everyone as many people will not want to get tested. Hourly workers without paid sick leave will not get tested if a positive result means they have to not get paid for 14+ days. They cant afford it. Not going to work means their kids don't eat. So they go to work sick and everyone else around them gets it.

The poor without insurance also cannot afford the test or treatment.

Testing is important but providing real benefits to those that are potentially infected will incentivize them to get tested. Otherwise we are going to struggle with getting this contained.


Not in the US, not really a big problem across Europe.

But you are right. So right. Because I would do the same if I were in that position. And again the weakest people and families are hit worst. Maybe it serves as a wake-up call why universal health care is important. It enables so many things, not just robust disease response.

Edit: Fixed the first sentence.


What is the argument against testing everyone? If it lasts 2 days on surfaces, it seems like a matter of when not if you get it.

Best we can do is "flatten the curve" by isolating people as much as possible. Realistically, all the hand washing and testing does next to nothing in terms of modifying behaviour.


Testing would allow to be way more aggressive where it matters. Also reaction time could be quicker.

Could be so, that once a certain number of people are infected, full quarantine measures will be taken anyway. So on could just jump to these measures right away. Which would leave increased transparency as the main benefit. Would still be worth it, even if actual countermeasures don't necessarily change.


How accurate are these tests?


> it's clear that the world's top economists felt we were perilously close to a full-blown disaster – trucks not bringing goods into cities, things grinding to a halt, etc.

The same top economists who didn't see the financial crisis coming? More like the top economists hired/backed by bankers felt that bankers would lose a lot of money and made the excuse of bread lines to dupe congress.

> But if there were ever a time for us not to be partisan and tribal, it's now.

No. I prefer the partisanship. It's when the government is united that you know bad things is going to happen. Everytime there is an illegal war, the government unites. Everytime the american people gets screwed over, it's always the united government. And the same messaging is used "if there were ever a time for us not to be partisan and tribal, it's now."

But then again, the partisanship is just for show anyways. They all work for the same masters.

> We need to act boldly, now.

Like what? Give more money to bankers and wall street? Like last time?

Every time there is a fear mongering event - 9/11, Financial Crisis, Red Scare, etc, it's the american public that loses more rights/privileges and the elites/government/state that gets more control.


> We blew the past few weeks

No, "we" didn't blow anything. Plenty of us have been preparing for this for well over a month. And now, you want taxpayers, savers, the conscientious, and the prepared to bail out the people who were buying TSLA at $800 and selling VIX with a 10-handle with a pandemic on our doorstep, all while name-calling those of us who bothered to read the research "crazy"?

No, let them all blow up. They deserve to soak in their margin calls.


- We need to unite and overcome tribalist instincts

- The GOP (the current ruling party) bears a majority of the blame for the recent screw ups (though _both_ parties are to blame for the decades-long problems with the healthcare system)

Both things are true.


The Democrats tried to give us healthcare and the GOP has systematically dismantled it as best they could. I'm not saying the Democrats are perfect, but one of these things is not like the other.


If you must compare the two, the virus is actually killing people. All those economists, bankers were lying and if we know anything today is that we shouldn't have let them off the hook so easily with the whole bailout.

Maybe a lot of people are so skeptical today about the virus because of the crisis fear mongering in 2008.


> But if there were ever a time for us not to be partisan and tribal, it's now.

We are in the middle of a problem exacerbated by politics, that will require political decisions to solve.

When politicians are doing nothing, or making the problem worse, this is not the time to shrug our shoulders, and be apolitical. Political decisions have consequences.


I don't think anyone is being partisan and tribal for the hell of it. Before last night, Trump's concern re: coronavirus was myopically focused on the economy. Now we're shutting the borders, as if we don't have upwards of a thousand cases here already. And as a sibling comment notes, it seems like Senate Republicans are poised to veto the coronavirus bill that's passed the House.

It's not "partisan and tribal" to criticize this administration and the GOP for their failure to respond. If they were doing a good job here, it would be one thing. But they're not, and for that we need to hold them accountable.


I'm sorry, I simply don't understand the thought process here...

Question 1) Is the spread inevitable, or can we achieve containment?

Question 2) If it can't be contained, and worldwide spread is inevitable, approximately how many new cases per day do you want to see for the next 6 months?

I would say the answer to #1 is that spread is absolutely inevitable. There are way too many vectors, and it is way too virulent. I'd go further and say that I believe tens if not hundreds of millions of people have already been infected and will never have serious illness, but such a claim is really besides the point.

I would say the answer to #2 is; just so many as you don't run out of ventilators. And absolutely start setting up rows of ventilators in dedicated facilities in major cities.

So to those saying we should have done more, sooner... I ask, to what end? Follow through on the hypothetical "done more sooner" scenario. Worldometer says the US has 1,518 active cases, of which 10 are serious. So 10 people in the country are in an ICU for COVID-19 right now?

"Test everyone!" To what end? You don't need to test people in order to know if they need an ICU. The ICUs are not full - and you don't need more testing to tell you that. The main benefit to more testing would be that people who are self-quarantining due to potential exposure could maybe stop self-quarantining earlier. That's a fairly marginal benefit.

This isn't a situation where the world is going to shut down until a vaccine is available and administered to a billion people. This is a situation where the vast majority of people have mild symptoms, then herd immunity, and then will very much need to get back to work in order to buy groceries and pay their mortgage.


> I would say the answer to #1 is that spread is absolutely inevitable.

The WHO disagrees: https://www.who.int/dg/speeches/detail/who-director-general-...

> "Test everyone!" To what end? You don't need to test people in order to know if they need an ICU. The ICUs are not full - and you don't need more testing to tell you that. The main benefit to more testing would be that people who are self-quarantining due to potential exposure could maybe stop self-quarantining earlier. That's a fairly marginal benefit.

Germany was ahead of the curve testing people and as a result (so far) they are weathering the virus much better than most other countries (including the US):

https://www.latimes.com/world-nation/story/2020-03-10/german...

It's not all about the testing for them but in the article they do count it as a key reason why they are doing well so far.


Testing may reduce the number of cases, how does it reduce the severity of cases? This is an illness with no treatment, only symptoms are treated.

Germany apparently has 10 people in serious condition. Availability of resources obviously isn’t a factor...


What do you mean, "no treatment"? Chinese used lopinavir+ ritonavir combination to a great effect, it's just that those drugs have quite a number of possible side effects, plus they're not officially blessed as COVID-19 treatment.


>> "Test everyone!" To what end? You don't need to test people in order to know if they need an ICU. The ICUs are not full - and you don't need more testing to tell you that. The main benefit to more testing would be that people who are self-quarantining due to potential exposure could maybe stop self-quarantining earlier. That's a fairly marginal benefit.

You underestimate human stupidity :) People self-quarantaing is a sign of great awarenes of the danger. Meanwhile there are millions of people who ignore symptoms because "it's just a common flu, not coronavirus, don't be paranoid". Testing everyone would help identify and quarantaine those people (against their will, if necessary).


yeah at this point it seems reasonable to me that increasing ICU capacity is going to become top priority soon. We missed the boat on testing and containment. We should continue to educate and modify behavior to lesson rate of injection and also increase ICU capacity to handle the inevitable severe cases.


You need testing to provide political capital to do all the other things that are actually necessary to respond to and treat the virus.

Otherwise politicians can hide behind relatively low numbers of confirmed cases as an excuse for inaction.


"But if there were ever a time for us not to be partisan and tribal, it's now" - Completely agree. I think GOP should ask Trump to step down and have someone responsible in charge.


>But if there were ever a time for us not to be partisan and tribal, it's now.

You say that like both parties are trying to deny testing and are refusing to provide the social safety net for workers to stay home when they're sick. This is very much not a "both sides" discussion. This is: the GOP needs to stop trying to pretend like nothing is wrong and actually DO SOMETHING to prevent this from becoming an even bigger disaster.

Ahh, the old cowardly downvote without comment because you don't like the reality of the situation that there is one party that's very much to blame.

https://thehill.com/homenews/senate/487258-senate-republican...


Also:

https://thehill.com/homenews/administration/486559-trump-fak...

https://theweek.com/speedreads/901405/seattle-lab-uncovered-...

https://www.vanityfair.com/news/2020/03/anthony-fauci-donald...

https://thehill.com/homenews/house/487014-trump-officials-cu...

Yes, the administration bears a huge amount of responsibility for sandbagging and obstructing the initial response, mis-informing the public, ignoring their own subject experts, etc.

Fresh Air did a great long-form report today summarizing the ways the administration has obstructed and worsened the crisis. No transcript yet but it's worth a listen.

https://www.npr.org/2020/03/12/814881355/white-house-knew-co...

(<3 Terry Gross, she's a wonderful interviewer who is fantastic at asking insightful and probing questions while being incredibly kind and gentle. Probably the single most informative show on the air, for whatever topic she covers.)


For what it's worth, the transcript is now live. Direct link:

https://www.npr.org/transcripts/814881355


Slight tangent, but the excessive focus on tests is misguided. The tests give us more data but make little difference unless they are used to rapidly trace outbreaks and quarantine entire areas, which just has not happened. And with something this viral, its only a matter of time before it spreads everywhere.

The focus needs to be on slowing the spread and treatment.

The treatment is about supporting the body while it fights the virus, and highly dependent on how & where the virus manifests. Some need oxygen therapy, some need antivirals, some even need lung transplants. In cases where the virus affects other organs, totally different treatment applies. The resource constraint there is general medical capacity - doctors, beds, ICUs, oxygen support, and probably a hundred other things.


>Slight tangent, but the excessive focus on tests is misguided.

The issue with our lack of testing is that we have no idea what we're dealing with, which is a big part of why the market's freaking out. If we had been ramping up testing months ago, when it was already a massive disruption in China and should have been clear that it was only a matter of time before it got to the US, then we would have a lot more information now.

This is why we need competent administrators running things like the CDC, the DoE, Homeland Security etc..., not political hacks.


> This is why we need competent administrators running things

The GOP has a conflict of interest here. They don't want to give evidence that government can work. Their goal is to break government and then go "see, government doesn't work!" It's a splendid position to take, because anything that comes up you simply shrug and wipe your hands clean. You're not responsible for anything.

While we all sit and ponder whether we're all going to die and if the economy will disappear overnight, let's all just remember the travesty that is Puerto Rico. If that's not enough, then kids in concentration camps. Oh? People care now because it impacts their little world?

"No time for politics" says the people actively breaking the world.


I saw the writing on the wall in January. We didn't need tests, all we had to do was look at the urgency & scale of China's response and the R0 of the virus. It is literally exponential growth, and even a few people spreading the virus with a 2 week delay in symptoms all but guarantees the majority of the world is going to get it. There is no doubt about what we're dealing with, hasn't been any for 2 months.

We needed information 2 months ago, we needed early action like quarantines, travel bans a month ago. Testing is the response to an old problem at this point.

Large democratic, decentralized institutions are uniquely bad at the kind of fast response needed here and the government continues to act 1 months behind, so I have little faith that much will change. Most of the world will get it, but medical systems are mobilizing and hopefully most people will make it out ok.


>Slight tangent, but the excessive focus on tests is misguided.

During H1N1 in 2009, within 30 days we tested 1 million people. This led to a vaccine developed within 6 months. Testing is core to understand spread.


Whatever we -have- got, we use to identify and isolate, to flatten the curve. Test priority for healthcare workers.

"Containment is making sure all the cases are identified, controlled, and isolated. It’s what Singapore, Hong Kong, Japan or Taiwan are doing so well: They very quickly limit people coming in, identify the sick, immediately isolate them, use heavy protective gear to protect their health workers, track all their contacts, quarantine them…"

https://medium.com/@tomaspueyo/coronavirus-act-today-or-peop...


Funny how many people think "they were too slow with testing" - do any of these commentators have any idea how long it takes to develop a reliable, sensitive and hopefully specific test for a virus that probably didn't exist in its current form until around 3 months ago. Oh, and then also to be able to make a production line capable of producing millions of them while maintaining quality - why not criticize them for not yet developing an effective antiviral treatment and vaccine for the condition too?


This is not a complicated test to make or run. Most microbiology grad students could make it and every university lab could run them.

Lack of testing does not appear to have been a technology or supply chain problem, possible supply chain probs in future...


The US had tested 23 out of every million people as of 11th March, while South Korea had done 3692/million as of 8th March.


Funny how many people think "they were too slow with testing"

They were.

do any of these commentators have any idea how long it takes to develop a reliable, sensitive and hopefully specific test

The CDC forbade King County from using their own home grown test.

that probably didn't exist in its current form until around 3 months ago.

The US CDC also declined to use the WHO test (and presumably the Chinese and Korean ones as well)... even as a temporary measure.

why not criticize them for not yet developing an effective antiviral treatment and vaccine for the condition too?

Because the tests were widely available, widely distributed, and non-CDC labs have already developed tests. The same is not true with a vaccine. IIRC antivirals are being tested in Seattle.

https://www.nytimes.com/2020/03/10/us/coronavirus-testing-de...

https://www.politico.com/news/2020/03/06/coronavirus-testing...


The WHO already had the test.


Which test? What kind of distribution did that test have? What kind of distribution capacity did that test have? What kind of false positive rate?


Classic "the [solution] that exists isn't good enough, therefore we can't use it at all!"

A pandemic is not the time to be picky - if anything, a high false positive rate helps. Would you rather 10 people quarantined, of whom only 2 are sick, or all 10 released into the wild because no test kit (of any sort) was available?


Even without a test you could quarantine people who get off flights. We've been doing it for years with pets traveling from specific countries.


To be fair, a test with high false-negative rate would be problematic. 10 people released into the wild, who think they don't have it, is worse than 10 people released into the wild who are uncertain about their status.

Not saying that's what happened here (perfect is the enemy of the good!), just that it could be worse. It could always be worse.


I would rather anyone with symptoms and ability to self quarantine instead of burdening the economy and healthcare system.


I think what gdubs was trying to get across is that sure, there are problems, people to blame, etc. but now is not the time. We have to get our act together and handle the situation. We can't have petty fighting betweeen parties.

Now is the time to unite and act. We can fight, argue and point fingers once this is all behind us.


Now is the time for leadership. If leadership is lacking, we don't star singing Kumbaya and offering platitudes about "unity" in the face of malpractice, we loudly and firmly demand better leadership.


You are right. Unfortunately we need good strong leadership focused on protecting not just numbers on a candlestick chart but actual real people. Our current president has proven completely incapable of that and should immediately step aside. I am no fan of Pence but he at least likely capable of listening to experts and following their recommendations. The markets reaction to last night Oval office speech is reason enough to prove the nation has lost confidence in its current occupant.


i don’t usually post on political topics but... i’m not so sure about pence... [0]

if we are lucky, hopefully he’s learned from that but i’m not holding my breath

[0] https://www.newsweek.com/mike-pences-pray-it-plan-combat-ind...


They're literally blocking COVID emergency budget bills getting passed in the Senate

This is time to fall in line or be thrown out of your job.


At least one bill is being blocked because it doesn't have language prohibiting the money to be used for abortion. The money would be used to fight Covid-19 pandemic, but for some reason, it's critical that the money in no way go to abortion.

https://www.salon.com/2020/03/12/gop-delays-coronavirus-bill...


Why don't Republicans need to fall in line when Democrats pass much needed relief for coronavirus?


That's who he is talking about, the republicans are blocking it.


You act like we aren't capable of doing two things at once.

Sorry, I am perfectly capable of acting while still pointing my finger at the people who are actively trying to make this worse.

Maybe you can afford to play kum-bay-yah but perhaps it's not your life or the lives of your loved ones which have been doomed by this ineptitude. Civility is poison to irrational discourse.


The fighting between the parties hasn't been petty for years now. It's frequently a disagreement on basic factual information. Solving problems is something that can be done when everyone understands and agrees on what the problem actually is.

I don't expect to be able to craft useful public health policy in discussion with an antivaxxer or space exploration policy with a flat earther – the idea of "unite and act" is be absurd when dealing with people who lack the ability to admit they can be wrong/consider multiple perspectives/think critically. And yet that's basically where we stand today politically.

> Fact-checkers and scientists have scrambled to correct the misinformation coming out of the White House. (No, the virus has not been “contained” in America; no, testing is not available to anybody who wants it; no, people shouldn’t go to work if they’re sick.) But Trump’s message seems to have resonated with his base: A Quinnipiac University poll released this week found that just 35 percent of Republicans are concerned about the virus, compared with 68 percent of Democrats. [1]

If the other side doesn't even agree with you this is a problem that needs serious attention to be solved, how are we going to get our act together?

[1] https://www.theatlantic.com/politics/archive/2020/03/trump-c...


> I think what gdubs was trying to get across is that sure, there are problems, people to blame, etc. but now is not the time.

Now is absolutely the time, because:

> We have to get our act together and handle the situation.

And identifying the problems in the approach to date is an essential element of course correction.

> Now is the time to unite and act.

No, now is the time to identify the problems in our actions to date and course correct to appropriate actions. “Unite and act” is pointless or counterproductive without that.


You can't just conjure the necessary tests up from nothing. Japan has also had problems with testing. No one is trying to "deny testing". It is a work in progress and is indeed ramping up.


The WHO actually had tests that worked. CDC refused those and chose to independently redevelop their own. Then those didn't work, they still kept trying, while also blocking states from using their own tests that also worked.

https://www.propublica.org/article/cdc-coronavirus-covid-19-...

The states with "local outbreaks" (NY, CA, WA) are the ones that told the CDC to get bent and did it anyway. It's everywhere, the states with low case numbers just aren't testing for it.

https://theweek.com/speedreads/901405/seattle-lab-uncovered-...


>The states with "local outbreaks" (NY, CA, WA) are the ones that told the CDC to get bent and did it anyway. It's everywhere, the states with low case numbers just aren't testing for it.

This is what I can't get people around me to understand.

No cases near me simply means no one has been tested for it at this point.


The FDA had a ban on tests outside of the CDC's tiny supply for a long time. That's whats being referred to by "denying testing." Not a political issue so much as a typical bureaucratic slowdown with very real consequences.


The comment I replied to was saying that the lack of testing was indeed a political issue with one side at fault.


It is insofar as the FDA and CDC are controlled by the president and both agencies could make emergency exceptions.

On a phone call the day after the C.D.C. and F.D.A. had told Dr. Chu to stop, officials relented, but only partially, the researchers recalled. They would allow the study’s laboratories to test cases and report the results only in future samples. They would need to use a new consent form that explicitly mentioned that results of the coronavirus tests might be shared with the local health department.

https://www.nytimes.com/2020/03/10/us/coronavirus-testing-de...


Not a political issue? The FDA having the power to ban things known to be a good idea sounds exactly like a political issue. A pretty serious one - excessive government regulation magnifying the effect of a crisis.


Testing is, indeed, ramping up: https://www.cdc.gov/coronavirus/2019-ncov/testing-in-us.html

The problem is it's ramping up to where it should've been weeks (months?) ago. We're way behind.


If the system is reliant on the legislative branch to respond to a crisis then there is no doubt that it will fail. Large voting bodies are no good at all in times of crisis.


I guess OP meant that this ignorance is systematic and long term. Current pandemic just very clearly shows how ridiculous it is not to provide a social safety net.


If you actually listen to the hearing today you will realize that this is a systemic issue with the US healthcare system not something any politician can do much about.

The US is not built that way the CDC can't just fix it. That's the power and weakness of our system compared to other countries.

Here the leaders of CDC explains the problem in a nutshell.

https://www.youtube.com/watch?v=PxC9Q99il1Q


Regardless, now is the time to put aside partisanship and face the problem before us. There will be plenty of time for retrospection, after we get through this together.


>Ahh, the old cowardly downvote without comment because you don't like the reality of the situation that there is one party that's very much to blame

People are probably downvoting silently this time because explaining to you that you're obliviously consuming propaganda is one step deeper into flamewar territory which is unpopular on HN (and against the rules).

Case in point? Media reports that bill forcing employers to provide sick leave failed to pass because of evil Republicans. What you won't see on the news is the nuance that such a bill can't be passed without possibly bankrupting small businesses.

That's just one example. The administration shut down the border early on and was enthusiastically rewarded with accusations of sinophobia.

All politicians play this game. The US government institution has been rotting for decades, and yes, it really is a "both sides" issue when one side is so blinded by hatred that they refuse to acknowledge positive decisions.

There are literally almost as many people on the Republican side blindly dismissing everything Democrats do. Remember, Trump only lost the popular vote by 3%. Now is not the time for partisan idiocy.

tw04 18 days ago [flagged]

>Case in point? Media reports that bill forcing employers to provide sick leave failed to pass because of evil Republicans. What you won't see on the news is the nuance that such a bill can't be passed without possibly bankrupting small businesses.

The bill literally includes the funding to pay for sick leave. That's why it's a FUNDING bill - I think you're confused about who is being mislead by propaganda.

Meanwhile, the GOP is trying to insert language about abortion into the bill because...?


The full text has not yet been published on congress.gov to verify who is paying and I can't find the full text elsewhere.

https://www.congress.gov/bill/116th-congress/senate-bill/341...

https://www.congress.gov/bill/116th-congress/house-bill/6150...

However, the press release from Murray and DeLauro makes it sound like businesses are paying: https://www.help.senate.gov/ranking/newsroom/press/coronavir...

If you have a primary source that shows that government, not businesses, are paying for the costs of sick leave as it relates to S.3415 and HR.6150, please share it.

I also can't find a single search result that includes the term abortion as it relates to either S.3415 or HR.6150.


It's honestly mindblowing that hacker news has reached the point where a comment asking for primary sources and evidence is downvoted.


Cheers

And all I could think was 'it's a PATRIOT act...'


Duh. Babies cost money and parents will do almost anything to keep it alive. Or at least bare minimum mandated by law. In either case, it is a sacrifice to the god of economy./$


[flagged]


I think it is a bit more nuanced than that.

My experience in large enterprises are that there are two kinds of "politics" that get played.

In one form, the leadership makes moves or take actions that benefit themselves but also help the company. Often that is called out as "leadership."

In the other form, the leadership makes moves or take actions that benefit themselves but hurts the company. That form is called "politics."

You can see examples all around of this. For example a CEO that buys another company, the result of which is hitting a milestone that triggers a big bonus for them but saddles the company with a bunch of debt and expense that drags down its productivity. That is bad. Versus the same example where the CEO buys another company and the combination results both in them getting a bonus as well as the combined company doing better than the sum of the individual companies. That is good.

So I agree with you that both parties are playing games, the differentiator for me is what is the ratio of benefit to the country vs benefit to the party/individual from the game being played? If that ration is 1:1 or greater I see it as a positive thing rather than a negative thing.


So what is the term for leadership makes moves that benefits the company but not gain interest on their own or even hurt their own reputation / interest ?


The term is 'heroic' for acts of leadership that sacrifice one self for the greater good.

In my experience, if the move "benefits the company" and the overall company governance is not dysfunctional, then the leader responsible does not get hurt by it. At least not in the long term.


It's called "fired from the mid-level manager position" because such people, generally, don't get promoted too far up in the ranks, for an obvious reason.


>> For example a CEO that buys another company, the result of which is hitting a milestone that triggers a big bonus for them but saddles the company with a bunch of debt and expense that drags down its productivity. That is bad. Versus the same example where the CEO buys another company and the combination results both in them getting a bonus as well as the combined company doing better than the sum of the individual companies. That is good.

Mergers are always risky. CEO can do all the analysis possible but can't know for sure if combined company will do better or worse than individual parts. That part of the job is called "taking calculated risks".


> Mergers are always risky. CEO can do all the analysis possible but can't know for sure if combined company will do better or worse than individual parts. That part of the job is called "taking calculated risks".

True, but growth-by-acquisition is a lot "easier" than organic (R&D-driven) growth, particularly when money is cheap.

A CEO looking for a quick win - usually quarterly, sometimes annually - will almost always default to an acquisition. It won't be clear for at least 2-3 years whether or not it was worthwhile.

I think a CEO who spurns acquisitions in favour of organic R&D will always, almost by definition, be putting the company's interests ahead of his/her own.


Republicans are playing games to get bailouts for corporations. Democrats are playing games to get people healthcare and paid sick leave.


[flagged]


As a non-American that's somewhat ignorant of the current states of the US legislative houses on this matter, could someone provide some context as to why the comment directly parent to $self is being maligned?


I downvoted because I disagree with the way they are arguing.

The gp's(grandposter) comment uses the word companies. Which companies? Well we're talking about the US and health care so it has gotta be the health insurance companies? No, the bill Lamar disagreed with was to make employer's provide sick time to their employees.

Also, pp(parentposter) is what I use. OP is reserved for poster of the content.


"Companies" in my comment refers to the 32.5 million businesses in the US since the proposal is that employers pay sick leave. I'm not sure why you're referring to health insurance companies. Yes they have employees that may need sick leave, but they are not the only ones.


I'm mentioned health insurance companies because I wasn't aware of the details of the bill that was rejected today by Lamar until after reading your comment when I educated myself by reading a more detailed source. While reading your comment I assumed you meant health insurance companies paying as that was the recent Trump kerfluffle from his speech last night and in addition if we're talking about US and health I'm putting money on our health insurance system being mentioned.


  No, the bill Lamar disagreed with was to make employer's provide sick time to their employees
... which Congress lacks the legal authority to do.


When you say parent comment are you referring to my comment or the one I replied to?


I was referring to yours. I edited the original in the hopes of improving clarity.


My suspicion is that it is because I wrote "I honestly don't understand why the Democrats are so consistently anti-business in so many things they do", which I will admit is a tad bit flamebait-y on a forum that leans heavily Democrat. Non-Democrat positions are heavily downvoted across Hacker News.


I dont understand one thing though in my life time I am in my late 30s. Us has done well economically under Democrats compared to Republicans. But Republicans are considered pro business and Democrats anti business. Republicans talk about fiscal conservation but run up huge bills. Democrats talk about spending on healthcare etc but actually improve the deficit.


Republicans haven't been about fiscal conservation in a while.

It's also a mistake to just look at who controls the White House to figure out which party is in control when the economy does well economically. Both the executive and legislative branches matter and for the legislative, you need to control both houses. Even if one party controls the excutive and both houses of congress, it's hard to attribute the success of the economy to the current controlling party. Somethings the economy might be doing better because of current policies and sometimes it might be doing better because of policies enacted by the previous administration and congress, but the effects were latent.

In general, you can't take a macro look to determine which party is better for business. Instead you've got to look at things on a policy by policy basis and look at the first and second order economic impacts of specific policies.

Also, while Republicans haven't been very fiscally conservative in many years, most of the "huge bills being run up" are only sometimes from new spending. Most of the time, running up the bills is just from tax cuts. The democrats pass spending bills with accompanying taxes and the republicans are unable to undo both the spending and the taxes at the same time, so they negotiate for at least cutting taxes to help the economy, but the spending gets left in place.

The truth is that both parties are generally drunken spenders, but that one party has no issue taking more money from productive Americans to pay for their drunken spending.

FWIW, I'm neither a republican nor a democrat. Both parties are awful, but at least the Republicans try to let people keep money they've earned and rarely try to raise new taxes.


Companies can pay from their CEO's paychecks. Are you telling me Walmart and McDonald's are hurting? What's the net worth of their founders' families again?


You think Walmart and MacDonalds are the only companies out there? Those are the ones that are going to survive regardless. What about the 32.5 million other businesses in the US?


This disease didn't exist 4 months ago and you're calling it a scandal that they can't process billions of tests in that short time frame? It's also not enough to be tested just once as there have been many false negatives. Scaling that up is an immense challenge. It was also exacerbated by the fact that China wouldn't allow our researchers into the country to study the disease. Meanwhile they've already reached stage 1 clinical trials for a vaccine in just 2 months. Fastest turnaround time ever for any clinical trial of a vaccine, ever.


South Korea has been running 10k tests per day since February.

The US has run less than 10k in total. That is a colossal failure.


> The US has run less than 10k total. That is a colossal failure.

Question claim in fact, although it is persistently being repeated everywhere constantly, for propaganda purposes. Three of the major private lab companies indicate they'll be at a 10,000 combined per day test capacity before the week is out.

The US doesn't know how many tests have been run in total nationally. A large volume of tests have been distributed to hospitals and private labs around the US, the majority of which do not report their numbers back to a central authority (such as the CDC). That's a failure of centralized reporting and organization, due to the US having dozens of separate healthcare systems which the Feds do not control.


> the majority of which do not report their numbers back to a central authority (such as the CDC).

State infectious disease registries are absolutely receiving ELRs (electronic lab reports) and transmitting case reporting back to CDC and data is currently moving for novel coronavirus as well.

The term you are looking for is NEDSS/NETSS reporting.

> Today, all 50 states and Washington, D.C., use NEDSS-compatible integrated surveillance information systems to send case notifications to NNDSS.

https://wwwn.cdc.gov/nndss/nedss.html


> Three of the major private lab companies indicate they'll be at a 10,000 combined per day test capacity before the week is out.

So you think we should celebrate that after a month to get ready, we'll have finally caught up with a country 1/7 our size in testing capacity?

The US is currently testing the smallest percentage of its population of any developed nation: https://twitter.com/nick_kapur/status/1238156462708477958


USA has a habit of using medical personal as spies so understandable if countries don't trust them. WHO had already provided testing kits but US didn't accept wanted to build it own bungled it the first time and is waiting for private companies to build the tests. CDC was not allowing hospitals and labs to do their own testing so I think you guys should stop blaming China and start looking inwards. Had US done everything perfectly then balmed China then it would be understandable so far they have bungled all the steps now blaming China for it. South Korea, Singapore the rest of Chinese neighbors didn't need to go to China to be on the ball. But oh China didn't allow usa inside China.


The US doesn't have billions of people, just checking the ones coming from the countries where it's present would have been enough, other countries managed to do it.


They did that weeks ago. Where have you been? They shut down travel from China a month ago. Which countries managed to contain this thing, by the way? Because I see tens of thousands of cases in Europe and Asia and the Middle East, by the way.


Taiwan and Singapore appear to be containing it thus far.

China, too, if you can trust their numbers, and South Korea's look positive after a big starting spike. Each of these countries took early (except for China, but they shut down Wuhan with fewer cases than the US has now), aggressive steps that should be considered a model for others.


South Korea has 8,000 active cases, over 114 today alone. Singapore has a population of 5.8M. They've got 178 cases. The U.S. has a population of 320M with 1338 cases. That means their infection rate is nearly 10x higher than the U.S. Meanwhile, we are taking action. Shutting down European travel, Chinese travel, cancelling schools, cancelling NBA season, NHL season, etc, etc...We are taking aggressive steps.


> That means their infection rate is nearly 10x higher than the U.S.

No, it probably doesn't. It probably reflects the fact that we're not finding folks, because we're not testing enough.

Ohio's (Republican, incidentally) governor, for example, is stating that their five confirmed cases likely indicate 100,000 undetected in the community so far: https://twitter.com/GovMikeDeWine/status/1238177953126604801


Look, we can only debate about confirmed cases. You can speculate as to whether there are more or less undetected in one country or another but that's just going to be a bunch of hypothetical posturing leading nowhere.


A country 1/7 our size has done 25x the testing.

If you don't think that affects how our numbers net out, I'm not sure we can have a rational discussion beyond here.


Source?


https://www.npr.org/2020/03/12/815097813/experts-credit-sout...

> In terms of per capita testing, Korea has run 3,600 tests per 1 million population. In contrast, U.S. has just run five tests per 1 million people.


We had 1300 cases. Now it's over 2000. It will be well over 5000 by next week. It does not look like other countries have higher infection rates than the U.S., but nearly similar.


> The lack of testing will maybe turn out to be one of the biggest scandals of my lifetime.

Testing more people is not going to change anything, this virus is so easy to transmit that we should take for granted that we will catch it anyway.

What we can do instead is realize that we are facing something big and protect vulnerable people from it by asking them to stay at home and create a system to send them food safely, it is almost useless to prevent healthy and young people to work as it will just block the economy/transportation/health work/everything


I think testing might be important to epidemiologists and public policy makers. It's probably why Dr. Fauci at the CDC was saying he is in favor of proactive testing.


"inject 1.5t" by that do they mean a 1.5t panic bailout for wall street? how can we find 1.5t in the budget but no money for universal healthcare, student loan forgiveness, ubi etc.

The markets wouldn't be so important if there were a safety net.

</soapbox>


The Fed isn't printing 1.5 trillion greenbacks and handing out fat sacks on Wall St. They are providing short-term loans to increase the amount of money in circulation (liquidity). The intent is to increase the total amount of trading occurring so that the market can return to equilibrium sooner than later. The Fed wants to prevent firms from not making trades solely for lack of liquidity in the market.

edit: "from making profitable trades" -> "from not making trades"


> They are providing short-term loans

They're also buying assets, e.g. Treasuries. This is about increasing liquidity, not printing money.


It's the closest to printing money as the real world gets. "Hey here's an insane amount of money at 0% interest rate so you could literally invest in ANYTHING and make free money. Go ham."

Lets remember what causes slowdowns in productivity, panics, the great depression, the recession etc: people being slammed with too high interest rates for what's feasible for them to repay when times are tough. If the fed offered low interest rates directly it would be a different world. Remember also, the world is an auction house, so when people get these kinds of perks and you don't, your money doesnt go as far.


There is huge amount of cash sloshing around as it is. Folks like Mark Cuban have already been mostly cash. Big tech have $100B cash lying around. I think it would be disgenuous to say there is no cash available for trading but perhaps right thing to say that I rather not trad with my own cash. I presume if you trad with fed money and go on loss over long term then you can simply declare bankrupcy of your shell company and start a new one.


Literally printing money and pushing up inflation would effectively claw back these dollars, yeah? So long as you send rebates to everyone else.


>> They are providing short-term loans

If I want to give my friend a loan, I need to earn that money first by working hard. FED does not conduct any profitable activity that would earn them any money, they DO PRINT that money from thin air.


Why do people keep telling the lie that the FED "does not print money"? As you say, these "loans" are the FED printing $1.5t, no other way to look at it.


There is at least one other way to look at it. These loans will primarily, if not exclusively, go to large financial institutions. Due to the wonders of fractional reserve lending, those institutions will get to loan out several multiples of the original $1.5T. Another way to look at it is that they've probably "printed" closer to $15T.


How does this work? Like any government can just print their way to prosperity?

I mean you just magically put $15T into circulation?

Won't this lead to inflation?


Yes it will absolutely lead to inflation. But for the well connected banks who are first to benefit, and coincidentally, I'm sure, the ones who run the Federal Reserve, the money will get to be spent/loaned before it causes much or any inflation. For the rest of us with value stored as US currency, we get fucked.


It depends on what it is used for. If banks have enough deposits to lend out $15T they might not find enough borrowers and therefore only a partial sum will reach the economy. Why do banks have so much trouble getting borrowers if the interest rates are negative? Because banks add additional fees on top. The fee must high enough to cover defaulting loans and the bank's expenses.

If you have ever taken a loan from a bank you are aware that you must prove to the bank that you are able to repay the sum. Based on the information they receive they will calculate the default risk and increase the interest rate accordingly.

Warning. Extremely simplified for ease of demonstration.

If you have a 50% default risk then someone else has to cover your missed payments. For every $10k you want to borrow the bank has to ask for another $10k in additional interest to cover the default risk. If your loan lasts 8 years that means $833 additional interest per year or around 8%.

Now, if you are a young poor person with a bad credit score then you might end up paying 5% on top of the actual interest rate. Negative interest: 5% - 0.1% = 4.9%. Positive interest: 5% + 1% = 6%. I'm glossing over compounding interest but the picture is clear. Negative interest rates are not going to meaningfully change the cost of borrowing money for the average person unless they get a mortgage that is backed by the value of the house. Meanwhile for rich people and companies who can get rates as low as 1% lowering the interest rate to -0.1% is almost like a cheat code. At those rates the money might as well be free.


As long as other countries use dollars, it's the US that's got 15T worth of goods more. These 15T buy entire tankers of oil, metals, minerals and goods from other countries and this is what matters.


The key distinction is that the Fed is trading the new money for high-quality collateral. The original owners of the collateral will return the Fed's money within weeks of months in exchange for the return of the collateral.


No matter how you look at it, somebody who is not the Fed benefits from this. If market participants didn't think that they will benefit financially from this, they would not participate. This kind of "zero-sum temporary money" theory doesn't add up.

The situation is exactly as kylebenzle inferred; the Fed is injecting new fiat money into the economy and it's going straight into the pockets of rich financial institutions which add no value whatsoever to the economy or society.


No, the way this works is this (as I understand it): I'm a bank, I need some cash to operate (people withdrawing money, trading, making payments, etc.), but I have no cash. I have $10B in US Treasury bonds, but - well, they're notionally worth $10B, but nobody want to exchange them for money, because noone else has money to spare (i.e. liquidity crisis). So here comes the Fed, takes my $10B in bonds, gives me $10B of cash so that I can run my business... In a week or so, I need to return $10B in cash, I get my $10B in bonds back ("collateral") and the cycle continues again.

The alternative is, the bank collapsing, taking some part of the economy with it.


Genuine question here. Any data on the typical duration of these loans? How long typically the Fed holds collateral?

I remember 2 years ago the market throwing a tantrum because of the fed unwinding it balance sheet. Doesn’t that mean that typical loans are never repaid and the Fed just let the bonds mature?


I think the "unwinding" was Fed stopping QE, which is slightly different - they were buying bonds on the market (not as emergency liquidity) to prop up asset prices (buy bonds -> reduce interest rate -> investors seek other sources of returns -> buy stocks -> stock prices go up... same with real estate). Bonds mature (literally disappear), so if you want to keep propping up asset prices, you must keep buying new bonds as the ones you own mature. The Fed was doing that for a while, then tried to slowly stop, ween the market off the cheap money (because if the patient is supposed to be healthy, s/he should be able to survive and thrive without drugs). Trump threw a tantrum (I guess he knew/suspected that Fed was the only/main thing propping up asset prices, without Fed the market would crash/stop increasing, which isn't good for elections because politicians always get the blame), the markets weren't happy either (basically NIMBY - you're invested so you want to keep the value of your assets as high as possible).


Got it thanks. Still, any data on how long a typical repo loans is?


> the Fed is injecting new fiat money into the economy and it's going straight into the pockets of rich financial institutions which add no value whatsoever to the economy or society.

Financial institutions control who gets levered money (loans). They provide a huge value to an economy and society in a fractional reserve banking system.

You are upset about the Fed, when you should be upset about the government who controls fiscal policy. The government can provide tax holidays and other benefits more directly to people, as is their role, not the Fed.


I don't agree that bank loans add any value to our modern fiat-based economy. It's possible that loans may have added economic value when money was based on a limited resource such as gold, but that economy was an entirely different beast from what we have today. Fiat is not simply a switch that one can flick off and on without anticipating negative flow-on effects; and yet that's exactly how governments have treated it when they abolished the gold standard whilst continuing to support an archaic system of debt and credit. Since the fiat system was introduced, house prices have skyrocketed (relative to average salaries) and corporations have gained monopoly positions in the market whilst using lobyists to take control of our governments. Our fiat-based, debt-oriented system has some obvious drawbacks.

Both the government and the Fed are to blame; one for designing the whole scheme and the other for implementing it. I'm upset about the idea that the Fed can inject money into the economy based on obscure criteria. From the perspective of an average citizen, who is legally obliged to accept Fed money in exchange for their labor, whatever set of criteria the Fed chooses is going to be inherently inadequate; the mere lack of transparency behind the Fed's operation is by itself sufficient to discredit the validity of the entire operation.

Money backed by gold was good money precisely and fundamentally because everyone understood what gold was and where it came from. Now, essentially nobody knows what fiat money is or where it comes from and yet everyone is legally obliged to accept it.


No. There are all kinds of discontinuities in money but this narrative is just an exhibition of ignorance.

Even when "money backed by gold" was a slightly less completely inaccurate fiction than it is now, what people "knew" to be money was many, many, many different things, depending on where they were and what they did for work.

Stories like this are like religious narratives, and "money backed by gold" is like the story of the angry god allegedly giving tablets to some dude. It is at BEST an allegory but yall go and read it like it happened.


What are you talking about? I’d love to see you actually expand on this and explain what you mean instead of just pooping on it and saying people believe in fairy tails.


I'm sorry- I am happy to respond to specific questions from the above but nearly every single sentence is a factual/historical misrepresentation, and the language/terminology ("fiat-based", "backed by gold", "yet everyone legally obliged to accept it") is that of someone who has a particular religious view of money (maybe a "goldbug") that may have its own philosophical consistency but...is...just...completely...ahistorical.

Money is a much more interesting topic that goldbugs give it...um...credit for.

There is another recent discussion on HN:

https://news.ycombinator.com/item?id=22573204

that has a lot of pointers to good resources from which to begin the discovery process.


Essentially its countering threat of massive deflation with some inflation


If you want to compare apple to oranges, then you would need to be able to print money from thin air in order to be consistent in your metaphor where you are the Federal Reserve and your friend is a cohort of "financial institutions providing high-quality collateral" in exchange.

Personal finance and monetary policy are not similar even though they both involve money. Money in your bank account is not the same as money in the Federal Reserve or even money printed at a mint.


>> Personal finance and monetary policy are not similar even though they both involve money.

That's what central banks want you to believe: that what they are doing is something special, "God's work" - as some drunk Goldman Sachs executive put it. Truth is: law of economics are pretty much like laws of physics - they work the same in small and large scale. It is no coincidence that Great Depression happened in 1929, mere 16 years after FED was created - that was just a first of many consequences of central bank's irresponsible actions.


How short term are these loans?


Overnight, I think


Why do banks get these sweetheart loans instead of civilians?


What is the average person going to do with an overnight loan?


I 100% agree that the Fed's actions are troubling and it's boxed itself into a corner, and has very ineffective tools for what it's trying to do, but ...

This injection isn't really comparable because those other things are expenditures, while the 1.5t refers to short-term loans to very creditworthy borrowers. It really doesn't come at the cost of providing universal healthcare.


The very creditworthy borrowers are very creditworthy because they receive 1.5t in short term loans from the Fed.


Not really, the assessment is made before extending the credit.


Like they were "very creditworthy" in 2008.


Because the people that pay for campaigns already have healthcare. The more money you allow into politics, the more politics is about money.


The Federal Reserve is not a government entity and has nothing to do with the budget, which is set by the US congress.


The Fed does not set the budget, and is independent of the three branches of government, that's true, but...

> The Federal Reserve System is an independent government institution that has private aspects. The System is not a private organization and does not operate for the purpose of making a profit.

From https://en.wikipedia.org/wiki/Structure_of_the_Federal_Reser...


Two sentences later in the paragraph your quote came from:

>As an independent institution, the Federal Reserve System has the authority to act on its own without prior approval from Congress or the President.

And later:

>The twelve Federal Reserve banks provide the financial means to operate the Federal Reserve System. Each reserve bank is organized much like a private corporation so that it can provide the necessary revenue to cover operational expenses and implement the demands of the board. A member bank is a privately owned bank that must buy an amount equal to 3% of its combined capital and surplus of stock in the Reserve Bank within its region of the Federal Reserve System.

*edit - Also, the source for your quote is cited as "BoG 2005", with a dead/nonexistent URL


Uh what?

Fed = Monetary policy == Make sure money can flow "appropriately"

Government = Fiscal Policy == "Who gets money"

I don't know how your quote is relevant at all.


You seem to be assigning the values of boolean comparison results with that syntax. So Fed and Government are both false in this example.


the part where it says the fed is a government institution...


Specifically, "the fed is a private bank" is a common refrain among goldbugs and currency conspiracy theorists, and it's not true, no matter how often it's repeated.

Not saying the OP is a goldbug or currency conspiracy theorist, but they're the only people I ever see tossing that out so quickly and without any elaboration on what they mean.


> The System is not a private organization and does not operate for the purpose of making a profit.

> Specifically, "the fed is a private bank" is a common refrain among goldbugs and currency conspiracy theorists, and it's not true, no matter how often it's repeated.

I'd recommend reading The Creature from Jekyll Island. Once you understand the origins of the Fed you will understand that it's an institution founded by public and private individuals and entities to drive profit and leverage the system and taxpayers where it can. It's a creature with public/private/independent parts. It requires no conspiracy because much is known about it, although most people are unaware. JP Morgan, Wells Fargo, Citibank, the government and others founded it together!

"At the end of November 1910, Senator Nelson W. Aldrich and Assistant Secretary of the U.S. Treasury Department A. Piatt Andrew, and five of the country's leading financiers (Frank Vanderlip, Henry P. Davison, Benjamin Strong, and Paul Warburg) arrived at the Jekyll Island Club to conduct a secret meeting to plan the country's monetary policy and banking system, formulating during the meeting the Federal Reserve as America's next central bank.[14] [15] According to the Federal Reserve Bank of Atlanta, the 1910 Jekyll Island meeting resulted in draft legislation for the creation of a U.S. central bank. Parts of this draft (the Aldrich plan) were incorporated into the 1913 Federal Reserve Act." [1]

[1] https://en.wikipedia.org/wiki/Jekyll_Island#Planning_of_the_...


$1.5 Trillion goes into a certain aspect of the money supply to help maintain credit spreads, etc. This is completely different than your agenda list expenses. If you flooded the entire US economy with $1.5 trillion in straight cash it would likely cause inflation, but the Fed isn't injecting it into that level of the money supply.


Often this type of action is not the government spending that level of money with nothing in return. Generally it is buying an asset it intends to sell later (often at a profit).


For sure. People still get up in arms about the 2008 bank bailout without realizing that it ended up resulting in a $121B profit to the government: https://projects.propublica.org/bailout/


I tried to click your Propublica link because I want to see their numbers, since the wiki article on TARP points out that the "profit" the government made comes out to a 0.6% annualized interest rate, so once you take inflation into account the government actually lost money.

https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program


The Propublica link includes both TARP and the government's investments in Fannie/Freddie, which provided heavy dividends and is where a large portion of the profits have come from.

That aside, the common misperception of TARP is that the government gave away $400+B of taxpayer money, which is a very, very far cry from a small inflation-adjusted loss.


>the common misperception of TARP is that the government gave away $400+B of taxpayer money

I don't think this is a common misconception, I think it's a strawman argument to deflect criticism of the bailouts.

Regardless of whether or not the government made money, we created a massive moral hazard by allowing banks to engage in shady behavior, avoid any criminal prosecution, get below-rate loans to avoid the market consequences of their actions, and left the common people out in the cold.

On top of that, we supposedly fixed the problem by expanding banks' reserve requirements, but when they got into trouble in the repo market, the FED runs to their rescue with even more below-market-rate loans, which seem to get larger and larger by the week.


When taking inflation and the time value of money into account, it was a loss.


This isn’t a bailout for wall street, it’s an attempt to bailout the economy as a whole because there isn’t enough money in the banking system to cover the institutional sell off. In other words, they had to do this to prevent a run on the banks which would royally fuck everyone.


Yes, because banks are over-leveraged. Regulations that kept leverage in check have been overturned by the GOP.


Completely and utterly false. Banks are at their lowest leverage of the last 40 years. This is verifiable hard data.


Can you help me find this data?


When you hear the Fed, it is referring to the Federal Reserve. The Federal Reserve is independent of the federal government. Essentially, it's the entity that can print money. When it does, it doesn't just give the money away, but it injects the cash by purchasing assets and making loans. It also does the reverse by selling assets. So this money doesn't come out of the Federal budget.

https://en.wikipedia.org/wiki/Federal_Reserve#Tools


Yes. The 500 million they injected yesterday stopped the freefall for 30 minutes. https://www.bloomberg.com/news/articles/2020-03-12/n-y-fed-t...


>inject 1.5t" by that do they mean a 1.5t panic bailout for wall street?

Banking clients are demanding more liquid assets (ie cash) than banks have access to, so they are swapping treasuries for cash from the Fed.

It's not like this is banking profits; would you rather the bank fail and you or your business or your employer lose everything you had there? Because that is also an option.


People always forget that the bank bailout is ultimately about people protecting their own bank accounts. If you dislike the incompetent banks then take your business to a bank you trust.


There aren’t any


Credit unions are generally trustworthy.


I trust my BTC wallet.


>how can we find 1.5t in the budget

Central bank ≠ treasury.


Not all dollars are created equally


Yea, dollars put into student loan forgiveness actually pay themselves off many times over due to the high velocity of cash in the hands in young people - money injected into the market has a comparatively low velocity and tends to just get exported overseas.


Why would you forgive student loans? That way you reward incompetence. Instead, you should give each young person $300k - some would repay their student loans, others (who were more prudent with their choice of education) would have down-payment for a house or something... Forgiving just the student loans would create massive perverse incentives.


> Why would you forgive student loans? That way you reward incompetence

It's the opposite: it's a step toward removing the moral hazard that allowed predatory loans to be offered to students in the first place. The logical end-point is to get back to free or affordable tuition.

> Instead, you should give each young person $300k

Admirable suggestion, but how does that _not_ create perverse incentives to e.g. blow it all speculating on Hearthstone cards?


They could also decide to buy stocks and then the entire idea becomes meaningless.


Because those student loans were made in bad faith to people who were too young to realize how badly they were being exploited and how meaningless their education was - for clarification I've paid off all of mine, and I'm still happy to see zero benefit out of this expenditure because it'll be just and help the economy.


You didn't meaningfully address the parent which was talking about rewarding this exploitation. Imagine you are a college and instead of investing into high quality education you try to get as many students to enroll through concessions even if it means that they cannot repay their loans because of bad job prospects. If students know that their loans will be forgiven then they might go for the "expensive vacation" college instead of the "boring nerd" college with those super strict professors.


Just like the bank bailout?


Not taking a stance here either way, but surely it's possible to oppose both the bank bailout and forgiving student loans on the grounds that they both create perverse incentives?


The bank bailout was purely about liquidity. Over the long term the banks are going to repay the loans. Student loans are a long term problem. The only way you could fix it is by sending students back to college and force them to get a profitable STEM degree.


I tend to agree philosophically, but is there data to support this? I'd like to upgrade to informed agreement.


Here is one source based on income bracket[1] which I think is a pretty strong corollary. Here is a nice visualization of spending by age group[2] and the original source for that data[3].

1. https://www.pewtrusts.org/en/research-and-analysis/issue-bri...

2. https://engaging-data.com/household-spending-age/

3. https://www.bls.gov/cex/home.htm


these are overnight loans that are intended to allow normal overnight financing to continue even if the markets siezed up because everybody is so panicked nobody wants to let loose of their cash.

Yes, this means the Fed is very very worried about the state of the market, it means they think it's at risk of stopping normal operation. Maybe not ongoing crisis but they're worried about crisis in the near future.

The fact that the stock market circuit breaker has been hit a grand total of once before, back when it used a different set of rules and was easier to hit, and then we've hit it twice in a week is pretty fucking bad news, if that sets the backstory for you at all.


By contrast, the Hong Kong plan is to mail a grand to every citizen (iirc)


While good long term health is nice, no one wants to be on the receiving end of mass hysteria when individuals find out they can't withdraw their money.


> The markets wouldn't be so important if there were a safety net.

The markets literally pay for the entirety of any safety net. Without the markets there are no jobs, so no payroll or income tax revenue. Without tax revenue, there are no safety nets.

Without the markets, there are no investments, so no capital gains tax revenue.

Without the markets, there is nothing to sell, so no sales tax revenue.

Without the markets, there is capacity for charity.

If you don't understand how critical the markets are to the functioning of the country, you don't understand how countries function.


We have a fiat currency. The Government creates “money” whenever it pleases. The money is “Backed by the full faith and credit of the United States”.

I completely agree that in the long term this is completely faulty and just helps to exacerbate the underlying causes of economic crisis. But our government (typically) does not act in long-term interests. We as a people do not hold our politicians accountable.


>The money is “Backed by the full faith and credit of the United States”.

I'm pretty sure its treasury bonds that are "Backed by the full faith and credit of the United States". Dollars are backed essentially by what you can buy with them.


The US dollar was at one point backed by a gold and silver standard, meaning that you could always go redeem the cash for a specific amount of the metal. After the Great Depression the US moved away from the standard, backing the money with the faith in the US government.

This is why each note has “Backed by the full faith and credit of the United States” printed on it.

https://en.m.wikipedia.org/wiki/History_of_the_United_States...

https://www.reference.com/business-finance/backs-up-currency...


>This is why each note has “Backed by the full faith and credit of the United States” printed on it.

No they don't. I just checked three different bills in my pocket (a $1, a $10 and a $100) and none of them say this. They say "This note is legal tender for all debts public and private" but there is absolutely no reference to "the full faith and credit of the united states"


This is debt, not equity.

The "budget" is equity.


Just a reminder, "bailout" is loans, not gifts. US government got it's 2008 bailout money back with interest.


If we're getting in to the weeds on the ebb and flow of money to and from the government, universal healthcare saves the government money rather than costing it money.


I'm genuinely curious what evidence there is for this?



Folks. Companies listed on the stock market hire average folks who need the money to provide for their spouses and kids. Companies that provide staples to you like food and gas and transportation and medical supplies.

These are the companies you are actively shorting. Think about that. This isn’t the same as 2008.


Company's welfare is somewhat connected to their stock price, but it's a really weak relation. The stock market is mostly a gambling simulator that runs beside the economy as it's own little micro-economy - this doesn't make it worthless but it does make this sort of a statement ring really hollow.


The connection with the real world is made whenever a company floats some of their stock.


It's like fantasy basketball vs real basketball


These days companies are VERY tied to quarterly EPS guidance and stock prices. Layoffs and adjustments closely follows that as well.


Only when those companies are trying to raise money. In the meantime, it is the speculators and the institutionals that hold a large chunk of what has been floated.


The point here is not where did the money come from, it’s why is it needed? And the answer is because there isn’t enough liquidity to cover the institutional sell off. Which means that they HAD to do this to prevent a run on the bank. That’s more alarming than the virus I think. Hospitals run on money. No money, no doctors.

This article is much less PR: https://www.forexlive.com/centralbank/!/new-york-fed-to-cond...


I honestly don't think this is going to work. Markets and investors are notoriously greedy and have a very short memory. This infusion will lift the market for a day (if at all) and institutions will make money and the next day the news cycle will take over and the selling will continue. We are in the early phases of negative news so not sure effective this will be.


No idea how you get downvoted. Market has already sold off the gains from the stimulus. Lasted a few minutes. Not very well spent money IMO.


it's not a stimulus it's loans to prevent a liquidity crisis and the credit markets from freezing up. It was the credit markets in 2008 that nearly killed the world economy. They dwarf the stock market.


Still, given the market was like Meh, seems like nobody thought it was very useful.

That said, yeah I see how you are right. Lots of businesses run month to month. When they run out of cash they go bankrupt. Once enough companies do so, the economy takes much longer to recover.


Maybe keeping the market from doing something much worse than "meh" was the point, and this was a success?


I doubt they expect it to "lift" the market in a meaningful way, they're just trying to smooth out some of the volatility. Having lived through the 2007/8 financial crash, yeah... market declines happen, not the end of the world when they do.


Speculation on my part as I still don’t fully grok repo markets and only have a vague sense of how the treasuries market impacts equities but I’ll continue.

I see some people saying this should alleviate some of the losses incurred by the recent market crash. I however, don’t see how that is the case. To me this seems like a move from the fed to make sure we don’t enter into a liquidity crisis which doesn’t necessarily do anything to signify substantial move upwards in equities. Sure, the fact that investors and traders can now be fairly confident we won’t hit a liquidity crunch and therefore kill some fear in the market, but was that the biggest factor causing the fear and selling in the first place?

My understanding was the selling, and rightfully so, comes from the affects of CoVid. Travel bans, event bans, trade bans, lower consumer activity, etc. I don’t see how injecting capital into the treasuries market alleviates any of these factors.

If anything I think this would cause equity markets to sell off more in the mid to long term knowing that the fed had to do this to keep shops open and liquidity available to those that need it (I'm talking to you banks). On top of this factor, this move by the fed surely will push inflation higher and I would assume production would slow given all the virus affects mentioned above. This puts our economy in stagflation which has a lot of the hallmarks of a recession...


Like you said, this is to make sure we don't enter a liquidity crisis. The market will stay down for a while, but this will allow businesses to weather the storm instead of going under.


I agree. I think I'll be adding to my shorts here. I'd still be very interested in hearing a real experts opinion on what this QE move does to inflation.


Will the fed's move fail to move asset prices higher but also cause inflation? If they're only making funds available for short-term loans, I'd figure neither equities or inflation will be significantly affected by the fed actions today.

I would not be surprised if we see inflation though. The virus is going to lower productivity due to all the extra overhead. Prices in many areas will probably go up even as the economy stalls. Hopefully the governments react appropriately.


Based on your opinion, you think productivity will slow and inflation will rise (regardless of cause) that is the definition of stagflation and by definition bad for the economy, bad for equities. Given these two things, higher inflation lower productivity, we would expect to see the price of equities go lower.

Also side note which is interesting, but not entirely sure how it effects things.

This article hints that the Fed might be moving to a longer term asset purchase plan

https://www.morningstar.com/news/dow-jones/2020031215079/fed...


> Speculation on my part as I still don’t fully grok repo markets and only have a vague sense of how the treasuries market impacts equities but I’ll continue.

From my understanding the US treasury market is the most liquid and largest market for any asset in the world. Up until recently these treasuries had a positive real interest rate, so if you are a corporation with large amounts of cash (typically a bank) you don't want to hold this as cash in a banking account but rather you want to hold treasuries and get a small return. If there aren't enough people trading treasuries anymore and liquidity dries up this can have devastating effects on companies because they might hold lots of assets in the form of treasuries but they need to convert them to dollars to pay their employees or suppliers and need to sell treasuries for that. The repo facility of the FED is a buyer (or seller) of last resort that can hand out dollars for treasuries thus ensuring that there's no shortage of dollars.

> On top of this factor, this move by the fed surely will push inflation higher and I would assume production would slow given all the virus affects mentioned above.

I don't think this will push inflation higher. This is not QE (though there is a meme that it is) where the FED buys treasuries (and MBS) outright and holds them until expiry. If a bank sells treasuries to the repo facility then it will have to buy them back until a pre-determined date. So if the repo facility works it will compress the spread in the treasury market and thus reduce funding costs for banks and ensure that enough dollars are around. Right now it seems like lots of companies are hoarding cash and drawing close to the full amount of their credit lines which means banks are short dollars. Because most of these credit lines will probably be used to fund ongoing operations (pay employees, etc.) or bridge a shortfall in revenues they are unlikely to cause companies to invest more or hire more and drive up prices.

Christine Lagarde today announced TLTRO III (https://www.ecb.europa.eu/mopo/implement/omo/tltro/html/inde...) which serves the same purpose. Helping companies and households to survive a shortfall in income. In short, you don't want to have a bunch of companies going bankrupt just because the economy stopped for a couple of months - the bureaucratic costs and resulting uncertainty for consumers would be much too costly.


Nobody is asking anything about funds now. But so many seems to be angry about healthcare for all. A universal health care can survive this pandemic and also others. This is unbelievable


But don't worry! Joe Biden has guaranteed he'd veto such an act even if it got through the house and senate.


Not according to his latest statement.


Source?


My bad, I misread the relevant portion of this article: https://www.npr.org/2020/03/12/814717480/sanders-offers-bide...


this is a very disingenuous read of that interview.


Just to note, the full interview transcript is here[1] and the reply to

> It comes to your desk. Do you veto it?

he replied with

> I would veto anything that delays providing the security and the certainty of healthcare being available now. If they got that through in by some miracle or there`s an epiphany that occurred and some miracle occurred that said, OK, it`s passed. Then you got to look at the cost.

Unlike on hackernews politician's statements shouldn't be read charitably and in the best light possible because not saying "no" is a clear signal to a lot of the folks listening to the interview. I think reading it in the light of "yes" is fair, but he at least waffled a lot more than was warranted.

1. http://www.msnbc.com/transcripts/the-last-word/2020-03-09


On the contrary, reading your side's politicians the way you expect (charitably) and the other side's politicians the way you expect (uncharitably), you end up with the divisions we have now. I'd suggest reading both charitably regarding interpretation, then being cynical regarding whether it'll really happen/whether it's honest.

[edit: (charitably) and (uncharitably), not (charitably) and (charitably)]


I think that is a noble stance to take and for a long time I was in that pack - but politicians lie a lot so now, whenever it sounds like a politician is leaving themselves an out I will assume they are doing so if they have a past track record of such (even if it is relatively rare).

Additionally, I don't take the words I hear from politicians on my side (if that's really an accurate term) charitably either. I err on reading both interpretations cynically, and one needs look no further than the "hyperbole" of trump's primary rallies to see where a charitable reading fell far short of the truth.


There's a difference between what they mean and whether they're telling the truth. If Trump says something that you could interpret uncharitably as "I eat babies every night" or charitably as "I eat caviar every night," then it's best to interpret it charitably. But then you call him on his bullshit that no he doesn't eat caviar every night.

Charitable interpretation, cynical trust.


You bring up a good point and I agree, the offering undue charity to persons arguing from a position of bad faith is why were are here.

Biden would veto the bill.


Thanks for providing the context. I agree that it's very difficult to read this as anything other than a carefully worded statement that he would at the very least consider a veto. His statements elsewhere suggest that he thinks the cost is in fact prohibitive.


Good, because it's a bad plan that won't work.


Can someone tell me, with a straight face, how this won't cause inflation at one of the worst points to have such?


The answer would be something like "Increasing the money supply has been very successful at mitigating previous recessions without causing inflation."

Unfortunately, previous recessions were caused by demand-side shocks. So increasing the money supply increases demand and mitigates the deflation that usually accompanies a demand driven recession.

It's not clear whether the upcoming recession is supply or demand driven. Shutting down factories in China causes supply shocks; laying people off because of social isolating will cause demand shocks.

If it's a supply shock recession, they usually come with significant inflation and more money will make it a lot worse.


> If it's a supply shock recession, they usually come with significant inflation and more money will make it a lot worse.

Surely in the beginning, with just China impacted, that was the case. But right now with a global pandemic it's not clear if its a supply shock, or both.

Curious, if supply is lower and the demand lowers more, then what does it mean. A depression??


Economic theories regarding inflation aren't so simple. It is not simply true that increasing the money supply causes a proportional increase in inflation. There are other factors. Where does the money go? How is it being spent? Is product output increasing with increased demand? If the money ends up in wealthy bank accounts, not being spent, then it won't really affect our consumer prices, will it? If consumers have more money to spend, but factories can meet the increased demand, that won't increase prices either, but it will drive growth.

There is plenty of evidence for this. Consider that the US money supply more than doubled since 2008, yet our purchasing power for general goods didn't halve.

Asset prices have doubled, though. Fueled by QE or real growth? I'm inclined to think the former. Food for thought.


It's "only" a big loan, so the money will be reeled back in. It would only cause inflation if it sloshed around the system long enough for McDonalds workers to get some and use it to compete for consumer goods. As long as none of it makes it outside of "the system" we're fine.


Not an expert but I think the argument is that this is just swapping one asset (government securities) for another (central bank reserves). So, the working monetary base is not necessarily increasing.


Demand for money is up, because there is a lot of volume being moved. This drives prices up; we are actually experiencing deflation right now. QE increases liquidity, lowers demand for money, and corrects the prices.

That is the idea, anyway.


Coronavirus is not a cause, but it is just an igniter.

The true cause of a crisis is pumping money into institutions which should bankrupt years ago. Pumping because we were too much afraid of normal crisis back then and now we get that crisis, but multiplied by 10 in terms of impact and time period.

Crisis is good in economy. It let big, old and damaged trees to fall and to give more sun light to small healthy trees which may start to grow.

Instead of pumping money into stock market which only feeds the richest ones, we should let them bankrupt to make a space for more healthy businesses. Unfortunately people on average do not understand it and still elect interventionists. It postpones crisis, increases income gap and make crisis at the end much more damaging.

We are very close to see a bankruptcy of Italy. Then banks which bought their bonds will follow. With the Deutche Bank on top.


Finally.

I agree with you!

Need to see wood not just trees.

That's also why I'm so triggered all the time when some bozo talks about "recession risk" again as if that was the problem.

This is a systemic crisis (in fact, my bet is on system collapse) and it's been years in fact decades in the making. If it hadn't been "coronavirus" hysteria it would have been something else to ignite the tinderbox.

Good riddance. It's kind of inconvenient for me personally but I think the system is stupid, evil and not accessible to reason or even pleading for change. As long as some portion of people can happily profit from status quo, they ride roughshod over everybody else and compensate their conscience with meaningless social wokeness and virtue signaling on IG/Fakebook.

Let the system burn down, maybe then people will listen to reason.


That worked for about 45 minutes and then the market dropped right back down again. Incredible. At this rate there won't be enough liquidity to cover these sell-offs if they continue. I don't think that's ever happened before.


This isn't and will never be a liquidity problem. This is a real crises. Economic activity is going down to 1980s levels


Reminds me of the legends of the Plunge Protection Team (PPT)[0]. A group of people who report directly to the POTUS who're attributed responsibility by pro traders to do large buy orders when the markets are dropping sharply.

https://www.investopedia.com/terms/p/plunge-protection-team....


In times of panic, remember that in the worst likely scenario, this virus will slow consumer spending, increase demand for hospitals, stagnate productivity for about 12 months, and kill about 0.4% of the world's population (using Spanish flu infection patterns for reference, which infected ~25% of the world population). At that point, there will be sufficient herd immunity (and likely effective treatments or vaccines) to allow the virus to decay into obscurity.

Then the economy will pick up the pieces again, with actual technology, hard capital, and active workers in the workforce still existing after the hard times. I expect this market crash to look most like 1987, which saw new highs 2 years later.

The long term consequences, besides loss of life, are that most market interventions will protect interest rates for large businesses with huge credit lines and existing debt, while small businesses go under, furthering consolidating income inequality.

Would a crash be worse without intervention? Perhaps. But the long term consequences would also be more natural and redistribute resources more fairly, in my opinion.


Past performance is no guarantee of future success. Using the worst case scenario so far as meaning "worst possible scenario" is a fallacy (consider that the past "worst case" was already surprising to people back then because it was worse than the "past's past").

Not to imply we should panic over a low probability event, just pointing out that we should be careful about Kurtosis.


Note that I wrote "worst likely scenario" not "worst possible scenario."

Worst possible scenario is not really useful for short to mid term planning in an unconstrained event space (gamma ray burst or massive meteor hits Earth, etc.).


Agreed, we need to just push onwards and all will be back to normal in 12 months.

The facts remain that children, young adults, adults and even elderly without comorbidities will survive. Deaths are still restricted to those with existing health problems, particularly the elderly.

From an economic perspective, this is the perfect pandemic. We should maintain all schooling and social activities to spread the virus as far and rapidly as possible, to gain herd immunity as quickly as possible. The vulnerable can self-isolate.

The savings in pensions and long-term healthcare for the elderly, as well as a reduction in housing prices owing to the deceased estates, will promote an economic boom that may even - in the long term - offset the short terms costs we are facing right now.

You can imagine a situation where the USA has survived the virus and gained mass immunity, with 5% of its elderly population perishing along the way, giving the USA a long-term advantage due to lower payroll taxes, versus Europe who shut down early, have continual flareups due to lack of herd immunity, and continue with a heavy taxation burden due to elderly losses of only 0.5%.


WTF? Maybe we could just shoot all the old people now and get even a quicker competitive advantage? (yes, it's sarcasm but this line of thinking is evil).


So here's the thing: 80% of the population doesn't own stock. When fed pumps such massive money to prep the stocks, where does that money end up? I guess the idea is that then we pump the stock so companies continue to hire people so unemployment remains low. Considering the vast majority of jobs are low paying, if not outright minimum wage jobs, this means these trillions of dollars of fed charity is basically meant for nothing but making sure people gets paid minimum wage for next couple of months. On the other hand, if US government equally distributed 1.5T to each citizen then each person would get $5000 which is about 1/3rd of minimum wage income for a year. That seems like far better deal than trying to keep pumping the stock.


The fed doesn't pump stocks. It buys bonds and gives good deals on loans. It merely increases liquidity. It doesn't just give money to people.


Giving Person A a "good deal" on loans so they can loan that money to Person B at a great profit isn't so different from just giving money to Person A.


Yes it is, because they have to pay the money back...

The money they make isn't "fake" in some sense, like you're making it out to be. It's real utility that they have generated by providing liquidity. Loaning money is not a get rich quick scheme. There is risk involved.


Fair point that the interest accrued is coming out of the pre-existing money supply. Doesn't really change the thrust of my comment that you quoted though - they are being handed the ability to accrue capital.

Also, this is getting a little into the weeds philosophically, but injecting large amounts of capital in this way increases the money supply (and by much more than the amount of capital injected). In a sense, this is a tax on everyone who was not a recipient of that capital via a reduction in the purchasing power of their capital. Generally, consumer prices aren't going to go up in this case... but tons of people who had no investments have been looking at this crash as an opportunity to get in the game, and these efforts to prop up the markets with monetary policy in the face of an honest-to-goodness crisis can feel a little gatekeeper-ish.


No, it doesn't give money to people, these injections allow people(large companies) to save money, which is like giving money to people. Without the Fed providing liquidity, the market can and will, but the market has it's own ideas about the rate to perform overnight lending.

The market and the Fed have been disagreeing with that rate for what over two years now?


Most people I know are not large companies. They live paycheck to paycheck, and some lost their work shifts for the rest of March _already_.


I suspect that it won’t be too long until the Fed starts to buy stock the same way the BoJ has been buying stock for nearly 30 years.


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