Objectively intelligent.

[sebastian_dangerfield]

Originally Posted by Tyrone Slothrop

Those of us who work in lending are maybe not interested in being left to hold this bag. I'd be curious to hear how you can make debt relief without ruining a huge chunk of the economy.

I'd be curious to hear how you get blood from a stone.

Contracts have always been predicated on a lie, or fear. If you don't do what the lender demands, oh my -- it'll sue you and take your stuff.

Okay. But what if we get a financial crisis that turns a lot of people into delinquent debtors? What if those people learn how to avoid paying those debts? What if they see banks bailed out while they are not and they develop a view that the system is unfair, and so it is morally okay to welch on debts?

Now what if twelve years after that crisis, a disaster causes these same people to find themselves delinquent debtors once more? What if they recall from the prior financial crisis, "Hey, I don't really have to pay this debt... The people holding the other side of the contract don't have a hell of a lot of power." What if they read stories on the internet about how half the country, rich and poor, landlord and tenant, are unable to pay debts and therefore not doing so? What if they see politicians on TV telling them they should receive all sorts of debt forgiveness? Suppose the idea takes hold, "Hmmm... If everyone stops paying, the whole system grinds to a halt and nobody can collect from anybody"?

Because that idea is gestating right now. People are learning that contracts are just pieces of paper. That you can test the enforcement capacity of the person on the other side of the deal, particularly in times like these.

I think Icky joked this thinking was #TeamNotPaying, or something like that. Well, I'm suggesting to you, and anyone else involved in lending, that if this lockdown persists for too long, you're "holding that bag" whether you like it or not.

[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

I saw huge lines of cars at Starbucks for the first time in weeks. At a meeting earlier today (distanced), all people could talk about was how there's finally "a plan." Gov. Wolf might be toppled in a coup if he tries to push a lock down beyond mid May.

The desire to resume life is overwhelming, and people are seeing green shoots. As I noted earlier, while some will be scared silly, neuroses tends to go along with intelligence, and it is not the default setting for the average American. You and I may think they're nuts. But what we think doesn't matter much.

There will be a surge in activity in the first two weeks of May. But it will be limited by two things: (1) People with fewer dollars after having been laid off; and, (2) Emphasis on necessities and things-just-above-necessities rather than truly discretionary purchases.

Barbers are going to have a great week in May. Forget all that stuff about how people will be afraid of contact. People are going to want to get rid of the Jesus haircut and women are going to need their roots done.

Gyms will crush it when they reopen. Imagine how many people feel like garbage because they couldn't work out. It's summer. Nobody wants to be fat in summer.

But yeah, if you're selling luxury vehicles, this is a really bad year. If you're a pricey restaurant, you're in a tough spot. If you're selling expensive clothes, you're going to feel a pinch from all of the people pulling back.

My advice so far has been to be careful, but to not become insanely neurotic, and not be paranoid about liability. To survive this, businesses are going to have to accept some risk. He who waits until the risk is all but neutralized will be dead by the time he resumes operations, his market share having been gobbled up the cowboys who leaned into the risk, prudently, earlier. (This might be why people ask me if I'm providing legal or business advice. The latter. The former, telling people all the reasons they can't do something rather than finding solutions, is a waste of money.*)

______
* Biggest possible landmine for businesses is that ludicrous leave bill. Every small to mid sized business is requesting the DOL waiver, or hiring back the childless first to avoid the risk. The bill harms workers.

If everyone tries to resume their normal life in the first two weeks of May, there are going to be a lot of people dying in June. You can ignore what I was just trying to say about testing, but most people don't want to die.

eta: There's a lot of wishful thinking and denial out there, and when government decides it's going to tell people what they want to hear instead of what they need to hear, you get this.

[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

I'd be curious to hear how you get blood from a stone.

Contracts have always been predicated on a lie, or fear. If you don't do what the lender demands, oh my -- it'll sue you and take your stuff.

Okay. But what if we get a financial crisis that turns a lot of people into delinquent debtors? What if those people learn how to avoid paying those debts? What if they see banks bailed out while they are not and they develop a view that the system is unfair, and so it is morally okay to welch on debts?

Now what if twelve years after that crisis, a disaster causes these same people to find themselves delinquent debtors once more? What if they recall from the prior financial crisis, "Hey, I don't really have to pay this debt... The people holding the other side of the contract don't have a hell of a lot of power." What if they read stories on the internet about how half the country, rich and poor, landlord and tenant, are unable to pay debts and therefore not doing so? What if they see politicians on TV telling them they should receive all sorts of debt forgiveness? Suppose the idea takes hold, "Hmmm... If everyone stops paying, the whole system grinds to a halt and nobody can collect from anybody"?

Because that idea is gestating right now. People are learning that contracts are just pieces of paper. That you can test the enforcement capacity of the person on the other side of the deal, particularly in times like these.

I think Icky joked this thinking was #TeamNotPaying, or something like that. Well, I'm suggesting to you, and anyone else involved in lending, that if this lockdown persists for too long, you're "holding that bag" whether you like it or not.

No doubt that delinquency is going to go up, but if it were really true that people are going to think contracts are just pieces of paper, you wouldn't be talking about the need for debt relief.

[sebastian_dangerfield]

Originally Posted by Tyrone Slothrop

No doubt that delinquency is going to go up, but if it were really true that people are going to think contracts are just pieces of paper, you wouldn't be talking about the need for debt relief.

That's exactly why we need forgiveness. If you offer it, the fiction is retained. It's beneficence. If we allow a shitshow to happen where debtors default en masse or go on debt strikes (like many renters are doing already), the fiction's gone.

But there is a silver lining to that... When no on trusts anyone to pay anything, rates fly. We could use some high rates at some point.

[sebastian_dangerfield]

Originally Posted by Tyrone Slothrop

If everyone tries to resume their normal life in the first two weeks of May, there are going to be a lot of people dying in June. You can ignore what I was just trying to say about testing, but most people don't want to die.

eta: There's a lot of wishful thinking and denial out there, and when government decides it's going to tell people what they want to hear instead of what they need to hear, you get this.

America: "Hold my beer."

[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

That's exactly why we need forgiveness. If you offer it, the fiction is retained. It's beneficence. If we allow a shitshow to happen where debtors default en masse or go on debt strikes (like many renters are doing already), the fiction's gone.

But there is a silver lining to that... When no on trusts anyone to pay anything, rates fly. We could use some high rates at some point.

The people who care about their credit scores and can pay their bills are still going to pay their bills.

[sebastian_dangerfield]

Originally Posted by Tyrone Slothrop

The people who care about their credit scores and can pay their bills are still going to pay their bills.

If the lockdown lasts six more weeks, you’ll be able to fit all of us in that category in a couple dozen football stadiums. (If we can do that then.)

Half the country can’t come up with $400 on 24 hrs notice. Two thirds lives paycheck to paycheck.

[Icky Thump]

Originally Posted by sebastian_dangerfield

There will be a surge in activity in the first two weeks of May. But it will be limited by two things: (1) People with fewer dollars after having been laid off; and, (2) Emphasis on necessities and things-just-above-necessities rather than truly discretionary purchases.

Barbers are going to have a great week in May. Forget all that stuff about how people will be afraid of contact. People are going to want to get rid of the Jesus haircut and women are going to need their roots done.

Gyms will crush it when they reopen. Imagine how many people feel like garbage because they couldn't work out. It's summer. Nobody wants to be fat in summer.

This is a pathetically bad take.

After this stay in isolation:

I will never set foot in a gym again. I can exist just fine running outdoors and doing bodyweight workouts in the house. I have realized that the gym workouts sucked and the people sucked and the cost sucked and yes now I can crank out pushups and do a 3 minute plank. I am not paying to see some old fucks blow dry their balls and talk about Hillary's emails. Yes, I will miss perving on young girls in the gym but that isn't worth the money at this stage.

Barber? I love my haircutter but now, I will have made the commitment to bring back the flow.

And for all those clamoring to reopen the states I'd hope 'em have been checked for antibodies and have a nice big fat number. 'Cause there will be some people out there who say: "This is a lighthouse. Your call.”

[Icky Thump]

Originally Posted by sebastian_dangerfield

I'd be curious to hear how you get blood from a stone.

Contracts have always been predicated on a lie, or fear. If you don't do what the lender demands, oh my -- it'll sue you and take your stuff.

Okay. But what if we get a financial crisis that turns a lot of people into delinquent debtors? What if those people learn how to avoid paying those debts? What if they see banks bailed out while they are not and they develop a view that the system is unfair, and so it is morally okay to welch on debts?

Now what if twelve years after that crisis, a disaster causes these same people to find themselves delinquent debtors once more? What if they recall from the prior financial crisis, "Hey, I don't really have to pay this debt... The people holding the other side of the contract don't have a hell of a lot of power." What if they read stories on the internet about how half the country, rich and poor, landlord and tenant, are unable to pay debts and therefore not doing so? What if they see politicians on TV telling them they should receive all sorts of debt forgiveness? Suppose the idea takes hold, "Hmmm... If everyone stops paying, the whole system grinds to a halt and nobody can collect from anybody"?

Because that idea is gestating right now. People are learning that contracts are just pieces of paper. That you can test the enforcement capacity of the person on the other side of the deal, particularly in times like these.

I think Icky joked this thinking was #TeamNotPaying, or something like that. Well, I'm suggesting to you, and anyone else involved in lending, that if this lockdown persists for too long, you're "holding that bag" whether you like it or not.

Hey I am sure there are people in Germany who have duffle bags full of Weimer Republic currency.

[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

If the lockdown lasts six more weeks, you’ll be able to fit all of us in that category in a couple dozen football stadiums. (If we can do that then.)

Half the country can’t come up with $400 on 24 hrs notice. Two thirds lives paycheck to paycheck.

Surprisingly, many lenders know this, understand that it's difficult to collect bad debt, and are reluctant to lend to those people.

[Tyrone Slothrop]

Originally Posted by Icky Thump

And for all those clamoring to reopen the states I'd hope 'em have been checked for antibodies and have a nice big fat number. 'Cause there will be some people out there who say: "This is a lighthouse. Your call.”

You win the internets for the day.

[sebastian_dangerfield]

Originally Posted by Tyrone Slothrop

Surprisingly, many lenders know this, understand that it's difficult to collect bad debt, and are reluctant to lend to those people.

Today’s 800 is tomorrow’s 600.

They said the same thing you’re saying now in 2008.

You’re wildly underestimating the the numbers of weak risks out there. After 2008, ratings were relaxed to improve borrowers’ ability to acquire credit and because banks want to show regulators stronger portfolios. Banks also increased credit card lines for good and decent risks to show a bigger delta between available credit and credit used. This made the borrowers and banks look stronger. Ratings agencies just started making the standards less forgiving last year.

But that’s just credit cards. Look at auto loans. They have 7 year loans now. Is that an indicator of a strong consumer? That’s a product for a strapped person (or a moron buying what he can’t afford).

And what’s been keeping young buyers out of the housing market? They can’t earn enough to put down a down payment. But that’s just a traditional loan. Why don’t they put down 3% on an FHA? Because they still can’t qualify.

Look, the reality is banks loan to most of the public. They have to do so to survive. But only about 25% of the country is strong enough to survive through a four month shutdown. That means a whole lot of loans are going to go into the non performing bucket real quick. The daisy chain of defaults you’ll likely see will be a cycle that will grow in momentum and as it does, default will be normalized.

What’s normalized jumps to ubiquitous in short order.

[Hank Chinaski]

Originally Posted by Icky Thump

This is a pathetically bad take.

After this stay in isolation:

I will never set foot in a gym again. I can exist just fine running outdoors and doing bodyweight workouts in the house. I have realized that the gym workouts sucked and the people sucked and the cost sucked and yes now I can crank out pushups and do a 3 minute plank. I am not paying to see some old fucks blow dry their balls and talk about Hillary's emails. Yes, I will miss perving on young girls in the gym but that isn't worth the money at this stage.

Barber? I love my haircutter but now, I will have made the commitment to bring back the flow.

And for all those clamoring to reopen the states I'd hope 'em have been checked for antibodies and have a nice big fat number. 'Cause there will be some people out there who say: "This is a lighthouse. Your call.”

other than playing basketball I never got gyms. Drive 5 miles to Work out? Got a Nordic Track in the basement and I run most days.

I've gone to barbers to get my head shaved once a month for probably 10 years. I bought a buzzer. I will never set foot in a barber shop again, especially now that Playboy is out of print (old guy joke).

[sebastian_dangerfield]

Originally Posted by Icky Thump

This is a pathetically bad take.

After this stay in isolation:

I will never set foot in a gym again. I can exist just fine running outdoors and doing bodyweight workouts in the house. I have realized that the gym workouts sucked and the people sucked and the cost sucked and yes now I can crank out pushups and do a 3 minute plank. I am not paying to see some old fucks blow dry their balls and talk about Hillary's emails. Yes, I will miss perving on young girls in the gym but that isn't worth the money at this stage.

Barber? I love my haircutter but now, I will have made the commitment to bring back the flow.

And for all those clamoring to reopen the states I'd hope 'em have been checked for antibodies and have a nice big fat number. 'Cause there will be some people out there who say: "This is a lighthouse. Your call.”

As I said earlier to Ty, don’t use yourself as an analogue for the average American.

We’re social creatures. FOMO pull is huge. I read somewhere that Carnival is selling out cruises for 2021.

[Did you just call me Coltrane?]

Originally Posted by Icky Thump

Yes, I will miss perving on young girls in the gym but that isn't worth the money at this stage.

Speaking of bad takes...