$1,000 in Free Money Won't Go Far

Mish

The hotel, airline, and travel-related industries are reeling. Marriott alone will lay off tens of thousands of workers.

The Wall Street Journal reports Marriott Begins Furloughing Tens of Thousands of Employees.

Marriott International Inc., the world’s largest hotel company with nearly 1.4 million rooms world-wide, said it is starting to furlough what it expects will be tens of thousands of employees as it ramps up hotel closings across the globe.

The company began shutting down some of its managed properties last week, a Marriott spokeswoman said. The employees at these properties won’t be paid while on furlough but the bulk will continue to receive health-care benefits that are ultimately paid by the hotel owner, she added, which for the vast majority of the brand’s properties isn’t Marriott. Marriott is also trimming staff through furloughs at properties that are still operating.

In the U.S., about 130,000 employees are on the Marriott payroll, the company said.

Occupancy levels at Marriott’s and other hotels throughout the U.S. have plummeted to 20% or lower, and many hotels are in single digits, hotel owners say. As a result, hundreds of hotels across the U.S. are expected to close their doors Tuesday or later this week, and many have already started the process by giving employees notice, owners said.

Fiscal Hit

Bloomberg reports From NYC to San Francisco, America’s Shutdown Brings Fiscal Hit

In New York City, the virtual shutdown from the coronavirus pandemic is threatening to create massive holes in the budget as billions of dollars in tax revenue disappears.

No one has a handle on how vast the toll will be on the nation’s local governments as much of the U.S. economy grinds to a halt, leaving it a near certainty that the economy is heading into the first recession in over a decade.

But the unprecedented uncertainty of how long and severe it will be is wreaking havoc in the $3.9 trillion municipal-bond market, which is usually a haven from financial market turmoil. Investors are pulling out their cash, bond prices are sliding, and even the potential for states and cities to raise funds is temporarily drying up as Wall Street banks put new debt deals on hold.

Even before the stepped-up directives to reduce crowds to curb the spread of the virus, ridership was down nearly 19% on New York City subways on March 11 compared with a year earlier, while morning commuters on the Metro-North Railroad fell 48% on March 12, according to the Metropolitan Transportation Authority.

Rush for Jobless Benefits Crashes New York State Website

The New York Times reports Rush for Jobless Benefits Crashes New York State Website

The sudden flood of laid-off workers seeking unemployment benefits swamped New York’s Labor Department on Monday.

After Mr. Cuomo waived the usual seven-day waiting period to apply, workers who had been let go over the weekend immediately tried to replace some of their lost income. Within hours, frustrated applicants were complaining on social media about not being able to apply online. Some said that the state’s system was crashing throughout the day.

“We are seeing a spike in volume that is comparable to post 9/11 but make no mistake, anyone entitled to these benefits is going to receive them in a timely manner,” department spokesperson Deanna Cohen said.

How Far Does $1,000 Go?

The stock market is surging this afternoon on news the Trump administration might start sending out $1,000 checks as part of an $850 Billion Stimulus Package.

But how far does $1,000 go?

For those laid off for three weeks or longer, that $1,000 will be used up pronto.

Three Weeks Without Pay

For example, San Francisco legally prohibits residents from leaving their homes except to meet basic needs including visiting the doctor, or buying groceries or medicine, until at least April 7.

That's three weeks without pay.

The San Francisco minimum wage is $15.59 per hour.

Wage Math

$15.59 per hour * 40 hours per week * 3 weeks = $1,870.80.

How long will the hotel workers be furloughed? Casino workers? Airline employees?

Boeing employees (and they make far more than $15.59 per hour).

If You Need to Be Somewhere, Get There Before You Can't

In regards to the San Francisco shutdown, please consider If You Need to Be Somewhere, Get There Before You Can't.

Mike "Mish" Shedlock

Comments (123)
No. 1-37
mark0f0
mark0f0

Well nobody's going to pay rent. And no landlord will dare evict, nor utility turn off the electricity or gas. So that will go 100% into food and liquid fuel. The real risk here is that the banks zero out the credit card amounts drawable. The Fed needs to generate hyperinflation in some asset right now, and practically the only one they could generate such is in gold -- if they want any hope of anyone rebooting the demand side of the economy. The US Treasury holds 8000 tons of the stuff so the US government would be solvent again at $50k/ounce or whatever the amount calculated is.

So in short, the US Treasury needs to: Print money, buy gold from the open market, take physical delivery, and keep doing so until the goldbugs are rich enough that they start buying everything else up.

shamrock
shamrock

Those laid off also get unemployment benefits of 40-50% of salary, starting on day 1 under the recently passed package. So at SF minimum wage that's an extra 250/week ad infinitum.

Roger_Ramjet
Roger_Ramjet

So far this fiscal year, treasury issuance has been running at an annualized rate of $1.5 trillion. And that was with a modestly growing economy.

I don't know how it is all going to end up, but are we talking about a $3 trillion hole in the budget this year? Maybe more. Maybe a lot more.

But you don't hear anyone talking about this future problem (as the current problem is so much bigger). But I think we are now going to enter a period of rolling problems given how much the Fed is printing and backstopping. And now that they are providing all of it (with still calls for even more), will it again be years before they will try to take it away?

Should we be preparing for the Everything Everything Everything Mega Bubble?

Tony Bennett
Tony Bennett

"The stock market is surging this afternoon on news the Trump administration might start sending out $1,000 checks as part of an $850 Billion Stimulus Package."

Well, needs to get through Congress first.

No doubt it will pass … in the dead of night at gunpoint so back benchers don't have a chance to read … but those 2000 page spending bills … that need to be written by corporate lobbyists to ensure all the insiders get their snout in the trough first … takes time to write.

How long?

Pat789
Pat789

The world should send China an Invoice for all the costs and of the chaos that they created with engineering this virus in a lab and somehow escaping the lab ......not to mention all the deaths worldwide. CHINA PAY UP.

mark0f0
mark0f0

Did someone request the United States pay for the Spanish Influenza, which started in Kansas due to poor animal handling practices/hygiene?
The China-America relationship is toast, but for other reasons.

Tony Bennett
Tony Bennett

Mr Bond Market has spoken.

He does not care for it. Both 10 yr and 30 yr up around 30 bps. With $US (dxy) strong around 100, the Federal Reserve has room to step up QE if necessary.

Anda
Anda

The site loads and freezes the page for me now :/ . A Java error because with it off it loads fine but no functionality. No longer asks for cookie permissions, blocks as soon as function bar appears at bottom of screen, whether in mobile or pc view. The independent reply box to an article is back though, haha. Had to scroll down to comments to write this before it blocked. Android/Monument browser.

Freebees2me
Freebees2me

we'll be lucky to keep this at 25% unemployment....

bradw2k
bradw2k

Let's have winners and losers chosen by government, i.e. at gun-point, because that'll be fairerer than leaving people to use their own brains. Guns for the win!

tokidoki
tokidoki

Marriot will be renamed into .... MAGA Hotel

Trump is looking for franchisees now.

CautiousObserver
CautiousObserver

President Trump said the economic distress companies like Boeing are in is not their fault. I beg to differ. Boeing and others like it have been systematically extracting capital by using debt to buy their own stock, leaving them very vulnerable to a market downturn. Risk management is part of reasonable corporate governance and they did not do that. It is totally their fault.

So, here we are back to privatizing gains and socializing losses under these circumstances. It has to stop. If not, then we are really more of a fascist society than a capitalist society.

Government needs to help individual people get through this; corporations that loaded up to the eyeballs on debt, not so much. The assets of those corporations will still be there and can continue to be productive, but they should go through bankruptcy and an ownership change.

lol
lol

1,000 bucks won't help in an economy in such a sorry shape for such a long time,million a piece maybe.Bigger question is...what happens when those govt checks stop?Those govt handouts stop?those govt bailouts stop?Those govt subsidies stop? Those govt this stop? Those govt that stop???

jivefive99
jivefive99

This has got to stop. $23.5 trillion in just Federal debt, not including states, corps and personal, money for half a dozen credit markets, money here, money there ... Trump always could scam a bank for $ before he wound up with no one left for funding except Duetschebank. But in his mind, spare no expense and borrow whatever to win and stay out of jail. Who cares about 2030. This is crazy. There are limits.

ohno
ohno

These people will lose medical, can't afford cobra and much of this $1000 will go straight to the pharmaceuticals.

James James
James James

There is no way the Fed can replace the income and products produced by the entire nation. If this goes on for more than a month, future stimulus programs will entail money printing on a scale previously considered incomprehensible.

Cocoa
Cocoa

$1000 a month even in Midwest.you do not need to be in San Francisco with a high rent to need more than $1,000 for three f****** weeks. But I do appreciate the sentiment in the thinking.

Greggg
Greggg

Ed McMahon for Federal Money Clearing House: "Congratulations, Your a Winner"!

Zardoz
Zardoz

I bet the Lumpy Trumpy StopNFleece Hotel chain is first beneficiary of this benevolent disbursement of wished-into-existence cash.

aqualech
aqualech

Good Gawd, most people and purportedly the entire financial system one step away from catastrophic default and collapse. And the only solution that people and companies and banks and funds of all sorts will be able to think of is for gov to take on greater powers.

Casual_Observer
Casual_Observer

We need a freeze on payments with deadlines. The economy flows from the bottom up not the top down.

Bohm-Bawerk
Bohm-Bawerk

The government is a leech planning to suck on it's own blood since the former host is broke. Won't last long.

Mish
Mish

Editor

Ridiculous assertion we have proof. Stop reading idiotic propaganda sites

Greggg
Greggg

Greggg
Greggg

From Ron Paul:
Governments love crises because when the people are fearful they are more willing to give up freedoms for promises that the government will take care of them. After 9/11, for example, Americans accepted the near-total destruction of their civil liberties in the PATRIOT Act’s hollow promises of security.

It is ironic to see the same Democrats who tried to impeach President Trump last month for abuse of power demanding that the Administration grab more power and authority in the name of fighting a virus that thus far has killed less than 100 Americans.

Declaring a pandemic emergency on Friday, President Trump now claims the power to quarantine individuals suspected of being infected by the virus and, as Politico writes, “stop and seize any plane, train or automobile to stymie the spread of contagious disease.” He can even call out the military to cordon off a US city or state.

State and local authoritarians love panic as well. The mayor of Champaign, Illinois, signed an executive order declaring the power to ban the sale of guns and alcohol and cut off gas, water, or electricity to any citizen. The governor of Ohio just essentially closed his entire state.

The chief fearmonger of the Trump Administration is without a doubt Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health. Fauci is all over the media, serving up outright falsehoods to stir up even more panic. He testified to Congress that the death rate for the coronavirus is ten times that of the seasonal flu, a claim without any scientific basis.

On Face the Nation, Fauci did his best to further damage an already tanking economy by stating, “Right now, personally, myself, I wouldn’t go to a restaurant.” He has pushed for closing the entire country down for 14 days.

Over what? A virus that has thus far killed just over 5,000 worldwide and less than 100 in the United States? By contrast, tuberculosis, an old disease not much discussed these days, killed nearly 1.6 million people in 2017. Where’s the panic over this?

If anything, what people like Fauci and the other fearmongers are demanding will likely make the disease worse. The martial law they dream about will leave people hunkered down inside their homes instead of going outdoors or to the beach where the sunshine and fresh air would help boost immunity. The panic produced by these fearmongers is likely helping spread the disease, as massive crowds rush into Walmart and Costco for that last roll of toilet paper.

The madness over the coronavirus is not limited to politicians and the medical community. The head of the neoconservative Atlantic Council wrote an editorial this week urging NATO to pass an Article 5 declaration of war against the COVID-19 virus! Are they going to send in tanks and drones to wipe out these microscopic enemies?

People should ask themselves whether this coronavirus “pandemic” could be a big hoax, with the actual danger of the disease massively exaggerated by those who seek to profit – financially or politically – from the ensuing panic.

That is not to say the disease is harmless. Without question people will die from coronavirus. Those in vulnerable categories should take precautions to limit their risk of exposure. But we have seen this movie before. Government over-hypes a threat as an excuse to grab more of our freedoms. When the “threat” is over, however, they never give us our freedoms back.

sangell
sangell

I 'give' everyone $1 milllion tonight. What happens tomorrow, especially under quarantine conditions. You go to the car dealer to buy a Porsche but the salesmen aren't there because they gone looking to buy a new house but the sales agents aren't there to sell it because they are at the boat dealer looking to buy a yacht.

You can't juice demand with no supply and, under present conditions, you'll only create a shortage of toilet paper.

QE2Infinity
QE2Infinity

And you thought the Fed was out of bullets! Nope, it just beginning. If the government did this without the Fed, interest rates would rise. But, a new version of Operation Twist will make sure more reckless government spending ensues.

Central banks were created to allow goverment to spend recklessly during wars. Now it to bail out Wall Street and the oligarchs that defacto run the government.

JG1170
JG1170

Let's not forget the many people in the "gig" economy who technically have not been laid off, but demand for their services has shrunken considerably. Sure, no one told them it was a good idea to depend on that income, but many, many people do and now they do not qualify for any unemployment.

tokidoki
tokidoki

Holy crap. The Fed's going to extend money and accept stocks as collateral. Market going to 100K!!!

awc13
awc13

buying TP with my 1000

astroboy
astroboy

I wonder if the best policy isn't what England is doing: tell the people at higher risk to isolate themselves, and let it burn through the low risk population, at which point herd immunity renders the virus unable to spread. Minimal (a very relative term) damage to the economy.

It could be the US is taking the worst possible path: economy tanks, and without draconian quarantines or a vaccine the disease comes to a halt only with herd immunity anyway. Possibly a much larger loss of lift.

Hard to tell, it will be interesting to see what pans out in England.

At my work, we're going to shift work so that the number of people in the building goes from 13K to only 4K. Yeah, that will help a whole lot.... I need to play some high stakes poker with the CEO. Bottom line, since my work is "indespensible" and can't be done via telework, there are going to be 13,000 possible (likely?) carriers in the local area, which I would think would cancel out the effectiveness of shutting down schools, restaurants, etc etc. Perhaps the Limeys have it right.

ClydeThe Raven
ClydeThe Raven

Mike or anyone, How's all those pension funds doing that were way underfunded when the Dow was at 29,000? Especially the Chicago public employee's funds?
:)

Cecil1
Cecil1

A purely inflationary move beyond the short term.

Because money (the things people want) doesn't really grow on trees.

Carl_R
Carl_R

$1000 may go further than you think, when you consider that people will also get unemployment, food stamps, medicaid, and many more programs, plus that they will not be going out to spend any money. I suppose the people for whom every meal comes via Door Dash may have high expenses....

kram
kram

Wouldn't this be the best time to introduce the Minimum Basic Income program (at least in phases) as much of the population will be without work and the scheme will be better received as it will be seen as a response to an epidemic rather than one due to AI/Robotics/Automation?

Greggg
Greggg

Orange, California just issued this:

oldereb
oldereb

so we want the companies to go bankrupt paying employees that are laid off ? That sounds like a socialist agenda to me.


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