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Notes -
So, what are you reading?
Still on Coornhert's Synod on the Freedom of Conscience. So far "Gamaliel" has been winning the fictional debate with genuinely inspired words. Though it turns out that he's just Coornhert's stand-in. These words have reminded me of the value of reasonable expectations:
Finished The Big Short today. Remarkable how much it all resembled a game of musical chairs - no one wanted to be the one left holding the bag at the end. Also a great example of "people won't understand something if their job depends on not understanding it." I didn't see much in there to make me think that something similar couldn't easily happen again.
That’s a great book and really kicked off an interest in financial non-fiction for me. If you’re looking for more stories, Liars Poker by Michael Lewis is good. I also really liked Billion Dollar Whale and The Rise and Fall of Long Term Capital Management. And if you haven’t seen Enron:The Smartest Guys in the Room, might be my favorite financial documentary.
What I find interesting about the financial crisis, is it seems that the federal government learned their lesson from the extreme backlash in non bailing out the general public. The banks were all bailed out in 2009, but millions of people lost their houses and jobs and were not given much additional money. When COVID shut down the world economy, the federal government was much more generous in cash handouts, unemployment, and loans. The federal government didn’t want another Tea Party or Occupy Wall Street movement on their hands, so they actually sent money straight to peoples pockets.
But they sent way more money to businesses and the donor class. The theme of COVID money was: we're going to let the little guys steal a little (stim checks, unemployment, small PPP loans) so they won't notice the big guys stealing a lot (big PPP loans, asset bubbles, ARP money to municipal governments pissed away on corrupt contracts, corrupt contracts). By making the public complicit in looting the Treasury they protected themselves from criticism.
Is this actually true? Seems like at least 40% of all COVID payments went to individuals, and a much higher percentage to small businesses, healthcare, and state funds.
https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html
"Small businesses" included 9-figure net worth private companies receiving multi million dollar PPP loans, which were not just forgiven in almost every case, the resulting income wasn't treated as taxable.
So where the $1200 check individuals got was taxed back for anyone with above median income, reducing the actual cost, the loans to businesses paying employee's wages weren't taxed even if the business made a profit that year.
State and municipal governments mostly pissed the money away on boondoggles, many of them likely either related to bribing key constituents (public sector union stuff) or blatantly corrupt (hiring the Manager's brother to upgrade the town hall). I saw very little ARP money spent on things that made sense as COVID relief.
Right, but in the chart above from the NYT, individuals received approximately 40% of COVID relief. Even if the money was wasted by municipal governments, even if the business loans weren’t taxed, even if corporations were bailed out, at the end of the day, the little guy did get a large piece of the pie.
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