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Finance, coronavirus, the economy, etc (Read 53725 times)

Johnny Brown

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Agree completely Gav, I've got a huge VAT bill due in two weeks, almost submitted it last week, now trying to work out how much of it is due on courses that won't happen.


Seems to be the best way to play the system - that seems to be set up to burden small business with more debt.

Is there anything to stop me setting up a company - getting all the loans I can from the govt. ‘spaffing’ the lot up a wall and then going bust?

If you can rent a small property you could potentially get a grant of £10,000. No doubt there will be spivs doing both right now.

Johnny Brown

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Quote
The brutal decline in economic activities that epidemiologists say is required make crashing stock markets inevitable, given that central banks’ policy of excessively cheap money and pooled liabilities caused an unsustainable bubble. Because they used up their ammunition at inopportune moments, central banks bear responsibility for the bubble that has now burst.

What is really needed are fiscal measures to save companies and banks from bankruptcy, so that they can recover quickly once the pandemic is over. Policymakers should be considering various forms of tax relief and public guarantees to help firms borrow if necessary. But the most promising option is a short-time work allowance. This approach, which has been tried and tested in Germany, compensates for the underemployment of the workforce through the same channels that are already used for unemployment insurance. Better yet, it costs hardly anything, because it prevents the losses that would follow from increased real unemployment. All countries should be replicating this part of Germany’s policy to prevent job losses.

https://www.theguardian.com/business/2020/mar/17/how-best-to-fight-the-economic-impact-of-the-coronavirus-pandemic

gme

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You can already defer your vat payment. We are doing so.
You need to ring HMRC but it’s about a two hour queue.
We have a very large one too in April.

Offwidth

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You can already defer your vat payment. We are doing so.
You need to ring HMRC but it’s about a two hour queue.
We have a very large one too in April.

Misreading that on purpose I wonder how well HMRC will fare over the next few weeks/months.

One of the things that really pissed me off during austerity was they heavily cut HMRC... the last thing they should have done when evasion and avoidance was so high and they needed more tax revenue. Economic dogma extended to the level of idiocy.

gme

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I I suspected they have not gone anywhere near enough and there’s loads of vague ideas, understandably as they are doing stuff never done before.
VAT was deferred but ultimately needs paying so most companies will have to take on loans in 12 months to do so.
Interest free loans ditto. Need paying off and start accruing interest in 12 months.
Payment of 80% of salaries. Sounds like it’s only for staff not working, I guess designed for all the businesses they have just shut down. Does not account for the fact that most businesses are going to be performing badly due to the situation but still working. I need more detail on this before I can pass judgement.
I guess it gives me comfort that if we have a true lockdown and we can’t work they will pay a good chunk of our costs.

Falling Down

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Extraordinary measures though.  It just shows how serious this all is and how long it’s likely to go on for.

I can’t imagine the mental backflips that Sunak, a lifelong free market neoliberal (ex-Goldman’s and hedge fund manager) has gone through in the last 72 hours.  There’ll be more coming I’m sure.

Johnny Brown

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We've now closed for the foreseeable. First hospital to have arrivals exceed capacity in London yesterday. I think we're less than a week away from full lockdown now.

Nigel

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Extraordinary measures though.  It just shows how serious this all is and how long it’s likely to go on for.

I can’t imagine the mental backflips that Sunak, a lifelong free market neoliberal (ex-Goldman’s and hedge fund manager) has gone through in the last 72 hours.  There’ll be more coming I’m sure.

His mind must be going through some serious pummelling, but at least its getting there. Interesting that due to events, we effectively did have ended up with a Jeremy Corbyn government...

gme

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I still dont think we will go that far. Localised maybe.
I also have no idea what a lockdown is. Ireland is supposed to be in one according to the media but all construction sites open.
Our Spanish supplier of BMUs delivered to us successfully and is working in Spain.
If we can still work it does not concern me.

abarro81

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In most places it means leaving the house for work (unless can work from home), food, pharmacy, hospital only. Exercise is a maybe depending on which country but driving to the crag would be out.

petejh

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We should know soon, within the next week or two at most, whether or not the European 'democratic' version of full lockdown is effective at reducing transmission of covid to the levels required to stop the increase in infections. I suspect the modellers already have a pretty good handle on what the answer's likely to be.

If it doesn't prove effective what do people think would be the next step?

Stop trying to fully lock down and instead move to the original 'mitigate' policy where vulnerable are locked down and the rest are encouraged to social distance - i.e. the current situation in the UK, or
Increase lock down to a Chinese level of enforcement.


Wondering how the wage underwriting is going to play out - there'll need to be an incentive to work, otherwise people can sit at home watching netflix on 80% pay while their colleague works full time for only 20% extra.
It would be a good opportunity for the gov to 'requisition' those without work, as a volunteer force for delivering food to vulnerable and other vital tasks. Kind of a national volunteer force paid by government. Bit like how the territorial army are still employed by employer but paid for by the government
« Last Edit: March 20, 2020, 08:33:53 pm by petejh »

Somebody's Fool

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I think the free marketeers are horrified because now it’s not just socialism for the banks and stock markets, it’s socialism for everybody.

Although I’m sure the ‘trickle up’ will be truly gravity defying!

Johnny Brown

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I saw a video today of a Chinese Red Cross guy speaking to the Italians. He was very critical of their 'lax' lockdown. It's no secret what needs to be done. The financial hit can be short and sharp or you can try to delay and end up with a bigger one.

I daresay the columns of army trucks taking bodies away for burning will have focussed their minds. Will we need that too?

Nigel

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It would be a good opportunity for the gov to 'requisition' those without work, as a volunteer force for delivering food to vulnerable and other vital tasks. Kind of a national volunteer force paid by government. Bit like how the territorial army are still employed by employer but paid for by the government

The jarring clash between the words "requisition" and "volunteer" notwithstanding, on the face of it a good idea. Why not do it in "peacetime" too?

petejh

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Ha, yeah I'm typing without too much thought for exact wording but yeah 'requisition' and 'volunteer' are at odds. Hopefully you get the picture of what might be possible given a government-funded workforce of millions organised into their company groups and set to work doing useful tasks.

Why not in 'peacetime'? Well I suppose we already do to some degree but on more a charitable footing than government-funded. I don't have an ideological view on it. Just pointing out that this moment is an obvious opportunity to do something pragmatic.

Falling Down

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We've now closed for the foreseeable. First hospital to have arrivals exceed capacity in London yesterday. I think we're less than a week away from full lockdown now.

Sorry you’ve had to close JB.  We (like many others) have been deep into contingency planning all week.  100 employees.  Working out plans and scenarios.  It’s serious.

Nigel

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Ha, yeah I'm typing without too much thought for exact wording but yeah 'requisition' and 'volunteer' are at odds. Hopefully you get the picture of what might be possible given a government-funded workforce of millions organised into their company groups and set to work doing useful tasks.

Why not in 'peacetime'? Well I suppose we already do to some degree but on more a charitable footing than government-funded. I don't have an ideological view on it. Just pointing out that this moment is an obvious opportunity to do something pragmatic.

Yes I got the picture! Forgot the winky thing :-)

I agree with the concept of your idea. I think the general point for discussion I wanted to make (which I kept in my head!) was; why is it we need such a huge crisis to raise ideas like this up the flagpole for consideration? For e.g. unemployment benefits are next to nothing. and those on them often scapegoated as scoungers. Why not have the government keep the current benefits for actual scroungers, but then on top also guarantee work to anyone who wants it at national living wage doing whatever needs doing? They could even allow people to leave with no notice if they had another job offer so that it "didn't interfere with the free market". It would increase productivity, give people a chance to work if they wish, and actually help them back into the private sector a lot more effectively than signing in once a week (evidence of work ethic, references etc.). It would also naturally enforce the national living wage nationwide without having to legislate for it via "market forces". I know you have no ideological position, but those in power do (I include the right wing press as a large part of this), hence why these pragmatic *at any time* ideas don't get an airing....

Nigel

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I can’t imagine the mental backflips that Sunak, a lifelong free market neoliberal (ex-Goldman’s and hedge fund manager) has gone through in the last 72 hours.  There’ll be more coming I’m sure.

Maybe...For those who are self-employed (I am) the only option as I see it is Universal Credit to a value equivalent to Statuatory Sick Pay = £94 / week (£407/month). Compare to employed people getting subbed up to £2500/month max? Also seems to be an issue of eligibility - UC not currently allowed for those with over £16K in savings (not me btw!). Seems to be a situation whereby your average self employed rope access tech whose fairly decent monthly wage is now replaced by £407/month max or £0 if they have put a good amount of money aside for whatever reason. Whereas if you're employed on £80K a year with a million in the bank you can get £2500/month. Does seem a strange situation? I can sort of half see some logic if I squint - the self employed are meant to be making a life choice to look after themselves so are left to the wolves. But on the other side everyone else now has less money to spend, social distancing makes some discretionary work impractical (plumber doing domestic bathrooms?), businesses postponing investment worrying about the future. Any thoughts? Not decided myself but then I do have some savings and no dependents. Suspect if I was looking after a young family I might feel differently...

Somebody's Fool

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I guess the subbing of employees allows businesses to reduce their overheads to a point whereby the business is as dormant as it possibly can be, with the aim of hopefully avoiding the entire retail, leisure and hospitality sectors going to the wall within the next few months.

tomtom

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@nigel lots of chat about this on the radio this morning. 5 million self employed affected. Suspect he’ll have to sort this out soon.

The easiest way would have been 2 weeks ago to say some sort of universal payment to everyone would happen. Instead we’ve had this tiered approach.

Nigel

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@nigel lots of chat about this on the radio this morning. 5 million self employed affected. Suspect he’ll have to sort this out soon.

The easiest way would have been 2 weeks ago to say some sort of universal payment to everyone would happen. Instead we’ve had this tiered approach.

Haven't heard / read the news yet but its no surprise there's chat, its a lot of people affected. They do seem to be edging towards some sort of Universal Basic Income, hopefully we'll get there for everyone's sake. Like Falling Down said, its no surprise its taking a Tory government a bit of time to complete the necessary mental backflips. Even Trump is talking in these terms now though...

andy popp

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Falling Down

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Habrich - Andy's wife is seriously ill in hospital.  It might just be me being overly sensitive but every time he posts something remotely political or economically related you almost always respond with a pointed remark or dig.  He just shared a podcast link that's all.  I would have thought that we might try and be a bit more civil to one another during these times.

Johnny Brown

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Probably a bit basic for some of you but interesting in light of some this discussion:

Quote
Sunak, like chancellor Alistair Darling in 2008, keeps saying “the economy will bounce back” because it’s fundamentally sound. And that’s how most people think of the shocks we’ve experienced in our lifetime. To the ordinary person it appears as if there is a “real economy” of supermarkets, coffee bars, hospitals and universities – and above that a barely tangible financial economy dedicated to handling risks and generating large rewards for the rich, which occasionally goes wrong.

During the 2008 crisis it appeared as if this financial “roof” collapsed onto the building that was supporting it, but the building – though it suffered damage – remained stable and the roof was rebuilt. The problem is, by the same analogy, this time it’s not the roof collapsing, it’s the foundations.

Capitalism, like all previous economic systems, is built on people’s work. We are compelled to get out of bed, cram ourselves into public transport, obey the instructions of managers and the discipline of the clock. And when it’s over, even as we huddle together in the pub, or play five-a-side or go out to dinner, we’re still generating returns to capital invested by someone else.

And though the epidemic will be temporary, the resulting disruptions will not. Because the finance system is not actually a “roof”: it has, in the space of 40 years, become the supporting structure of capitalism itself.

Every aspect of human life, in a developed society like our, is “securitised”. That is: my gym membership fees, the takings at my local pub, the profits of Starbucks, the bus and tube fares I pay – all are wrapped up into financial instruments into which a complex network of banks, hedge funds, insurance firms and pension funds invest in order to generate profits.

If the gym membership is cancelled, if Starbucks makes a loss, if the pub closes and, above all, if the worker does not go to work, the entire financial system will come under strain – and in ways we cannot predict because more than half of it exists in the so-called “shadow banking system”, a barely regulated and opaque network that has amassed $52trn in assets since the 2008 crisis. These “assets” are in fact just the expected profits made by all the restaurant chains, insurance companies, airlines etc – which are about to go bust.

Paul Mason in The New Statesman.
« Last Edit: March 22, 2020, 08:30:17 pm by Johnny Brown »

tommytwotone

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Well it would appear I timed the world's worst job change. Got offered a new (much better) job about 3 weeks ago, and finished up at my old place on 13th March (date of Boris' "we need to level with the public" speech).

I wasn't due to start new job till 6th April (their next available "bootcamp" for new starters). So, happy days I thought - a few weeks off, get stuff done on the house snagging list, climb myself back to fitness etc, generally de-stress.

How wrong I was. I managed all of a day of freedom, then my son had a slight (but over the limit) fever at nursery, triggering 14 days of self isolation for the whole family. Then, my new employer called to say that while they definitely still want me, given circumstances they can't commit to me starting until mid-July, and even that is a "wait and see".

Only positive is that with schools now closed, and a teacher as a partner I can at least be here to sort the kids without having to juggle working from home in a brand new job at same time.

Fortunately we have always been pretty prudent financially, so thankfully we have a decent contingency fund to draw off.

No idea what to do in meantime though. Just take the time, "enjoy" more time en famille, or maybe go help out at Tesco stacking shelves or on till. It won't pay big money but it'd keep us topped up.

 

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