Politicians and the people charged with enforcing politicians’ directives really can be like the pigs in George Orwell’s book Animal Farm.
The pigs’ express commandment for governing became, over time, “all animals are equal but some animals are more equal to others.” The “more equal” animals were the pigs in charge for whom the rules they imposed on other animals did not necessarily apply.
For examples of this commandment in practice, we can consider haircuts during the government-mandated closing of “nonessential” businesses, including salons and barber shops, in the name of fighting coronavirus. No professional haircut is allowed for the regular person in many parts of America.
But, for politicians and cops, the rules may not apply.
A photograph of a hair stylist with Chicago Mayor Lori Lightfoot alerted people to the fact that the mayor had received a haircut from the stylist — something the state government is prohibiting for people in the sate. On top of that, Lightfoot had even publicly promoted the prohibition. Still, when confronted about the apparent hypocrisy, Lightfoot defended her haircut. Gregory Pratt reported Monday at the Chicago Tribune:
Asked about photos on social media showing her with a stylist, Lightfoot acknowledged getting a haircut, then said the public cares more about other issues.
Asked about that, a visibly annoyed Lightfoot said, ‘I’m the public face of this city. I’m on national media and I’m out in the public eye.’
‘I’m a person who, I take my personal hygiene very seriously. As I said, I felt like I needed to have a haircut,’ Lightfoot said. ‘I’m not able to do that myself, so I got a haircut. You want to talk more about that?’
Yeah, we get it: Some animals are more equal than others.
In at least one instance, the lower-level enforcers of government policy can also take part in the elitist haircuts exception to the coronavirus crackdown.
Robby Soave wrote Thursday at Reason that, while the Florida state government has required barber shops across the state to be closed because they are “nonessential” businesses, Police Chief Sergio Velazquez in Hialeah, Florida, has “arranged for one barber to continue to cut cops’ hair.”
The police chief’s justification? It sounds much like the one offered by the mayor of Chicago. Soave quotes this explanation from Velazquez:
“Particularly in these unprecedented times of a global health pandemic which has caused tension and anxiety and disruption in our community, it is imperative that our law enforcement Officers project an image of command and authority.”
So the argument is that it is OK for the law enforcers to break the law so they can “project an image of command and authority” while enforcing the law. Are you persuaded?
‘Breadlines’ Erupt Across America As Lockdowns Crush America’s “Working Poor”
The economy has crashed into a depression, 16.78 million Americans have applied for unemployment benefits, and consumer sentiment crashed the most on record. This American horror story has taken only three weeks to play out, the fastest and most severe economic crash in the country’s history, and still, we don’t know the true extent of the damage until the second half of the year.
However, the one thing we do know is that food bank networks across the country have reported unprecedented demand as a hunger crisis unfolds. Here’s our reporting on the evolution of the virus pandemic, has morphed into a financial crash, and now social crisis:
And how do we know food bank networks are becoming “overwhelmed” across the country? Well, citizen journalists have launched their Chinese DJI drones overhead food banks to figure out why there are miles-long traffic jams of hangry people. And it appears that these lines are America’s new breadlines, similar to what was seen nine decades ago in the Great Depression.
“Hundreds of cars” waiting in line at a food bank in Duquesne, Pennsylvania, on March 30.
Here’s footage from April 2, documenting long lines of cars trying to get into the Feeding South Florida food bank, located in Broward County.
On Thursday, the San Antonio Food Bank, located in San Antonio, Texas, aided about 10,000 households with food.
“It was a rough one today,” said Food Bank president and CEO Eric Cooper after the largest distribution day in the nonprofit’s 40-year history. “We have never executed on as large of demand as we are now.”
Helicopter footage, courtesy of KENS 5 San Antonio News, shows the shocking aerial view of thousands of cars lined up at the food bank, waiting to receive a care pack.
Also, on Thursday, the Los Angeles Regional Food Bank saw a “line of cars waiting for free groceries stretched about a mile,” reported Reuters. Hundreds of other people, many the working-class poor, lined the streets waiting for food:
Organizers of the food bank said 2,500 families were given a 36-pound box of rice, lentils, frozen chicken, oranges, and other food.
“I have six kids and it’s difficult to eat. My husband was working in construction but now we can’t pay the rent,” said Juana Gomez, 50, of North Hollywood, as she waited in line.
“This food saves me money because my little income goes to my rent,” said Daniel Jimenez, 40, an independent contractor for golf tournaments.
“I haven’t been working for three weeks. I have a little money saved but I’m paying rent, gas, and cellphone bills. I don’t even know when we’re going back to work,” Jimenez said.
“For a lot of people, they are new to the situation of needing help and not knowing where to turn,” said Michael Flood, president of LA Regional Food Bank, noting that many of these people had just been laid off and are waiting for government assistance.
“But that may take some time for them to get those benefits. We want to do what we can to get food in the hands of families, just so they can eat,” he said.
Here’s another long line of cars at a food bank in Pittsburgh from earlier in the week.
BACKED UP OVER A MILE: Hundreds of Pittsburgh residents waited in line for hours to receive boxes of food from the Greater #Pittsburgh Community Food Bank amid the Coronavirus pandemic. More: https://t.co/xoYb8iJQFnpic.twitter.com/X6z2ahTQvZ
On Friday, a long line was developing at the San Diego Food Bank.
Another big food distribution by San Diego Food Bank, this involving South Bay: Southwestern College, 9 am, entrance off of H St, a thousand vehicles, many already here pic.twitter.com/Zrv6MTQfYE
These are America’s new breadlines. As food banks become inundated with hangry Americans, what happens when these nonprofits run out of food to feed people? Could a hunger crisis lead to social unrest?
Bailouts Destabilize The Economy And Over-Inflate Asset Prices
President Trump recently signed a $2 trillion stimulus bill, ostensibly to support the economy through the coronavirus crisis. Pundits hailed it as a great bipartisan accomplishment that will help ease the pain of this economic slowdown. Of course, there will still be pain. And the government stimulus may actually cause more pain than it eases in the long run.
As with all politically motivated policies, Peter Schiff reminds readers that everybody will focus on what is seen – the immediate impacts of the stimulus. Airlines will be “saved.” Workers will get checks. But nobody will pay any attention to the unseen, and that’s where the pain comes in.
In an article originally published at the Mises Wire, economist William Anderson explains how bailouts destabilize the economy and create artificial asset bubbles – the exact problems that set the stage for the current economic meltdown. Keep in mind, it isn’t about the coronavirus. COVID-19 was just the pin that pricked the bubble.
In the end, after all of the political posturing and all of the speeches and exhortations for Congress to “do something,” a $2 trillion “coronavirus stimulus” bill landed on the president’s desk for The Donald to sign. And sign he did, uttering all of the platitudes and everything else that comes with “historic” spending legislation that never should have seen the light of day. Although COVID-19 has helped expose vast weaknesses in public health systems in the USA, it also has shown that with much of corporate America, the emperor has no clothes.
Although tracking where the money goes is not an easy thing, we do know that the airlines will receive about $50 billion in cash and loans, while Boeing will receive a share of $17 billion earmarked for industries favored by Congress. Another $500 billion will go to cruise lines, hotels, and other firms that have lost business because of travel restrictions and the economic shutdowns.
Politicians of both parties heaped praise upon themselves for their “bipartisan” efforts, which in real life only can mean that Congress cleaned out what was left of the IOUs in the till. Rep. Thomas Massie, a Republican from Kentucky, drew attacks from all sides as he tried to force a roll call vote (as opposed to the voice vote that the members wanted) and announced his opposition to the bailout. President Trump called for his expulsion from the Republican Party while Democrats declared him to be an unsavory ideologue.
There is not much to do but to wait for the results, and they will unfold over time. However, much of this bill’s harm is invisible, the way that termites quietly but surely destroy a house when homeowners fail to detect them. The politicians and the pundits, along with corporate executives, are hailing this infusion of public funds to business as a lifeline to the economic system itself, when, in reality, it will weaken these firms in the long run.
This commentary deals mostly with the airlines, but what we say here applies to any firm receiving rescue funds and loan guarantees. While some of these essentially bankrupt firms gain some relief as taxpayers and consumers pony up to pay the companies’ bills, the temporary cash infusion allows them to kick the financial can down the road and not deal with the underlying problems that they are facing, at least for now.
In a recent New York Times op-ed piece, Tim Wu of Columbia University asks the following: “Are taxpayers rewarding a decade of bad behavior?” If he is asking specifically about US airline firms, the answer is a resounding yes. Wu notes that in recent years the airlines have been very profitable but that instead of building defenses against possible downturns that are not easily predicted (such as the coronavirus crisis), they have used much of their profitability to buy back their own stock.
Obviously, stock buybacks are controversial, and as long as stock prices rise, company officials look like financial geniuses. However, if the markets crash or if bears loom on the horizon, all of that value vanishes very quickly and the companies are left in worse shape than when they began. As a financial strategy, stock buybacks are inherently risky and tie up cash that could go toward capital development or even the “rainy day” fund for the inevitable market downturn. Writes Wu:
During the past decade, flush with cash, most of the companies in line to get taxpayer money did not prepare for a downturn. Instead, they spent enormous sums on stock buybacks, which reward shareholders and increase executive pay. For example, the airline industry, which is prone to booms and busts, collectively spent more than $45 billion on stock buybacks over the past eight years. As recently as March 3 of this year, with the crisis already beginning, the Hilton hotel chain put $2 billion into a stock buyback.
Such behavior is especially galling given that the airlines received a major bailout in the immediate wake of the 2001 September 11 attacks that severely damaged that industry. Likewise, Congress spread out the rescue money in 2008 and 2009 to deal with the infamous housing bubble that the government and the Federal Reserve System created. Yet here are the Usual Suspects once again gathering around Washington, collective hats in hand.
Airlines this time are promising (or at least say they are promising) not to use the newest amount of rescue money to engage in stock buybacks, but that hardly is reassuring. There is a larger problem, and it is not limited just to overvaluing their stock or their inability to learn any lessons from past disasters.
The greater problem of which we speak the Federal Reserve’s ongoing policy of pumping up the system the way that nineteenth-century cattle ranchers would “water” their herds shortly before sales by feeding them salt. The overly thirsty cattle would drink more water than usual, and when they would be weighed during a sale, would seem heavier—and fatter—than they really were.
While Fed pumping (and simultaneous suppression of interest rates) inflates the value of stock—providing a façade of an economy performing better than it really is—it also inflates the capital assets of companies, and airlines are no exception. Because of past bailouts, glorified money printing by the Fed, and corporate practices such as stock buybacks, the nominal values of these firms are substantially higher than they would be in a more free market.
It is not difficult to see the vast network of market misrepresentations that has come with these policies. Wu notes:
The past decade was also an “easy money” decade, thanks to federal monetary policy that favored liquidity and low interest rates. Many of the firms now asking for bailouts took advantage of low interest rates to borrow heavily. For their part, many creditors lent money at rates that did not fully reflect the risks to these industries. The debt loads have created their own fragilities during the economic downturn.
In other words, one set of policies to get around natural market constraints has led to one distortion after another. We now are at the point where airlines—and the banks that have been underwriting them—are hooked on cheap money, inflated stock prices, and overvalued capital assets. If Congress, Trump, and the Fed actually were to step back and let market forces work, the short-term results would be devastating—to current airline management. Yes, the airlines would be bankrupt, but in real terms, they have been bankrupt for a long time and the COVID-19 crisis now has exposed this industry for the financial fraud that it has been.
Given that the various players previously mentioned have decided to keep the fraudulence afloat, what does that mean for the future of the airline industry? One cannot necessarily predict future events and when they will happen, but one can say with utmost certainty that the airlines soon enough will bring a new generation of management to Washington bearing the same tin cups that their forebears carried.
There is no doubt that airlines, along with Boeing and almost certainly Airbus, will find themselves in a future crisis that keeps them at least partially grounded. It could be another pandemic, a terrorist attack, or just awful political leadership, but one can be sure that something will occur to significantly reduce airline ridership. Reduced ridership means reduced funds, and a similar scenario to what we see currently playing out is sure to follow. At some point, however, the financial damage will be so great that not even the Fed will be able to “water” airline stock anymore and the cold water of massive bankruptcies will follow, imperiling the entire financial system.
These bailouts don’t just reward irresponsible business behavior, but they also impose restrictions that will create future problems. Airline firms receiving federal funding are not permitted to cut worker pay or lay off workers until at least September 30, which means that the aid is a glorified welfare check to labor unions representing airline workers. (The bailout rules also forbid stock buybacks and freeze executive pay at 2019 levels.) Bloated union contracts also are part of the problem with airline financial policies, so, in the end, Congress and Trump have managed to reward most, if not all, of the bad actors in this sorry saga.
What is done is done, but at least we can take a look at what would have happened had Congress just said no to the airlines this time. Unlike the current situation, in which we will see the “good” effects first and the “bad” effects down the road, a “solve your own problems” approach to the airlines would result in immediate layoffs, bankruptcies, and at least some airlines would completely go out of business.
Although most politicians and airline executives want us to believe that airlines are an “essential” industry that is the equivalent of the “thin blue line” between prosperity and a depressed economy, the markets see things differently. First, and most important, with the current situation there is no way that airlines can meet their loan payments, issue stock dividends, or even pay all of their employees at current rates (including their executives). Faced with that situation, the healthier companies would most likely come to terms with their creditors and restructure their finances.
The unlucky firms, however, would go into Chapter 7 bankruptcy, with all assets sold to pay off their creditors. That means massive layoffs, fewer flights—and realistic valuation of their assets. If the economic need for airlines really were as great as airline executives and political pundits claim, then whoever has purchased those assets at bargain prices would be able to put them to use in no time. The industry will have had its necessary cold-water bath, and asset values, along with prices of airline tickets, would settle at true market values, not the bloated numbers that pollute current airline balance sheets.
Because the “bad effects” of allowing airlines to go under would result at first in massive layoffs, bankruptcies, and fewer passengers in the air, the media and political classes would be condemning those who voted down the federal largess. “Bad effects,” not surprisingly, are quite visible and the plight of the newly unemployed and of stranded travelers plays well on the news.
The “good effects,” however, are less visible. By the time airline assets were sold at bankruptcy auctions and new companies hit the airport runways with market-priced capital and market-paid employees, the media would be on another crusade and the resurrection of airlines would not receive the coverage it deserved.
By shoveling out cash to the airlines and more promises to the banks whose unsteady solvency always lurks in the background, Congress and Trump have perpetrated a financial fraud greater than much of the mess we saw on Wall Street more than a decade ago. Yes, they will receive praise in the media and votes from those grateful to have taxpayers pay their wages and salaries, but they have solved no problems and have created a generation of new ones.
While China continues to fake its economic recovery, pretending to reopen businesses, only to figure out it’s facing a second coronavirus wave, new stats from China Passenger Car Association (CPCA) detailed some disturbing realities the country continues to face: crashing car sales in March.
CPCA data showed car sales in March plunged 40.8% from a year earlier to 1.08 million units as quarantines, limited travel, and business shutdowns still plague the second largest economy in the world.
China is the world’s biggest car market and has seen crashing sales in the last three months. However, CPCA notes during an online briefing on Thursday that sales could rebound in April.
China is hoping for a speedy recovery, but as we’ve noted over the last month, it’s happening at a much slower rate than anyone has anticipated. Leaving some to believe, any recovery is not the widely expected V-shaped or U-shaped, but rather a possible L-shaped recovery.
Tesla car sales in the country went against the grain last month, considering after several months of quarantine, the first thing a person does is buy a Model 3?
CPCA data showed the US-based electric car company recorded the highest ever monthly sales in China, coming in at 10,160 units in March, reported Reuters. The company sold around 3,900 units in February, up from 2,620 units in January.
With overall Chinese car sales continuing to print lower, recovery hopes for the second-largest economy, nevertheless, the world, are dim at this point. As per the latest reports from WTO and OECD on Wednesday, the global economy might already be in recession.
This Curve Will Never Flatten Again: Fed Balance Sheet Hits $6.1 Trillion, Up $2 Trillion In 1 Month
Here is an example of a curve that everyone wants to flatten.
And here is an example of a curve that while some – namely the bears – also wants to see collapse, it will never do so as that would mean the end of western civilization – which is now entirely contingent on the level of the S&P500 – as we know it. We are talking of course, about the Fed balance sheet which is now well above $6 trillion to make sure stocks and bonds don’t crash.
With that in mind here is all you need to know about this particular “curve”:
Total Fed assets grew by $293Bn to $6.08 trillion as of close, April 8, with the increase primarily driven by $294bn of Treasury securities added to the SOMA portfolio. Through its credit facilities, the Fed also extended $680bn in temporary liquidity to various counterparties, a decline of $61bn from last week.
In the past month, the Fed balance sheet has increased by $2 trillion, more than all of QE3, when the balance sheet increased by $1.7 trillion over the span of a year. The balance sheet increase has also been faster on a weekly basis than anything observed during the financial crisis, increasing as follows:
April 8: $$272BN
April 1: $557BN
March 25: $586BN
March 17:$356BN
Since the Fed needs to monetize all debt issuance this year, and probably every other year now that the Treasury and Fed have merged and helicopter money has arrived, the pace of the current QE is like nothing ever observed before:
.. we can calculate that by next Friday, April 17, the Fed’s assets will rise to at least $6.4 trillion, almost double where the balance sheet was in early September 2019, just before hedge funds needed to be bailed out and the Fed pretended like it was saving the repo market.
Some more details:
The highest utilization among the Fed’s credit facilities was the central bank liquidity swap lines, which saw its balances increase by $10bn to $358bn.
Temporary repo operations with primary dealers fell by $70bn to $193bn. The newly introduced repo facility for foreign central banks had a balance of only $1mm.
Balances in the Money Market Mutual Fund Liquidity Facility (MMLF) and the Fed discount window were relatively unchanged from last week with $53bn and $43bn, respectively.
Then, to make sure the balance sheet goes even more exponential soon, on Thursday, the Fed announced a new facility for municipal bonds and details for a number of other programs, including the Main Street Business Lending Program (MSBLP) and the corporate facilities. The two corporate credit facilities will receive a combined $75bn, allowing for a market footprint up to $750bn. Fed purchases will also include “fallen angels” and portions of syndicated loans. In addition, a portion of its ETF purchases in the Secondary Market Corporate Credit Facility will be allocated to high-yield ETFs.
In terms of the other facilities, the MSBLP will receive $75 billion of equity, allowing for Fed purchases of up to $600bn in loans.
Meanwhile, the newly established Municipal Liquidity Facility will offer up to $500bn of lending to states and municipalities backed by $35bn in funding from the Treasury.
Here is a recap of all the Fed’s various credit and liquiidty programs:
And finally, a comparison of how much the various liquidity programs are being used now vs 2008/9.
Mexico’s president Andrés Manuel López Obrador has been reluctant to impose mandatory “social distancing” orders on the Mexican population. According to USNews, López Obrador “has maintained a relaxed public attitude” toward COVID-19, and the Mexican government did not impose a ban on “nonessential” work until March 30, long after health officials in other countries insisted Mexico must do so.
According to Dr. Miguel Betancourt, president of the Mexican Society of Public Health, those measures are “too late” and “should have come weeks earlier.” But, even with legal measures in place, it’s hard to say how many Mexicans can afford to follow them.The Financial Timeshas described what is likely a common attitude in Mexico:
Salvador Almonte has been doing a roaring trade in antiviral citrus cocktails at his stall in Iztapalapa, a sprawling working-class district of Mexico City. He makes about $9 to $13 a day selling juices and sandwiches and—like his customers—cannot contemplate staying at home to slow the spread of Covid-19. “We live day to day,” he said. “If we don’t work, we don’t eat.”…
Cuauhtémoc Rivera, head of the Association of Small Businesses, warned that a quarter of a million corner shops could close, with the loss of 500,000 jobs….If this goes on for a long time, I don’t know how we’ll all survive,” said Enrique Rosas, who has a fleet of 20 taxis.
The Mexican government is right to be hesitant to shut down Mexican businesses. The distance between a “normal” economy and grinding poverty is a lot smaller in Mexico than in a wealthy country like the United States or Germany. While mandatory lockdowns in rich countries will cause mass impoverishment—complete with all the usual mental and physical health problems that accompany it—the stakes are even higher in a middle-income country like Mexico.
Moreover, many Mexicans are already suffering from the mandatory shutdowns in the US. In 2019, for example, Mexicans working in the United States sent more than $39 billion back to Mexico. This is a vital lifeline for many Mexicans, and these remittances are likely to be decimated by the government-forced shutdown.
The Financial Times continues:
Balancing the competing needs to keep citizens healthy without devastating the economy is particularly tricky in Mexico….almost 50 per cent of Mexicans live below the poverty line, another 30 per cent are vulnerable to sinking into poverty and 30m work in the informal sector, where they receive no social benefits.
What Mexico Learned from the H1N1 Panic
This isn’t the first time Mexicans have been commanded to lock down their economy to battle a disease.
During the H1N1 pandemic of 2009, Mexican officials closed schools for a week, locked down various businesses, canceled movies, concerts, soccer games, and “virtually forced the entire population to wear ineffective face masks.” Mexico experienced 390 deaths out of a population of 120 million.
The cost of the pandemic was estimated at 1 percent of Mexico’s GDP in 2008….The A(H1N1) outbreak particularly impacted tourism—an important component of the Mexican economy due to its magnitude and its importance as a source of foreign currency; the tourism industry lost an average of 80 percent of its sales. After the first weeks of the quarantine, 90 percent of the country’s hotel and transportation reservations were canceled, along with 290 cruise ship arrivals. It was estimated that in 2009, Mexico lost $3.4 billion from touristic activities due to the pandemic.
In the immediate aftermath, the Mexican government was praised and congratulated for its actions, but many later admitted the Mexican government had overreacted. According to Jorge Castañeda Gutman, former Mexican Secretary of Foreign Affairs,
One year later the WHO acknowledged it had exaggerated, and the Mexican government was moderately criticized for the type of measures it took….The government didn’t know, or didn’t acknowledge, that this response would prove to be undoubtedly more onerous for the country than the epidemic itself.
This disastrous impact on the Mexican economy informs the debate today in Mexico. According to Physician’s Weekly,
The lesson is not lost on the officials running Mexico’s response in 2020, many of whom were also involved in fighting the influenza epidemic. Mexico’s economy last year suffered its first recession since 2009. [Deputy Health Minister Hugo] Lopez-Gatell said on [March 17] countries around the world were repeating Mexico’s mistake in 2009, making decisions based on anxiety and social pressure rather than science….The lesson from the flu epidemic is that acting too soon is counterproductive, he said. “Acting responsibly, we can’t and should not take measures that exhaust our society. Let’s not use up all the interventions too soon. Let’s keep our calm.”
With the implementation of last week’s order, the business shutdowns have now begun. Unemployment will soon follow, but it’s unclear how many Mexicans can sit at home and wait things out. Many will be forced in the the informal economy to bring in at least a little income. Since far fewer Mexicans than Americans have jobs that lend themselves to “working at home,” keeping food on the table will require flouting demands that Mexicans practice “social distancing.”
This isn’t the say things are proceeding as normal. At least one study claims ridership on public transport in Mexico has fallen by 50 percent, and traffic congestion has fallen by even more. But even big declines in usually traffic-choked Mexico City hardly signal a situation in which streets are deserted.
How many will studiously avoid human contact outside the home? Mexican business and political culture suggests many will not. The number of annual hours worked per worker is higher in Mexico than any other country. Moreover, according to Castañeda, Mexicans react with “skepticism with regard to anything derived from government,” and this “individualistic, incredulous attitude” applies to public health orders as well.
It may be that many Mexicans will fear COVID-19 more than they feared H1N1. But in Mexico, many are also familiar with the hardships poverty brings, and fear of being destitute may trump fears about the disease. Although wealthy Americans with secure employment and luxurious lifestyles like Anthony Fauci continue to insist mass unemployment is merely “inconvenient,” few Mexicans have the luxury of such blasé thinking.
NYC Resorts To Burying Dozens Of Coronavirus Victims In “Mass Grave” On Hart Island
Four and a half years ago, the New York Times published a feature about a man named George Bell, a Queens resident who died anonymously in his apartment, and whose body, after going unclaimed for several months, was eventually interred at the potter’s field on Hart Island, in the Bronx, where all of NYC’s unclaimed bodies are eventually buried.
They say more than 1 million bodies have been buried on the island since shortly before the Civil War, when the city started using it as a burial ground. And now, dozens of patients who succumbed to COVID-19 will likely be buried there too as the city accelerates its potter’s field burials as morgues and funeral homes fill up.
By now, Americans have probably seen photos of the makeshift morgues set up in ice trucks, and the hospital tents set up around the city as it battles the virus. The city has already buried some coronavirus victims on the island, and is planning more burials in the coming days. Though to be sure not all of those expected to be buried died of COVID-19.
“It is likely that people who have passed away from (coronavirus)…will be buried on the island in the coming days,” New York City Mayor Press Secretary Freddi Goldstein told CNN.
Instead of waiting two months to transfer an unclaimed body to the island, the city has sped up the amount of time it will hold a body to 2 weeks.
Usually, about 25 people are buried on the island every week. But since the virus landed, that pace has accelerated to 25 a day, the city said. NYC has also said it plans to bury some victims in local city parks, a plan that was widely mocked for its ghoulishness by New Yorkers.
Deaths across the state – but in the city especially – have been piling up in recent days, as Gov. Cuomo showed earlier.
A city spokesperson added that as long as contact with a family member has been made, a body will be kept, even if it’s just a verbal claim.
From the per curiam opinion today, joined by Judges Stuart Kyle Duncan and Jennifer Walker Elrod (Judge James Dennis dissented in part, “because he would not stay any part of the district court’s April 9 TRO”):
On April 7, 2020, we issued a writ of mandamus directing the district court to vacate its temporary restraining order … that exempted abortion procedures from GA-09, an emergency executive order issued on March 22 by the Governor of Texas postponing certain non-essential medical procedures for three weeks during the escalating COVID-19 pandemic. As we explained, GA-09 sought to preserve critical medical resources and slow the spread of a pandemic during what the district court itself recognized was Texas’s “worst public health emergency in over a century.” We further explained that GA-09 “is a concededly valid public health measure that applies to all ‘surgeries and procedures,’ does not single out abortion, and … has an exemption for serious medical conditions.”
In our opinion, we emphasized that the district court had “scheduled a telephonic preliminary injunction hearing for April 13, 2020, when all parties will presumably have the chance to present evidence on the validity of applying GA-09 in specific circumstances.” The evidence presented at this hearing, we said, would allow the district court to make “targeted findings, based on competent evidence, about the effects of GA-09 on abortion access.” We emphasized that “those proceedings” must “adhere to the controlling standards, established by the Supreme Court over a century ago, for adjudging the validity of emergency measures like [GA-09].” As we stated in our opinion, those “controlling” standards come from the Supreme Court’s decision in Jacobson v. Massachusetts (1905). Having already painstakingly explained those standards in our opinion, we reiterate our holding:
“[W]hen faced with a society-threatening epidemic, a state may implement emergency measures that curtail constitutional rights so long as the measures have at least some ‘real or substantial relation’ to the public health crisis and are not ‘beyond all question, a plain, palpable invasion of rights secured by the fundamental law.’ Jacobson. Courts may ask whether the state’s emergency measures lack basic exceptions for ‘extreme cases,’ and whether the measures are pretextual—that is, arbitrary or oppressive. At the same time, however, courts may not second-guess the wisdom or efficacy of the measures.”
We also articulated how the Jacobson framework would apply to the Casey undue-burden analysis. We explained that this analysis “ask[s] whether GA-09 imposes burdens on abortion that ‘beyond question’ exceed its benefits in combating the epidemic Texas now faces.” We explained further that this analysis would “require[] careful parsing of the evidence,” and we noted some of the conflicting evidence in the record. But we emphasized that “[t]hese are issues that the parties may pursue at the preliminary injunction stage, where Respondents will bear the burden to prove, by a clear showing, that they are entitled to relief … in any particular circumstance.”
The day following our mandamus, April 8, 2020, the district court did the following: (1) it vacated its March 30 TRO; (2) it cancelled the telephonic preliminary injunction hearing previously scheduled for April 13; and (3) it ordered the parties to confer and propose a status report before April 15 setting out the parties’ agreement on procedures and a schedule for a new preliminary injunction hearing on a yet-unannounced date.
Also on April 8, plaintiffs filed in the district court a new application for TRO supported only by one additional declaration. The next day, April 9, the district court—without allowing defendants either to file a pleading or to submit evidence in opposition to the TRO application—entered an order granting plaintiffs a TRO. The new TRO enjoins all defendants from enforcing GA-09 against Plaintiffs or their agents in the following ways: (1) it enjoins enforcement of GA-09 “as a categorical ban on all abortions provided by Plaintiffs”; (2) it enjoins enforcement as to providing “medication abortions”; (3) it enjoins enforcement as to providing “procedural abortion[s] to any patient who, based on the treating physicians’ medical judgment, would be more than 18 weeks LMP [“last menstrual period”] on April 22, 2020, and likely unable to reach an ambulatory surgical center in Texas or to obtain abortion care”; and, finally (4) it enjoins enforcement as to providing “procedural abortion[s] to any patient who, based on the treating physician’s medical judgment, would be past the legal limit for an abortion in Texas—22 weeks LMP—on April 22, 2020.”
Texas officials have now filed a petition for writ of mandamus seeking vacatur of the April 9 TRO, as well as an emergency motion for stay of the TRO and a temporary administrative stay of the TRO.
IT IS ORDERED that the motion for temporary administrative stay of the district court’s order of April 9, 2020 is GRANTED, until further order of this court, to allow sufficient time to consider the mandamus petition and emergency stay motion. This stay operates against the April 9 TRO in all respects EXCEPT that part of the TRO applying to “any patient who, based on the treating physician’s medical judgment, would be past the legal limit for an abortion in Texas—22 weeks LMP—on April 22, 2020.” Our stay does not operate against that part of the April 9 TRO.
The panel also set an expedited briefing schedule, with all the papers due by next Wednesday. Thanks to Josh Blackman for the pointer.
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From the per curiam opinion today, joined by Judges Stuart Kyle Duncan and Jennifer Walker Elrod (Judge James Dennis dissented in part, “because he would not stay any part of the district court’s April 9 TRO”):
On April 7, 2020, we issued a writ of mandamus directing the district court to vacate its temporary restraining order … that exempted abortion procedures from GA-09, an emergency executive order issued on March 22 by the Governor of Texas postponing certain non-essential medical procedures for three weeks during the escalating COVID-19 pandemic. As we explained, GA-09 sought to preserve critical medical resources and slow the spread of a pandemic during what the district court itself recognized was Texas’s “worst public health emergency in over a century.” We further explained that GA-09 “is a concededly valid public health measure that applies to all ‘surgeries and procedures,’ does not single out abortion, and … has an exemption for serious medical conditions.”
In our opinion, we emphasized that the district court had “scheduled a telephonic preliminary injunction hearing for April 13, 2020, when all parties will presumably have the chance to present evidence on the validity of applying GA-09 in specific circumstances.” The evidence presented at this hearing, we said, would allow the district court to make “targeted findings, based on competent evidence, about the effects of GA-09 on abortion access.” We emphasized that “those proceedings” must “adhere to the controlling standards, established by the Supreme Court over a century ago, for adjudging the validity of emergency measures like [GA-09].” As we stated in our opinion, those “controlling” standards come from the Supreme Court’s decision in Jacobson v. Massachusetts (1905). Having already painstakingly explained those standards in our opinion, we reiterate our holding:
“[W]hen faced with a society-threatening epidemic, a state may implement emergency measures that curtail constitutional rights so long as the measures have at least some ‘real or substantial relation’ to the public health crisis and are not ‘beyond all question, a plain, palpable invasion of rights secured by the fundamental law.’ Jacobson. Courts may ask whether the state’s emergency measures lack basic exceptions for ‘extreme cases,’ and whether the measures are pretextual—that is, arbitrary or oppressive. At the same time, however, courts may not second-guess the wisdom or efficacy of the measures.”
We also articulated how the Jacobson framework would apply to the Casey undue-burden analysis. We explained that this analysis “ask[s] whether GA-09 imposes burdens on abortion that ‘beyond question’ exceed its benefits in combating the epidemic Texas now faces.” We explained further that this analysis would “require[] careful parsing of the evidence,” and we noted some of the conflicting evidence in the record. But we emphasized that “[t]hese are issues that the parties may pursue at the preliminary injunction stage, where Respondents will bear the burden to prove, by a clear showing, that they are entitled to relief … in any particular circumstance.”
The day following our mandamus, April 8, 2020, the district court did the following: (1) it vacated its March 30 TRO; (2) it cancelled the telephonic preliminary injunction hearing previously scheduled for April 13; and (3) it ordered the parties to confer and propose a status report before April 15 setting out the parties’ agreement on procedures and a schedule for a new preliminary injunction hearing on a yet-unannounced date.
Also on April 8, plaintiffs filed in the district court a new application for TRO supported only by one additional declaration. The next day, April 9, the district court—without allowing defendants either to file a pleading or to submit evidence in opposition to the TRO application—entered an order granting plaintiffs a TRO. The new TRO enjoins all defendants from enforcing GA-09 against Plaintiffs or their agents in the following ways: (1) it enjoins enforcement of GA-09 “as a categorical ban on all abortions provided by Plaintiffs”; (2) it enjoins enforcement as to providing “medication abortions”; (3) it enjoins enforcement as to providing “procedural abortion[s] to any patient who, based on the treating physicians’ medical judgment, would be more than 18 weeks LMP [“last menstrual period”] on April 22, 2020, and likely unable to reach an ambulatory surgical center in Texas or to obtain abortion care”; and, finally (4) it enjoins enforcement as to providing “procedural abortion[s] to any patient who, based on the treating physician’s medical judgment, would be past the legal limit for an abortion in Texas—22 weeks LMP—on April 22, 2020.”
Texas officials have now filed a petition for writ of mandamus seeking vacatur of the April 9 TRO, as well as an emergency motion for stay of the TRO and a temporary administrative stay of the TRO.
IT IS ORDERED that the motion for temporary administrative stay of the district court’s order of April 9, 2020 is GRANTED, until further order of this court, to allow sufficient time to consider the mandamus petition and emergency stay motion. This stay operates against the April 9 TRO in all respects EXCEPT that part of the TRO applying to “any patient who, based on the treating physician’s medical judgment, would be past the legal limit for an abortion in Texas—22 weeks LMP—on April 22, 2020.” Our stay does not operate against that part of the April 9 TRO.
The panel also set an expedited briefing schedule, with all the papers due by next Wednesday. Thanks to Josh Blackman for the pointer.
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Last week, we got news that Carnival became the first of many large corporations to aggressively dilute shareholders after a decade of reckless financial engineering.
Visual Representation of the CCL Cap Structure…
Before discussing this malfeasance of capital structure management, let’s rewind three decades.
Excluding brief periods of exuberance at the end of the 1920s and 1960s most public companies historically were staid organizations – they grew a few percent a year and paid out some of their profits in dividends. Boards of directors were mainly recruited from large shareholders who were more focused on sustainability than quarterly numbers or pushing the share price. Sure, there were outliers, there were guys doing crazy things, but a large portion of corporate America was focused on building long-term wealth for the large shareholders (often the families who controlled these businesses).
Then came Mike Milken and his cohort of extortioners and restructuring artists.
Don’t get me wrong, by the 1980s, many US corporations had grown fat and a bit lazy—a good shake-up was needed, but the following generation of financial engineers took things too far. I’m all about improving returns on assets (ROA)—my gripe is that the focus then shifted to returns on equity (ROE).
Here’s a simple exercise, take a mediocre business, add ten turns of leverage and then marvel at how amazing the returns to equity are. For the past generation, every corporate executive has undertaken a similar exercise and congratulated themselves on the results. For the holdouts who refused to lever up, there was a wolf-pack of hedge funds ready to pounce and educate them on why returning too much capital to shareholders was necessary. Is it any wonder that corporate balance sheets are such a mess today? Like a wounded gazelle, if your leverage ratios were low, you were pounced upon and told to lever up.
Coming out of the GFC, Boards of Directors tasked every CFO with a simple mission; figure out how much excess liquidity they’ll need if there’s another GFC that is 50% worse.
What does 50% worse mean? Who cares – CFOs built models and created numbers that were agreed upon. The models mostly looked at how deeply earnings could decline.
Not a single model looked at what would happen if revenue stopped. As a result, there was no rainy-day fund. There was no excess capital beyond a revolver that lasts only a few weeks at best.
What should have been excess cash reserves were squandered long ago on buybacks at all-time high multiples.
As we come out of this COVID-19 crisis, I suspect that Directors will demand larger liquidity buffers.
How much of a buffer? What if you need six months of op-ex in cash on the balance sheet? What if Directors demand Japan style balance sheets? What happens when you take leverage down at most corporations? You end up with middling ROEs and reduced valuations (like in Japan). I suspect that ROEs across corporate America are going to converge towards a new and much lower level. Think of the lesson from Carnival; if you spent a decade buying back stock and then dilute down 80%, have you created any value for anyone?
You think the Carnival execs will want to see their cost of capital do this again anytime soon? (note The Fed’s HY bond rescue)
I think a lot of corporations are about to have some real soul searching after they undertake similar exercises. If you’re a shareholder in an industry with terrible asset-level returns (think of your typical property REIT or pipeline MLP for instance), made palatable by high leverage, you may want to stop and think a bit about how the economics will look when leverage drops precipitously. You may be surprised at just how dramatically the ROE also declines. Conversely, industries that have been plagued by oversupply may now have a moment with reduced competition as companies focus on balance sheet repair instead of growth at any cost.
As the balance sheets of the world are reshaped, there will be winners and losers. You’d be foolish if you aren’t thinking about how capital structure evolution will impact your portfolio. I guarantee you, as you are reading this, Boards of Directors are re-reading their D&O policies and then thinking deeply about the balance sheet…
