Big Business and Bailouts

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S1: This ad free podcast is part of your slate plus membership.

S2: Hell, no. Welcome to the Big Business and Bailouts edition of Sleep Money, your guide to the Business and Finance News of the Week.

S3: And yep, it’s been another one of those weeks and it’s only been a few days since Wednesday when we last talked to you. But there’s a lot to catch up on. I’m Felix Salmon of axios. I’m here with the SHYMANSKY of Breakingviews. Hello. I’m here with Emily Peck of HuffPost.

S4: Hello. And we even have a special guest. We have the CEO of BCG. So many let us in.

S5: Rich LESER is going to talk to us because he is a management consultant who talks about big business the whole time. So we’re going to ask him about what on earth big business is thinking about and going through right now. We’re going to talk about the Fed and exactly what it’s doing in terms of trying to get the economy moving. We’re going to talk about Amazon and what they need to do to keep their workers safe, because that will be a good example for the rest of us when every other business gets up and running again and will even have a slate plus segment on equity, because we haven’t had one of those in a while. It’s a mildly gloomy show. I mean, it’s a mildly gloomy time, but I think you will like it.

S6: It’s all coming up on Slate Money.

S7: So rich. Yes. Introduce yourself and tell us what you’ve been up to for the past couple of weeks.

S8: I’m Rich Lester. I’m CEO of BCG Boston Consulting Group. BCG operates in 50 countries around the world, is one of the leading management consulting firms working across all industries, public sector, huge range of topics.

S9: And and the news of the week is that your clients, that the big businesses in America, $454 billion dollars of the stimulus bill is allocated basically to them, and then that’s being leveraged up to something on the order of four trillion dollars by the Fed. And we’re gonna talk a little bit about how that leverage works. But. Can you give us an indication of just how much money is four trillion dollars and where is it going to go and what’s it going to do?

S10: I should say if you stack them on top of each other, how many how far a planet they can reach?

S11: I mean, I did I did a little bit of back of the envelope where I was like, if you take the median wage in America, it would $14 would pay 50 million workers for like over a year and a half. Like it seems like an astonishing amount of money.

S8: So the four trillion. So first, my understanding and again, I don’t profess in any way to be an expert on the bill, but my understanding is that money is going to help business as well as to help state and local governments. And the four trillion, as I understand it, is that it’s actually about a little over it’s over 400 billion. But because that’s an equity infusion into Treasury, the Fed can lend on top of this. So it’s it’s the power of being able to leverage up that equity into a higher volume of loans. And no one knows exactly how high that volume is. But the estimates we’ve seen as well fall into the three to four trillion dollar range. I think right now we’ve got a host of organizations that are facing massive costs and extraordinary losses and the risk of going out of business or being in bankruptcy. And by the way, that includes, I think, state and local municipalities as well as many businesses, if you think about some of the sectors of the economy, starting with travel and tourism. But certainly going far beyond that, take away all the revenue or a very high percentage of it and leave the vast majority of the costs. And even well-capitalized, well-run businesses don’t last very long. And so the challenge is, first and foremost, to help people get help and to support the potentially 10 million plus unemployed that we’re likely to see out of this. And second, to make sure that we have an economy to return to. And frankly, the group I worry the most about our small businesses. And I’m so pleased that so much of the effort in that package was geared toward smaller businesses. No one knows now if that’s enough, as I can tell you. No one can tell you, but at least a lot scared because they’re just facing massive challenge. But we need to keep big businesses going, too. And loans should help. And and hopefully they’ll be able to be around once we come out the other end of this.

S9: So just to be like very broad brush about this. The the general idea here. Correct me if I’m wrong is that if I’m a big business and I’m losing money right now, I’m losing money in much. I’m losing money in April. I’m losing money. And may I can just go along to my bank or the special purpose vehicle or somehow I can borrow whatever those losses are. It could be hundred million dollars or whatever. And then that will cover the losses. And then I don’t need to pay that. I get to pay that back at a very low interest rate over many, many years. And I can afford to do that because my fundamental business is strong. And so long as there’s enough liquidity of, you know, these. Special purpose vehicles that are set up in the in the stimulus act of sending out these trillions of dollars, that should basically that should be fine for big business, right?

S8: Well, except that those losses are real losses. And those loans are real loans. And it will pay probably a substantial amount of time for these industries to recover. And probably some businesses within various sectors of the economy won’t make it. I think we will still just as we did in 2009, we will see that in some cases this leads to consolidation. In some cases this leads to restructuring in some cases. This leads to really healthy, vibrant businesses. As you say, it was a sharp drop. But once the drop has passed, they can re-emerge strong and they can be on a path to recovery. My understanding is that a lot of this is now on the Treasury to figure out the rules and that the big debate and who are the recipients. And a lot of the debate that held up the legislation was the degree of transparency around the choices that are made with a fairly high level of transparency being in the final legislation. And and but I don’t think often I think at a high level what you described as pride, the overall direction. But my understanding is you saw a ton of need to work through. Everybody has been running. This is legislation you would normally think would be crafted over many months or years at this volume with this level of complexity. It’s been crafted over days. We can bet they haven’t had a lot of time to work through the mechanics of exactly how this is going to play out in the weeks and months ahead.

S12: And I guess one thing I’m kind of wondering, too, is, you know, even if we are able to kind of put the economy in this like medically induced coma for a period of time and then kind of wake it up again. It seems like behavior is going to change. You know, it just seems like people are not only are they probably not gonna be flying as much, but they just might not be spending as much even if they have money coming in. And I’m just curious, the effect that can have also on trying to get that economy working again.

S8: Right. So I think to me there are two core long term questions that while we were in the midst of a crisis of shutting places down, which, by the way, are still going on in parts of the country and figuring out this legislation have not gotten much attention, but are going to rapidly get much more attention. The first is your point, which is how will consumers and other businesses in the B2B world adjust their behaviors as this moves along and even when we’re officially through it? What behaviors will we see different from we see it today? How will a few vacations? How will they view discretionary purchases? Our businesses, new capital investment and investing to build capacity? That’s one. The more immediate question, however, is how will we sustainably flatten the curve? Because as you put it, the medically induced coma, when we are at risk of an acceleration that could kill hundreds of thousands or millions of people and completely overwhelm the health care system. You do whatever you can to try to wrest that curve and whatever you can in our case of socially distancing. But we’re probably at least a year away from a vaccine and a number of months away from any effective treatments that are proven and scaled. And in that world, the big near-term question is how will we flatten the curve in a way that’s sustainable for the economy so that we can get at least some sort of rebound, even if that is into the trajectory we were on back in January and February. And I think that’s a huge question that businesses and governments are only beginning to wrestle with.

S11: Certainly we saw that in Hong Kong, right. That they really did a great job of bringing the number of new cases down.

S9: But then the minute they started relaxing some of the social distancing and some of the really hard core, you know, curve flattening attempts that they were doing, the number of cases started going straight back up again. So it’s not clear. You know, I think there’s a lot of and a lot of expectation that you might see a sort of rebound in the economy in the third quarter or the fourth quarter. It’s not clear how you how you can have that rebound with also keeping the number of new cases under control.

S8: Exactly. And if you think about it, in Hong Kong is a great illustration. There are two kinds of problems from a health standpoint at least that we’ll need to navigate through. One is, if you don’t bring the virus levels all the way down to zero and you start to restart the economy, where in your local environment you have small number of cases, can you put the disciplines in to keep that number low despite issues early with more aggressive testing, to use quarantine, to use A.I. and digital tracking and all the technologies that are out there but not scaled yet in the US, not even deployed in some cases to try to keep it low and manageable even as you restart the economy at a 9 0 caseload. Then the second point is the one you referred to. Suppose I get it to zero and I open back up. My issue is not just my own community. It’s all the influx into my community. And Hong Kong is nice because it’s kind of separate from much of the rest of the world. And, you know, you fly and or you come in from mainland China, which has done a good job so far of controlling more recently. But the US, if every community is on its own curve, you open up this city or this stake. It’s not just in that state. It’s inputs from other parts of the country that are on different parts. And we have no history of doing what China did it to really segment up Hubei Province and to make that work. So you’re exactly right to say that the challenges that we’re going to be facing in the months ahead about restarting the economy and still keeping a sustainably flattened curve that will keep the level of infection within the capacity of the health care system to manage until we have a vaccine. These are huge unknown challenges where there’s a ton of work that’s gonna be required.

S13: Rich, what are you telling businesses now to do to manage through this? You know, what do you tell a relatively small business that has no customers right now? What are you advising them to do? They get a big loan, lay off workers. It seems to me that part of the reason the government spending so much money on these companies is so that they continue to employ people so far cheaper for us to have businesses employing and paying people than it is for us to just directly pay every worker in the country. So keeping that in mind, what are you telling leaders now? What is besieges kind of advice?

S8: So a couple of things. The first is, I mean, if you just backtrack and we’re talking about backtracking like a month or maybe in some parts of the world, two months, not 10 months. The first steps were about reacting to the situation in terms of near-term, first and foremost, protecting workers and customers and second, protecting core of the business model. And that was the initial focus. And there’s a huge focus on people and near-term actions to protect supply chains and other things. Now, I think for many companies, it’s somewhere between survival and, you know, just getting along. For some industries, it’s literally just about how to survive, which has both an element of how to restructure the PNL as fast as possible to climb on. Revenues have dropped by huge double digit percentages. And what to do in terms of expenses and how to do it in a way that recognizes there’s a real chance of a rebound. So it’s not just it is in society’s interest to keep those workers employed. It is also in businesses interest to keep the last you’ve trained a workforce, you’ve got a high performing business. A shock has happened. The last thing you want to do is break the bond of trust you have with your employees and potentially lose employees that are critical. So it’s it’s hard on both a societal dimension and a business dimension. And the balance sheet challenges partly hopefully addressed through this legislation and legislation in other parts of the world will help to allow these companies to maintain a viable balance sheet to be able to get through this. The third element is the rebound element. And I would say there are a number of businesses, but only in the last week or two. It’s going so fast that are starting to turn their attention to what will I do to be able to come out of the strong. Actually, if you look at China, that’s a better example, because there are like six weeks a week ahead of us. You know, leading companies started saying, what do I need to do in terms of how I engage with my customers more online behavior, how do I need to change my product and service offerings? How do I think about distribution models and other things? And actually a number of them. I’ve been quite forward thinking to retool their models, to be able not just to navigate the crisis period, but to be able to come out strong. In all honesty, I would say most businesses here are only at the early stages about we’ve been in shutdown mode in most parts of the country, not in restart mode. But I think over the next couple months, if I think what our clients are talking about now, that’s the big thing. And then if you take out the public sector, part of our equation, because we do a lot of public sector work to the two big topics have been how do we just navigate the healthcare system crisis we’re facing, whether it’s with PPE ventilators, you know, navigating, you know, how to keep people safe and how do we start the journey to think about what it will take to restart, which, you know, the president talks about, you know, very short period of time. I think most other leaders feel like that’s very aggressive, very, very aggressive. But but whether it’s that leak or some number of weeks later, at some point, you know, governments are going to be based all around the country or with not just when and where do I restart, but how do I restart in a safe way for my community.

S5: Rich, thank you. This has been super informative. Thanks for coming on sleep. money. And as a New Yorker, I just want to say anything you can do for New York state and getting the government to take some of that. Four trillion. Move it to Andrew Cuomo. We would appreciate that.

S10: Well, I’m a New Yorker, too. And I think about it every day.

S8: And I think we really all feel for. I mean, and unfortunately, New York is is where it’s hitting now. But if you look at some of the other parts of the country, they may be 10 days behind New York. But I’m I think it’s hard to look without feeling tremendous concern at the challenges facing. I think we all have responsibility from our own business vantage point to do whatever we can to support these communities, whether it’s helping them get supplies or helping them navigate through. We each have different capabilities to bring. But it’s on all of us to get through this crisis together. So thank you. It’s a pleasure to be with you.

S9: Thank you. Thank you very much.

S7: So Anti-rich was talking a bit about this Owna delve into it a little bit more because we got a couple of requests over Twitter, which is basically how does this whole fed the thing work?

S14: We have two trillion dollars of stimulus bill and then four trillion dollars of Fed money where basically and this is this is the magic of loans, is that because loans need to be paid back, you can leverage and multiply and the Treasury puts 400 billion dollars into this sort of bucket.

S3: And then the Fed tops up the bucket with another three and a half trillion dollars of money that it just invents from nowhere.

S14: And then all of that money goes out in the form of loans to to businesses who then pay it back. And then the Fed doesn’t lose any money. And it’s it’s all kind of weirdly magical. And this is this is how capitalism works. This is fractional reserve banking at its best.

S15: So, yeah, very similar. I mean, like when we think of how a lot of money is created just normally in the US system, I mean, you have the Federal Reserve that creates like the monetary base. And then of course, they set rules for banks in terms of how much money is created. But you know, if your bank you’re if you’re if someone comes in and you give them a loan, you are essentially creating money. You know, and this is very similar to what we’re seeing happen now that the Fed has this amount of money that the Treasury has given it. And it’s not as though we can only lend out that amount of money. It can basically keep lending out that same amount of money over and over again. And so it’s into it’s creating all of these loans. What’s causing all of this additional money in the system now? Eventually, when that money is paid back in theory, then that would come out of the system.

S7: But but the payback period is going to be, what, 20 years or something enormous. Exactly. And the Fed doesn’t care because like the Fed, I mean, it is actually a very profitable institution, but it’s not the purpose of the Fed is not to make money. And so the Fed is like, yeah, we’ll have that money out there in the form of loans.

S14: And if there are any actual losses on the loans, then the Treasury will eat those losses. The Fed doesn’t need those losses as the Fed is doing. Risk free lending of trillions and trillions of dollars into the economy, which seems amazing. And it kind of makes me think why doesn’t it do that like all the time just normally?

S15: Because that would that would not be good, I think, because, you know, if you’re thinking about it right now, you know, the Fed is essentially going to be lending money to, you know, many investment grade companies and and also potentially even small businesses here. But if you think about it. So like if a lot of money is going to the people at the top and some of the best companies at the top, then that means the amount of money that a private investor would get to lend to them is going to be less because the risk is now going to be less because you have the Fed in the market. So not only is the risk on that bigger company going to be less, but the risk on all of the companies that are kind of down the line, the smaller, riskier companies, you’re also going to get less money for lending to them.

S11: And this is something brilliant, like everyone gets to borrow it for cheap.

S16: No, no, it’s not. Because for no reason, the one it’s like it’s fine right now. I am not criticizing what the Fed is doing right now. This is a crisis, but long term.

S15: You want the market to allocate capital to the businesses that can survive. You don’t just want this kind of flow of money coming in. So then you’re not pricing risk, which means investors are going to take horrible risks. You’re not getting money to the place. We’re going to be used the most effectively. And also, I mean, we have the ability to do this right now because the United States is in a very unique position.

S17: But if all of a sudden we started functioning very, very differently in terms of how our central bank worked, we would not be in that position anymore. We would be a very different type of economy. And that is not how our economy works normally. Right.

S11: And we we are not going to talk about the platinum trillion dollar client coins. The God, we are naive ones.

S3: But but we I think we I would like to just ask you one more question about the finances of big business and bailouts and stuff. There was a article in The Washington Post which we all put in the show, notes basically saying there’s absolutely no point in bailing out the airlines because airlines go bust the whole time.

S4: Airlines, if you look at the history of airlines, this is all they do is they go bust. And remember who said that if you want to make a million dollars, just start with a billion dollars and start an airline. And what happens when airlines go bust is they consolidate, they go through bankruptcy. But ultimately, as far as the routes being flight and the then, you know, the pilots and the.

S14: Employees all seem to just continue with the same brands and they keep on getting their paychecks and the passengers keep on flying from A to B. And, you know, a bunch of shareholders become bondholders and bondholders become shareholders in this financial engineering and this death and this equity. But is there any particular reason why having the airlines go to that 15th bankruptcy bout of bank airline bankruptcies would be a bad thing right now?

S12: Yeah, I mean, I would probably argue that airlines are a really, really significant part of the economy because not just because they’re getting people, although that is still significant in terms of moving people, but they’re also moving goods. It is just now. You’re not wrong that you could, of course, continue to operate while going through bankruptcy. But that’s that’s not seamless. And and to me.

S7: Well, isn’t that basically what we did with the auto industry and the financial crisis that it continued to operate while going through bankruptcy and seemed to work quite well?

S16: It did. Although I would again, though, argue that it was definitely not seamless. And and it would also mean that the airlines would have to make some very difficult choices. And I’m not saying that they perhaps shouldn’t have to make some of those difficult choices. I just don’t know if they should be doing those in a crisis. I think what probably makes the most sense is to get the airline industry through this. But to then afterwards say, OK, in the same way that the financial crisis taught us that the banks are too big to fail, we cannot allow them to kind of go under. So that means there have to be more regulations around them. I think that is the same with the airlines. I’m not saying we have to go back to like way back in the day with how we regulated airlines. But I do think that right now it is reasonable if we understand that every time there is a crisis, the airlines are probably going to need help. Then it’s also possible. When this particular industry, the government could have a little bit more say in what they do. And, you know, I don’t always say that.

S9: But in this instance, I will say that I do think that we are seeing a very interesting lesson right now in terms of how governments really do learn from previous crises. And what we’re seeing in Korea and Hong Kong and Singapore and places like that is they’re reacting incredibly swiftly and effectively to it precisely because they went through songs, they write food.

S7: Yeah, you know, H1N1 and Murs and they know the playbook.

S5: And it’s and and they can just basically click their fingers and make it happen. And they are equipped to deal with this kind of crisis. And I think that one of the little silver linings that we’re seeing in this crisis is there is no banking crisis. We went through the financial crisis in 2008, 2009. We were like, the banks are way too levered. We need to do something about that. We need to make sure they’re much better capitalized.

S11: And we did. And they are better capitalized. And now we don’t need to worry about the banks is the one part of the economy we don’t need to worry about like it worked. No. In fact, they have so much capital that like, well, hey, it’s an emergency. Go out and lend the capital grid.

S16: And I think you’re right. I mean, granted, I think if this went on forever without any federal aid, the banks could be in trouble at some point. You’re totally right. I mean, clearly, what we did worked. And I feel like that’s important to say over and over again, because once this is all over, I give it a year or two. The banks are going to be complaining that they have to hold too much capital. So, I mean, I do feel like you can say, wait a second. Remember two years ago. So I think that I’m not saying there’s anything good about this. Obviously, there’s nothing good about what’s going on. But you are correct. I this definitely did teach us that lesson.

S13: I feel like that’s the one bright spot is the banks are OK and that Jerome Powell seems to be willing to do whatever he needs to do to keep capital flowing. And it was reassuring to see him on the Today, show it enough if everyone watched. It was like the first time the Fed chairman on The Today Show, I think Savannah Guthrie said in like 40 years or something. And he he did a good job talking like a normal person to in the human language, like, for example, he said very simply, like the the Fed can lend out $10 dollars if it just has a dollar of backstop at Treasury, which for me was like a light bulb moment. I was like, oh, I get it. This is how they do that. They make 400 billion into whatever trillion dollars 10 to 1. OK, fine. Got it. Thanks, Jerome. And he was very smart and reassuring. And the contrast to what’s been going on this past week or so with getting this third stimulus package passed was pretty striking because even though I think it’s like a two trillion dollar bill and I’ll provide all this money for loans to big and small businesses and has this beefed up unemployment insurance and has payments going out to a lot of families, households, it’s still not enough. It’s still not that good. And there are still all this ridiculous squabbling over it, like at some point. The bill was held up because a few conservative. Others were worried the unemployment benefits would incentivize people not to work. Which is kind of literally what we’re doing right now, we’re telling people not to work and actually they they need to be incentivized not to work. It’s been really striking to me just how well the Fed works and how well all of that is kind of figured out and solving this crisis, while at the same time there is this building crisis for everyone else, like the jobs numbers this week were terrifying. You all obviously saw the chart of unemployment, unemployment. I was showing initial initial claims with the vertical line just shooting up like infinitely into the sky because it was 3.3 million clams. I mean, I put a call out on Twitter like, have you been laid off? And I’ve never gotten such a big response because the sample is so big. There are so many people now without jobs. And I feel like while, you know, Pells doing everything you can like, you can’t help all those people without jobs. And even said on The Today Show, you know, like I’m doing all I can. But we really need Congress to kind of like kick it into gear. And I still feel like the problem in the U.S. isn’t just that we haven’t experienced a pandemic. It’s just that like none of our our our our government is. The foundations and values that these people hold do not jibe with what needs to be done and what needs to be done is pretty simple. You stop the economy. You give everyone money and you contain the virus. Like it’s actually pretty simple. Like just give everyone the money.

S9: And that’s that’s it. That’s the thing which I was most ratified about, if that’s the right word. In terms of the Powell interview, was that he was absolutely unambiguous, that the thing that you need to do to get the economy moving again and to help the economy is stop the virus. And he would say our timetable is going to be set by the virus.

S7: And when the virus when new infections go down to zero and there’s a then we can start talking about like restarting the economy. But we need to wait and do that first. It’s so great to hear that in plain language from someone like him when you know, you’re hearing something very different from Donald Trump and you’re in. I keep on seeing all of these people doing opinion polls saying what’s more important, saving lives or restarting the economy.

S11: It’s like it’s the same thing. The way you restart the economy is by saving lives.

S13: I feel embarrassed for our country for having that debate at all, even a little bit. It’s like Trump is that is actually his own. He is a one man virus that’s infected the public discourse and is like keeping us from solving the actual crisis of the real virus.

S15: One last like lesson this has taught us as well, maybe to move forward is that what part of modern monetary theory is that? They say that basically it shouldn’t be you shouldn’t use monetary policy to control prices. You should use Congress because it’s so simple to get Congress to just raise taxes or lower taxes. This has also taught us that that would be an absolutely horrible idea. Yeah.

S9: OK. Emily, you had a big story this week about Amazon, and one of the things that has fascinated me about the way that this crisis has played out is the.

S14: 74 page documents that you get from the state of California in the state of New York and stuff like that, talking about all of the things that are essential. And all of the services that turn out to be essential even under a lockdown. And, you know, people going to work to make the chips that go into the radios that the EMT is use to communicate with each other like that. There’s absolutely enormous parts of the economy which fall under essential services and supply chains are clearly part of that. And Amazon is like the biggest and most visible incarnation of like modern supply chains.

S5: And so everyone else is basically working full out, right?

S18: Yes. Everyone at Amazon is working full out. The company announced it’s going to hire 100000 more people. Everyone’s ordering Amazon right now and they’re definitely an essential business and service. What I wrote about is, given all that, the companies should be doing everything in its power to keep its workers as safe from this virus as they can. And from my conversations with warehouse workers and drivers and advocates, they’re not. And I think that big businesses so far through this crisis have really shown how. I mean, in my opinion, they cannot be trusted to keep Americans safe and protected. So like, for example, with Amazon, they’re not in all cases telling workers when someone in the warehouse has tested positive for COVA 19. They don’t have the protective equipment right now that everyone needs to say safe when they’re working altogether. And that’s mostly because there’s a shortage country countrywide over that. But even given that they’re not social distancing necessarily and all their facilities and workers are really scared and the way they’ve set up their leave policy is kind of this distorted thing where they’ve raised pay $2 an hour for workers at least through April.

S13: Right. To really incentivize people to work and come to work. And I think they’re even giving bonuses as well. And then on the flip side, they’re covered. 19 sick leave policy is that you can take unlimited sick leave but not get paid. So it’s like, thanks. So the choices, you know, protect your health and go bankrupt or risk your finances or go into work and risk your health. And there’s no guarantee when you go in and risk your health that they’re really doing as much as they need to do to keep you safe. Amazon, of course, says it is. We should say Jeff Bezos wrote a letter.

S7: And like, I feel like this is a little bit a precursor to what we were talking about we’re with which less so, which is like this conversation that you’re having about Amazon right now and how much can you do and how much should you do and what kind of measures can reasonably be taken is the exact conversation that pretty much every reopening business is going to be having in the next few months. And, you know, people want to go back to work, but also people don’t want to go back to work because the minute you go back to work, you open yourself up to a greater number of potential infections.

S3: And, you know, it does seem I think you’re actually right, that Amazon is in the perfect position to try and work out what best practices are in this kind of thing, because everyone is going to have to go through this pretty soon.

S12: I think that’s right. And I think that obviously no cut, no company, at least especially the United States, has ever had to deal with anything quite like this and doesn’t really as pretty much making everything up on the fly. But for those companies like Amazon, it is an enormous company.

S16: And B, we’re now very much seeing is also a vital part of our economy in many ways is going to have to figure out how to make this work, not only for this crisis, but I just can’t imagine that once this is over, every single company is going to have to show how in the next crisis they will be able to keep their workers safe.

S13: Right. And I mean, these companies I did a similar story about Walmart workers also who are going through a lot of the same things with just as bad of a paid sick leave policy. These companies should should have been doing better on this all along, like you speak to these Wal-Mart. Wal-Mart has publicized we give sick leave. But when you speak to the workers, they’re like, oh, yeah, I earns eight hours of sick leave. Like, it’s it’s meaningless stuff. And it’s not like we have a massive public health crisis all the time to deal with in this country. But like there have been studies after studies that show like places that have paid sick leave have lower rates of of flu like these companies have never done enough to keep their workers safe. And now this is coming home to roost. And policymakers still aren’t like getting it either. And it’s just like this rolling crisis of irresponsibility that. As I see it.

S9: Let’s have a numbers round. Emily, what’s your number?

S18: Five dollars? My number is five dollars. That is what Instacart workers want per order for hazard pay. Now, we talked about Amazon workers, but Instacart workers are also the true heroes of the coveted 19 economy, bringing groceries to all of us, people holed up in our houses. So on Friday, some Instacart workers threatened to basically go on strike starting Monday if they don’t have their demands met by the company. And their demands are $5 per order hazard pay and 10 percent like to have the minimum tip set at 10 percent instead of whatever it is now, 5 percent.

S19: And then some other protections while they are our nation’s heroes, delivering our milk and eggs to our doorsteps. And I really need my Instacart to keep flowing here. Up up in Westchester. So this is my plea to Instacart to just meet the demands of these people and just keep going. Like they’re making a lot of money right now. They’re one of the few companies making tons of money. Right. Instacart has never had business like this before. I would never have used Instacart before. Maybe I would use it again.

S13: But please, like, just give the workers what they want. Instacart, please. We need our milk and eggs here in Westchester.

S9: My number is 24, which is the number of days that elapsed between March 3 and March 27. You see, that’s that’s how sophisticated I am.

S4: March 27 is the day that Boris Johnson announced that he had tested positive for Corona virus.

S11: March 3 is the day that Boris Johnson came out on a press conference and said, quote, I can tell you that I am shaking hands as I was at the hospital the other night, where I think there were actually a few Corona patients and they shook hands with everybody.

S7: So twenty four days to go from shaking hands with rotavirus patients, too. I can’t believe I’ve tested positive.

S20: I was hoping you would bring that with all of the world leaders are going to have the current virus.

S14: But I mean, it’s kind of impressive that the Britain has managed to infect the actual head of state as well as the technical heads. You know, like with got Prince Charles and Boris Johnson both have covered.

S19: You want to wish Boris Johnson good health. I’m not wishing him poor health or anything, but like, sometimes karma is a beautiful thing. Can I say that? Is that OK? It’s true.

S11: I can I can see a little image of Harvey Weinstein going through your head right now.

S20: I mean, not Harvey Weinstein, but anyone who is out there telling an entire population that it’s totally fine to shake hands with people with coronavirus virus, like life comes at you fast. So that’s my number.

S15: My number is 1.3 billion people. So that’s the biggest shut down that we have in the world right now, which is in India and. Yeah. I mean, I feel like we think it’s rough here. But like, you know, if you’re thinking about a country like India, where you have lots of parts of the country, where you have people living very, very close quarters of a lot of migrant workers. So you’re telling everyone to go home and kind of close themselves off, which is essentially almost impossible for a lot of people. You also have such a large, informal part of the economy that it isn’t going to be really having any way to access, you know, basic necessities.

S16: Now, I will say the Indian government is giving money and they’re getting food. So I don’t want to say that they’re not. But like we think things are bad here. Like other and I’m not trying to downplay how bad things are here, but they’re worse than a lot of other places.

S7: Yeah, I mean, India. I mean, not to put too fine a point on it. It doesn’t have everyone doing like zoom calls and getting Instacart.

S16: Yeah. Like I mean this is it’s it’s in the in the fears that they’re gonna have a harder time stopping it. I mean the song I’ve been reading a book on the Spanish flu, but the Spanish Spanish flu, it was something like almost 20 million people in India were killed. I mean, it was an enormous number that I mean, the estimates are kind of all over the place. But but still, you know, and and the fear is that it’s going to be very hard to contain it if it starts to spread.

S7: I mean, it’s truly India is probably the most terrifying country. I mean, presumably what goes for India also goes to Pakistan and Bangladesh and Pakistan. He has it that the subcontinent. But if it starts tearing through India, there’s very little India can do beyond what it is doing already is trying to lock down the entire country.

S9: And if that doesn’t work, I I have no idea what else they could do. It’s absolutely terrifying. I think that’s it for us this week.

S2: Thanks to Rich Loesser as well as to the shimonoseki. And just I mean, Molly and Emily Peck and all of you guys are listening. Do keep the e-mails coming. Sleep money. Dot com and we will talk to you next week on sleep money.

S7: So, Anna, we’re going to move to Ecuador, which is your and my favorite country. It’s generally with my very first sovereign debt default. In fact, it was everyone’s.

S14: It was the very first song we all remember in the world. Those of us who remember nineteen ninety eight, I think it was ninety nine. It was the first country in the world to ever default on the sovereign Eurobond.

S9: And now it’s going to do that again.

S12: Well so basically what’s happened is that Ecuador has said it’s going to be using its grace period to put off paying a number of interest payments, and has also indicated that it’s probably going to have to renegotiate some of its debt as well. I mean, it’s giving mixed signals. But the reality is, Ecuador is in a horrible position right now. I mean, I feel like I come here on every we can talk about a country that’s in a horrible position to do. But like it, it’s really bad.

S7: The fact is, like I remember this is this is 1999 all over again when they was struggling with a very low oil price. Guess what? Oil has just plunged. Ecuador is an oil producer. And without having that oil revenue, you can imagine that there’s no way they’re going to be able to pay their debts.

S11: The other thing they had, though, in 99 was El Nino, which that they really they really counted on the shrimp harvest yesterday.

S9: And so. Yeah, and then like they had a real problem for the trip. I don’t know if they’re having problems with the shrimp harvest right now.

S16: Well, we’ll part of the other issue they’re having is with the demand for shrimp. Yeah. I mean, you know, like this is so. Yeah. I mean, Ecuador, essentially all of their exports, one of the other exports is like cut flowers. So like, you know, essentially the price that they can get for all of their exports is significantly declining. At the same time that their ability to fund themselves is significantly increasing. And like they went into this crisis already having an IMF plan in place, which you would which isn’t actually good, because that means that they already have all these IMF loans they have to pay back. And it’s so and on top of that, also, like they went into this where their economy basically was in a recession or was their economy was not growing. They’re dealing with a political crisis partly because of the IMF loan, because they can’t push through reforms and they’re not going to be able to get money out of capital markets if they can’t push for the reforms. But then they’re gonna a political crisis. If they try to push through reforms, they have a fiscal deficit. They have a current account deficit. And then on top of that, they use the dollar.

S11: So they’re doomed. I’m just I’m just in my in my in my mind, they have this idea that, you know, auto makers and non-essentials. So they’re becoming ventilate to make heads and shirt makers and nonessential. So they’re becoming mask makers and everyone’s like pivoting to become something essential. But if you’re a florist, that is really hard. You’re just going to close down men. And that’s you know, every florist is where Ecuador makes this money.

S16: I mean, it’s like I mean, granted, it’s mostly oil, but. But yeah, I mean, like, this is and you know, I realize I’m going to be a broken record probably for the next year on this. But like in the last like in the financial crisis, a lot of land and was able to do OK coming out of it because China was spending so much money on come on commodities until those prices were super high. That is not happening this time. And also, you’re having this massive still kind of risk off movement in the market, which I have a hard time believing is going to come right back in. So we are really looking at a tremendously difficult time for Latin America and for much of the world, but for Latin America especially. Oh, the other thing I forgot to mention. Ecuador also has the second highest number of cases of the coronavirus in the house. Highest is Brazil. But like even like Ecuador has like adults run a thousand cases like Brazil’s economy is like 17 times the size of Ecuador.

S9: So I can tell you that Ecuador’s health system is overburdened and falling apart at the best of times they can cope with a pandemic.

S16: Yeah.

S5: So this is that it’s there in have a rough time and there’s less hope for these countries right now because the United States, everyone is really focused inward right now with the IMF and the World Bank did come out with a communique telling all of the countries in the world to basically not ask for any interest payments on the money that they’ve lent to developing countries.

S9: That’s something known as the Paris Club.

S11: How much how big of a deal that is? I’m not entirely sure, but the bond markets don’t do that kind of thing. Only the only countries do that kind of thing.

S12: Yeah. And I mean, and that’s the issue is that it’s gonna be very hard for a country like Ecuador to fund itself. And yes, it can keep taking on loans from the IMF, but that’s it. So it’s not the most sustainable.

S11: And it can get loans from China. I feel like this is what it normally does. So we just sell off another part of its economy to China.

S15: Yeah, exactly.