I see so much talk here on about how companies should be left to go bankrupt because of their "shitty decisions", that "the weakest companies should be allowed to fail", and "shareholders have to hold the bag" (all from comments here).
This fundamentally misunderstands how businesses work.
If your business has a 5% profit margin, and you're supposed to have enough savings to weather, say, six months of essentially full fixed costs but zero revenue... that means you would need to save a full ten years of profits before ever returning them to shareholders, and if your company is less than ten years old, goodbye.
That's ludicrous.
It's also against the "accumulated earnings tax", where the IRS virtually requires companies to return their earnings to shareholders (via dividends/buybacks) yearly, because they're financially penalized otherwise.
Good management teams aren't supposed to save for pandemics. It's not normal business. Companies in general are unable to buy insurance against it (because there's no insurance company with enough money to pay out). Capitalism is about weeding out the better companies from the worse -- not ones that are arbitrarily more or less hit by an unpredictable global catastrophe.
Letting swathes of companies go bankrupt through zero fault of their own is economic disaster, and neither is there anything remotely fair or capitalistic about it whatsoever.
I find your implied assumption that starting a company should in normal circumstances be seen as a get rich scheme that pays out in under 10 years as completely toxic, but that's an aside.
The point is large companies shouldn't be hurting for money, they have two big options on the table to generate money right now: issue stock or bonds. However, there are a lot of really stupid large companies that decided to max out their credit cards in the good times to pump up their stock price via buy backs. They can't issue bonds, but they could still issue stock. However, that would cause the price to crash, and Trumperino in Chief can't allow that to happen.
Of course, the Fed is implicitly at fault here too for keeping interest rates too low for too long. They tacitly encouraged borrowing with low rates. If rates had been higher, companies would be thrilled about lowering rates due to covid and would start to issue bonds.
> Capitalism is about weeding out the better companies from the worse -- not ones that are arbitrarily more or less hit by an unpredictable global catastrophe.
For the definition of better or worse implied by your above statements that is... almost entirely untrue. Given the entirety of the history of capitalism (and definition of capitalism) the only purpose of capitalism is to accumulate more capital within an existing system.
In fact we've seen many companies arbitrarily sink or swim -- and many successful business people will say as much. Otherwise there would be many more repeatable successes for businesses. Capitalism is not God.
This fundamentally misunderstands how businesses work.
If your business has a 5% profit margin, and you're supposed to have enough savings to weather, say, six months of essentially full fixed costs but zero revenue... that means you would need to save a full ten years of profits before ever returning them to shareholders, and if your company is less than ten years old, goodbye.
That's ludicrous.
It's also against the "accumulated earnings tax", where the IRS virtually requires companies to return their earnings to shareholders (via dividends/buybacks) yearly, because they're financially penalized otherwise.
Good management teams aren't supposed to save for pandemics. It's not normal business. Companies in general are unable to buy insurance against it (because there's no insurance company with enough money to pay out). Capitalism is about weeding out the better companies from the worse -- not ones that are arbitrarily more or less hit by an unpredictable global catastrophe.
Letting swathes of companies go bankrupt through zero fault of their own is economic disaster, and neither is there anything remotely fair or capitalistic about it whatsoever.