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A Hope


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I am reading too much about how firms (and I guess by extension their employees) should be “punished” for share repurchases or dividends. I believe this entirely misses the point and reflects a dangerous misunderstanding of what is going on.


1. This virus while bad is not worth entering a Great Depression for. Indeed it would be better to let it run, implement harsh triage rules for the use of ICUs and kill many of our elderly and infirm and not shut everything if the result is an economic cataclysm.


2. We are a wealthy society with the resources to take a long “holiday” however so that we can deal with this health issue more humanely. 


3. As such we should treat it as a health holiday and place everything on hold. No firing, no defaults etc. With the governments paying everyone to not work and stay quietly at home for a number of weeks/months.


4. We absolutely do not want to destroy many important industries and companies and jobs for no good reason.


5. Furthermore we do not want to have the economic  survivors emerge from this and spend the next x years delevering and investment freezing because they believe they must prep for zero revenue scenarios. So, let’s not waste time overcomplicating things with who should be supported, who should be punished, diluted, preferred stakes, equity stakes.... All that is nonsense.


6.  In conclusion, put an end to recriminations, stop this firing, let’s simply go on a health retreat for the next month or so, everything paid for or guaranteed by government borrowing and come back in a little while when we can easily pay it back when our economic engine is firing on all cylinders.

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Let's take a real world example so we can understand your proposal:


Employee A

Works at business B

Which rents space from Landlord C

Who has a mortgage with, and pays interest to, Entity D

Which pays out an income stream to Investor E


Is your suggestion that the government give B whatever money is necessary for it to pay A and to pay C, which in turn can pay D, which in turn can continue to pay out to E?  Or are you suggesting that the money should stop somewhere along this chain?  If so, where does it stop?  If it does not stop anywhere in this chain, who ultimately will foot the bill?  If no one will foot the bill, how is such a free lunch possible? 

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