I've said it before and I'll say it again. What the Fed is doing is very dangerous for the long-term health of the American economy. Yeah, sure, send me my $1700 bailout check. I'll pay down some debt and that'll basically be the extent of what I do with my QE for the People.
But using Fed monies to inflate the USD currency to absurd levels, only to hand it out to Trump cronies and big firms that have other means of accessing credit but just went ahead and got PPP loans anyway to shore up their balance sheet, that doesn't help anyone at all. According to some measures, 80% of small businessess are still waiting on some kind of assistance. And we'd likely already be at the end of round 2 of the PPP if it weren't such "a very cumbersome, complicated, manual, time-consuming process for the banks and for the businesses.”
And now we're inviting oil companies to apply to PPP? That ain't right. The Fed has jumped the shark.
It wasn't enough to facilitate a $25 billion pseudo-bailout for Boeing, a company which had experienced debilitating woes long before the coronavirus came to force us all to shelter-in-place. Now the US government is creating an environment where oil frackers get to call mulligan on their outsized leveraged bets on American oil production. These big indebted firms will now be able to tap the PPP to refinance the debt they took on before the virus. I'm sorry, but that shit is absolutely ridiculous.
I thought we were capitalists here? Whenever our buddies make a bad business deal, now we're just gonna scream "Virus!" and then recapitalize them with public funds? Uh, guys, that's socialism. I'm all for it, by the way. But you gotta call a spade a spade. If the US is going to be the great capitalist society where you can go and risk it all in the hopes of "making it," well I'm sorry guys, then some of these folks are gonna have to fail. Or otherwise the whole thing just doesn't work. We can't print money forever (or at least, everything I've ever read about economics makes me think that). The alternative is raising taxes to an absurdly high level. And everything I've ever read about American politics makes me think that just isn't possible. So something's got to give.
Of course, the government is out there saying, "Naw guys, those changes to the PPP are not for oil companies." Sure, they're not. Just look at what the Secretary of Energy tweeted,
So, yeah, at least somebody sees this for what it is. And what this is straight up crony capitalism. In case you don't know what that means exactly here's the textbook definition. "Crony capitalism is an economic system characterized by close, mutually advantageous relationships between business leaders and government officials."
Sounds about right.