Coronavirus Diaries

I am certainly in favor of bailing out the airlines. The airlines and their employees are bearing the brunt of this crisis. Especially if a bailout will stop immediate layoff... it is well worth the money.

Of course, the airlines are a critical part of the rest of the economy as well.

I would make the airlines give us seat room before giving them a lincoln penny.

It appears you have very little understanding of the challenges of the realities attending the financing and operation of a business, large or small, and have never studied (or understood) a company balance sheet.

A very large fraction of corporations and proprietor owned business have had their revenues virtually shut down by lawful action of the government to protect the public health - and with the expectation that this may last for up to four months. This instantly creates a crisis for any business.

Most business yield profits of well less than 10% of net revenue. That's about five weeks of revenue. The prospect ahead of an immediate shutdown of up to four months (14 weeks) can instantly create a revenue and cashflow problem sufficient to bring down most companies. Lease payments for offices, stores and property must be paid along with the continued servicing of outstanding debt, not to mention current accounts payable. Cash on hand in a well run company is very rarely greater than a year's profits, and a good deal less than that in many indebted companies. This now widespread situation could easily create an unraveling downward spiral affecting nearly all product and service businesses similar to the one that occurred in late 2007 in the financial market.


Do the fallacious (and largely unrelated to the current crisis) opinions you expressed about "our" taxation refer to your system in Canada or ours in the USA? The fact is that whatever they are has little to do with the present situation, except to note that the cost to government of taxes lost to a widespread business collapse and an accompanying surge in unemployment are large compared to the remedies being planned.

See George, I agree with you when you are right .

Does everyone at least agree that pumping money into unemployment to help displaced workers an important way to help the economy and provide a safety net for workers.

I still don't want the government to give me any money. I don't need it.

I recognize that.

A close examination of the coronavirus case rates in Italy indicates that the active caseload there is growing at a reduced rate, compared to last week and will peak in no more than five weeks, as the recovery rates catch up with and pass current infection rates. Case rates in North America are about 20% those of Italy and they are likely to peak out soon afterwards, but at much lower levels as a % of population.

That said the immediate economic effects are serious indeed. Prompt action to address them now will give us more flexibility to manage the disease and will soften the economic impact after it is over.

I don't see any reason to expect that the US will follow Italy's curve.

I believe that Italy has taken much more drastic measures than the US including shutting off regions and using the army to keep people from the streets.

In the US there are millennials openly flaunting the social distancing measures. Parks and beaches in California (one of the worst hit states) are still filled.

I am worried that the US will be far worse than Italy.

Max, dammit. My 30-ish kids are millennials. These stupid beach brats are Gen Z.

“Is it reasonable, at such a difficult time, to point the bone at large corporate tax avoiders? We believe it is crucial. Political ideology has failed. The economy is supposed to serve the people, not be an end in itself. Sadly, neo-liberal thinking has it that the people are there to serve the economy. So it is that $50 trillion or so is sitting in tax havens while medical supplies run short.
So it is that the big business lobby, which has suckered politicians for decades, now pleads for the support of government and taxpayers even though they have called for less secure conditions for workers and lower taxes for business and done nothing to stop the exodus of capital to tax havens.
Now is the time for government to rework its contract with the corporate lobby, to get real about tax avoidance, cap the years in which tax losses can be claimed and demand far greater disclosure and accountability. Billionaires and their entities need to disclose financial statements, not hide behind grandfathering laws. …”
Michael West.com aus

Have you spent much time in Italy? I have. Delightful people and very law abiding. However the laws they observe are generally unwritten, more cultural than judicial. Very hard to believe they will obey such rules more than we. Their case rate is now about five times ours and still increasing faster than ours - even on a relative basis. Unlike us they are now seeing a fast growing recovery subset of the total caseload. Given the later start date of the case rise here our recovery rate should start rising very soon. The rate of increase in the total rate of infections is already slowly decreasing here.

No. The rate of cases in Italy is not increasing faster than ours-- at least not in a mathematically meaningful way.

With exponential growth, the rate can be determined by the amount of time that it takes for the number to double. With exponential growth, this quantity will be constant. In the US the number of cases is doubling just about every 2 days now (this is terrifying). In Italy they are doubling every 5 days (and they are now experiencing less than exponential growth because the time it takes to double keeps increasing).

The US is experiencing exponential growth at a rate faster than Italy.

Max is right. We're in trouble. A lot of Americans are about to die.

Everyone should try to avoid all contact as much as possible.

In fact, I was a business manager at the end of my working career. Corporations, including small business S corporations, are routinely advised by their accountants and tax lawyers to sequester a significant amount of their annual revenues, and in some states, they are required to do so. Your claim about 10% of net revenue is grossly disingenuous. People and corporations which are involved in retail sales, for example, only break even very late in the year. (Although, of course, if they follow the common corporate practice of an October to September fiscal year, the expected pre-Christmas revenues come early in their fiscal years). That is why the post-Thanksgiving sale day is called Black Friday--the day on which their balance sheets go into the black, based in large measure on the anticipation of large pre-Christmas revenues (although, given common fiscal year, that's really an urban legend). That means your "five weeks of revenue" claim is nonsense for retail operations, and wholesale and dealer operations which supply them.

Corporations which are not involved in retail sales, or wholesale or dealer sales to retail companies, have their own anticipated revenue calendars. These are often governed by the fiscal year revenue expectations of their customers. The last company I worked for sold security equipment and systems--sales, installation and service. A local, Big Ten university was one of our customers, so we knew we had a reliable income from our service contract, and that expansion of their security equipment installation would be tied to the disbursements of money to the university by the state. We also had contracts with a regional hospital corporation which was a subsidiary of a national hospital corporation. We knew that new installation was going to be authorized after the end of their fiscal year, in October or November. We had a contract with a major highway service station chain, largely based in the southern United States, but with interstate locations all the way to California, and a large presence in the Midwest. We knew that they authorized new expenditures on a quarterly basis, which would be the time when we would install new equipment (in this case, communications equipment), in other words, potentially four times a year. We had a service contract with them, as well, and that meant sending out a small crew on a few days notice. They were reasonable, we could schedule a service trip for a pair of employees, usually on a monthly basis.

We knew when we could expect to get paid, we knew when we could expect contracts, or the necessity of bidding on contracts for new installations. We knew when we could expect to get service contracts, how much we could charge without risking the loss of the service contracts, and we knew all the players. This is true of all corporations (or S corporations such as that security equipment and systems firms). If it's not true for the Federal government, then Plump's administration is even more incompetent than I had thought. Your simplistic apocalyptic narrative here ignores just what is going on in the Senate. Basically, the current administration wants to bailout their buddies, the corporate sponsors of the political campaigns. The Federal Reserve has already disbursed almost all of the annual budget for corporate support, which means that the Senate bill wants more cash for the Fed so they can keep up the level of swill in the corporate hog trough. That Senate bill is a political move so they can hold up their hands and say to the electorate, "Hey, we tried to help, but the Democrats wouldn't help us because their only interest is the political bottom line," which is actually the only interest of the Republicans. Corporations who live on the fiscal edge can always file for bankruptcy protection, just as the four corporation that Plump launched did when he failed to manage them properly. His buddy Wilbur Ross bailed him out in each of those four cases, and secured generous terms for the use of his name in the continued operation of those corporations. That's why Wilbur Ross got the job as Commerce Secretary.

All of your comments attempting to suggest that I don't know how business works are descriptions of retail operations which rely on end of year revenues. As I have pointed out, corporations, including S corporations, which use the October to September fiscal year (a good way to balance revenues for tax filing purposes) are well advised, and in some states required to sequester a certain amount of their revenues in each fiscal year. More than that, corporations, including S corporation, with payrolls over $50,000 per quarter, are required to deposit Form 941 payments (which can be done at any bank) every two weeks. Corporations who are not paying payrolls right now can deposit very small amounts, equal only to the salaries of caretakers for the physical plants. For many corporations, that will be a substantial operating cost savings.

In fact, if the Republicans were sincere about helping out American citizens, as opposed to their corporate paymasters, they could work with the Democratic controlled House on legislation necessary to afford fiscal protection to corporations which pledge, against future penalties for non-compliance, to retain their work force. Then a bailout package could be worked out as the situation develops, with an immediate program to pay a set monthly amount to all taxpayers for whom 941 deposits have been made since the beginning of the 2019-2020 fiscal year.

I have not just studied, I've prepared many balance sheets. I've also gone over them line by line with accountants at the end of company fiscal years. Peddle your pompous, self-righteous BS to someone else.

A very good friend of mine that moved to California... living there now... is battling breast cancer. She has posted those pictures of full beaches in CA and has complained to the governor about enforcing the social distancing and closing the beaches.

She has adopted several girls some of whom are special needs. They need her mother and here we have thousands of people carelessly ignoring these rules that protect someone like her.

With Trump suggesting he may restart businesses that have been shut down and Texas' Dan Patrick suggesting old people would be proud to sacrifice themselves to keeping the economy going for the sake of the young, I am not too hopeful this morning.

It's enraging. I think he's going to get unprecedented push back from the people.

I don't think the will of the people carries much weight these days.

Actually, he is going to et blamed for all of the deaths. That is the reason you see him dithering.

Letter to the guvner. "You first"

I'm wondering if everybody refusing to show up to work one day would change that...