The State of the Economy Thread - “Falling inflation, rising growth give U.S. the world’s best recovery”

[Larry]

6 minutes ago, FanboyOf91 said:

Just nationalize it already.

 

They don't want to nationalize it.  

 

They want private companies (who donate Republican) who the federal government guarantees a profit.  

[Fergasun]

Thinking about oil futures.  There is an ETF, USO that was set up to be like "investing in crude oil futures."  I don't think that ETF ever envisioned the demand... but I don't know if they actually intend on taking physical delivery of the oil. 

 

This is an issue with ETFs....

[Renegade7]

Oil companies have been some of the most profitable in our economy for decades and been getting subsidies.

 

Don't bail them out, let them consolidate and figure it out, offer nationalizing (even temporary) like Sallie Mae did to keep from ceasing go exist.

 

I don't support bailing out Exxon, I don't agree with letting it disappear, offer to absorb it into DOE at minimum, that's too many jobs and downstream jobs to not protect.

Edited April 21, 2020 by Renegade7

[Fergasun]

We need to end TBTF.  Its not fair to say, "There's too many jobs in the oil industry".  What about all the other industries and small business?  

 

Everything is contracting.... 

[Larry]

21 minutes ago, Fergasun said:

We need to end TBTF.

 

TBTF is a legit complaint, when we're talking about one company being too big to allow to fail.  

 

Not sure it really applies when you're talking about an entire industry.  

 

Every individual gas station in our country is easily expendible.  But if something threatens to end all of them?  That's a problem that our nation needs to deal with.  

 

I suspect that there are very few entire industries that our economy can just write off.  (Depending on what you call an entire industry.  Are we talking "the electronics industry" or "the bluetooth earbud industry"?)  And "energy", or even "oil" is an industry that just too much of our entire way of life depends on.  

 

Now, I do think, when we start to have a discussion along these lines, that it's appropriate to examine whether there's a problem that needs to be corrected, here.  

 

If one bank has over-leveraged itself speculating on mortgages, I could see etting it fail. 

 

If the entire industry has been doing it, then maybe we can't let the entire industry fail, but maybe we can and should establish requlations to make it impossible again.  (And maybe we shouldn't repeal said regulations, a few years later, when they make some campaign contributions.)  

 

Or if the problem is more systemic, and isn't necessarily evil, then maybe we need to look into how to make the system more resiliant.  

 

In this case, it seems that the prblem is that we've got oil tankers about to arrive in port, to deliver oil that nobody has a place to put.  

 

We need a short term solution.  (Where do you put the oil nobody wants?)  And maybe a longer one.  (How do you change the system to make it less susceptable to this?  Some way we can encourage oil companies to maintain a level of empty capacity, in case a surge of one kind or another is needed?)

 

(Do we need a similar solution when it comes to health care capacity?  Some way to encourage hospitals and such to run at 90% capacity, instead of forcing them to run at 98%, to break even?)  

 

We do that for some things.  We pay firefighters and soldiers to sit around and be ready, in case they're needed.  Are some of these industries imortant enough that we should be doing that with them, too?  

 

Or maybe what's needed isn't a carrot, but a stick.  "Y'all screwed up by not being prepared for this situation.  We'll bail you out, but it'll cost you.  It's gonna be a loan, with a painful interest rate, to penalize y'all for not being prepared.  Next time y'all are sitting around getting fat on profit, spend some of it on making sure this doesn't happen again."  

[twa]

1 hour ago, Larry said:

 

 

 

 

In this case, it seems that the prblem is that we've got oil tankers about to arrive in port, to deliver oil that nobody has a place to put.  

 

We need a short term solution.  (Where do you put the oil nobody wants?)  And maybe a longer one.  (How do you change the system to make it less susceptable to this?  Some way we can encourage oil companies to maintain a level of empty capacity, in case a surge of one kind or another is needed?)

 

(

 

one short term solution is to store it in govt storage we have...at a price or as deposit on future tax liabilities(much as we accept royalties in kind) at rates favorable to us in a buyers market.

 

the Tankers are perfectly capable of storing the oil in them if the folk contracted to buy it can't take it

 

I have a question on oil futures.....if you buy them and cannot take delivery is your money forfeit along with any claim to it?  

 

added

 

already in talks

https://www.worldoil.com/news/2020/4/14/doe-working-to-lease-out-23-mmbbl-of-strategic-petroleum-reserve-capacity

Edited April 21, 2020 by twa

[PeterMP]

1 hour ago, Larry said:

 

TBTF is a legit complaint, when we're talking about one company being too big to allow to fail.  

 

Not sure it really applies when you're talking about an entire industry.  

 

I'm extremely dubious if you defined "industry" broadly that any whole industry that is actually necessary would fail.  Almost by default as some fail, others would become more stable as there would be less competition and their creditors would have already lost a lot and be more likely to make a deal on their debt.  The creditors would take a beating and loss, but if the government fails to act, the creditors or almost certainly going to make a deal on the debt or they will organize to take over the infrastructure and start over.

 

Even if that's the case, I'd much rather allow the companies to fail and allow other companies to replace them.  Let's remember, their resources (infrastructure in terms of the oil industry, including drilling platforms and refineries, and workers) don't go away when the company fails. 

Edited April 21, 2020 by PeterMP

[twa]

18 minutes ago, PeterMP said:

 

I'm extremely dubious is you defined "industry" broadly that any whole industry that is actually necessary would fail.  Almost by default as some fail, others would become more stable as there would be less competition and their creditors would have already lost a lot and be more likely to make a deal on their debt.

 

Even if that's the case, I'd much rather allow the companies to fail and allow other companies to replace them.  Let's remember, their resources (infrastructure in terms of the oil industry, including drilling platforms and refineries, and workers) don't go away when the company fails. 

 

 

One thing I have seen floating is creditors seizing property and getting a exemption to the law that the property has to be sold within a  year or whatever.....and simply hiring folk to run it themselves till the market rebounds.

 

seems a stupid idea,unless you are the creditor

[Larry]

1 hour ago, PeterMP said:

Even if that's the case, I'd much rather allow the companies to fail and allow other companies to replace them.  Let's remember, their resources (infrastructure in terms of the oil industry, including drilling platforms and refineries, and workers) don't go away when the company fails. 

 

I've made a kinda-similar argument, myself.  

 

My version is that if Russia and OPEC want to sell oil cheap, then well, our oil isn't going anywhere.  It'll still be here when they raise their prices again.  

 

(And I have to confess, I assume that the number of people/industries who would benefit from cheaper oil - such as any industry that involves shipping, and any person who commutes - is bigger than the number of people who actually work producing the oil.)  

Edited April 21, 2020 by Larry

[megared]

4 hours ago, twa said:

 

one short term solution is to store it in govt storage we have...at a price or as deposit on future tax liabilities(much as we accept royalties in kind) at rates favorable to us in a buyers market.

 

the Tankers are perfectly capable of storing the oil in them if the folk contracted to buy it can't take it

 

I have a question on oil futures.....if you buy them and cannot take delivery is your money forfeit along with any claim to it?  

 

added

 

already in talks

https://www.worldoil.com/news/2020/4/14/doe-working-to-lease-out-23-mmbbl-of-strategic-petroleum-reserve-capacity

 

Hopefully they have the good sense to buy it outright.  Last time they tried RIK, they got fleeced with dubious quality oil, with light end problems.  And a bunch of environmental issues to move it.  

 

Theoretically you'd have to go to Cushing, OK and pick it up.  The reason why the price went negative, is that the traders (like USO ETF) who never had the capability to take deliveries, are dumping their futures contracts that had a settlement date of yesterday (May futures).  Because no one wants the oil, they're paying for the delivery and storage.

 

Good article summing it up:

 

https://www.nytimes.com/2020/04/21/upshot/negative-oil-price.html

[TheGoodBits]

My wife got a 15% pay cut. Good times. 

[CousinsCowgirl84]

Let the oil companies fail. It solves all kinds of problems...

46 minutes ago, skinsfan_1215 said:

My wife got a 15% pay cut. Good times. 

Don’t feel bad, my business has lost 50% of its revenue... I think @TryTheBeal! was saying he is basically loosing his dealership, and many restaurants aren’t gonna reopen.  Some people actually had to work in the middle of sickness and death...
 

This is the price we have to pay, and it’s worth it, I guess. 40k and counting  have died despite these insane measures....

 

 

47 minutes ago, skinsfan_1215 said:

[NoCalMike]

How about we let mortgage holding banks fail and ownership reverts to those paying mortgages. 

[twa]

7 hours ago, NoCalMike said:

How about we let mortgage holding banks fail and ownership reverts to those paying mortgages. 

 

why not to the state....citizen

[PeterMP]

13 hours ago, NoCalMike said:

How about we let mortgage holding banks fail and ownership reverts to those paying mortgages. 

 

Only if you want to make it 100X harder to get a mortgage in the future.  Banks have creditors.  The assets of the bank are theirs if the bank goes under.  If banks start failing, those creditors are going to take a huge hit anyway.  If you give the assets of the bank to people that are not their creditors, people are going to be very reluctant to invest in or be creditors of banks in the future.

 

This would a great way to benefit everybody that's older with a home and mortgage and screw over younger people that don't have home and mortgage.  Especially as home prices have been going up faster than inflation the last decade or so and are now well above the historical average/median inflation adjusted price.  Let all of those people that bought a home during that period stay in their home, keeping home prices high, and making it very difficult for people to get a mortgage in the future.

Edited April 22, 2020 by PeterMP

[Kosher Ham]

On 4/21/2020 at 11:31 AM, Renegade7 said:

Oil companies have been some of the most profitable in our economy for decades and been getting subsidies.

 

Don't bail them out, let them consolidate and figure it out, offer nationalizing (even temporary) like Sallie Mae did to keep from ceasing go exist.

 

I don't support bailing out Exxon, I don't agree with letting it disappear, offer to absorb it into DOE at minimum, that's too many jobs and downstream jobs to not protect.

 

There should have been a system set up around 40 years ago. Gas prices soared to about a dollar. 

In certain situations, a national brand monopoly type of situation works. We would just have to monitor it closer for price purposes.

Think Airlines, gas, among others...and you should be able to invest in it.

 

[Supernatural24]

 

[BatteredFanSyndrome]

I've been thinking all along about how opening up means getting a lot of people off unemployment.  Puts people in a very tough spot.  Yet there are folks cheering this on.

[Hooper]

Stephen Moore, who has the President's ear. Interview excerpt presented without comment.

 

Well, we’d have to make the space outfits, right?

I know we don’t have space outfits [laughter]— I mean, just thinking out loud, and maybe this is a crazy idea, but instead of just locking down the economy, putting everybody in a kind of — you’re right. You have to make 200 million of these, but it wouldn’t have cost $3 trillion to do that. And you can have for months people just walking around in these kind of — I mean, I was looking online, and there are all these kinds of suits that they’re building now that you’re not exposed and you’re breath — kind of ventilator.

[NoCalMike]

The entire "people just want to go back to work" narrative rings a bit hollow.  Do people want to go back to their lives in general? Sure, of course, but I am wiling to guess that most people who are "desperate to get back to work!!!!!!!!!!!!!!" are desperate out of necessity to feed their family and/or not lose their home/car/whatever.  It isn't this symbolic yearning to go back to being a working class schmuck.  I know corporations definitely want their employees back to work though they can't wait to get back to overworking/underpaying their employees.  And I am sure that this pandemic has given many boards of directors plenty of time to reassess just how many workers they actually need to bring back versus how they can find ways to squeeze more work out of less workers.  

[BatteredFanSyndrome]

1 minute ago, NoCalMike said:

It isn't this symbolic yearning to go back to being a working class schmuck

It's really just an underhanded jab at democrats, because you know, democrats don't work and want to live off the government.

[DCSaints_fan]

On 4/22/2020 at 3:27 AM, twa said:

 

why not to the state....citizen

 

That essentially what we did with the auto companies. 

[FanboyOf91]

Just do the full nationalization ffs.

[Cooked Crack]

 

 

[FanboyOf91]