Through No Fault of Their Own

Scott Wapner, CNBC host, interviewing Chamath Palihapitaya on April 10

“I think we all agree with you that more money for Main Street is needed. But maybe not in spite of the money to all of these companies and whatever that make up the economy, as well. More money is needed everywhere, perhaps.

Why does anybody deserve to get wiped out from a crisis created like this? It’s like a natural disaster! Why does anyone deserve to be wiped out? Wouldn’t that be immoral itself?”

Richard Clarida, Fed vice-chair, in WSJ interview on April 13.

“Mr. Clarida also dismissed a question about whether the central bank had created a “moral hazard” that encouraged risky investor behavior when the Fed moved quickly to backstop swaths of credit markets.

“This is entirely an exogenous event,” said Mr. Clarida, noting how the virus—not private-sector behavior—had forced widespread business closures and revenue losses.”

I, for one, am delighted to learn of the “Through No Fault of Their Own” exemption to stock market risk.

What a relief to learn that there’s no need for the plebes to hog all of the money, that so long as investment losses are from an “exogenous event” as opposed to “private sector behavior” – whatever the hell that means – the Fed will provide unlimited amounts of money – their words, not mine – to make ~~the rich~~ investors whole.

Could this possibly be a bad idea … some form of moral hazard … for the federal government to insure ~~the rich~~ investors against capital market losses by buying TRILLIONS of dollars in financial assets and providing TRILLIONS of dollars in ~~interest-free loans~~ liquidity facilities? You know, provided that these losses weren’t their fault.

LOL.

These are exactly the same people who paid off Goldman Sachs 100 cents on the dollar with their AIG losses in 2009. You think they give a flying fuck what you think about moral hazard or precedent or optics or fairness or decency? You think these oligarchs and their CNBC/fintwit Renfields care about ANYTHING other than getting their MONEY back?

Why, it would be immoral NOT to pay off ~~the rich~~ investors on their market losses. I mean, sure, let’s hope that Congress gets its act together and throws a bone to the poors, but c’mon, man. First things first.

Besides, you wanna know the REAL moral hazard here? Wanna know what sort of immoral behavior your sociopath “leaders” are worried about encouraging?

South Carolina Sen. Lindsey Graham, joined by fellow Sens. Ben Sasse and Tim Scott in bemoaning the moral hazard of overly generous unemployment benefits.

“Claiming the relief package will encourage people to stay out of the workforce, Graham told reporters that the bill “pays you more not to work than if you were working,” noting that it would provide the equivalent of $24.07 an hour in South Carolina versus the state minimum wage of $7.25 an hour. “If the federal government accidentally incentivizes layoffs, we risk life-threatening shortages in sectors where doctors, nurses, and pharmacists are trying to care for the sick, and where growers and grocers, truckers and cooks are trying to get food to families’ tables.”‘

I am not making this up. It’s the old Welfare Queen argument, all dolled-up for the age of COVID-19. Can’t make unemployment too attractive, you know … all those good-for-nothing poors will laze at home eating bonbons and sucking on the gummint teat instead of getting off their ass and doing an honest day’s work.

Meanwhile, back at the ranch, the Big 4 airlines will be accessing tens of billions of dollars in cash grants and easy 10-year loans, all explicitly designed to support entrenched management and equity shareholders. But hey, fret not, concerned citizen! Management will be prevented from making more stock buybacks until Sept. 30, 2021. That’s a whole eighteen months of no stock buybacks, so don’t tell me that Wall Street doesn’t understand shared sacrifice. And yikes! Management will also have to get by on their current salaries for the next three years, as hard as it may be to imagine the privation and human misery that will entail.

Oh yeah, here’s the stock-based comp, not including salaries and bonuses and deferred comp, for the CEOs of the Big 4 airlines since 2014.