Read on Twitter
1/ I’ve mostly refrained from commenting since there are too many people ax-grinding using CV-19 as an excuse. My personal position on this was that mass closures were a blunt emergency tool which will have to give way to nuanced regulations...
2/ Almost all clinics have closed and most hospitals in most regions are emptied out, awaiting a tide of cases in weeks or months, based on models which appear to be seriously flawed. Allowing “elective” surgery (which is often necessary) to be coninued (with precautions)...
3/ would alleviate the suffering of people who can’t see because of cataracts, or are in pain and can’t walk because they need replacements, who have spent all of their savings on IVF and have had their appointments cancelled.
4/ Golf courses, beaches, and parks that are closed could be reopened with a guard to enforce social distancing — at far lower social cost. The area I live in (Coachella Valley) has one primary industry, tourism. Most small businesses are being bankrupted as we speak...
5/ ..and tens of thousands of workers laid off. There is a heavy cost being paid — people who were already cash-strapped unable to pay rent, cascading up to landlords not making mortgage payments, then all overleveraged businesses bankrupted.
6/ Managements that borrowed to buy back stock and inflate their own incomes should face removal in bankruptcy, otherwise moral hazard created by the Fed put will continue to stagnate our institutions. Assets and employees won’t be any worse off than in a Fed bailout...
7/ Bankruptcy cleans up the balance sheet and hurts equity (the holders who agreed to high risk) while preserving as much as possible bonds owned by pension funds. New mgmt will be much more careful to keep a recession reserve. We made the mistake of retaining bank mgmts in 2008.
8/ As a result, the wealthy were cushioned while the unempowered underclass suffered huge losses. This corporatist takeover has been enabled by every administration since Hoover. As a result we have inflated asset prices (housing) in prime job locales.
9/ Mobility has decreased, young people are delayed in getting a career foothold, finding housing, and having children. The Idiocracy syndrome is becoming reality. A healthy society rewards risk taking when successful but lets zombie companies die.
10/ The VC funding of unicorns has artificially propped up companies that destroy value - not only are they not profitable, but they destroy existing businesses by underpricing services. Profit margins go to zero and the Softbanks of the world are set up to collapse.
11/ The rest of this thread (ten more posts) was erased. I should learn not to use the Twitter app in IOS devices, which clears its memory if you put it in the background. In the meantime, some good reads: https://www.project-syndicate.org/commentary/covid19-will-change-economics-three-ways-by-mohamed-a-el-erian-2020-03
