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1/n
I took bailout money once.
I was 22 and a senior in college. I had been irresponsible with credit cards for 3 years and had finally maxed them out. My card got declined at the gas pump, and I had to borrow money from my grandma to fill my tank.
I took bailout money once.
I was 22 and a senior in college. I had been irresponsible with credit cards for 3 years and had finally maxed them out. My card got declined at the gas pump, and I had to borrow money from my grandma to fill my tank.
2/n
My grandma survived the Great Depression. She was a Rosie the Riveter during WW2. Coming from literally nothing, she went on to retire young with some rental real estate and a solid nest egg. As a widow and then 79, she still mowed her 2 acres twice a week.
My grandma survived the Great Depression. She was a Rosie the Riveter during WW2. Coming from literally nothing, she went on to retire young with some rental real estate and a solid nest egg. As a widow and then 79, she still mowed her 2 acres twice a week.
3/n
Borrowing money from her was an embarrassment. And I vowed never to put myself in that situation again. I sold stuff I didn't need, started working more, created a budget, and did everything I could to pay down my credit cards.
Borrowing money from her was an embarrassment. And I vowed never to put myself in that situation again. I sold stuff I didn't need, started working more, created a budget, and did everything I could to pay down my credit cards.
4/n
The experience profoundly changed me. I grew as a person. I improved.
How do we move forward as a country and a society if corporate bailouts are not only accepted, but encouraged and expected?
The experience profoundly changed me. I grew as a person. I improved.
How do we move forward as a country and a society if corporate bailouts are not only accepted, but encouraged and expected?
5/n
We MUST help our fellow citizens who've been negatively impacted by COVID-19.
We CANNOT, for the sake of the country, continue to bailout hedge fund managers, bankers, and corporate CEOs who've abused the system for years and gambled and lost.
We MUST help our fellow citizens who've been negatively impacted by COVID-19.
We CANNOT, for the sake of the country, continue to bailout hedge fund managers, bankers, and corporate CEOs who've abused the system for years and gambled and lost.
6/n
Natural law is survival of the fittest.
This has become survival of the shittest.
By bailing out those who didn't manage their balance sheets, bought back stock over investing in R&D, or speculated in risky financial instruments, we kill progress. They have to fail.
Natural law is survival of the fittest.
This has become survival of the shittest.
By bailing out those who didn't manage their balance sheets, bought back stock over investing in R&D, or speculated in risky financial instruments, we kill progress. They have to fail.
6.5/n
The Fed, just yesterday, announced plans to spend hundreds of billions to buy junk debt ETFs that will not save or create a single job. Think about that.
The Fed, just yesterday, announced plans to spend hundreds of billions to buy junk debt ETFs that will not save or create a single job. Think about that.
7/n
When we let these bad actors not only continue, but thrive, it comes at the expense of many:
1. The taxpayer
2. The employees
3. The competition
4. Innovation
When we let these bad actors not only continue, but thrive, it comes at the expense of many:
1. The taxpayer
2. The employees
3. The competition
4. Innovation
8/n
The taxpayer. This one is obvious. We are right now subsidizing corporate CEOs who paid themselves by buying back stock & hedge fund managers who gambled on risky derivatives & lost.
The taxpayer. This one is obvious. We are right now subsidizing corporate CEOs who paid themselves by buying back stock & hedge fund managers who gambled on risky derivatives & lost.
9/n
Before a company gets any bailout money, these people should cover losses personally.
Just like any small business owner is forced to do.
Before a company gets any bailout money, these people should cover losses personally.
Just like any small business owner is forced to do.
10/n
The employees. Employees of companies receiving bailout funds have this week been hit with job losses, furloughs, and pay cuts, despite Congress assuring us all that they wouldn't permit this.
The employees. Employees of companies receiving bailout funds have this week been hit with job losses, furloughs, and pay cuts, despite Congress assuring us all that they wouldn't permit this.
11/n
No flight attendant, baggage handler, or pilot made the decision to buy back $46B worth of stock in the big three US airlines. Their 3 CEOs who did profited to the tune of over $300M personally over the last 5 years. That should be clawed back before any bailouts.
No flight attendant, baggage handler, or pilot made the decision to buy back $46B worth of stock in the big three US airlines. Their 3 CEOs who did profited to the tune of over $300M personally over the last 5 years. That should be clawed back before any bailouts.
12/n
The competition. When companies who misallocate capital are rewarded with bailouts, their competitors who acted responsibly are harmed.
2009 gives us a great example in banking.
The competition. When companies who misallocate capital are rewarded with bailouts, their competitors who acted responsibly are harmed.
2009 gives us a great example in banking.
13/n
National City was a regional bank in Cleveland, OH who had avoided subprime lending. PNC was a Pittsburgh-based bank who accepted TARP funds to offset loan losses from subprime. With all that free government cash, PNC bought National City.
National City was a regional bank in Cleveland, OH who had avoided subprime lending. PNC was a Pittsburgh-based bank who accepted TARP funds to offset loan losses from subprime. With all that free government cash, PNC bought National City.
14/n
If we were capitalist and if we valued progress, PNC would have either failed or had to be acquired by a stronger company like National City. Instead, the company who failed and couldn't effectively run its business got to take over a healthy one and mismanage it.
If we were capitalist and if we valued progress, PNC would have either failed or had to be acquired by a stronger company like National City. Instead, the company who failed and couldn't effectively run its business got to take over a healthy one and mismanage it.
15/n
Finally, Innovation. Harvard Business Review says it better than I can, so I'll share this first: https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy
Finally, Innovation. Harvard Business Review says it better than I can, so I'll share this first: https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy
16/n
Buybacks for the last two years have outpaced R&D spend and CapEx spend. Buybacks are cash incineration. Once the buyback is done, a liability is left and no asset is there to offset it and generate cash.
Buybacks for the last two years have outpaced R&D spend and CapEx spend. Buybacks are cash incineration. Once the buyback is done, a liability is left and no asset is there to offset it and generate cash.
17/n
Had companies invested that money in innovation (R&D) and efficiency (CapEx) instead, we'd be much better poised for economic rebound and less in need of bailouts. They created their bed and the executives should have to lay in it.
Had companies invested that money in innovation (R&D) and efficiency (CapEx) instead, we'd be much better poised for economic rebound and less in need of bailouts. They created their bed and the executives should have to lay in it.
18/n
In closing, we must help our fellow man and woman in these trying times.
Corporate bailouts aren't the answer.
We must get back to valuing and rewarding discipline, hard work, and ingenuity and stop the bullshit of bailing out bad behavior and poor performance.
In closing, we must help our fellow man and woman in these trying times.
Corporate bailouts aren't the answer.
We must get back to valuing and rewarding discipline, hard work, and ingenuity and stop the bullshit of bailing out bad behavior and poor performance.
