PLAYPEN: Covid-19 Everything Political

[Alan Klein]

I wouldn't worry too much about those bankruptcies. Those companies are run by smart businessmen, like Trump, who know how to work the system. Nobody will lose any money except the banks, who shouldn't have lent it in the first place, and that subcontractor who did the monogrammed towels for the executive washroom.

I'm sure most were Chapter 11 bankruptcy which allows re-organization rather than Chapter 7 total liquidation bankruptcy.  Chapter 11 allows them to freeze debts and such.  But it doesn't relieve them of the debt.  Whether they can settle for a lot less and stay in business like Kodak did, really doesn't matter.  I don't think most will be able to be at their same size with the same number of employees. Even companies that haven't filed like Macy's, have laid off thousands of middle management types who made decent salaries or manufacturer's like Boeing who laid off high paying engineers and assemblers.

The smaller business won't survive at all.  These are the ones not on the list and will be by the thousands.

[Peter McLennan]

Not everyone stopped working.  Many are working at home like my daughter who's a therapist and her husband who's a lawyer. 

The big problem is that many businesses will not open up again or fail anyway when they try.  Many will open only partly.  There are so many marginal companies that the virus has revealed that should go out of business anyway. They're staying alive on a lot of debt and now, due to Covid 19, the chickens are coming home to roost. I just read that Neiman Marcus an upscale department store is closing its new flagship store in Manhattan and filing for bankruptcy.  Here's a list of bankruptcies from July 13 of retail type stores mainly.  Other industries have been hit hard as well.
RTW Retailwinds (July 13)
Muji USA (July 10)
Sur La Table
Brooks Brothers
G-Star Raw (July 3)
Lucky Brand (July 3)
GNC (June 23)
Tuesday Morning (May 27)
Centric Brands (May 18)
J.C. Penney (May 15)
Stage Stores (May 11)
Aldo (May 7)
Neiman Marcus (May 7)
J. Crew (May 4)
Roots USA (April 29)
True Religion (April 13)
Modell's Sporting Goods (March 11)
Art Van Furniture (March 9)
Bluestem Brands (March 9)
Pier 1 (Feb. 17)
SFP Franchise Corp (Jan. 23)
RTW Retailwinds

I thought you were in favour of "survival of the fittest" when it came to corporations. 

[Alan Klein]

I thought you were in favour of "survival of the fittest" when it came to corporations. 

I am.  What's your point?

[Peter McLennan]

Your list.  That's my point.

[hogloff]

The smaller business won't survive at all.  These are the ones not on the list and will be by the thousands.

Survival of the fittest? Makes room for new companies to spring up.

[Alan Klein]

Your list.  That's my point.

What about my list?

[Alan Klein]

Survival of the fittest? Makes room for new companies to spring up.

But zombie companies are being kept alive with government money being taken from other parts of the economy that would be better left with the people to spend in the free market to companies that have a better chance of surviving.  We're throwing good money into the toilet bowl. 

[faberryman]

A couple wore Swastika masks to Walmart. When asked why, the woman said:

"Because I'm trying to tell you if you vote for Biden this is what you are going to have, socialism!"

I keep telling you guys to stay away from Walmart.

https://www.cbsnews.com/news/swastika-masks-minnesota-walmart-customers/

[hogloff]

But zombie companies are being kept alive with government money being taken from other parts of the economy that would be better left with the people to spend in the free market to companies that have a better chance of surviving.  We're throwing good money into the toilet bowl.

Why can a zombie company stay alive and a prosperous company go belly up? Sounds to me the companies that go under were on shaky grounds heading into the pendemic...so a little bit of cleaning is good.

[Alan Klein]

Why can a zombie company stay alive and a prosperous company go belly up? Sounds to me the companies that go under were on shaky grounds heading into the pendemic...so a little bit of cleaning is good.

In agree with you that bad companies should be cleaned out.  Supporting them makes it harder for a good company to survive as the government underwrites the bad company.  In effect, the good company is competing with the government and it's unlimited pocketbook.  It would be like a wedding photographer who has a small successful business having to compete with a competitor where the government is paying for its cameras and staff.  That's not right. 

[hogloff]

In agree with you that bad companies should be cleaned out.  Supporting them makes it harder for a good company to survive as the government underwrites the bad company.  In effect, the good company is competing with the government and it's unlimited pocketbook.  It would be like a wedding photographer who has a small successful business having to compete with a competitor where the government is paying for its cameras and staff.  That's not right.

Don't both photography companies get assistance from the government?

[Alan Klein]

Don't both photography companies get assistance from the government?

The way the rules work, if you don't need it, you can't request it. 

Separately, there are a lot of marginal companies that will be going out of business no matter what.  What this government thing has done is give the owners a "going-out-of-business" bonus for them to keep for themselves.  Sure they give a few bucks of the $150,000 or more they get from the government to their employees as required.  But keep the rest for themselves when they walk away. You and I are paying for that.  It's criminal. 

[faberryman]

The way the rules work, if you don't need it, you can't request it.

That really doesn't seem to be the case from a practical point of view. Seems like a lot of companies that didn't really need the money got it. A lot of it. I don't remember hearing of anyone who got turned down. Fill out the paperwork and collect the check. They are not even going to audit loans under $150,000.

[Alan Klein]

That really doesn't seem to be the case from a practical point of view. Seems like a lot of companies that didn't really need the money got it. A lot of it. I don't remember hearing of anyone who got turned down. Fill out the paperwork and collect the check. They are not even going to audit loans under $150,000.

Exactly. The whole thing is a fraud.

[faberryman]

Exactly. The whole thing is a fraud.

I don’t think the whole thing is a fraud. There are always some people that take advantage of the situation.

[Alan Klein]

I don’t think the whole thing is a fraud. There are always some people that take advantage of the situation.

We'll never know how many because the government isn't going to check at all for under $150,000.  EVen above that amount, does anyone really think they're going to check?  They gave out these "gifts" to 4.9 million companies, so far.  More with the new bill they;re working on right now.  There's no way they have the IRS investigators to check.  And if they check, the business owners will say they're out of business.  What's the IRS going to do. 

For those still in business who had business still working, they can show they paid their workers as required by the rules.  Other money the received from the government paid rent and other costs.  However, since the government paid these costs means that income from sales had no costs.  So there were higher profits which goes to the bottom line and in the owner's pocket.  The owner got a bonus thanks to you and me.  How's that fair, equitable, or make sense from and economic standpoint?   

[Robert Roaldi]

We'll never know how many because the government isn't going to check at all for under $150,000.  EVen above that amount, does anyone really think they're going to check?  They gave out these "gifts" to 4.9 million companies, so far.  More with the new bill they;re working on right now.  There's no way they have the IRS investigators to check.  And if they check, the business owners will say they're out of business.  What's the IRS going to do. 

For those still in business who had business still working, they can show they paid their workers as required by the rules.  Other money the received from the government paid rent and other costs.  However, since the government paid these costs means that income from sales had no costs.  So there were higher profits which goes to the bottom line and in the owner's pocket.  The owner got a bonus thanks to you and me.  How's that fair, equitable, or make sense from and economic standpoint?

I get the outrage but the reality is that they NEVER have enough investigators in normal times. I think that's just standard operating procedure. Anyway, if Apple and Amazon paid their taxes in country, it might make offset it all. 

[faberryman]

We'll never know how many because the government isn't going to check at all for under $150,000.  EVen above that amount, does anyone really think they're going to check?  They gave out these "gifts" to 4.9 million companies, so far.  More with the new bill they;re working on right now.  There's no way they have the IRS investigators to check.  And if they check, the business owners will say they're out of business.  What's the IRS going to do?

Since, as you said, we will never know, we can decide for ourselves what to believe, of course subject to revision if we get further information. We can chose to believe a few, some, or a lot of people took advantage. A lot depends on your beliefs about people and your general outlook on life. If you chose to believe a few people took advantage, you will probably just shrug your shoulders and get on with life. If you believe that a lot of people took advantage, you will probably fume around the house, lash out irrationally at people on the internet, and maybe kick the dog. It is kind of up to you how you want to live with yourself and others. Like I said, subject to revision if you get additional information.

[Chris Kern]

What about my list?

"He's got them on the list, he's got them on the list;
And they'll none of them be missed, they'll none of 'em be missed."

[Alan Klein]

I get the outrage but the reality is that they NEVER have enough investigators in normal times. I think that's just standard operating procedure. Anyway, if Apple and Amazon paid their taxes in country, it might make offset it all. 

Don't get me started on government billions to large zombie corporations like the airlines.  Another boondoggle.  All that money wasted, will have to be paid back in the near future by you, me and our kids.