EJ: The countdown to the next crisis of The System has started.

[Milton Kuo]

Re: EJ: The countdown to the next crisis of The System has started.

This March 12 press release caught my eye: SBA To Provide Small Businesses Impacted by Coronavirus (COVID-19) Up to $2 Million in Disaster Assistance Loans

Shouldn't the system be trying to enforce a system of forebearance, where taxes, rents, and principal and interest payments are suspended until things get back to some semblance of normal? Lending cash-strapped businesses money just further encumbers them while protecting the rentier class.

[thriftyandboringinohio]

Re: EJ: The countdown to the next crisis of The System has started.

Shouldn't the system be trying to enforce a system of forebearance, where taxes, rents, and principal and interest payments are suspended until things get back to some semblance of normal? Lending cash-strapped businesses money just further encumbers them while protecting the rentier class.

Bingo. Forbearance for payments due. Unemployment payments to hourly workers during shutdown periods.

Loans will just aggravate the injury to small business.
Just how, exactly, does anyone think millions of separate loans might be applied for, processed, and disbursed in the next 3 weeks?
Fughetaboutit.

That shot of unemployment money at the grassroots can have quick effect and broad effect. It's the only fast acting antidote in our tool kit.
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.
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[shiny!]

Re: EJ: The countdown to the next crisis of The System has started.

Most outlets reporting that futures plunged to limit down AFTER fed announced emergency measures.
This time Fed measures might pump markets for zero hours and zero minutes.

I'm not smart like you guys are, don't know if this fellow's figures are totally correct or even remotely correct, but I read this on Wolf Street and it expresses how I'm feeling. I suspect many millions more people are going to be reading and hearing words like this in the next few days and weeks. If they continue on this track, this does not bode well for the black limousine class of Wall Street and Washington D.C. Reign of Terror comes to mind.

Charles Callahan
Mar 15, 2020 at 7:01 pm
I am heart attack level angry! With this ‘new money’ we could have wiped out the college tuition debts, car loans, provided a paid mortgage payment holiday for a couple of years, AND, gave a $1000 to every human being in the US. Oh yes, how many small businesses have survived without help after a 15% decrease in wealth? Talk to a small acreage farmer, or a restaurant owner operator, or a mall retail owner operator about surviving hits that reduce wealth sometime. Talk to a family that lost 10-20-50% of their wealth and listen to how they paid the debt off. And soon the FED will be buying equities—won’t the CEOs be pleased.

[thriftyandboringinohio]

Re: EJ: The countdown to the next crisis of The System has started.

I'm not smart like you guys are, don't know if this fellow's figures are totally correct or even remotely correct, but I read this on Wolf Street and it expresses how I'm feeling. I suspect many millions more people are going to be reading and hearing words like this in the next few days and weeks. If they continue on this track, this does not bode well for the black limousine class of Wall Street and Washington D.C. Reign of Terror comes to mind.

You have this one spot-on shiny

[ST]

Re: EJ: The countdown to the next crisis of The System has started.

In other news, rates to 0-0.25%, $700B QE and the Dow futures react with ...limit down.

[globaleconomicollaps]

Re: EJ: The countdown to the next crisis of The System has started.

In other news, rates to 0-0.25%, $700B QE and the Dow futures react with ...limit down.

You're about the become the six billion dollar man.

[Chris Coles]

Re: EJ: The countdown to the next crisis of The System has started.

History teaches that, centuries ago, leadership would pass a law to effectively clear all debt; wipe the slate clean overnight; every debt vanishes.

When you think about it, any other way forward will involve massive disruption, probably for several years, even perhaps a decade. If all debt is immediately cleared, no one has any worry, immediate calm.

So, why not try repeating some very old new thinking?

[ProdigyofZen]

Re: EJ: The countdown to the next crisis of The System has started.

To your point about the urgency of emergency financial support for small businesses...



Restaurants were already seeing major declines in numbers of diners even before major cities like LA started forcing restaurants to close for all business except take-out and delivery.

This March 12 press release caught my eye: SBA To Provide Small Businesses Impacted by Coronavirus (COVID-19) Up to $2 Million in Disaster Assistance Loans

Friday I wrote to the email address provided to ask how a company qualifies and applies for such a loan. Here's the response I received today:

Thank you for contacting the SBA Disaster Customer Service Center.

A disaster declaration has not yet been announced for the county where your business is located. Therefore, SBA Disaster Loan Assistance is currently unavailable for Coronavirus related economic impact on businesses in your area.

Once a declaration is made, the U.S. Small Business Administration will begin offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). The application process for Economic Injury Disaster Loan assistance will be made available to all affected communities as well as updated on our website: SBA.gov/disaster.

SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.

Sincerely,

Office of Disaster Assistance, Customer Service Center
U.S. Small Business Administration

So if you're a small business owner in Massachusetts you need to hold out until the economic impact of COVID-19 earns MA a disaster declaration.

A disaster declaration is made by FEMA according to the process described here.

It's not clear how or when a disaster declaration process that's designed for disasters like hurricanes and floods will be applied to a pandemic.

I visited the SBA Disaster Loan website, created an account, and started to dig around to see if any state had be so designated, starting with Washington, the pandemic epicenter of the US. Excerpt below from Seattle’s tech hub goes quiet as businesses struggle to cope with effects of COVID-19:

In South Lake Union, small businesses ranging in size from five to 50 employees make up 85 percent of the businesses in the community and represent more than 7,500 employees, according to Danah Abarr, executive director of the SLU Chamber.

Businesses that rely on daily revenue that could be anywhere from $500 to $3,500 a day were reporting 80-90 percent declines in sales and are facing a huge financial burden.

“There is simply no way for a small business to weather this storm without immediate funding relief,” Abarr said.

I was unable to find a single state that has yet received a disaster declaration. The announced Disaster Assistance Loans are unavailable.

We'll keep and eye on it. Unless this changes over the next few weeks, a substantial number of small businesses will fail.

Wow this is an incredibly short shifted statement from Mnuchin:

“There will be a huge amount of pent-up demand when this is done. And it will be done,” the Treasury secretary told CNBC’s Jim Cramer.
“Look for companies that have a ton of liquidity. An Apple will have customers,” Mnuchin added. “That’s just a given. The goal is not to bail out companies.”


What could he possible be thinking here!

[ProdigyofZen]

Re: EJ: The countdown to the next crisis of The System has started.

To your point about the urgency of emergency financial support for small businesses...



Restaurants were already seeing major declines in numbers of diners even before major cities like LA started forcing restaurants to close for all business except take-out and delivery.

This March 12 press release caught my eye: SBA To Provide Small Businesses Impacted by Coronavirus (COVID-19) Up to $2 Million in Disaster Assistance Loans

Friday I wrote to the email address provided to ask how a company qualifies and applies for such a loan. Here's the response I received today:

Thank you for contacting the SBA Disaster Customer Service Center.

A disaster declaration has not yet been announced for the county where your business is located. Therefore, SBA Disaster Loan Assistance is currently unavailable for Coronavirus related economic impact on businesses in your area.

Once a declaration is made, the U.S. Small Business Administration will begin offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). The application process for Economic Injury Disaster Loan assistance will be made available to all affected communities as well as updated on our website: SBA.gov/disaster.

SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.

Sincerely,

Office of Disaster Assistance, Customer Service Center
U.S. Small Business Administration

So if you're a small business owner in Massachusetts you need to hold out until the economic impact of COVID-19 earns MA a disaster declaration.

A disaster declaration is made by FEMA according to the process described here.

It's not clear how or when a disaster declaration process that's designed for disasters like hurricanes and floods will be applied to a pandemic.

I visited the SBA Disaster Loan website, created an account, and started to dig around to see if any state had be so designated, starting with Washington, the pandemic epicenter of the US. Excerpt below from Seattle’s tech hub goes quiet as businesses struggle to cope with effects of COVID-19:

In South Lake Union, small businesses ranging in size from five to 50 employees make up 85 percent of the businesses in the community and represent more than 7,500 employees, according to Danah Abarr, executive director of the SLU Chamber.

Businesses that rely on daily revenue that could be anywhere from $500 to $3,500 a day were reporting 80-90 percent declines in sales and are facing a huge financial burden.

“There is simply no way for a small business to weather this storm without immediate funding relief,” Abarr said.

I was unable to find a single state that has yet received a disaster declaration. The announced Disaster Assistance Loans are unavailable.

We'll keep and eye on it. Unless this changes over the next few weeks, a substantial number of small businesses will fail.

Wow this is an incredibly short shifted statement from Mnuchin:

“There will be a huge amount of pent-up demand when this is done. And it will be done,” the Treasury secretary told CNBC’s Jim Cramer.
“Look for companies that have a ton of liquidity. An Apple will have customers,” Mnuchin added. “That’s just a given. The goal is not to bail out companies.”


What could he possible be thinking here!

[bpr]

Re: EJ: The countdown to the next crisis of The System has started.

Would love to know what Mnuchin was telling his friends at GS back in February.

[Adeptus]

Re: EJ: The countdown to the next crisis of The System has started.

Sorry, I'm late to this thread, but been watching this COVID-19 thing for over a month on a daily basis. The stock market crash has been amazing to watch, fortunately, for completely unrelated reasons (not foresight), I dumped all my stocks in December.


Some personal thoughts/observations:
- By the time this is done, there is a very high chance that USA becomes the #1 or #2 country with the most infections in the G20. Why? You can blame Trump for down playing and delayed action.
- I seriously question how well a nationwide lockdown, at least as aggressive as Italy (which is not that aggressive compared to China) will work out in the USA.
- I am almost convinced that within 2-3 months we will see an effective treatment (not vaccine) for this virus, such that the death rate plummets to season flu levels (i.e. to 0.1% to 0.2%).
- Reason being is that I do not recall a time when 10's of thousands (100's?) scientists from all around the world had a vested interest in finding an effective treatment, when rich people's incentives (i.e. don't want to die/get seriously ill) also aligned with the scientists, businesses including pharmaceutical companies who need to get back to selling regular drugs or Tesla who needs to sell cars and is offering to make ventilators, and likewise governments for fear of societal breakdown were also alignment.
- With a new major bailout seemingly announced every day in the past week, I'm honestly losing track of which countries have implemented the right bailouts to support the small businesses to survive and come back after this is over, as well as support those individuals that are most vulnerable at this time. I'd be curious to hear your thoughts on how this recovery will playout. Snap back V shaped recovery? (I doubt it, not with massive unemployment to contend with), 6 months to see a 50% stock market climb back? Maaaaybe. 1-1.5 years seems most likely to me, but I'm purely guessing here.
- Although logically it would seem Bernie would be the most preferred candidate to deal with this situation, Biden seems to be far in the lead.
- As per EJ and other predictions I've seen, there'll be shock and awe level of deaths in the USA as a result of this, and it's all only 2-3 months away! I can't see Trump surviving into another election cycle, but I didn't see him winning this one either. Trump is probably right about one thing, Biden's mental capacity does seem to be dwindling, so *maybe* he still has a chance?
- Short of declaring Martial Law, I don't see Western countries managing to implement a level of lockdown like China did. I'm not aware of which countries have that (or equivalent) legal capacity, but I fear it may be required.
- There still seems to be a massive shortage of masks and other protective gear to go around for all the countries showing exponential infection curves, which is also growing each day. 2 days ago I read an article about 1 company that manufactured 250K masks per month, that is ramping up production to 1 Million, but has a demand of 100 Million masks from all around the world! Personally, I went with a non-disposable painter's mask with the dual gas filters on the side, and then with a small add-on N95 disposable filter that clamps on, on top of the gas filter. I look a bit crazy walking around with that thing and Chemistry class style eye protection gear, but at this point I could care less. I figure each N95 filter pair will last me for 2-3 months, using it once per week for 3 hours to do grocery shopping, and staying away from dust/polution areas (which would clog up my filters). I have ordered enough filters to last me a year. They cost me $4 per pair. The downside of such a mask is that you have to disinfect the outside, as it's not throw away. Also you can't talk clearly when wearing the mask, which gets tricky at times, but if you talk loud enough people will eventually understand you.
- Crypto has mostly traded in correlation with the stock market, with the odd 1 or 2 days in a couple of weeks bucking the trend.I suspect this is because many who invest in crypto invest in the stock markets, especially hedge funds, and if they are getting margin called or simply want to run to cash, they will dump everything... Bitcoin, other cryptos and even gold.


So what happens next here?
- Trump gov to dole out $2K to nearly every American?
- Ban naked short selling?
- Ban short selling?
- Roll out FEMA? The National Guard? Martial law?
- Halt stock markets for a few weeks until the worst is over/treatment is found?
- I have more questions than answers.


Side note: EJ, this is the perfect time for VR to catch on. If not now, when everyone is forced to stay home and people will need entertainment and exercise, then when? I personally have had an Oculus Quest since July 2019 and even though I find it a bit clunky/heavy, not fully immersive (not 180 degrees of visibility), graphics still disappointingly pixelated (will we need 8K per eye until this problem goes away?), a tad on the expensive side and somewhat lacking in content, I have to admit - it's pretty damn amazing and fun! I consider this like version 1.5. In 5 years I'd expect the VR headset to shrink by 80% in weight, with graphics that are 2-4x better such that no more pixelation occurs. In 10-20 years, I could see additional sensory IO (input/output) to be integrated via possibly brain waive interconnectedness. That is, your VR device could visually show that you are in a garden, and emit brain waves into your brain such that you can smell the roses! Maybe I'm dreaming but if they mange to do that for the senses... smell, touch & taste, then it's going to be more addictive than drugs! You could physically live in a rented garage, but virtually speaking, you live in a castle with prestine land and oceans as far as the eyes can see, with countless fantasies that will seem at least as real as real live... Matrix anyone?

[lb]

Re: EJ: The countdown to the next crisis of The System has started.

I guess I should have stopped by a month ago. Itulip it has been too long....

[sunpearl71]

Re: EJ: The countdown to the next crisis of The System has started.

Around iTulip we used to talk at length about "sudden stop events". In past discussions we were focused on sudden stops caused by purely financial causes like the quick dry up of credit, capital or liquidity.

COVID-19 looks to have created something in China that feels an awful lot like a sudden stop event.
Is it accurate to view it that way, economically?

Latest tweet from EJ - 3.3m Initial Claims between 03/14 - 03/21 per FRED data


Link to the tweet here: https://twitter.com/ejanszen/status/...743560707?s=20

[strittmatter]

Re: EJ: The countdown to the next crisis of The System has started.

The Frisco Texas Independent School District here in the dfw area, with a current enrollment of 60,142 students, has emailed a procedural instruction link to all parents on how to withdraw your student. This is due to the growing number of how-to requests from parents over the course of the past several days.

Mostly its the result of one or both parents losing their employment and thus making the decision to abandon their ships and move in with whomever wherever.

[ProdigyofZen]

Re: EJ: The countdown to the next crisis of The System has started.

The Frisco Texas Independent School District here in the dfw area, with a current enrollment of 60,142 students, has emailed a procedural instruction link to all parents on how to withdraw your student. This is due to the growing number of how-to requests from parents over the course of the past several days.

Mostly its the result of one or both parents losing their employment and thus making the decision to abandon their ships and move in with whomever wherever.

Hi Stritt, I am also in DFW!