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U.S. Labor Department allows unemployment benefits for coronavirus (reuters.com)
155 points by djsumdog 16 days ago | hide | past | web | favorite | 87 comments

You know what else would help? Since the risk curve bends sharply upward at age 60, immediately allow anyone to start drawing full social security payments at age 60, without any sort of penalty. Those companies that value their older workers would now be in the position of making work-from-home a full-fledged option, because the bargaining power would shift to where it belongs - the worker.

That would both put a massive strain on the Social Security trust and not pressure employers at all, since they'd likely be happy to have the most expensive employees retire early.

Oh right because all of our pensions systems are based on people actually dying after 60, keep forgetting that.

If we can afford a $1.5 trillion injection into the markets, then we can afford moving the SS retirement age to 60 where the most vulnerable exist.

The $1.5 trillion injection doesn't actually cost any money. The Fed is making short-term fully-collateralized loans.

It costs, just not the face value. From a government revenue perspective, it's going at around half a point lower than before, which costs about $20m/day.

(There are a lot of different ways to look at the effect of that money injection, but this is one way to try to simplify it into a cost measure that doesn't require thinking about the effects on the economy)

Well, they are presumably generating some 10s of basis points of profit (lack of loss) for the banking party, so it's more like putting a $B out there for the taking, but providing a lot more "liquidity".

That's the really disturbing thing... the bond market hasn't been liquid this week! Lots of no-bid.

Yes, just like how poor people can get 1.5 trillion in subsidized payday loans to cover the gap between pay checks...oh wait.

It’s absolutely a bailout.

Payday loans are generally not overnight and are typically not collateralized; they are in fact very risky.

Repo's are overnight borrowing collateralized by the US Treasuries. Basically it is borrowing to maintain capitalization requirements in these high volatility times. From the perspective of the US government they have literally 0 risk (you are guaranteed to get back either USD denominated money or US treasury).

If you want to use that analogy ...

You should compare it to a payday loan that is collateralized [1]. And then where the collateral happens to be insufficient because a glut of that item just came on the market (analogous to the sudden rush of banks needing to convert their Treasurys to cash).

For the ordinary person, "Sorry, can't help you, you just have to deal with the fact that everyone else is selling that product too and so it doesn't provide the value you want and you have to take a big loss or an interest rate corresponding to higher risk."

For banks, "Omg! You can't sell your bonds at par because everyone else is trying to sell before maturity? You poor thing, let me buy them up for you with new money!"

[1] Sometimes referred to as "title loans", as you might e.g. put up your (remaining equity in your) car as the collateral.

Except for they are not using random bonds, they are using Treasuries. This isn't random toxic debt, it's the debt of the US government to itself. More akin to "if banks are insolvent this ensures a certain degree of quantitative easing", which is a good thing since we are undershooting our inflation targets as is.

They’re not technically toxic debt, but the market definitely prefers cash now, so they’re unwanted just the same.

If they were unwanted, the 30 day interest rate would spike, but it hasn't. This is purely a move to provide liquidity, which is the essential job of the Fed.

They only not unwanted because the Fed is providing demand the market isn’t. That would be just as true of anything else where a glut hit the market.

What's the story here? Banks are buying 30-day bonds so they can borrow overnight with the Fed? They can only borrow up to the amount of the bond, so why don't they just... use the money directly rather than in this roundabout fashion.

If the Fed wants to keep the 30-day interest rate down, they can just buy the bonds directly themselves. They don't need to wait for the banks to buy the bonds and then repo them.

They are buying treasury and selling a treasury future, which nets them some premium. They then fulfill overnight capitalization requirements with the very same treasuries. Future premiums are higher than overnight lending rate.

It’s a bailout that doesn’t cost the government any money and that is guaranteed to be returned. Unfortunately, poor people aren’t a guaranteed return or the government would give subsidized payday loans. That said, the whole system needs to be changed to make it so that no one is in a situation to need a payday loan.

Except this time the federal reserve is paying money for loans collateralized by the federal government. It's a bit like purchasing your home loan from your bank and then giving it back after they pay you a bit of interest for it.

If a payday loan required full collateral this comparison would make sense.

Title loans on cars and second mortgages do just that, yet the people borrowing never get bailed out the same way by the fed.

And guess what, medical bills are the number one cause of bankruptcy in the US, insurance companies are refusing to guarantee coverage for Coronavirus treatment, and the Trump administration just blocked states expanding Medicaid to do the same.

Might need to think about systemic risk a little differently.

There is no bailout here. It would be like the fed stepping in to offer title loans because the title loan companies get too scared. No debts are being forgiven here.

Technically lowering the SS age doesn't cost any money either. The government controls the money supply; they could just print money and hand it out.

The real problem is that if they did this it wouldn't actually have any real short-term effect other than making the things seniors want to buy more expensive. Money's a fiction: it's purpose is to incentivize people to produce things that other people want. If you increase the amount of money in a population but don't increase the supply of goods, it just means everything gets more expensive. You still have the same amount of hospital beds, senior living centers, cruise berths, golf courses, etc. to go around but now the market-clearing price of buying one goes up, some fraction of poor old people end up without one, and their spot is taken by a richer young person.

Over the long-term there's a reallocation of labor that actually does change things: that senior might retire and his job will be filled by someone younger, or people who might've gone into pediatric nursing instead work at a nursing home, or luxury condos might be converted into assisted living. All of these have unintended consequences that ripple down to others, eg. if condos are converted to senior homes it raises the price of housing for young people.

> Technically lowering the SS age doesn't cost any money either. The government controls the money supply; they could just print money and hand it out.

The government doesn’t do this though. That’s why there is confidence in the USD.

The government does, actually: Article 1, Section 8 of the U.S. Constitution explicitly gives Congress the power "to collect taxes; to coin money and regulate its value; provide for punishment for counterfeiting", among other powers.

It's just that Congress has delegated this to multiple independent organizations within the government. The U.S. Mint makes physical coins and paper money. The U.S. Treasury issues government debt. The IRS collects taxes. The Secret Service prosecutes counterfeiting. The Federal Reserve serves as the lender of last resort to the banking system. The President submits the budget, which must be approved by Congress.

The division between the President, Congress, U.S. Treasury, and Federal Reserve forms a very important check on the tendency of most governments to just print money to cover government services, since different branches of government are responsible for determining how much is spent; where it's spent; where it's collected from, and under what terms it'll be repaid; and how much it's worth. But it's worth remembering that constitutionally, Congress has the power to create all of those agencies, and Congress also has the power to unmake them. I don't necessarily think that doing so is a good idea, but it's possible.

Parent meant the government has a credible policy of not printing away obligations like that, not that the government doesn't have the authority to do so.

“Has the ability to” != “does”. There is faith in the US dollar because the US government doesn’t exercise that right.

> The government doesn’t [print money and hand it out] though.

This is exactly what they're doing every time they drop rates - handing out new money to the financial industry. The main thing one can be confident in regarding The Fed is that they will create enough new money to keep the numbers at the Wall Street Casino ("The Ecomony") going up up up, even attempting to do so when it's blatantly inappropriate. It's seemingly the only button they know how to push.

The belief in USD comes from military dominance, the petrodollar, momentum, and a lack of better immediate options. Nobody was ever fired for buying IBM either, but eventually the world will move on.

Printing money and QE are not the same, and it spreads misinformation to equate them.

The money being "injected into the market" is in exchange for assets. They're not just giving it away.

You will gt downvoted like there is no tomorrow here, but you are factually correct. Sadly people do not grasp our fiduciary currency based financial system.

We create money all in extreme amounts all the time. Money is not some sort of 'ore' which we have to mine out of the planet through hard labor. It's a resource we create at will by simple agreement and at the push of a button in unlimited quantities. The 'downside' is that 'new' money potentially can devalue existing money, as there is just more to go around.

Giving the massive amounts of money we create daily to those that need it, for instance to retire after a reasonable lifetime of work, in some twisted logic feels 'bad', where lavishing it on those that do not need it, so they can use it just to hoard, speculate, or buy back their own stock, seems to be accepted as 'fine'.

Comparing fed injections to expanding social security spending is not "factually correct" though, it's a very weak analogy and two very different things.

You can be critical of QE, monetary policy, and the general priorities of the government but it doesn't make OP's point a helpful one. Especially considering the lack of centralized control, let alone the various other major differences between it and entitlement spending.

The $1.5 trillion thing is a bit confusing. That came from the Federal Reserve, not the US Treasury so didn't it just essentially chip away a little bit at the value of all dollars in existence instead of adding to the national debt? The Fed just created that money out of thin air (or zooming electrons) as far as I can tell. A small inflationary tax on everyone holding dollars?

They’re technically short-term loans only (like, overnight) to avoid that issue.

On the other hand, the whole Coronavirus response is largely the young sacrificing for the old. That's a sacrifice I'm willing to make, but older people should not get special financial consideration.

Being able to collect social security early is not as big of a negotiating tool as you would expect. It just doesn't pay enough to be an alternative for a lot of people, and it wasn't designed to be

Maybe a one time payment from the Government, say $3K for 2 months, without changing anything.

I wonder if the Social Security program is allowed to do something like a one off payment, I've never heard that floated before.

Social security is based on what you paid in, so the earlier you start withdrawing the lower your monthly check is. You couldn’t allow people to receive the full amount starting at 60 without bankrupting the program.

Ahem. Social security is not self-funded, it's funded by current payroll tax receipts, plus a 2.6 trillion trust fund, plus about 5 trillion in debt owed to it by the rest of the government.

Right, SS is already in a risky position, most millenials question if it'll even be standing when it comes to their turn (especially if population drops since they're having less children who will pay in), what they're suggesting would make it worse.

Well... it's a morbid thought, but if COVID-19 kills a large number of old people quickly, maybe SS will work itself out (FWIW it was my elderly dad who pointed this out to me)

Related: according to Twitter, kids are starting to call COVID-19 the "boomer remover" https://twitter.com/BaileyCarlin/status/1238147875143647234

Yeah, except that’s not true at all. SS is not in a risky position. The worst that can happen to it is current SS receipts do not pay out enough money for the current SS recipients to live a reasonable quality of life. SS is a transfer of funds from current earners to current retirees.

People trying to scare people about SS talk about the trust fund depleting, but the trust fund is simply a bonus that was created to account for the fact that when the baby boomers started retiring, their numbers would be much greater than the numbers of working people to maintain a healthy SS system. So they set aside some additional money so the large number of baby boomers, who in their prime had to pay for a relatively smaller number of retirees, were paying some money towards their own retirement and so wouldn’t place too much of a burden when they retired.

"Set aside" is a funny way to put it. They "set it aside" in US Treasury bonds, causing a massive growth in the US government -- who still managed to run a deficit on top of that because they also cut taxes. That artificially boosted the GDP in a way that made a few people much richer while leaving everybody else flat at best. Now, their children inherit an oversized government that they must either cut or pay for with a big tax hike.

The people who pocketed that money have resisted any attempt to put the tax burden on them, and indeed, have demanded more and more tax cuts. The next generation is thus not only paying for their parents' retirements, as per the Social Security social contract, but also financing their parents' massive debt. The Social Security Trust Fund helped enable that by making a massive government debt seem smaller than it would otherwise have been.

Thanks for injecting some sanity into this. Benefits drop to about 75% when the trust fund is exhausted around 2026, and we'd simply need to take the salary cap off Social Security taxes and possible transfer some monies from the general fund.

It's an entirely solvable political problem.

I never said it was self-funded, just that what you take out is a function of how much you pay in + when you begin withdrawing. The proposal here is a major shift in how it works.

It was my understanding that the $2.6 ($2.89 actually) trillion is the total asset balance. That includes everything “owed.”

You say that as if liquidity management in a crisis wasn't a thing. Why, exactly, should free temporary cash be available to investment banks but not entitlement programs?

As mentioned in another comment, its a loan, not free cash. Investment banks will have to pay it back afterwards.

Sure, but it's basically free money for them because they'll turn around and loan it to the rest of us with higher interest rates.

> it’s basically free money

They can only borrow to the extent they have collateral. You can do the same thing. Any decent broker will let you margin Treasuries on the cheap.

No, this is short term lending (e.g. overnight).

Why can't social security pay back a loan? It has revenue, it requires management and accounting for its assets anyway. We take loans from the trust fund constantly!

There's absolutely no reason this can't be done.

Maybe I misunderstand, but since the money paid out through social security will not be repaid by these 60+ year olds, isn't this a very different thing?

Banks have assets to offer as collateral for those loans. What assets do entitlement programs have to offer as collateral?

The social contract not falling apart. Most people stand to lose quite a bit if it does.

How about a $2,790,000,000,000 trust fund? Is that asset enough? I think a big problem with this discussion isn't about public policy, it's that people don't understand how social security works.

These loans have to be paid back almost immediately. Unless the people receiving social security early pay it back, you haven’t solved anything.

Hopefully all the states implement this as it would help immensely at least in theory. I’d prefer an emergency temporary UBI but bureaucrats gotta bureaucrat.

Though it's obviously a long-shot, Tulsi Gabbard just introduced a UBI COVID-19 relief bill: https://gabbard.house.gov/sites/gabbard.house.gov/files/docu...

I bailed on a job just before all of this started because we weren't doing any work for 3 months and I got bored. Biggest mistake ever.

You got bored of collecting an easy paycheck? But do you think tech hiring will really slow down? I feel like there is just too much momentum in the area. We are the force multipliers.

Yeah I had just switched to pentesting, was eager to get started. Killed some passion.

Believe me, I'd still be collecting it if I knew this was going to happen.

>But do you think tech hiring will really slow down?

We should be good but these are extraordinary times.

Did you have a solid safety net when you bailed? I considered doing the same a year or so ago. I don't think this is a systemic problem like 2008... so I don't see how it kills off viable tech projects. If you are top 20% skills you will be fine. It's just going to kill off overleveraged entities, and also kill off non-viable business models.

>Did you have a solid safety net when you bailed?

Yeah, took cash positions before leaving.

Also California just waived the waiting period for unemployment benefits and short term disability as a result of Covid19.

I wonder if people who don't have regular jobs would be able to use these services in any way? As far as I know, self employed people don't qualify for these for example. I'm not an expert, but that's what it looked like last time I checked.

Being self-employed and having lost a lot of business due to the cancellation of conferences and sporting events, I've looked into it and as far as I am aware, I am not eligible for any sort of unemployment benefit.

If COVID-19 digs in deep in the US then there is going to be a transformational change in how US citizens think about work, travel, entertainment, security, and the relationship between US citizens and their government. All of these aspects are intertwined:

Work: More people will work more time from home and many firms will switch to virtually full time remote with limited physical gathering. This will decrease the cost of office rents and alter the work/life balance. It will affect wages because people can live outside of city centers and still work so companies will pay less. We may be on the cusp of US government guaranteed sick leave.

Travel: People will, for the short term, do less travel for pleasure, but the big impact, long term, business trips will decrease. More and more business meetings will be replaced with voice and video conferencing. There was no big driver other than some cost reduction here, but now safety and security will be the big drivers here. Global pandemic concerns (prevention, containment) will complicate travel to varying degrees, and in a way that most US citizens aren't used to - it will affect interstate travel, not just trans-national travel.

Entertainment: Many of the sports that have been deferred or canceled will likely be replaced with other forms of entertainment that can be viewed on television or the Internet. Fewer people will go to live performances, both because they can't (cancelled by the government) and reluctant to after COVID clears. This will affect service workers - where most of the lesser skilled jobs have been created in the last three decades.

Security: Security will no longer be seen as just a physical access control concern. Business has been preparing over the last two decades for the eventuality of global pandemic - now they can put those plans into action, and the impacts of them will cascade into personal lives. US citizens will be demanding more from their government in disaster preparedness on pandemics - it will affect travel.

All of these tie into how US citizens see their relationship with their government, and what they demand from it.

> Entertainment: Many of the sports that have been deferred or canceled will likely be replaced with other forms of entertainment that can be viewed on television or the Internet. Fewer people will go to live performances, both because they can't (cancelled by the government) and reluctant to after COVID clears.

My guess is that you're overstating the long-term effect on this front. People like leaving the house; people like gathering with other people; people have liked these things for as long as there have been people. They're not going to stop liking them because they've been stuck alone indoors for a couple of months. Enforced abstinence for a while may even increase demand for social entertainment, once the dust settles -- "you don't know what you've got until it's gone," etc.

Not to mention, people can still go to low-density venues outside. I wonder if both neighborhood parks and county/state/national parks will experience higher rates of attendance.

I understand everything that you wrote is just speculation starting from the conditional, “If COVID-19 digs in deep in the US then...” but I just don’t follow the logic.

It’s not our first pandemic. It won’t be the last. And I don’t see any reason at all to think why people won’t go back to living their lives at the first possible opportunity.

But what does “dig in deep” even mean? In the vast majority of cases it’s a mild virus with symptoms generally lasting a week.

If anything I think at the end of all this people will be deeply suspicious the next time the WHO declares a pandemic and insists we need to shut down the world economy.

We are not dealing with an exponential function. We are dealing with a logistics function, I.e. an “S” curve.

The predominant factor to coming out the other side of the curve is herd immunity.

IMO, the faster that young and middle age people acquire herd immunity, the safer it is long term for the elderly who are at the highest risk, because it drives R0 below 1 and extinguishes the pandemic.

The flaw with “flatten the curve” is overly simplistic thinking around the severity of cases. The best way to eliminate severe cases, assuming strict containment is impossible or cripplingly costly, is to gain herd immunity in the low-risk populations.

> It’s not our first pandemic. It won’t be the last.

As far as I can tell, for almost all Americans, this is our first pandemic. The closest analogue might be polio in the 1950s, but maybe 10% of the population remembers that.

Going down the list, none of the remaining pandemics within living memory seem to have made a large impact on life in the US [1].

It’s not crazy to imagine changes from this event. There doesn’t seem to be much precedent here for it.

[1] https://en.m.wikipedia.org/wiki/List_of_epidemics

In 2009 we had swine flu, H1N1 which was declared a pandemic by the WHO.

> These final estimates were that from April 12, 2009 to April 10, 2010 approximately 60.8 million cases (range: 43.3-89.3 million), 274,304 hospitalizations (195,086-402,719), and 12,469 deaths (8868-18,306) occurred in the United States due to pH1N1.

It remains to be seen if the hospitalizations or deaths due to COVID approach or exceed the levels of H1N1, which itself was less fatal than a typical flu.

Certainly the response to COVID is markedly different. But I think in the end what will matter is the actual numbers impacted. If the virus turns out to be not as deadly as H1N1 I think people will seriously question the role of the media in building up hysteria around this coronavirus.


> If COVID-19 digs in deep in the US then there is going to be a transformational change in how US citizens think ...... All of these tie into how US citizens see their relationship with their government, and what they demand from it.

I certainly hope you are right, but unfortunately I suspect the companies making billions of dollars will do absolutely everything in their power to make sure those changes don't happen.

Because there is so much money tied up in the current way things are done Americans have decades of fighting the power structure before they can expect to change their relationship with their government. If only they knew what Europeans get for their tax dollars.

> "If COVID-19 digs in deep in the US then there is going to be a transformational change in how US citizens think about work, travel, entertainment, security, and the relationship between US citizens and their government."

Even the Spanish Flu didn't manage to do that and the actual death toll was even higher than the projections from COVID-19.

Instantaneous worldwide communication is arguably a game-changer. And while it's easy to be pessimistic about the state of science education, the ability and motivation to self-educate may have some impact on national and global consciousness. Neither of these things were even slightly possible 100 years ago.

I don't see how it will make long lasting changes other than your first point about WFH and virtual meetings being even more normalized.

Travel and entertainment, doing these in-person is interwoven in our DNA. These industries (lol at how Trump says this word) are gonna take a huge hit, but will of course rebound.

I do think people will be more hygenic for many years to come because of this.

Helpful, but not much good if somebody was coincidentally between jobs before this started. I bet not a lot of hiring is going in (although the linkedin recruiter spam hasn’t stopped)

So where can one apply?

One of my podcasts recently said something that I found very fitting: Americans really love themselves some socialism when they get it.

I don't think there are any humans alive on this earth that won't happily accept free money.

Especially when it's free money. One of the worst things the government does is take your own money only to give it back with strings attached or in the form of programs they paid more for than it would have cost you to buy in the market.

If all they were doing is giving people cash then you could just as easily call it a tax cut. And nobody turns those down either.

US government spending is 38% of the GDP. But don't call it socialism, it's economic stimulus.

We have incredible status quo bias on the subject of public resources and economic infrastructure; if we already have it (schools, libraries, Medicare), it's sacrosanct; but if it's any new idea or initiative, it's scary socialism destined to lead to starvation and gulags.

The legendary Craig T. Nelson quote comes to mind: "I've been on food stamps and welfare. Anybody help me out? No."

Most people don't even remotely understand what socialism is. Every public road, every interstate, every subsidized city train/bus system, every public park, every police department, every fire department, the CDC, the FDA, the EPA .. they are ALL examples of socialism.

You cannot have a high income country without a high level of socialism. Socialism is simply the State providing services for its people.

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

> Socialism is a political, social and economic philosophy encompassing a range of economic and social systems characterised by social ownership of the means of production and workers' self-management of enterprises.

The likes of police and fire departments in the US are an example of not socialism. Most of what they need for their operations (cars, radios, buildings, etc.) are produced by private industry. The workers at the CDC and the FDA don't own it, its management and policies are chosen by politicians and voters (and lobbyists) rather than the workers.

Actual socialism doesn't even require government involvement. A worker-owned collective is a socialist enterprise. But the MTA and the US Department of Transportation are not examples of that.

oh, just in case that wasn't clear: I'm all for having public infrastructure and healthcare and such largely non-market organized. I just find it funny (in a currently rather sad way) that the debate about socialist ideas in the US is largely avoided by making the debate center about worst cases, and mostly really about the word socialism iteself...

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