The shutdown of the US economy to prevent the spread of the Coronavirus is going to be tanking a lot of people.
Consequently, the government is discussing bailing out a lot of industries to keep the economy from totally collapsing.
Politics being politics means that everyone has to have their input regardless of how much of a good idea it is.
Elizabeth Warren decided to pitch her idea for what the government should do with the companies they bailout. It starts reasonable and goes downhill very quickly after that.
Elizabeth Warren has a list of demands for companies bailed out by Washington
And Senator Elizabeth Warren already has a list of demands to be included in any bailout packages for major corporations hurting from the coronavirus crisis.
“Let me clear: We’re not doing no strings-attached bailouts that enrich shareholders or pay CEO bonuses. Period,” the influential Democrat from Massachusetts tweeted on Tuesday.
I actually agree with his. The most infuriating thing about the Obama bailout was the bonuses to the people who made the banking decisions that caused the economy to crash in the first place.
This crash is a little different. It wasn’t the result of bank malfeasance, it was the result of telling Americans to stay home, not spend money, or go to work.
However, I agree on the principle that if a company is falling on hard times and gets a taxpayer-funded bailout, the executives shouldn’t be pocketing the money for bonuses.
Here’s a sample of what Warren is calling a “progressive litmus test for bailouts to large corporations”
Uh oh, this sounds bad. Very bad.
Payrolls must be maintained and companies must use funds to keep people working or on payroll
Good start.
$15 minimum wage within one year of the end of the national emergency
Permanent ban on share buybacks
We’ve seen the $15 min wage cause other business to fail. Bailout now and fail or layoffs later because of the minimum wage is a bad trade-off. A permanent ban on share buybacks seems like a deal-breaker.
No dividends or executive bonuses while receiving relief and for three years afterwards
Three years is longer than the tenure of many executives. A year is reasonable but longer than that and it’s going make it harder to retain good management.
Must obtain shareholder and board approval for all political spending
Collective bargaining agreements should remain in place
Meh.
She’s going to take some reasonable requests and then add other bullshit to it and poison the well. I don’t know if it’s her intention to sink the bailout or not, but that’s what she’s going to do.
President Donald Trump told reporters Tuesday that he supports a bailout of Boeing, which is seeking $60 billion in federal assistance, primarily in the form of loan guarantees for the aerospace industry. The White House is also in favor of help for the airline industry, which could need $50 billion in federal help because of the collapse in air travel.
I’m of mixed minds about this.
Jim Cramer says Boeing ‘will run out of money’ if it is not ‘saved’
CNBC’s Jim Cramer on Wednesday called on the federal government to follow through and provide assistance to Boeing and the aerospace industry as the coronavirus continues to upend the American economy.
“It’s not a plea for me. It’s a plea for the 2 million workers who are in the supply chain,” Cramer said on “Squawk on the Street.”
On the one hand, I agree with this. Boeing has a big presence in Huntsville and I don’t want to see this city take a hard hit.
On the other hand…
Boeing has already been facing significant financial troubles due to the two fatal crashes of its 737 Max plane, which has been grounded worldwide for a year.
Boeing’s problems predate the Coronavirus crisis.
Airplanes still use aluminum for their structural members. Aluminum has no fatigue endurance limit. So even if air travel is down for a few months, all that will do is delay the turnover of airframes by a few months.
That is minor for an airframe manufacturer compared to their fleet being grounded for safety concerns. Then there is the failure of the Starliner to enter orbit.
Is it right to bail out Boeing using the Coronavirus crisis as an excuse when the real problem was mismanagement that caused major technical failures in the year prior?
Maybe if Boeing gets bailed out, it should come with mass layoffs, of the upper-level management that has created a culture of failure.
I’m not sure if you understand stock buybacks. It is a way to inflate your stock price and earnings per share. It was attributed to helping crash the market in 1929 and was banned afterwards. It doesn’t make the company more profitable but it does make the stock price go up temporarily.
Boeing, in the past 10 years (good stock market) had $58.37 billion of free cash flow. They could have invested that into R&D, marketing, worker training, or put it in savings for when times get tough. No, instead they spent $43.44 billion in stock buybacks (which only produced a higher stock price but produced no goods nor services). Hmm, if they would have saved for a rainy day like an individual should, they’d have $58.37 billion in savings and wouldn’t be asking for a $60 billion bailout like they are asking, now would they? They squandered their money buying back stocks so the CEO and Board of Directors could cash in their stock options at a higher price. Personal greed is all.
Do you not get that these bailouts are worse than Socialism? We the taxpayers don’t get the profits when the company does well but we the taxpayers ARE stuck with the losses due to their CEO personal greed and mismanagement.
Let them go to bankruptcy and let someone else pickup the torch that can better manage it. Bailouts are not free market by any stretch. None of us want socialism but this is even worse than socialism: Privatize the profits and socialize the losses. I’m sick of it. Let the free markets deal with it or let’s just become full blown socialists so we can socialize the profits and socialize the losses. No, I don’t want socialism or this “thing” we have now which is worse than socialism. Wake up people.
I understand stock buybacks. If you want to make them illegal, that’s fair. But to impose that as a restriction on some companies and not on others will be a deal breaker. No company will voluntarily accept that. Keep the economy afloat then ban stock buybacks across the board for all publicly traded companies.
In general I agree with you. I’m just disappointed that as an engineer/metallurgist you make the statement “Aluminum has no fatigue endurance limit.” I think from the point you were making you might have said aluminum has no “shelf life”, but it definitely has a fatigue endurance limit.
Aluminum does not have an endurance limit. There is no stress state so low that fatigue will not occur. That is why airframes must be retired once they reach a certain number of cycles.
This is metallurgy 101.
https://www.efatigue.com/glossary/
Oh, is that what you meant. As a layman, I thought you meant the opposite, that “no endurance limit” means “it doesn’t do fatigue”.
Now I see that “no limit” means “no non-zero limit”. Unlike steel, if I remember right, where stresses below a certain value can be endured indefinitely. Right?
Often technical terminology has an intuitive-to-the-layman meaning that is reasonably accurate; I guess this was an example where that isn’t the case.
That is correct. Endurance limit is the stress state at which you can reasonably assume fatigue will not occur past 10^7 (10 million) cycles.
That exists in steel. You can design a component for a train or truck or bridge that in theory will last forever.
Aluminum will not do that. You design aluminum to last to a certain number of cycles then you retire it once it reaches that point.
Personally, I am adamantly opposed to bailing out the airline industry. 100%. No ifs, ands, or buts about it.
No one demanded that they should allow cancellations without penalty for all flights. No one told them to allow changes without penalty across the board.
Yes, if the US Government decides that no flights from XYZ country will be allowed to land, the airline has a claim for that cost, but the rest of it is ridiculous. Domestic flights are at a 50-60% load factor. Why? Because there are no consequences for cancelling, and the airline is bearing the cost.
Which they could have chosen not to take on. This was their choice. if you have a ticket, and choose not to travel, you lose money. Oh, wait, coronavirus… No more penalties.
Sorry, if the airlines have to file bankruptcy, it is self induced.