Layoffs are mounting, alternative work is limited, and the unemployment systems in many states are either broken or running out of funding. Add the federal governments indicated desire to let blue states go bankrupt and we are looking at a good combination to enter a depression.
There was an interesting piece in this week's Atlantic on the motivation for having states declare bankruptcy:
"Under the Constitution, bankruptcy is a power entirely reserved to the federal government. An American bankruptcy is overseen in federal court, by a federal judge, according to federal law. That’s why federal law can allow U.S. cities to go bankrupt, as many have done over the years. That’s why the financial restructuring of Puerto Rico can be overseen by a federal control board. Cities and territories are not sovereigns. Under the U.S. Constitution, U.S. states are.
Understand that, and you begin to understand the appeal of state bankruptcy to Republican legislators in the post-2010 era."
His unwillingness to not solve the state's pension problems should be applauded. the amount of unfunded liabilities is in the hundreds of billions of dollars and approaching a trillion if it has not passed that already. This all happened because the number of public servants who are pulling in over 100k has skyrocketed... 100k+ in retirement.. with millions past 50k! Think about that 50k in pay plus medical.
These pensions and their medical side are the reason why the ACA did not touch golden medical plans because the vast majority are in this area along with certain other larger private pension systems. By the way, the House silently dropped that provision entirely from the ACA in 2019 so they any taxation of them is gone.
My favorite story to fall back on is provided below... and there are other states worse off. This type of largess should never have been allowed nor should the tax payer bail them out. People bemoan the pay of executives at private companies, well guess who is right up there in many cases.
In their defense, PR is spectacularly mismanaged. I love the place. I love the food. I love the culture, but there is something really annoying about an island, where everyone is on island time and blackouts are just a part of daily routine.
This is a pretty grim path to follow. If States are to go bankrupt and subject to federal imposition of what debts must be paid, then it may push States to seek further sovereignity. An example being pressure to mint their currency. This is currently banned in the constitution, but if things get dire... they could simply ignore?
The Atlantic author seems deeply confused. Not unexpected for David Frum. Puerto Rico is a territory, not in any state. A city is under state sovereignty.A state or a city can default. A city can declare bankruptcy under Federal law.
There is no law allowing a state to go bankrupt and be managed by the Feds.
Bankruptcy is an option , not a Federal power. McConnell isn't playing 7 dimensional chess, he just doesn't want to return tax money to Blue states and was just using language loosely when he said "bankrupt".
Pushing people off of unemployment insurance, which it’s generally assumed that some states are doing, all while there is no work to go to isn’t a recipe for a depression, it’s a recipe political catastrophe. In a weaker democracy this stuff would trigger a revolution, and I’m starting to get worried about ours.
this is why a lot of people have raised their eyebrows over the cost of shelter in place vs the risk of Covid19 infection. I'm glad it's becoming more visible, a few weeks ago you'd be shouted down for even suggesting the economic and political consequences of shelter in place could be catastrophic.
We just fired our cleaning crew this morning and cut hours for the entire shop floor. We are a mid-size, midwestern diesel repair shop similar to Western Truck Exchange. I used to just do valve work and major overhauls, now I carry garbage to the dumpster and fix the copiers in the front office too.
>alternative work is limited
non-existant out here really, but the real thing no one seems to be covering is crime seems up. We had two break-ins this month, one stole all our nitrile gloves, another took our air conditioner and a tool box.
>the unemployment systems in many states are either broken or running out of funding.
LOL this is a massive understatement. I applied a month ago for limited unemployment and got a voice message telling me the system was overloaded after I had completed the 40 minute call. the next day the line didnt even answer and the website was still down two weeks later. I finally stood in line for an hour at the unemployment office to be told I had to call the number "when it comes back up." Oh, those Trump Bucks? the $1200? Not me or a single person ive talked to has gotten that money.
>the federal governments indicated desire to let blue states go bankrupt
Just the blue ones? I'm in a red one and so far its starting to feel like we're all up shits creek. The local Sheriff wanted us to do oil changes on their patrol cars because we're part of a city contract for fire truck maintenance and they dont have the budget for regular service anymore. the motor pool for the county just cancelled their snow plow rebuilds, the county schools cancelled their bus maintenance and wanted to know if we would buy about 15 of them. The local water company asked if we could do their pump house generator maintenance on a net 120 or a payment plan.
>a depression.
I remember living out of my truck during the 2008 financial "downturn" and freezing all through November. I think the government may be vastly over-estimating the social credit they have with the people of this great nation if they think another round of "austerity" is going to sit right with us while all the banks get bailouts and the rich get richer.
> Oh, those Trump Bucks? the $1200? Not me or a single person ive talked to has gotten that money.
That's awful. In Canada, most people got their CERB money within a week. It took 2 days if you already had direct deposit info on there. Some people are refusing to go back to work after the relaxed lockdown because the CERB is more than they make working a few shifts a week.
It's a bit frustrating that part-time workers are getting more than if they would work, but I'm happy that everyone is taken care of.
Has there ever been a time in US history that the federal government has been so openly antagonistic and overtly willing to attack opposite-party state governments? If so, what were the outcomes? If not, is there anything even close?
Current question - what is the endgame for those who what blue states to go bankrupt? What do they get if that happens, outside of talking points? I assume they profit off of it (because that's the reason anyone does anything that I can tell), but how?
Well yes - there was a civil war! And more recently, the national guard was used to enforce school integration. Things have been much more antagonistic between the federal government and the states at times in the past.
> overtly willing to attack opposite-party state governments
It might be straight-up politics. But there is a real situation where state governments have been financially mismanaged. Should the "working class" person in Alabama without any retirement prospects be forced to bail out (via the Federal Gov't) the state of California's very generous pensions that were not fiscally sustainable in the first place?
I can try to give you the most "good faith" argument in favor of allowing Blue States to go bankrupt.
There's a caveat here that the Federal laws will need to change a bit to allow States to go into packaged restructuring. And to ensure that we are bailing out specific individuals to ensure that they are not too negatively affected.
One of the strongest arguments against "bailouts" of large corporations is that it negatively impacts price discovery. More specifically, it removes a company's ability to thrive in certain extreme conditions from the pricing equation entirely. An example: Amazon is at all-time-highs right now, and it's because it's proven itself to be a hugely important institution, both during wartime and peacetime. Its market price should reflect this value. Airlines, OTOH, are an institution that can be prone to failure when some things go wrong (exogenous or otherwise), and the price should reflect that. A theoretical airline doing $1B in revenue should be worth less than a theoretical Amazon doing $1B in revenue, even if both have identical profits, growth, balance sheets, etc. The net effect of this is inefficient and poor capital allocation, where more capital would be allocated towards airlines than warranted, and that capital could be allocated elsewhere in more productive / less risky endeavors.
This may come across as overly fundamentalist about the market, but where this really manifests is in the Fed's bailout of junk bonds, which is absolutely nuts. The whole point of junk bonds (I.e. the type of a loan that WeWork would have to take) is that it's default risk is high, but the yield is also high. If junk bonds are bailed out, then that means that we all ought to go and buy junk bonds. High yields for everyone! The Fed is going to bail you out no matter what. This, then, overly inflates the demand (and price) for junk bonds, and you now have a total capital mis-allocation, with a lot of capital going into AirBNBs and WeWorks of the world, rather than the Amazons of the world.
How does this relate to States? Taxation is the price we pay to live in a society, and States are a really underrated way we can accurately come up with the correct "price" for the correct basket of services society might offer. This is the Charles Tiebout school of thought. Bailing out states with shitty fiscal policies is 1) a moral hazard and 2) messes with the long run calculation of the optimal level of taxation.
Okay great, so then what happens if we just let States "fail", like we might let Corporations fail? If we allowed States to declare bankruptcy, the bond-holders won't get paid, and the State credit ratings will shift to reflect their true creditworthiness. In this regard, bailing out bad States is no different from bailing out junk bonds — the only difference is that today State bond-holders don't know that they're holding onto junk bonds — most States have a generally high credit rating (except Illinois, because, well lol)[1]. The only mechanism we know of for the system to correct the ratings of these bonds is to 1) let States relieve themselves of their debt obligations, and 2) organically allow the bonds for those States to become more high-yield.
You might argue that this makes it difficult for States to fund infrastructure projects and safety nets. Yes, it makes it difficult to finance projects in the short run, because the bond failures are reflective of the quality of the current governance. Who comprises the government, who is running things can change democratically — if citizens want more infrastructure projects / better development, they will have to vote for better policies and better representatives. It's the democratic equivalent of swapping out the entire executive team at WeWork with the executive team at Amazon. The alternative is that you never see these governance changes at the State and local levels, and you have the same problems in perpetuity because the same people are always in power, and we never learn from mistakes — institutional rot. Better governance might be to restructure bad pension systems, or raise their own State taxes (IMO State taxes are far too low).
TL;DR — the best argument for letting States go bankrupt is that it's an effective way to weed out institutional rot in the long run, and come up with the optimal level of taxation for the optimal basket of State provided services. Such a scheme can only work if individuals continue to be bailed out so that they are not caught in the onslaught.
End game for people like McConnell is that it puts downwards pressure on unions. A bankruptcy if a law is passed actually allowing states to go bankrupt would be a process overseen by federal courts, many of which are chaired by Trump appointed judges now. The judge gets to decide which debts are paid, meaning that pensions are very likely going to be chopped, hurting union members. There are other reasons.
Bottom line is that they want rich people (their primary donors) to get richer and don't care about poor or middle class. They are very open about it now and still somehow supported.
As sad as it is, I hope all those who voted for this are willing to accept the fate bestowed upon us from our 2016 election and the political stonewalling from both parties.
Perhaps its time to go back to basics. A focus on health, store-able foods, alternative investments which might survive bond/stock market issues, and family would be imperative in such a "new normal."
Vaccination certificates and debt forgiveness incoming? Who knows anymore - what harm is there in being ready?
McConnell is a shrewd negotiator so I assume he is using the bankruptcy position to win concessions on rescuing the oil and energy industry. Otherwise there will be a handful of Republican states facing their own bankruptcies.
Trump is just a spiteful moron but not even he would let New Mexico, Wyoming, North Dakota, Alaska, Louisiana, Oklahoma, and Kansas all fail.
No, but he'd let New Mexico fail (it's blue) and ram through a bailout for the rest out of political patronage, and the legislature would go along with it, since the Democrats seem to be allergic to actually opposing Trump policies.
That death rate would be significantly higher if hospitals didn't have the capacity to treat patients. Mortality rates for non COVID19 related cases would also go way up.
It maybe true, anyway, those young people, full of energy and party-lover is virus's best carrier though, locking in help prevents the spread to others whose vulnerable.
Ultimately, no one knows what the best strategy is, maybe the 'Swedish approach' maybe right, or not...,time will tell.
This seems like a great time for Amazon or Google to buy Lyft.
Amazon could bundle rides with package deliveries and get the pre-existing driver and passenger network from Lyft. Lyft was actually telling drivers to work with Amazon when the pandemic started (1).
Waymo could take Lyft’s aggregated rider demand. They already have a partnership to transfer autonomous rides from Waymo to Lyft during bad weather situations and refer Lyft riders to Waymo vehicles (2).
...What would they do with it? The business model (also uber) as-is makes a loss.
Uber/Lyft's initial proposition was that once ride sharing incumbents were established, they'd have a software-ish monopoly and margins. This did not work out. Now the proposition is "When driverless cars get invented..."
If google had a car that can drive itself, they can figure out an app. They can get to a customer base. The driverless car is the important part.
Amazon otoh... deliveries maybe? If they could figure out a way to do deliveries in a lyft/uber model... that's valuable to amazon.
Sure, I'll switch between ride sharing apps based on cost alone. But I'll still want available drivers near me. I'm not willing to try multiple apps just to see if it's usable.
I think Uber/Lyft's customer bases are definitely valuable. There's a real business there post Covid-19. I'm not sure what the margins would look like though. I think an acquisition might be a good idea if it was cheap enough and it looked like competitors wouldn't be able to use vc money to offer rides below cost.
Exactly. Lyft doesn't have anything they can't create for a lot less money. And if they buy it, they get a lot of headaches: legacy code, legacy staff, legacy relationships to partner and drivers.
I could see value for self-driving/ride-sharing data collection for Google. Google wants to make a ride-sharing program, well has one now I guess, having all that data seems like a boon if Lyft is a cheap buy. They could also collect a lot of data for use with their self-driving research as well.
I really don't think Waymo needs Lyft or Uber to dominate the ride hailing market in the future.
If they can make a better self-driving car than anyone else, they will win the ride-hailing market. People have no loyalty to Lyft or Uber. They will use whatever is the cheapest/most convenient.
This seems like a great time for Amazon or Google to buy Lyft
Or maybe Apple.
Apple has been pouring millions into improving its street views in Apple Maps. It should buy Lyft. Pay the drivers an extra $x/mile to clamp the Apple Maps image gathering device to the roofs of their cars.
The drivers win because they get a bump in income in an industry that's already hurting.
Apple wins because it gets up-to-date information about the places where people go most.
Even better: Apple could pay them $x/mile to drive to specific areas where the data is stale or missing.
As a former Uber/Lyft driver, I'd be all over this like Oprah on a baked ham.
> Pay the drivers an extra $x/mile to clamp the Apple Maps image gathering device to the roofs of their cars.
Scenario 1 (buy Lyft): So if Lyft has around 1 million drivers in USA [1], and Apple will pay them an average of $50/month to use the device + the cost of the device/installation (around $100) that would cost around $150,000,000 on top of the acquisition price. And you cant really be sure that they covered all roads.
Scenario 2 (hire drivers): US total road length is about 4 million miles, average driver can cover about 160 miles a day (8 hours * 20Mph). If you want to drive through all of the US in 30 days you would need around 800 drivers. If you pay them $5000/month to do that, that would cost you "just" $4 million.
This gives you high frequency data of common roads at an incredible cost. Street views only need very low frequency data of all roads, so you'd be paying a premium for data that isn't needed while still having a gap.
Apple would only buy Lyft if they could control the brand experience to a level that just isn't possible at scale with humans as the primary service delivery (cough) vehicle.
Consider the Apple retail experience. Retail is relatively easy to train for, there's a big labor pool to pick from, and with Apple's revenue/sq.ft. they can afford to compete for good staff.
Now consider the sum of your Uber/Lyft experiences and the scale of the problem. Is it reasonable to expect an Apple retail level experience in the ride app space? Even with a tolerable up-charge?
Retail experiences have always varied with some brands able to offer consistently stellar experiences. Tiffany comes to mind. In all my adult years hailing a car has always been a total shit show except at the most extreme price points. I won't speculate as to why, I'm just saying, the quality problem of mass small auto ride hailing has yet to be fixed by anyone.
> Apple wins because it gets up-to-date information about the places where people go most.
Apple is already doing this - my iOS Maps has real time traffic in areas where I know that they're only getting this information from other iOS users, not from reporting devices.
I work for Lyft and was part of this cut. I truly worked toward fixing things, and I don't want to sound salty here even though will, there's not much going on with Lyft or Uber to save in terms of tech. It's shoddy and useless. For the most part if Amazon got into the game now, and with their flywheel, they could eat Lyft alive and wait for Uber to bleed dry.
I'm sorry for it. Just wondering and want to know your perspective, if teams like ML and Data Science are more of a luxury than a necessity? They're mostly not a revenue generating team and I constantly see them being part of such layoffs.
Both Uber and Lyft have self-driving initiatives. Perhaps their regular ride-hailing business doesn't have much tech but they hired some famous people to do their self-driving tech.
That's because there is at least 17% less share dilution than there was a day before, let alone the runway being marginally extended.
So speculators don't get dumped on by employees with RSUs all day every day, and the business prospects are not adversely impacted any more than they already were. Thats when you pay more for shares.
Layoffs are proactive for investors, not an omen for investors, don't get that confused.
I've also heard that large investors are much more cautious about doing large deals right now. I think with all the uncertainty with Covid-19 would mean a major acquisition would be unpredictable.
> This seems like a great time for Amazon or Google to buy Lyft.
and buy what exactly? Uber and Lyft aren't very valuable businesses, especially as their mythical ability to corner the supply (drivers) hasn't materialized at all.
IMHO both of those companies are destined to shut down or survive in a much more limited fashion, as unicorns they make no sense.
love that this is the top comment on HN and not the fact that 1k people just lost their ability to pay their rent/mortgages, take care of their families, deal with medical costs.
Business value (or lack thereof) of Lyft now is an unknown, worthy of discussion. The things you mentioned are basic facts everyone is acutely aware about, hard to see what does it help restating them.
In fact the top comment is now some partisan bickering! All these smart people and not 10% of them enough foresight to think beyond "the enemy of my enemy is my friend".
Not in the US, but I'm not sure someone unemployed and out of medical insurance can tell much of a difference between "red" and "blue" right now.
I am (for a few more weeks) a PM at a fairly popular applicant tracker company. I was just laid off. While recruiting is the first to get affected, you're underestimating how much of a bellwether HR tech truly is. If we're suffering this much, it's pretty clear what's about to happen. I've seen our internal data, things will be bad for a while.
The tech companies you identified are getting hit 1st. I expect to eventually see fallout in Fintech, Realestate, Advertising, anyone selling B2B SaaS (particularly to marketing/HR/ sales departments, SMB), etc. It will take time to feel the 2nd and 3rd order impacts. Hopefully, we bounce back quickly, but it's hard to not be a little concerned.
Unless their investors believe in a V-shaped recovery afterwards, and are willing to spend money now to gain market space from competitors who would die in the meantime.
I mostly agree at this point but wonder if covid's economic impact is just getting started and there's gonna be massive unforeseen 2nd and 3rd order effects.
Hospitality/transportation and startups that were already in trouble (e.g. WeWork) might just be the tip of the iceberg.
Conversely, it's helped some tech companies (Amazon and Zoom) so who knows how this all shakes out.
My thoughts are that amidst the fear, the thing is, this economy was slowed solely due to the lockdown. If there was a bubble, it hasn't popped yet. There really is no reason for the economy being in the position its in except for the virus. I doubt there will be 3rd order effects that are too devastating. The lockdown will end soon enough and the economy will thaw and start moving again, maybe even to the roaring pace it was at before all this happened ... and after all that is when we will likely see the actual once-a-decade market-correction/recession/depression.
Maybe we should consider a higher level? For example, with our interconnected highly computerized trading systems and with every megacorp these days heavily invested in financials (think stock buy-backs) who knows? Definitely not the FED Reserve.
Also: "Lyft's other cost-cutting measures include furloughing 288 employees and base pay reductions of 30% for executive leadership, 20% for VPs, and 10% for all other exempt employees. Board directors will give up 30% of their cash compensation during Q2."
Paying people in stock and performance bonuses is ideal during a downturn. It doesn't cost the company anything to pay people in stock, since it just siphons off value from all existing stock, and nobody's getting their performance bonus!
There was a person in the Uber thread yesterday who predicted this. I wonder if they’ll go back to hiring if this is over or they’re using as an opportunity to get rid of people they shouldn’t have hired in the first place.
Possible. I remember going a Lyft event in mid-2018 and they were telling me that they had just doubled their team size and were looking to double again by the end of the year, so they were certainly hiring fairly quickly then.
Some companies should be billion dollar companies with 30 employees, like when Instagram was bought out in 2012. Headcount is mutually exclusive from how much the enterprise makes and can return to shareholders.
If headcount is not directly helping that then it should not be an indefinite relationship.
Also, I'm available for hire as a CFO or board member if you think your company has challenges with adopting this market-relevant predilection and needs to make "the hard decisions".
> Lyft is laying off 17 percent of its workforce and furloughing 5 percent. This is after an employment lawyer at the company accidentally invited much of the workforce to a weekend meeting called "Jetty" in what workers took to be a reference to jettisoning jobs.
I'm sure the current economic situation plays a role in the decision to layoff.
But, i wonder, in general, if all these layoffs are to some degree something overdue that companies wanted to do anyways and are now just taking the opportunity to do it whilst still saving face.
This entire situation is going to allow for a lot of, arguably, necessary house cleaning.
I think you're also going to see management at surviving businesses exploit the downturn to their advantage. Lots of rationalization as to why you won't see raises, why you'll need to work more to pick up the slack, lots of "be greatful" (there's some validity here), lots of pay/hour cuts, etc. that will likely perpetuate long after the crisis has rebounded and balance sheets are in the green again. Its funny how quickly businesses react to cut costs but are slow to react to shore up their current employees.
You're also going to see employers who lay-off yet justify continual hiring in this marketplace. Businesses will try to capture high quality labor talent at reduced costs (due to competition) and lock in those rates for awhile (hoping some will stay and be happy with modest raises on their significantly reduced labor rates).
One place I work with, management claims everything is fine and they've locked down all non-essential hiring, but I keep active monitoring on popular labor marketplaces for them and see continual updated advertising, even after they've claimed to stop hiring. Some of it's automated but I know for a fact a few places manually renewed listings intentionally. They're not locking hiring, they're looking for discounts right now because they know they're financially solid and will weather this storm just fine.
I love many aspects of technology but am really growing to hate industry practices to the point of looking at career changes.
Isn't a "jetty" a defensive barrier to protect a harbor against storm tides? Dumb move to accidentally invite everyone to a meeting with a codename, but not a dumb codename as you protect a company from a storm.
IIRC this is why the U.S. military (in certain cases?) uses a pre-generated list of code names. If you let humans do the code names, they'll choose names that leak info.
There's always some related piece of news about the way the company went about the layoffs. This one seems especially reaching. Really, a meeting invite?!
If I found out that a bunch of my coworkers had been laid off in a video meeting, I’d be bummed because they got laid off, but I’d understand that companies have to make hard decisions sometimes.
If I learned that the accidentally visible filename of the PowerPoint in that meeting was “EjectorSeat.pptx”, I’d be some combination of angry and alarmed about management’s attitude. That would be a definite “update my resume and call up some former colleagues for lunch” kind of moment at the very least.
I think people reasonably expect that when a company makes a serious decision that affects hundreds of people’s livelihoods, that they effect a pretty somber tone.
In the long term I think this will be a solid move for both Uber & Lyft. The apparent economics of both businesses are relatively dire but the long term value prop is still as important as ever: they are generating the consumer data that will ultimately be used for self driving vehicles.
This will allow both companies to trim the fat and (hopefully) regain the move fast mentality that is necessary for a startup. This can be Uber and Lyfts time to shine.
No, but they have a good understanding on routes and areas with high traffic. That data is going to be worth a fortune for the first fully autonomous taxi service.
Readit News
Its a pretty sobering time.
"Under the Constitution, bankruptcy is a power entirely reserved to the federal government. An American bankruptcy is overseen in federal court, by a federal judge, according to federal law. That’s why federal law can allow U.S. cities to go bankrupt, as many have done over the years. That’s why the financial restructuring of Puerto Rico can be overseen by a federal control board. Cities and territories are not sovereigns. Under the U.S. Constitution, U.S. states are.
Understand that, and you begin to understand the appeal of state bankruptcy to Republican legislators in the post-2010 era."
https://www.theatlantic.com/ideas/archive/2020/04/why-mitch-...
These pensions and their medical side are the reason why the ACA did not touch golden medical plans because the vast majority are in this area along with certain other larger private pension systems. By the way, the House silently dropped that provision entirely from the ACA in 2019 so they any taxation of them is gone.
My favorite story to fall back on is provided below... and there are other states worse off. This type of largess should never have been allowed nor should the tax payer bail them out. People bemoan the pay of executives at private companies, well guess who is right up there in many cases.
https://www.forbes.com/sites/adamandrzejewski/2018/10/26/ill...
We just fired our cleaning crew this morning and cut hours for the entire shop floor. We are a mid-size, midwestern diesel repair shop similar to Western Truck Exchange. I used to just do valve work and major overhauls, now I carry garbage to the dumpster and fix the copiers in the front office too.
>alternative work is limited
non-existant out here really, but the real thing no one seems to be covering is crime seems up. We had two break-ins this month, one stole all our nitrile gloves, another took our air conditioner and a tool box.
>the unemployment systems in many states are either broken or running out of funding.
LOL this is a massive understatement. I applied a month ago for limited unemployment and got a voice message telling me the system was overloaded after I had completed the 40 minute call. the next day the line didnt even answer and the website was still down two weeks later. I finally stood in line for an hour at the unemployment office to be told I had to call the number "when it comes back up." Oh, those Trump Bucks? the $1200? Not me or a single person ive talked to has gotten that money.
>the federal governments indicated desire to let blue states go bankrupt
Just the blue ones? I'm in a red one and so far its starting to feel like we're all up shits creek. The local Sheriff wanted us to do oil changes on their patrol cars because we're part of a city contract for fire truck maintenance and they dont have the budget for regular service anymore. the motor pool for the county just cancelled their snow plow rebuilds, the county schools cancelled their bus maintenance and wanted to know if we would buy about 15 of them. The local water company asked if we could do their pump house generator maintenance on a net 120 or a payment plan.
>a depression.
I remember living out of my truck during the 2008 financial "downturn" and freezing all through November. I think the government may be vastly over-estimating the social credit they have with the people of this great nation if they think another round of "austerity" is going to sit right with us while all the banks get bailouts and the rich get richer.
That's awful. In Canada, most people got their CERB money within a week. It took 2 days if you already had direct deposit info on there. Some people are refusing to go back to work after the relaxed lockdown because the CERB is more than they make working a few shifts a week.
It's a bit frustrating that part-time workers are getting more than if they would work, but I'm happy that everyone is taken care of.
Has there ever been a time in US history that the federal government has been so openly antagonistic and overtly willing to attack opposite-party state governments? If so, what were the outcomes? If not, is there anything even close?
Current question - what is the endgame for those who what blue states to go bankrupt? What do they get if that happens, outside of talking points? I assume they profit off of it (because that's the reason anyone does anything that I can tell), but how?
GOP knows they're gonna lose the election. They want to hand the dems the worst economy possible.
Then, 4 years down the road, they can start campaigning against "do-nothing-dems" and point to the horrible economy they had to start fixing.
It might be straight-up politics. But there is a real situation where state governments have been financially mismanaged. Should the "working class" person in Alabama without any retirement prospects be forced to bail out (via the Federal Gov't) the state of California's very generous pensions that were not fiscally sustainable in the first place?
There's a caveat here that the Federal laws will need to change a bit to allow States to go into packaged restructuring. And to ensure that we are bailing out specific individuals to ensure that they are not too negatively affected.
One of the strongest arguments against "bailouts" of large corporations is that it negatively impacts price discovery. More specifically, it removes a company's ability to thrive in certain extreme conditions from the pricing equation entirely. An example: Amazon is at all-time-highs right now, and it's because it's proven itself to be a hugely important institution, both during wartime and peacetime. Its market price should reflect this value. Airlines, OTOH, are an institution that can be prone to failure when some things go wrong (exogenous or otherwise), and the price should reflect that. A theoretical airline doing $1B in revenue should be worth less than a theoretical Amazon doing $1B in revenue, even if both have identical profits, growth, balance sheets, etc. The net effect of this is inefficient and poor capital allocation, where more capital would be allocated towards airlines than warranted, and that capital could be allocated elsewhere in more productive / less risky endeavors.
This may come across as overly fundamentalist about the market, but where this really manifests is in the Fed's bailout of junk bonds, which is absolutely nuts. The whole point of junk bonds (I.e. the type of a loan that WeWork would have to take) is that it's default risk is high, but the yield is also high. If junk bonds are bailed out, then that means that we all ought to go and buy junk bonds. High yields for everyone! The Fed is going to bail you out no matter what. This, then, overly inflates the demand (and price) for junk bonds, and you now have a total capital mis-allocation, with a lot of capital going into AirBNBs and WeWorks of the world, rather than the Amazons of the world.
How does this relate to States? Taxation is the price we pay to live in a society, and States are a really underrated way we can accurately come up with the correct "price" for the correct basket of services society might offer. This is the Charles Tiebout school of thought. Bailing out states with shitty fiscal policies is 1) a moral hazard and 2) messes with the long run calculation of the optimal level of taxation.
Okay great, so then what happens if we just let States "fail", like we might let Corporations fail? If we allowed States to declare bankruptcy, the bond-holders won't get paid, and the State credit ratings will shift to reflect their true creditworthiness. In this regard, bailing out bad States is no different from bailing out junk bonds — the only difference is that today State bond-holders don't know that they're holding onto junk bonds — most States have a generally high credit rating (except Illinois, because, well lol)[1]. The only mechanism we know of for the system to correct the ratings of these bonds is to 1) let States relieve themselves of their debt obligations, and 2) organically allow the bonds for those States to become more high-yield.
You might argue that this makes it difficult for States to fund infrastructure projects and safety nets. Yes, it makes it difficult to finance projects in the short run, because the bond failures are reflective of the quality of the current governance. Who comprises the government, who is running things can change democratically — if citizens want more infrastructure projects / better development, they will have to vote for better policies and better representatives. It's the democratic equivalent of swapping out the entire executive team at WeWork with the executive team at Amazon. The alternative is that you never see these governance changes at the State and local levels, and you have the same problems in perpetuity because the same people are always in power, and we never learn from mistakes — institutional rot. Better governance might be to restructure bad pension systems, or raise their own State taxes (IMO State taxes are far too low).
TL;DR — the best argument for letting States go bankrupt is that it's an effective way to weed out institutional rot in the long run, and come up with the optimal level of taxation for the optimal basket of State provided services. Such a scheme can only work if individuals continue to be bailed out so that they are not caught in the onslaught.
[1] https://en.wikipedia.org/wiki/List_of_U.S._states_by_credit_...
Bottom line is that they want rich people (their primary donors) to get richer and don't care about poor or middle class. They are very open about it now and still somehow supported.
This is a good read on it:
https://www.theatlantic.com/ideas/archive/2020/04/why-mitch-...
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Vaccination certificates and debt forgiveness incoming? Who knows anymore - what harm is there in being ready?
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Trump is just a spiteful moron but not even he would let New Mexico, Wyoming, North Dakota, Alaska, Louisiana, Oklahoma, and Kansas all fail.
Ultimately, no one knows what the best strategy is, maybe the 'Swedish approach' maybe right, or not...,time will tell.
Amazon could bundle rides with package deliveries and get the pre-existing driver and passenger network from Lyft. Lyft was actually telling drivers to work with Amazon when the pandemic started (1).
Waymo could take Lyft’s aggregated rider demand. They already have a partnership to transfer autonomous rides from Waymo to Lyft during bad weather situations and refer Lyft riders to Waymo vehicles (2).
Edit - links below.
(1) Amazon - https://www.theverge.com/2020/3/27/21197699/lyft-amazon-coro...
(2) Waymo - https://www.fool.com/investing/2019/05/08/waymo-lyft-partner...
...What would they do with it? The business model (also uber) as-is makes a loss.
Uber/Lyft's initial proposition was that once ride sharing incumbents were established, they'd have a software-ish monopoly and margins. This did not work out. Now the proposition is "When driverless cars get invented..."
If google had a car that can drive itself, they can figure out an app. They can get to a customer base. The driverless car is the important part.
Amazon otoh... deliveries maybe? If they could figure out a way to do deliveries in a lyft/uber model... that's valuable to amazon.
[1]https://flex.amazon.com/
I think Uber/Lyft's customer bases are definitely valuable. There's a real business there post Covid-19. I'm not sure what the margins would look like though. I think an acquisition might be a good idea if it was cheap enough and it looked like competitors wouldn't be able to use vc money to offer rides below cost.
Uber's ride-hailing business is profitable. They lose money because they subsidize Ubereats.
If they can make a better self-driving car than anyone else, they will win the ride-hailing market. People have no loyalty to Lyft or Uber. They will use whatever is the cheapest/most convenient.
Or maybe Apple.
Apple has been pouring millions into improving its street views in Apple Maps. It should buy Lyft. Pay the drivers an extra $x/mile to clamp the Apple Maps image gathering device to the roofs of their cars.
The drivers win because they get a bump in income in an industry that's already hurting.
Apple wins because it gets up-to-date information about the places where people go most.
Even better: Apple could pay them $x/mile to drive to specific areas where the data is stale or missing.
As a former Uber/Lyft driver, I'd be all over this like Oprah on a baked ham.
Scenario 1 (buy Lyft): So if Lyft has around 1 million drivers in USA [1], and Apple will pay them an average of $50/month to use the device + the cost of the device/installation (around $100) that would cost around $150,000,000 on top of the acquisition price. And you cant really be sure that they covered all roads.
Scenario 2 (hire drivers): US total road length is about 4 million miles, average driver can cover about 160 miles a day (8 hours * 20Mph). If you want to drive through all of the US in 30 days you would need around 800 drivers. If you pay them $5000/month to do that, that would cost you "just" $4 million.
[1] https://investor.lyft.com/news-releases/news-release-details...
Consider the Apple retail experience. Retail is relatively easy to train for, there's a big labor pool to pick from, and with Apple's revenue/sq.ft. they can afford to compete for good staff.
Now consider the sum of your Uber/Lyft experiences and the scale of the problem. Is it reasonable to expect an Apple retail level experience in the ride app space? Even with a tolerable up-charge?
Retail experiences have always varied with some brands able to offer consistently stellar experiences. Tiffany comes to mind. In all my adult years hailing a car has always been a total shit show except at the most extreme price points. I won't speculate as to why, I'm just saying, the quality problem of mass small auto ride hailing has yet to be fixed by anyone.
1) You don't explain how in monetary terms Apple having that better data would offset its additional costs since Lyft does not derive a profit.
2) This comment was mean-spirited and completely unnecessary:
> As a former Uber/Lyft driver, I'd be all over this like Oprah on a baked ham.
Apple is already doing this - my iOS Maps has real time traffic in areas where I know that they're only getting this information from other iOS users, not from reporting devices.
Why bother paying them? If they own the company, just make it a condition of the contractor agreement.
Why? It's a low-margin, money losing business. On top of that it's operating in a space with a lot of legal risks, regulations and competition.
They might as well buy a cheese company that is in financial trouble.
So speculators don't get dumped on by employees with RSUs all day every day, and the business prospects are not adversely impacted any more than they already were. Thats when you pay more for shares.
Layoffs are proactive for investors, not an omen for investors, don't get that confused.
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[0] https://techcrunch.com/2020/04/28/warren-ocasio-cortez-pande...
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and buy what exactly? Uber and Lyft aren't very valuable businesses, especially as their mythical ability to corner the supply (drivers) hasn't materialized at all.
IMHO both of those companies are destined to shut down or survive in a much more limited fashion, as unicorns they make no sense.
Not in the US, but I'm not sure someone unemployed and out of medical insurance can tell much of a difference between "red" and "blue" right now.
- They also are in industries that entirely use gig workers with personal contact in 90% of their services(airbnb the least of these).
- I don't see other tech companies getting hit this hard(the sky is not falling!).
- I really, really hope these laid off engineers find other jobs quickly and land on their feet.
Ask people at Sun how relying on the .com economy worked out for the company, as one example.
Conversely, it's helped some tech companies (Amazon and Zoom) so who knows how this all shakes out.
Aren't executives mostly paid in stock and bonus?
If headcount is not directly helping that then it should not be an indefinite relationship.
Also, I'm available for hire as a CFO or board member if you think your company has challenges with adopting this market-relevant predilection and needs to make "the hard decisions".
https://twitter.com/kateconger/status/1255526352813535232
But, i wonder, in general, if all these layoffs are to some degree something overdue that companies wanted to do anyways and are now just taking the opportunity to do it whilst still saving face.
I think you're also going to see management at surviving businesses exploit the downturn to their advantage. Lots of rationalization as to why you won't see raises, why you'll need to work more to pick up the slack, lots of "be greatful" (there's some validity here), lots of pay/hour cuts, etc. that will likely perpetuate long after the crisis has rebounded and balance sheets are in the green again. Its funny how quickly businesses react to cut costs but are slow to react to shore up their current employees.
You're also going to see employers who lay-off yet justify continual hiring in this marketplace. Businesses will try to capture high quality labor talent at reduced costs (due to competition) and lock in those rates for awhile (hoping some will stay and be happy with modest raises on their significantly reduced labor rates).
One place I work with, management claims everything is fine and they've locked down all non-essential hiring, but I keep active monitoring on popular labor marketplaces for them and see continual updated advertising, even after they've claimed to stop hiring. Some of it's automated but I know for a fact a few places manually renewed listings intentionally. They're not locking hiring, they're looking for discounts right now because they know they're financially solid and will weather this storm just fine.
I love many aspects of technology but am really growing to hate industry practices to the point of looking at career changes.
1) Those little docks like in Venice (cf. "Let me off at this jetty" in The Last Crusade).
2) The jetty server library that Jenkins uses which shows up in error messages.
The whole point - the only purpose of a codename is that it doesn't give the game away.
A:
If I learned that the accidentally visible filename of the PowerPoint in that meeting was “EjectorSeat.pptx”, I’d be some combination of angry and alarmed about management’s attitude. That would be a definite “update my resume and call up some former colleagues for lunch” kind of moment at the very least.
I think people reasonably expect that when a company makes a serious decision that affects hundreds of people’s livelihoods, that they effect a pretty somber tone.
See here: https://twitter.com/haddartha/status/1255559084012699650
Also, there are alumni facebook groups and slack channels. If those are for you, email me: ivan.kirigin@gmail.com
This will allow both companies to trim the fat and (hopefully) regain the move fast mentality that is necessary for a startup. This can be Uber and Lyfts time to shine.