THE WOLF STREET REPORT: Nothing’s Fixed – What’s Behind the Corporate Debt Bailout

Over the past two years, nobody knew what would trigger the next financial crisis, but just about everyone knew it would involve the record pile of corporate debt. And so it happened. Now the Fed fixed it…

By Wolf Richter for WOLF STREET.

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  177 comments for “THE WOLF STREET REPORT: Nothing’s Fixed – What’s Behind the Corporate Debt Bailout

  1. 2banana says:

    How do you fix record corporate debt and leverage?

    With even more more corporate debt and leverage!

    And lots of jawboning!

    • Reality says:

      Now do you see why we had to overreact to the Coronavirus? How else would Big Corp get its bailout? Follow the money. Very simple. Now go back to hiding under your mattresses.

      • Wisdom Seeker says:

        You and reality appear to be strangers.

        Big Corp’s bailout isn’t but a drop in the bucket compared to the tsunami of trouble headed their way.

        Ye,s the bailout is measured in trillions with a T. But the debt level is well into the hundreds of T’s globally. And the policy response to too much debt is… to print up more debt.

        $1000 Trillion is a petadollar.

        Get ready for a world where Peta-Dollars are a thing.
        1,000,000 is one million.
        1,000,000,000 is one billion.
        1,000,000,000,000 is one trillion.
        1,000,000,000,000,000 is the next big thing.

        A petadollar is over $100,000 for every person on the planet.

        • Richard Dube says:

          Covid100,000,000,000,000 etc…..

        • max says:

          Usually when numbers get too big for accounting and shopping, they cut off few zeros.

        • Blockhead says:

          For this wonderful state of affairs, we need to thank Jerome Powell. That’s according to the Oracle of Omaha who places Powell on the same pedestal as Paul Volcker. Obviously, Buffett knows who his friends are.

        • NJGeezer says:

          I believe that 1,000 trillion is called a quadrillion.
          Wish we didn’t have a name for a number that large, at least when speaking about dollars.

        • RD Blakeslee says:

          “1,000,000,000,000,000 is the next big thing.”

          Contemporary conviction: Little thing

        • Mark says:

          I remember a commercial from a way back for Parker fountain pens with the catch phrase “the noughts just flow from the tip”.

          How apt for these times …

        • Wisdom Seeker says:

          Yes, could be Quads or Quadrillions… but “Petadollar” has a nice ring to it.

          Besides, we really ought to go fully metric. We have megabucks and gigabucks, so we ought to have terabucks, petabucks…

      • Mira says:

        Where is all this money coming from ??
        The money does not exist that will cover the cost of the coronavirus.
        Micro chips .. it did not work with our pets .. an expensive extravaganza .. hey .. some of us are on a budget out here .. & they are now going to do it to us.
        Continuous .. compulsory vaccination .. world wide .. 9.500.000.000 people .. oh please !!
        Okay .. .. that covers us .. the Western population.
        Still ….
        Where is this money going to come from ??
        And the wish list of the establishment brain storm goes on & on & on.
        [When] .. we get all this money up & running .. a loaf of Coles brand sliced bread will cost $400.00.

    • sevensec says:

      So the Escher Staircase Economy was already a reality… and now, having stumbled, we’re still trying to climb that staircase while redlining the financial system even further. Not pretty.

      Seems like vast corporate collapses, with nationalization in earnest of the most essential industries among the ensuing wreckage, is where this will eventually have to end up. (There are already murmurs about the government buying equity in the fracking companies.) How much more can the government bail these companies out without ending up with de facto control anyway?

      Capitalism was already kiddie-pool deep in deep ways, underlain by an iron bottom of state manipulation via QE, buybacks and general “moral hazard”. But now it seems we are watching the last drops of it whirl down the drain.

      • polecat says:

        We be well beyond Hallucinary Staircases !

        I think we’re soon to be headed into a flying formation of cooked-white swans swooping uncontrollably into a Very black foreboding cloud, as it pertains to the Big Picture-Plane.
        Try not to get plucked !

        • sevensec says:

          Thanks for your vivid imagery. Now I can’t resist wondering what roast Black Swan tastes like…

          Taleb actually thinks this pandemic was a White Swan & I see his point–as a pandemic has been due for a while now & anyone reading Wolf was well aware how jerry-rigged world finances were.

          Still there appear to be certain weird aspects to this virus that might yet push it into Black Swan territory…

        • Wisdom Seeker says:

          It was a Black Swan to everyone except Taleb and some infectious disease experts. All the prior pandemic scares served more as boy-who-cried-wolf than actual risk-mitigation efforts. Otherwise we wouldn’t have been caught globally (including China) with inadequate supplies.

          “The book asserts that a “Black Swan” event depends on the observer: for example, what may be a Black Swan surprise for a turkey is not a Black Swan surprise for its butcher. Hence the objective should be to “avoid being the turkey”, by identifying areas of vulnerability in order to “turn the Black Swans white”.”

  2. Crazy Chester says:

    Ok. I finally get it (and I can take down my ‘Dear Fed. I’m For Sale. Call Me’ sign). But why, when the speculators had refused to call the bid and Powell had won the pot, did Powell show his cards? He didn’t have to do so. Instead he gloated just a bit. You don’t ever gloat at the table. Now they’ll be waiting to see the whites of his eyes next time.

    • Shiloh1 says:

      Powell and Mnuchin did the corporate bailouts so fast before Uncle Buffy had time to pick up any dead carcasses to throw into the trunk of his Olds 98.

    • Wisdom Seeker says:

      Methinks the Fed needed the market to bid up the prices of the trash securities before taking them off their hands – best way to give them a bigger bailout.

  3. Grant says:

    You should do videos more often. I would be happy to see more ads for this to happen.

  4. HR01 says:

    Thanks, Wolf.

    Fed still can’t print cash flow so Boeing and many others get downgraded to junk status before long.

    The IG ETF’s will be forced to sell all the fallen angels when the downgrades arrive. Then the next phase of the crisis gets underway.

    Have to believe that the portfolio sizes for these IG ETF’s will shrink substantially as it will become increasingly more difficult to find IG debt issues to purchase, no?

    • SP11 says:

      If the ratings and yields keep dropping, I would assume so. Many companies in affected sectors like airlines and cruises are on review for downgrade. It seems like a debt implosion is looming, yet JPow and FOMC will do everything they can to ensure that there is no value left to the U.S. dollar.

      Anyway, I think you’re right. When the next rush to the credit markets happens, we will see more price/yield movements. Some were talking about a lack of demand, but I dont think prices and ratings are low enough. I could see some FA’s dipping even lower into junk status and as that population grows, then we may see a freeze in demand.

      • HR01 says:


        Trashing the U.S. dollar is a lost cause. When the world enters a crisis, all rush to the safety of greenbacks.

        As for the Fed’s alleged intentions to purchase IG corporate bond ETF’s, evidently no one bothered to look for the fine print. Sounds like the Fed has imposed a number of requirements that must be met before authorizing any purchases. Apparently no purchases of any ETF will be authorized if the shares are trading at a premium to NAV. Good luck with that one. Given the illiquidity of global bond markets, what might appear to be a discount to NAV now might be a huge premium in a matter of nanoseconds.

  5. coalman says:

    May be the corporations could tap into the Trillions hidden in overseas tax havens to pay down some of their debts? Just sayi’n.

    • sunny 129 says:

      They already bought their buy-back shares with that, way long ago or bought against that collateral and issued the bonds.
      Wonder also why would be there, US dollar shortage overseas?

      • Petunia says:

        There’s a dollar shortage overseas because the foreign banks use dollar reserves to conduct fractional reserve lending. If they have $100 on reserve, they lend $90 as a dollar credit. They are printing fictional dollars when they do this. The borrowers use the dollar credit, but the real dollars to pay the debt back, don’t exist, never existed. That’s where the dollar shortage comes from.

        • sunny129 says:

          Fed has the $ swap program of varying time frames ( like repo) where they exchange dollars for their currency(foreign banks) and back at the end. This is on going but EM crisis has made this liquidity crisis, beyond $ SWAP solution! The secondary effect is $ is getting stronger!

    • Stuart says:

      Why should they when Uncle Sucker bails them out ad infinitum. Time to start Nationalizing major industry beginning with the entire health care business. You know, like every industrialized country in the world except for the U$A. Socialized Medicine now !

      • NewGuy says:

        Not a problem. Healthcare is about 18% of the GDP, so figure on adding another 18% tax on all goods and services to pay for it.

  6. otishertz says:

    The Fed wasn’t jawboning about buying treasuries. Looks like they are buying the majority of new treasury instruments indirectly via favored sons. The corona panic sure is a convenient reason to monetize debt.

    The deflation in markets and the coming credit crisis / debt destruction will also conveniently prop up the value of the dollar and temporarily innoculate against inflation and dollar devaluation, enabling the monetization.

    I had a business for sale under contract since February and the deal just fell apart due to tighter credit and a couple of the buyers having to drop out. My regular business is not affected by Covid, except maybe with a small increase in demand.

    How can they get away with it is anyone’s guess. My longstanding opinion is that the PTB are going to turn money from a traditional store of value into a fee for use service, which implies NIRP. Everything happening now, including hints of UBI, helps further this along.

    • Memento mori says:

      ….My longstanding opinion is that the PTB are going to turn money from a traditional store of value into a fee for use service, which implies NIRP…

      You are into something. The traditional concept of money as a store of value is about to become obsolete.

      • California Bob says:

        I don’t think money has ever been a ‘store’ of value; only a medium for exchange of items of real value; i.e. a quantification of value.

        • RD Blakeslee says:

          People with bank savings accounts prior to the abandonment of the dollar’s backing by gold and silver were storing value, IMO.

        • Wisdom Seeker says:

          Prior to 1965 money WAS silver and gold (coins), or exchangeable for such, and thus by definition a store of value.

          If you want such a store of value today, you can trade physical metals warehouse shares, such as CEF or PHYS or PSLV.

          But today no one wants money as a store of value, they just want digital credits.

    • joe says:

      ” turn money from a traditional store of value into a fee for use service”

      Brilliant insight. If they don’t want you to own anything but only rent, than why would money be any different?
      Talk about owing your soul to the company store. Endgame.

  7. economicminor says:

    I’m baffled! In what universe can you solve insolvency with more debt?

    I must have missed out on that class on Magical Thinking!

    So these investors are expecting what to happen?

    Or do they just have these piles of cash that they have to spend.. Period… doesn’t matter on what…. doesn’t matter that they will probably only get back 50c on the dollar or less… It’s their job to move that money so they just buy dumb with it?

    An entire generation of institutional investors who believe Magic is a strategy!

    • 2banana says:

      Magical Thinking is an old game.

      Going back to Genghis Khan and earlier.

      I remember reading a book about Saigon, right before it fell to NVA troops.

      The stock market was still operating and having massive swings up and down. Literally, with fighting right outside the city, the brokers were trading.

      • California Bob says:

        The ‘loss’ in Vietnam was a foregone conclusion long before Saigon fell; the loss was immaterial to the American economy except that it might have damped some MIC companies’ forecasts. The loss in American–and world–GDP has been a foregone conclusion for a while, the consequences are as yet unknown.

    • bern says:

      wouldnt it just be easier if the government didnt bail anyone out!
      just sent them a money printer ..but u have to buy your own ink!a

    • polecat says:

      I’m thinking we’ve crashed into a different part of the multiverse – where the the Fed is not what we perceive .. it, to us, real in all asspects .. but it is Kinda Fed, Sorta Fed, Nearly Fed … PSEUDO Fed, trying to pull a gauzy, ephemeral haze over us all, seemingly in command of all quantum credit … when it is actually trying to blow digital smoke up everyone’s arse, hopeium we will vape !

  8. otishertz says:

    We know that if all the large central banks debauch their currency at the same rate, their exchange rates will remain the same. That’s not a wild card unless one or more of them goes hog wild with credit creation.

    The joker card is solvency. A solvency crisis like I see brewing – where debt destruction offsets credit creation – would normally raise interest rates and prop up the dollar. However, interest rates will remain low by means of Fed bazooka mandate, special purpose bailouts, and central bank complicity.

    Is there a point where this falls apart from demand destruction that causes mass waves of insolvency or will central banks continue to create credit and money with impunity?

    Insolvency would have to get unbelievably bad to offset the unbelievable amounts of new credit injected into the global financial system.

    • joe says:

      As they expand the things they buy while at the same time AI weaves it’s way into their process why would you think there are limits? They don’t need you any more. They can buy cars, planes, bonds and grains so long as the dishes keep spinning.

    • Portia says:

      Is this where we transition into Trekonomics?

    • joe2 says:

      “Is there a point where this falls apart ”
      Yes. Look at the total value added chain. If insolvency takes out critical links then the whole thing collapses. Can’t buy a Tesla if nobody is refining rare earth elements. Can’t fix your G3 if all the mechanics are on well paid unemployment. Remember when NASA tried to restart engine manufacturing and found out everyone who knew how to manufacture them was retired or dead. NASA still buys engines from Russia even with all the trade sanctions. Of course there’s Musk with his tin foil spaceships.

  9. Memento mori says:

    If the Fed bluffed the markets by saying it will buy junk , that bluff might have worked for a while but it will soon be called. Then you will find out that if there is one thing the Fed doesn’t bluff about, it is printing more money to buy junk.
    Before the new year, Wolf will need to scale up the chart of Fed’s junk holdings.

  10. rhodium says:

    With financial repression the Fed killed traditional investing. Too many people still want to believe in it even though incentives are for them not to save, so they buy this junk either thinking they will get out before it collapses or they simply ignore the risk and insolvency.

    I don’t think we’re going to have inflation above 3% in the next 3 years, but it’s still going to be there so why anyone who doesn’t need collateral would be buying treasuries at any point on the curve at these insanely low yields blows my mind. Stocks are delusional too. It’s now a popularity contest with a massive number of them. People are just desperate for a place to put their money. I don’t know, besides having emergency funds in a bank account does it actually make sense to save money anymore if everything else is gambling? I’d say buy gold but the government clearly disincentives using it as an investment vehicle as well.

    Enjoy your life and blow you’re money today, for tomorrow may be a nightmare. Maybe all those spendthrifts accidentally had the right idea.

    • otishertz says:

      You are 100% correct. I’ll still be a saver. Being an inherent saver is the only thing keeping me from going full on Mad Max and welding spikes all over my car.

      60%+/- of the population can’t cover a $1000 dollar unexpected expense. People in the US in general have been operating on a three paycheck margin of error forever.

      Those three weeks have already gone by. So, what now? UBI? The “stimulus” better last a long time.

    • John Taylor says:

      A lot of individual investors buy into the sales pitch of safety by diversification of passive ETF’s. They have their retirement money invested straight into those and don’t think about it. They believe the old mantra that buy and hold always works over time.

      As for professional money managers – they often have to do the same, because if they underperform the S&P 500 they lose clients fast. These managers typically can’t sit on cash for long or they’ll lose their jobs. On the other hand, if they are 100% in the S&P 500 and it drops, that it isn’t assumed to be anyone’s fault.

    • Bobber says:

      The wealthy aren’t stupid in aggregate. If they spend 10% of their savings, then inflation and interest rate increases from the increased spending will destroy the remaining 90% of their savings. Besides, they already have everything they want, so what’s the point of spending?

      Better to sit on their savings and only spend 1% of per year, so that wages for workers stays low and the cash flow and wealth build continues.

  11. andy says:

    The Geat Great Depression (TM) wasn’t a joke. Boomers, well set for retirment, could not figure out where it all went. But it went. Millenials had no savings to lose, and fared better. But many lost most productive years of their carriers and never recovered.
    Wolfstreet replaced Wall Street Journal as most trusted source of finacial analysis, and even employed couple of Nobel prize laureats over the years.

  12. David Hall says:

    The have been more retail and energy defaults this year.

    Illinois has been near the edge a long time. Detroit, Puerto Rico and Stockton had to reorganize in the past. Puerto Rico was shaken by another earthquake the other day.

  13. Implicit says:

    If they schoo this, there is x probability of y happening, and the fed got the desired result. So extrapolate to the big picture to why are they doing all this. They are not ignorant of the possible results. Find out hard fo believe that they really think it will work.

    • California Bob says:

      re: “They are not ignorant of the possible results.”

      You sure? They have been ignorant of the possible causes for quite a while.

  14. The rally in stocks added market cap to the companies issuing debt. Most of the stock losses have been contained. Companies with large corporate debt must service that debt, zero revenue is not an option, which is why Musk kept his Tesla factory open. Which is why we have to force people back to work, hence the worker benefit is much smaller. That is the stick, and Powell adroitly pulled the carrot away from Wall St, by rolling back QE, and jawboning corporate debt while he never had the authority. Right now he wants stocks to level off, but he won’t get his wish. The dollar is going to moonshot, and take the markets along for the ride.

    • VeryAmused says:

      You can sort of force people back to work but you cannot force people back to spending lavishly. This event is a consumer confidence shock like few others in recent history. This is a shock to the 70% of Americans who were just holding on before. The rest of the worlds consumers are in the same boat.

      You are correct, stocks will not level off they are going to go much lower because the 70% are broke and the entire world is drowning in debt. Investors will not ignore the absolutely plunging earning straight ahead that will be with us for awhile. The only hope for a different outcome is massive amounts of UBI type money printing. And if this is the only hope, there is very little hope.

      • Jim Larsen says:

        In debt up to your eyeballs? Call Dr. Powell, specialist in raising eyeballs.

        • VeryAmused says:

          When the common man calls he gets “This number is no longer in service. If you need immediate help please dial 1-800-F#$%-OFF”.

      • UBI will put money in consumer pockets. Consumers with a mortgage can consolidate debt, the way corporations refinance. This was how GFC mortgage problems started, people rolling CC debt into their home REFI. Healthcare costs were rising, so it was not always lavish spending. Now the problem has three parts, getting the mortgage market going, serving those people who don’t have mortgages, allowing them to roll their student debt and subprime car loans into an equity grab, (before the housing reset) and extracting the last bit of blood from the turnip. Another leg up in stocks may prove embarrassing, but it will serve their purposes. The next shakedown (AHCA) will be mandatory private unemployment insurance. The first government shutdown, over a 5B border wall, was prelude, this one was way bigger.

      • RD Blakeslee says:

        Quite right! If enough people have the good sense to curtail spending and there is some evidence that’s happening – the savings rate in the U.S. had been rising before the job situation imploded.

        Some of us who are retired wont be spending as much as we could, either, but our means of saving wont be “investments” or dollar denominated “savings” accounts.

        Every dollar the government gives us in “emergency” funds, e.g. the recent $1,200 emergency payment, has gone into our form of savings: hard assets.

  15. CCC says:


    Great report! Although I’ve been convinced for several years that the US market has become a giant ponzi scheme it seems to have gotten much worse with this crisis. With the market not being allowed to periodically rightsize itself for more than a day or two without the whole world freaking out and the Fed jumping in and bailing all the bad actors out. Capitalism doesn’t work this way.

    All ponzi schemes collapse eventually, even when it’s the Fed running it. But I’m not sure when it will happen. They have a lot of power. I grew up with “Don’t fight the Fed” and it has normally proven true.

    But this one is a little different. The scale of who will need bailouts is just crazy. It’s easier to say who won’t need bailouts and it’s basically the FANG/MAGA stocks which is likely why they continue to skyrocket.

    Literally everybody else is screwed. Hospitals are losing billions a day, restaurant many will close, movies aren’t reopening anytime soon, cruise lines had virus problems before they could kill you, automakers aren’t selling cars, I’m not flying again for a few years, commercial real estate is dead with companies realizing people working from home works, real estate in major cities is dead because it’s too easy to catch the virus in that packed in environment. I could go on for paragraphs about all who are in major trouble.

    Can they print that much money? Should I buy some gold?

    • DP says:

      Yes and yes

    • John Taylor says:

      At this point, stock markets will rise along with the Fed balance sheet but will drop when it levels off.

      When the Fed pushes money into the asset markets it increases price pressure throughout and everything rises. Once that spigot shuts off, fast-trading assets like stocks can drop rather quickly – especially with algos monitoring these money flows to make quick decisions.

    • Rcohn says:

      If you eliminate the earnings of
      FAAMG, earnings were down 7.5% in 2019. In 2020 earnings of these S+ P 495 will be down again.

  16. historicus says:

    Janet Yellen, shocked by the level of debt.
    Well no kidding Janet…..are you that stupid?
    The debt market rises and declines in geometric fashion…to adjust the interest rate, the corpus must move dramatically at the extremes of the move.
    The debt market will make the stock market moves look timid.
    Now, here we have the Fed, dictating fake interest rates, and now finding themselves the only buyer.
    Just like playing catch with yourself.

  17. Cobalt Programmer says:

    Were you born outside US like Germany?

    Most likely, Fed is running a pump and dump scheme. They purposefully, give misleading announcements (not buying but hinting). That way all the companies can sell the bonds to investors. Then when all the bonds crash in future, fed can buy them very cheap.

    This might be a stupid question.
    What is the main difference between issuing bonds vs more stocks. Why a company prefer one than the other?

    • sunny129 says:

      Credit is the foundation of the Equity mkt. So imho issuing bond is lot easy when there is crave for yield than issuing new shares of stock with recession at the door, at this time!
      Look how many offers got oversubscribed!? Besides Fed will be forced to buy once the investors realize and start selling, like next week!

    • Wolf Richter says:

      Cobalt Programmer,

      “Were you born outside US like Germany?”

      For that story, read the first chapter of my book BIG LIKE for free. On the book’s Amazon page, click on the book cover, which opens the book and allows you to read the first few chapters for free:

    • Petunia says:

      Bonds have a claim on the assets of a company, stocks don’t. In bankruptcy, stockholders get wiped out first, bondholders get a piece of what’s left, oftentimes a bigger piece than other creditors.

      • Too bad it doesn’t work that way. When the Merval crashed in 06, I bought shares of TEO under a dollar, they were back in the 20s within a year. (no IMF magic, Carlos Slim bought the market) while sovereign bond holders, Italian widows and orphans, took a 50% haircut. Two points, corporate vs government, and Treasury bonds extended to our friends in China through BIS. Do I need to draw a picture?

        • Cas127 says:


          “Do I need to draw a picture?”

          Well, you do need to explain more, if you as a shareholder recouped, while debt holders allegedly took 50% losses – it doesn’t sound like an actual bankruptcy (although foreign laws can differ) – perhaps there was some political forfeiture of debt rights in order to bail out the company (it is very hard to tell from your shorthand description of events).

        • TEO is Argentinas largest telecom company. Stocks come back (always) while bond liquidations are final. The US has offshored trillions in treasuries to China and is now threatening to default. Alguna pregunta??

        • Cas127 says:

          “Stocks come back (always) while bond liquidations are final.”

          Huh? Stocks “always” come back? What do you mean by “bond liquidation”? Chapter 7 bankruptcy?

          “The US has offshored trillions in treasuries to China and is now threatening to default.”

          Ok…China has bought trillions in US Treasuries (largely by forcing its exporters to deposit their dollar proceeds rather than use them to buy US goods, therefore keeping the Yuan undervalued, which significantly helped perpetuate the huge US trade deficit…)

          And, okay, I’ll agree there are political rumblings about renouncing some portion of that accumulated debt “due to” C19…which sounds sleazily political (as were China’s earlier currency manipulation moves).

          But what has that got to do with some Argentine company?

          Your shorthand is too cryptic

      • Cas127 says:


        “Bonds have a claim on the assets of a company, stocks don’t.”

        Not precisely – it is better to think of equity holders, bond holders, and secured lenders as standing in a line to recoup their invt when a corporation goes bankrupt (defined as either having liabilities in excess of assets, or more real-worldly, not having sufficient cash/cashflow to pay various debts/interest pmts as they come due).

        The secured lenders are de facto first in line to get repaid (possibly partially by taking over the equity stock of the company) because if they don’t get the full, equivalent value of their loan collateral, they have the legal right to reclaim it – almost always forcing a company to really, genuinely shut down.

        Historically, over many less serious recessions, secured lenders tend to recoup about 70 cents on the dollar of their loans (their new equity holdings may pay out more over many years…or the companies can go “Chapter 22” – re entering bankruptcy.)

        Bondholders stand second in line of repayment, because in the vast majority of cases, they have no specific claim on specific corporate collateral, if realizable/adjudicated value of assets is less than known liabilities (very common because asset values carried on the books is frequently more theoretical than quickly realizable).

        Unsecured bondholders have legal claims, but no rights to specific collateral. In practice, this means that bondholders have historically recouped about 20 cents on the dollar of their investment in bankruptcies, with the rest being made up by taking over the bulk of the post-bankruptcy equity in the company. They become most of the new shareholders (and not infrequently take a haircut on what they are owed anyway).

        Equity shareholders come last in line of repayment, by which time the money has usually run out (as P indicates) – since in practice vaguely valued assets rarely exceed explicit liabilities when put to the test, there simply is nothing left to give to the shareholders.

        It isn’t that shareholders don’t have a claim, it is that the money has run out before reaching them. And their “residual” equity rights tend to get 99% diluted (or completely extinguished) because those equity “control/decisionmaking” rights get transferred to secured/unsecured lenders/bondholders in lieu of getting full, exact, timely repayment of their debts (remember, bondholders historically took 80% loan losses in bankruptcy – taking over equity control is what they get in exchange).

        Given the severity of this crisis, the near term losses of lenders/bondholders is likely to be much worse, because the realizable/adjudicated value of assets will fall further.

        There are of course, many complicating factors (DIP lenders get special superior rights to repayment in exchg for funds to keep corporations alive *during* bk and “new money lenders” tend to get special trmt in exchg for money to re-launch the corp with a buffer of new cash, etc).

  18. sunny129 says:

    Now the Corp debt mkt knows that Fed just jaw boned and didn’t buy a single corporate bond or an ETF, what will be the mkt reaction next week or going forward?

    Will they sell? or wait for the Fed to buy or complete collapse with this shenanigan trick by Fed? Whatever, it doesn’t sound good.

    • WES says:

      The Fed is busy moving the decimal over 3 places to solve the current debt crisis.

      In the life of the Fed, starting in 1913, first it was hundreds, then thousands, then millions, then billions, now trillions. Next stop quadrillions!

      In 1933, owing thousands in a million economy was just pocket change!

      In 1953, owing millions in a billion economy was just pocket change!

      So owing a trillion in a quadrillions economy is just pocket change!

      Solving the debt crisis is nothing new for the Fed. They have been successcfully doing it for over 100 years!

      The debt crisis is not a problem as long as the Fed doesn’t run out of zeros!

  19. Frank Miller says:

    The Fed & govt is supporting only the “supply side”, of the economy, ie GDP, is not being supported; (mostly). Corporate capacity yes, but not consumer or long term GDP spending (infrastructure, education, health care, governance). And for these tax-cuts & bailouts & handouts, regardless of irresponsible corporate behavior, the Fed & govt have no public-interest expectations on these corporations, hence we don’t see behavior consistent with public (or general shareholder) interest or even financial payback. Imagine what a investor of last resort would expect!

    For the other side of the economy, the demand side, it is being crushed by Fed/govt policies started 30 years ago; plus demographic shift, plus technology shift. For example, consider savers, on $100, they have gone from $5 to $2 to 0.50cents as return on savings; so their spending declines; crushed by inflation too. Or for example, we export jobs and send crap back, and cut tax revenues. etc.etc. As others have said here, debt will not solve a solvency issue. And with who all are in charge, l am worried that the taxpayers are going to pick the defaults; the spin will be “good for the economy, good for jobs”. Who is going to fix this mess?

  20. timbers says:

    Fed Strategy to make economy great again:

    Plan A: QE bailouts and debt.

    Plan B: QE bailouts and debt.

    Plan C: QE bailouts and debt.

    Plan D: QE bailouts and debt.

    Plan E: QE bailouts and debt.

    Plan F: QE bailouts and debt.

    Wonder what Plan G is?

  21. Paul says:

    “Leveraged-Loan Downgrades Signal Cracks in Corporate-Debt Rally
    Financial Stability Board has warned of risks to global financial system”

    Ranks Of Leveraged Loan “Weakest Links” Hit Record As Credit Downgrades Mount
    S&P Market Intelligence Feb14-20

    Then there is cov-lite…. is spiking…

    its seems to depend on the ratio of downgrades to outstanding loans, but the new issues have slowed..

    This is going to be a big hole for the FED to fill..or any central bank.

  22. Chauncey Gardiner says:

    So with this hat trick the Fed kicked the can down the road again… unsurprising. It’s like a placebo effect for the financial system.

    In my view, the Fed and its New York Fed-Wall Street Public-Private Partnerships are trying to wear too many different policy hats. Further, the objectives of these proposed Fed asset purchase policies are unclear, both in terms of realizing the Fed’s dual mandate and protection of the nation’s depository and payments system during this pandemic. I also agree with others that the Fed lacks legal authority to make direct purchases of corporate bonds, including those with junk ratings, regardless of whether they structure the purchases through SPVs.

    • Bobby Dents says:

      They really didn’t kick any can. The Fed by law can’t buy corporate debt. What they can do is set up a intermediate vehicles that can, and THEN offload them. But the Fed ran into a problem, nobody wanted to that. So on its balance sheet says nada.

      Banks aren’t dumb. They can secure the bailouts when it serves them and liquidate when it also serves them. I am not talking retail, I am talking about investment banks.

      • timbers says:

        He just said the Fed can not legally set up intermediary vehicles to buy junk bonds/stocks, in his opinion. I agree.

    • sunny129 says:

      ‘Fed lacks legal authority to make direct purchases of corporate bonds’

      No single or specific corporation bonds but bond ETFs like LQD as it has already announced! 50% of LQD has BBB or lower rated bonds. So the next one will HYG and or JNK!

      if they don’t, the Credit mkt will start cratering affecting the equity mkt, especially now, with more ‘bloated’ Corp credt mkt! just a matter of time.

      • Bobby Dents says:

        Credit markets have already cratered. ETF is frankly a overrated concept. Most debt there is marginal compared to the whole. Debt is going to be crammed down no matter what.

        • sunny129 says:

          Sorry. You are wrong on this issue!

          Responding indirectly to Jeff Gunlach’s late Friday tweet, in which the bond king observed something we had noted previously, namely that “the Fed has not actually bought any Corporate Bonds via the shell company set up to circumvent the restrictions of the Federal Reserve Act of 1913” adding that this “must be the most effective jawboning success in Fed history if that is true”[..]

          moments ago the The New York Fed announced on its website that it expects to begin purchasing eligible ETFs, most notably the LQD and JNK as part of its emergency lending programs in “early May.”

        • Wolf Richter says:


          When the Fed does buy any bonds or ETFs, you will see it right here, on Thursday, every Thursday when the Fed’s weekly balance sheet is released, which I cover every Thursday, and I’ll even include a multicolored chart as to what SPVs bought what types of securities.

        • sunny129 says:

          Fed responded to this accusation yesterday, Monday May 4th, posting on its website that it would begin buying corporate bonds in “early May.”

          When will the CCFs be operational?

          The SMCCF is expected to begin purchasing eligible ETFs in early May. The PMCCF is expected to become operational and the SMCCF is expected to begin purchasing eligible corporate bonds soon thereafter. Additional details on timing will be made available as those dates approach.

          Source: The New York Fed

          Remember, the Fed promised to buy corporate bonds back on MARCH 23rd… and it was announcement stopped the stock market meltdown… and it is now May 5th (six weeks later) and the Fed hasn’t bought a single corporate bond.

          Stocks literally rallied 30% on a lie.

        • sunny129 says:

          Corp bonds – Fed

          Never before in its 107-year history had the Fed bought corporate bonds before. IN fact, it was technically illegal for the Fed to do this as the Federal Reserve Act of 1933 expressly forbid the Fed from buying corporate bonds and other risk-assets.

          The Fed got around that legislation by setting up a credit facility with the Treasury called the Corporate Credit Facility of CCF (there are actually two of these now, one for buying investment grade corporate bonds and the other for buying corporate junk bonds).
          In its simplest form, the Fed would print new money and then funnel this money into the credit facility. The Treasury, not the Fed, would then take the money and use it to buy corporate bonds and corporate bond ETFs on the open market.

          This was a HUGE development for the markets.

      • timbers says:

        The Credit “market” God must not be transgressed. It’s served us so well. It’s helped get us where we are today. Round up the usual suspects and prepare them as human sacrifice to our Credit “market” God. Only then will the rest of us be redeemed through the awesomeness of our Credit “market” God.

  23. Bobby Dents says:

    Debt restructuring. It’s already began. Based on the models, a recession was likely begin around November, probably signaled by a front equity crash in the fall.

    Covid sped everything up. Might as well ram the debt down now. The banks are no fools.

  24. BuySome says:

    I’d change the title to “Everything’s Fixed…but Nothing’s Repaired”.

    • Wolf Richter says:


      That gives “fixed” an entirely different and very appropriate meaning!

      • CCC says:

        Completely agree with that use of fixed.

      • polecat says:

        Well, through the generosity of the Fed, the corporates have been held together with bailing wirefraud, so there’s that …

        • polecat says:

          .. and everyone who’s someone, want’s to hitch on the only ride-‘share’ in town – Jerome’s worn-out jalopy!

  25. DR DOOM says:

    There are old grisiled money managers that ain’t pretty or young enough to be on tv. They babble about things like fundamentals , earnings and ceo’s that pay attention to their product and the people that make’em and debt . They babble on about free cash flow,resiliency of the balance sheet in a down turn. They believe lapping up future growth from people’s taxes that ain’t even born yet is , yes I am going to say it,Immoral. They want to win fair and square but they ain’t in the rotation.Sweet sound of spring is the retort that pitchers and catchers report. I love baseball . If you can’t go long then put in the dirt and make something happen. Balls and strikes are like life. As long as both sides get the same shitty blind Ump calling it the same we Americans will play the game. Spring of 2020 and baseball is suspended. This is bad shit for a superstitious baseball guy.

    • BuySome says:

      Star Trek DS9 placed the end of baseball in 2042. Maybe they were overly optimistic. Perhaps we will find ourselves to be like the ’61 Tigers…could have, should have, but in the end did not…Knocked down once again by the storm winds of doom blowing from New York?

  26. MonkeyBusiness says:

    I am just hoping bacon will not shoot up to 50 dollars per slice.

    • sierra7 says:

      RE Bacon:
      I don’t know about anybody else buy I’ve noticed bacon quality declining for several years now. Even the “good brands” are going into the tank.
      Like most other foods the quality has been bred out of them for the sake of more profits and longevity of shelf life.

      • RD Blakeslee says:

        Smithfield hams were until a few years ago, made by a plurality of small firms in Smithfield, Virginia. “Smithfield” was a place name, not a company’s brand and its hams were famous for their quality.

        Then the Chinese moved in and bought up the small businesses. They consolidated most of them, reduced the quality and Smithfield as an emblem of quality was gone.

    • CCC says:

      Fortunately I’ve stocked up on bacon and toilet paper.

    • California Bob says:

      It’s a steal when pigs are $5T each.

  27. Jeff Relf says:

    Instead of printing money to
    bailout the (morally) bankrupt,
    (lazy) governments should’ve provided
    long-term care for homeless lunatics.

    There’s a teeter totter:

    — Asset prices are on one side.
    — Consumer prices are on the other.

    Currently, asset prices are up in the air;
    consumer prices are at the bottom.
    But that’s about to switch.

    Landlords are about to sell because (lazy)
    governments won’t kick out bad tenants
    ( so the good tenants had to leave ).

    As a result, buildings will be shuttered and
    the price of rent will go up,
    pushing up the CPI,
    forcing interest rates up.

    Asset prices will fall dramatically.

  28. Dan Romig says:

    “… will give Boeing $40 billion in cash to burn … that Boeing will also have $40 billion in additional debt …” These are the words that Wolf speaks that ring loudly in my ears.

    Bill Blain wrote about Boeing on 1 May:
    “Boeing illustrates everything that was once great but is now rotten about our Western economy.

    It was once a good solid plane maker. It built the aircraft that allowed global airlines to develop, grow and innovate new routes and services. Regional travel, tourism and business travel all exploded in the wake of the Boeing aircraft that enabled it. The B-737 regional jet and the B-747 Jumbo really did make the world smaller and brought it to everyone’s door.

    Then it bought McDonnell-Douglas. The smaller planemaker pulled off the coup of the century, buying Boeing with Boeing’s money as the joke went. Its executives took over. The brilliant Boeing engineers were ousted by McD cost accountants. Cost cutting trumped engineering every time. The company moved to Chicago – away from its Seattle roots.”

    Blain continues with a direct and accurate look at what got Boeing in its current state:
    “As interest rates fell, Boeing borrowed more and more from market, using it to buy back stock. The stock soared. Executives received enormous bonuses and stock option packages. Workers saw salary and conditions cut. Quality fell. The C-Suite decided not to invest in new aircraft development – they simply further extended the B-737, making the once slim thoroughbred of the skies into a fat, bloated unstable and unsafe lump of flying metal. 346 people paid the ultimate price for Boeing compromising safety.”

    Final word on Boeing by Mr. Blain: “Boeing is textbook corporate failure.”

    But what the hell? As Wolf adds to this story: Boeing has forty billion cash to burn and forty billion more debt to deal with.

    Personally, I don’t want to see the next chapter of the ‘Book of Boeing’. The best thing to do with this once great book would be to close it shut and toss it in the trash or recycle bin I reckon.

    The new CEO of Boeing, Dave Calhoun, is a 1979 Virginia Tech grad with a degree in accounting. In 2014, he joined The Blackstone Group as head of ‘Portfolio Operations’. Blackstone is a private equity firm.

    • MonkeyBusiness says:

      Boeing will just be folded into our Armed Forces Corps of Engineers.

      Once their accountants have run amok and cut all the soldiers for cost cutting and efficiency improvement reasons, the Mexicans will come in and reclaim most of Baja California.

      You read it here first ;)

      Airbus and Boeing should do a merger.

    • WES says:

      Dan Romig:

      Yes, an accountant to “fix” the books!

      That is likely why Boeing not selected by NASA to design lunar landing model!

      Boeing no longer knows how to fly anymore!

    • andy says:

      David Calhoun should hang his head in shame for being part of the Board that gutted Boeing and left it where it is today:

      – riddled with debt that would not have been needed if Boeing had saved cash for a rainy day instead of blowing $45 billion on buybacks at twice the current shareprice (so losing $23 billion cold on the way through).

    • Shiloh1 says:

      How about a modern version of Arthur Miller’s play All My Sons with the Boeing executives as “Joe Keller”, with same ending?

    • MC01 says:

      Leaving aside for a moment why Boeing executives chose to scrap the Yellowstone-1 clean-sheet design and instead focused on re-engining the existing 737NG, let’s focus on the issue of MCAS, the flight control software which cause the two deadly 737MAX crashes.

      The chief test pilot of the Boeing narrowbody division at the time, Ray Craig, recommended dealing with the 737MAX tendency to pitch up while at high angle of attack by applying aerodynamic improvements.
      This is nothing new: the Beech 1900 regional airliner, the largest offspring of the widely succesful King Air family, sports a vast array of aerodynamic extensions to tame its flying characteristics. They may not look good but they do their job very well.
      The 737MAX program managers instead opted for a software solution, perhaps swayed by the success of MCAS on the KC-46 military aircraft (one of the few trouble-free parts of the program). Not only that, but instead of merely using MCAS to “tame” the 737MAX they decided to turn MCAS into a way to “emulate” the flight behavior of the previous 737NG in an attempt to sell the new aircraft to airlines by stressing the low level of extra training required.

      Problem is that by turning MCAS from a simple flying aid into an emulator Boeing opened several new cans of worms: this is a classic case of a solution being far worse than the problem. The re-certification process of the 737MAX has been finding MCAS shortcomings on a seemingly monthly basis: it’s literally like trying to empty the sea with a bucket.
      At this point the solution suggested by Transport Canada sounds not merely like the most sensible but also as the cheapest: completely remove MCAS from the 737MAX, introduce aerodynamic improvements and a new training program for commercial pilots. The estimated costs for Boeing at this point are so high the company has to cut its losses and tinkering with MCAS will only increase them by stretching the re-certification process even further.

      There’s another thing. Airbus has announced they are putting ongoing studies for a new widebody freighter aircraft (whether based on the A330neo or A350-900 is not known) on the backburner to save cash. Freighters is one of the few things Boeing has been doing right and they should not throw away their lead.
      Boeing has had two freighter conversions (737-900 and 777-200/300ER) on the backburner for a while and Qatar Airways (which together with Emirates will emerge as the big winner in the post-Covid-19 world of air travel) has been vigorously pushing for a 777X freighter variant for months now: the Chinese domestic market is clearly telling us that demand for freighter services will not abate even when passenger flights resume and retailers are allowed to re-open. Yes, it’s not a long term strategy, but it’s still a way to raise urgently needed cash. What are Boeing executives doing on the freighter front?

      • Gandalf says:

        A great article detailing the ongoing problems with the 737 MAX’s MCAS system:

        The 737 MAX’s computers has only two 25 year old 16-bit computers to try to handle the updated MCAS software, its Airbus competitor, the 320 neo, has seven.

        Even if the FAA re-certifies the 737 MAX again, the requirement for pilots to get flight simulator certification, and the fact the Europe, China, and India want to do re-certification independently means the 737 MAX will not be flying for quite a while longer.

        Well, there’s no demand for airliners anyway, and probably not for another 2-3 years

    • KDMaz says:

      And don’t forget, on the military side, Boeing can’t get the KC-46 Pegasus tanker right.

  29. Frank says:

    JP Morgan was booked on the Titanic but he cancelled at the last minute, I wonder what the world would look like if he hadn’t?.

  30. Dan Romig says:

    Three men who were on the Titanic and perished when she sank in 1912 were bankers. And they were bankers who opposed the planned Federal Reserve.

    Benjamin Guggenheim, Isa Straus and Jacob Astor got on a new boat with not enough fuel to go slower or further, and a fire in the coal room bunker 6 that would weaken the steel compartments before she even left port.

    • BuySome says:

      Guggenheim heritage leaves us the problems of resource extraction and refinement, which itself relates to problems of consumption. Isidor Straus leaves us Macy’s and the whole problem of mass retail and concentration. Astor adds to mass hospitality and the resultant mass travel which brings, you know, viral vectoring on a grand scale. You are both on to the right period and some of the players who got the ball rolling on the coming nightmare which is still growing, but you may be missing other events and players. (There’s a rarely accessed file in a library at Princeton which pretty much lays out the inside information on a raging battle that occurred in the vacuum left behind. The winners gave us war, debt, unfair taxes, and a regulating body which we all now see for what it is and who it is really regulating.) As for Titanic…being aware of the tragic events at the South Pole could have made the ice watchers more aware of the potential opposing forces up in the north leading to greater shelf losses and more persistent bergs flowing further south into normally safer lanes..caution was key to countering all those minor factors that combine into a disastrous event. And ramming the beast head-on might have had a better end…something we might need to remember. Old man Morgan is himself a lesson in going traveling to foreign shores (Egypt for him) where you pick up an illness and carry it to Italy where you die…the burden of lost lives and his wrecked shipping conglomerate might have even been acting to lower his immune system’s response. Our current problem is inherited…we need to figure out what to do with that. Direction is tacking forward, but on which path and at how many knots.

  31. DeerInHeadlights says:

    Thanks for that very apt summary Wolf. I guess now we watch the White House and the fed and one try to strong-arm the other in walking the talk. It is election season after all and one side’s entire elect-ability rides on the economy, aka ‘stock market’.

  32. Mike says:

    Amen as to Wisdom Seeker. The major banks’ reportedly had derivatives positions worth $210+ Trillion dollars with a T in December 2019. The latest bailouts were not anywhere near enough.

    Most derivatives amount to fees paid to banks or other institutions to bear certain risks. Thus, I predict that a large amount of derivatives went and are going south on the banksters. :-)

    That shoe will drop later. The major banks net, realizable capital on their MBS, other loan portfolios, etc., will probably not cover all of their debts. Their net capital was always inadequate compared to their gambling exposures.

    • Wolf Richter says:

      Maybe they made a ton of money on some of their derivatives, no? They go both ways… For example, if those derivatives bet on lower interest rates, they made a killing.

      • Mike says:

        That is true. However, the banks’ and large financial entities’ business tactics are often to take risks with the expectation that their “Federal” Reserve will bail them out.

        Due to the banksters’ confidential provisions, I cannot know for sure: e.g., one huge financial entity that was “converted”/”called” a “bank” after the fact in the last crisis did knowingly bet that the real-estate-backed securities (bonds in tranches with supposedly different risk levels) which it sold to gullible pensions and others would go south. (In a California fraud case, if one had been brought, such could have been called evidence of intent to defraud. See CACI 3116.)

        However, the banksters’ game is to profit from the Fed’s repeated subsidies and also what amounts to financial gambling (with MBS, derivatives, etc.) Which is risky) and their past records do not inspire confidence that they are truly financial wizards. Given the scale of their gambling and low, net, realizable capital, lady luck may not stay by their side.

        If any of them were not bailed out, given ultra low interest rates, QE commissions, e.g., if they were florists or restaurants or manufacturers not deemed “worthy” of Fed bail outs, most of the banksters’ parasitic institutions would soon go into bankruptcy due to bad bets.

  33. Wisoot says:

    Cost of transportation of gold, silver and other metals around the world is subject to a 60% cost increase. Been particularly difficult to get metals in and out of Asia. Medical supplies take plane cargo priority causing metal delivery delays – up to 2 weeks. What would be really handy right now would be to have access to all surveillance tools and command of secret service special forces to intercept these delayed metals to boost bank deposits to offset against debt. Who might have both I wonder? Dusty cobweb strategy might work if all individuals didnt decide to stop paying tax simultaneously en masse – chattels rebellion – biggest fear – loss of control – life purpose – street security. Fraudulent money system vs Freedom to create honest one. hmmm thats a hard one.

  34. akiddy111 says:

    It’s such a shame to see how things are so bad out there right now.

    But is anyone noticing how well the FAAMG stocks are doing year in and year out. They are up 10% YTD ?

    I guess we need more technology as we enjoy working, playing games, watching shows and shopping from home more and more.

    More wrap around technology services for the hyper connected household. Technology 24/7. It makes perfect sense.

  35. Fat Chewer. says:

    Mr Powell, if there is nothing wrong with the economy, why did you stop raising interest rates in early 2019 and begin lowering them back to zero? It is my naive understanding that when there is nothing wrong with the economy then interest rates should be about as high as the market will pay. At the moment, apparently, zero is the most anyone is willing to pay. This would be because no one is confident about getting enough of a return on the investment to pay the interest on the capital they borrowed. Why should they be worried about this if nothing is wrong with the economy?

  36. Patrick says:

    Is it still considered debt if the Fed buys and never sells?

    Isn’t that just plain asset inflation against a devaluing currency? And how do you get inflation in consumer goods without also inflation in the assets the Fed buys?

    So when someone says markets will crash for a prolonged period then how does that not imply deflation and debt being wiped clean via defaults? And how can that happen with a Fed willing to soak up all the debt, never to require repayment? Sure companies will continue the same irresponsible behavior but has Chrysler gone under since it’s bailout in 2009 or in 1979?

  37. Willy2 says:

    – And what are these companies going to do with the money they received from al these bonds issued ? Buy back their stocks (again) ? Hollowing out the balance sheet even more ? Pushing the company even deeper into negative equity ? Leaving the workers (to be laid off in the future) with nothing ?

  38. Leo says:

    Who bought this debt?
    Do we know what kinds of investors did what during the last months?

  39. Michael Engel says:

    1) In 202/22 NYC old retired firemen heroes will not get their promised paycheck.
    2) Yesterday $400 dinner, with a nice bottle of wine and great desert, will be gone.
    3) Dollar General xmas gifts will rise from five to ten, but the low quintile
    of income employees will not complain, because they will produce this stuff themselves.
    4) We might be subjected to several bout of recessions. The unemployment rate might remain high for years, but the 155M out of 175M new work force will have a jobs.
    5) In the middle of 2020’s there will be little to spend on. Rent will be cheaper.
    6) A rejuvenated industrial sector will build capacity to replace China, but the service sector will shrink.
    7) There will be rotation from low paying jobs in the service sector to
    middle income jobs in the tech and industrial sectors.
    8) With little to spend on the saving rate will rise.
    9) The black market will flourish, along with invisible slavery.
    10) People will do whatever it take to survive.

  40. KPL says:

    Now that jawboning has worked and stocks were off to the races but has met with resistance, we are likely to see some real action soon. After all, market likes it when sh*$ can be piled on to the Fed’s plate and the Fed laps it up and asks for more.

  41. dr spock says:

    Awesome article and comments. Thanks Wolf and all for taking the time to write well thought out facts that benefit each and every one of us.

  42. Karen says:

    Prior to last week’s press conference, I thought of Jay Powell as a cynical man, based on his actions and choices. But after watching him I realized with horror that he actually believes in the authority of the Fed. Like a reluctant hero who had no choice but to act, because Congress will not take the necessary steps to support the economy. Well, why should Congress face any difficult political choices when the Fed is more than happy to play God? There are no limits on God’s authority.

    Powell was very clear that the Fed will make good on its commitment to buy corporate debt; he knows the world is watching and they have to do *something* soon or lose whatever credibility they have left. But they cannot solve the solvency problem, which is overwhelming.

    They are living in a bubble of their own making. They just don’t see what’s obvious to the rest of us. It’s truly astonishing.

    • Paulo says:

      When you make a comment like that it is worth noticing. Scary. Scary stuff.

      My wife and I were talking about what we think our BC economy will look like in a few years? Every imagined scenario did not include more of the past or anything the same. Even property paying rentals require tenants who are financially secure. Boeing? Unless it’s Govt defense work or inside help they are done.

      On a local coast ham radio net, US boaters state they are waiting on their boats to head north. However, they are not allowed into Canada in the forseeable future. Even if they are heading to Alaska, local communities will not allow them to land and purchase fuel, tie up, or provision. With the states relaxing restrictions, there is a growing ground swell of comments pushing to keep the border closed to foreigners. Tourism is dead, as far as I can see. And if it takes 2-5 years to stumble back, what companies will remain operational?

      The entire industry seems suspect to me as it is discretionary. Assets? What happens, (world wide), to all the hotels, resorts, ships, planes, airports, etc etc?

      • VintageVNvet says:

        Ports not allowing passing ‘boat’ to obtain fuel, etc., might provide an opportunity for some enterprising captain to set up as a tanker/refueling at sea facility.
        Guy was doing that a couple decades ago in the Caribbean, buying fuel in SA, and selling it around the area from there. I heard he was doing well with it.
        Of course ya always gotta keep in mind the true definition of a boat, “A hole in the water into which you throw money.”

    • timbers says:

      How dare you impinge – even obliquely – the Holiness of the Credit “market” Gods!

      Rather, you should be asking for the first number in the line to volunteer yourself to be sacrificed for their Holiness’ sake.

      For without our Credit “market” Gods actubg in true form as they do even not as I type this, the Wall Street Casino would come crashing down and Nancy just might have to sell her gourmet refrigerators parked in her basement and all her ice cream would melt.

      And we can’t have that.

    • Wolf Richter says:


      The two SPVs for corporate debt are becoming operational in “early May,” so maybe we will start seeing some numbers on the next balance sheet (through Wed), though that may still be too early. The Fed put a lot of limits on what they can buy in the below-investment-grade arena. And for now, not much qualifies. I think they did this on purpose. The purpose was to unfreeze credit markets for junk debt, not to load up on junk debt.

      • Cas127 says:


        Only marginally on topic (junk bonds), but I thought you might be interested in this roundup of the credit outlook for the retail sector…

        Nice to have so much info in one place…too bad it just covers retail…

      • Kpl says:


        Am I right in assuming this is how the “unfreezing credit markets for junk debt” works.

        credit markets for junk debt frozen–>the Fed unfreezes it by jawboing —> junk debt unfrozen (on the basis of being able to unload to the Fed)–>the Fed does not load up as expected–>new investors realize they have been had–>credit markets for junk debt freezes–>rinse repeat

        Till all the new investors have been had this can continue is what it means! What happens by then – we will be long gone looks like the way our Atlas has performed.

  43. Wes says:

    Mr. Richter:
    The new creditors for Carnival are secured by a physical asset i.e. a new cruise ship being built, which Carnival is required to make periodic payments during the construction process.

    As for Boeing, are the “new” creditors being secured by physical assets? Did they gain senior secured status over existing Boeing bond holders? As you noted it looks like Boeing’s balance sheet lacks asset/ equity security for the amount of debt they are carrying as compared to Carnival’s creditors being secured by a new cruise ship as collateral.

    Maybe there’s some hidden government military asset under contract that could be collateral for the “new” creditors? We’ll just have to wait and see how it plays out and if new information becomes available. If not, Boeing may be a Zombie corporation for quite some time.

    • RD Blakeslee says:

      It may be that a cruise ship for collateral might be better exchanged for a large inventory of buggy whips or tulip bulbs.

  44. robert sills says:

    I’m wondering why we spent all the time/energy to cut costs, outsource our jobs and gut our companies if the FED was just going to be our backstop anyway. It looks like profit and revenue don’t matter now. Now, how do we get those jobs back?

  45. DeerInHeadlights says:

    The fed has just announced that it’s going to start buying corporate ETF’s. You weren’t making it up Wolf. They DO read stuff here! :) So the wall street party’s going to go on for a little while longer.

  46. Just Some Random Guy says:

    I keep telling everyone here, this is not going to have much if any long term impact.

    “New listings are at 60% from this time last year. And the backlog of buyers, Scott said, is serious. Even with the economy teetering on the brink of recession, and a record number of people applying for unemployment in Washington, most homes are still getting multiple offers and selling at or above listing price.”

    • Wolf Richter says:

      RE Propaganda that the RE industry got placed. Happens all the time. I ripped one of those apart publicly that was placed in the NY Times. A lot of times, the writer gets paid for it from the industry, not the paper.

      • VintageVNvet says:

        Certainly appears to me that about half of the local mackerel wrapper are pieces that have been written by some paid flack and placed in the paper for free Wolf.
        It also appears that it isn’t helping their bottom line much, as the paper continues to get smaller and smaller, (Similar to the SF Chronicle) and they just took another $8MM loan locally, so I don’t think they will be around much longer in even the reduced size.

      • Cas127 says:


        Civilians tend to underestimate just how easy it is to buy off a jaded journalist…and it tends to be worse in local “real estate” journalism…those special weekly “real estate” sections start out as 75% advertorial to begin with.

        Spend a few years in that culture and payoffs stop being seen as taboo, but rather as std operating procedure up and down the line.

    • VeryAmused says:

      “We believe the effect of the troubles in the subprime sector on the broader housing market will be limited and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system,” – The Bernanke

      Don’t worry random dude, everything is fine. There are no distortions or calamities and we are certainly at a permanently high plateau.

      Excuse me while I go excrete a rainbow.

  47. Michael Engel says:

    1) Warren Buffett first Qt losses are : 50B/ 137B = 37% of BRK cash & Treasuries reserves.
    2) CA have 180K homeless people, 1/3 of all US on public assistance, and one out of three CA is obese and have diabetes. For covid19 CA is a lucrative standing target.
    4) Few smaller states are open today.
    5) Red/Blue swing states will stay either closed or semi closed.
    6) Androgynous Red/ Blue states are politically beautiful. They can squeeze money and benefits from trump/Biden until Nov. If their governor yield too fast, become loose & submissive, she or he are lousy poker players.
    7) Large salt water states generate most of US GDP. Since they operate on low flame, US GDP isn’t likely to recover until the end of the year, or longer.
    8) Small business will get gov loans to pay their employees salaries and 25% of their overhead. This money will be written off. Its for free. Additional 300B will be available as LT 30Y loans. Their workers will not join the unemployment line and will not get unemployment benefits.
    9) They will get a check their bosses.
    10) Small business have incentive to shave the gov loans. They will cut
    a portion for themselves. 11) Landlords will hear : “its not my fault”. Small business owners might cut a deal with the landlord, or default. They will leave behind another vacant space, that have to be cleansed first, at landlord expense.
    10) If a small business expect a deep recession, he or she will cut NOW , before its too late. She/ he will put the gov money in his pocket, workers and the landlord money and run with a full gas tank. GoSueThem.

  48. kitten lopez says:

    Dan Romig, you succeeded where Unamused failed to get me sufficiently cynical about All This. yours was the “poetry” that got me to finally understand after a second-listening to Wolf’s piece, that The System will do what it does and now we’re entering not a growth economy with industrialization and mining resources– but now more of a down slope, Private Equity inspired Sausage Making Economy, using burning whatever’s at hand a la bill mckibbon’s bio fuel b.s. where they were looking to burn up anything in site to justify their existence.

    it’s All Wrong and noname probably could’ve predicted me throwing in the towel, for i had to read that post 6 times to realize… wait he’s trying to top me like he knows me as he thinks he’s outing me as a crackhead or something. nah..i’m just emotional. i’m HUMAN. i’m ALIVE. i feel things and this shit does not make me HAPPY. and you don’t wanna be deadened and drugged to be “grounded” to “buy into” this crap heartily, and happily take all this shit their about to do to you. or maybe you DO.

    what do i know?

    that’s the point. after listening to this and talking to James about how it’s not even about keeping corporations alive, but the BANKS… i don’t know nada.

    and Karen and Tom right here i will say i have to bow out of this online project because i’m in no position to even write on THIS site anymore, as i can barely face my own. and i’ve no TIME.

    so i want to apologize to all the young ones on here who might’ve listened to me sword fight my Exceptional American Optimism Idealism (Obliviousness) with Unamused, and thought this would be a cute, easy fight.

    and like me, Karen can point to Kubler/Ross diagrams to what we’ll be going through. but it took me a DECADE to come back to myself and i had James. i wanted not a living suicide like i’m living now (and can’t get out of… it’s actually kinda weird because i always feel subtly not here… dead… i’ve got a big ego but it’s …cheap tin foil now), i wanted a dead suicide.

    and i fear a lot of those are coming. it took me to see on 60 minutes the terror i’m not seeing on these faux smiling “i’m doing fine, saving people by being closed down…” folks around here.

    James said don’t believe ’em. /reminded me those are the ones you find hanging in their apartments later on.

    and i danced out on 24th/potrero yesterday and admitted to James ..yeah, that’s what i finally felt out there. there’s relief but a lot of ….

    i don’t even KNOW. just listening to Wolf’s story underlined how it’s worse than even i can imagine. thus i’m saying bye for now to youse guys as well as my DJs at KPOO i write cheering fan letters of gratitude to.

    i’m not dead.

    shit’s just gonna be bad. i wanted cheap rents and a renaissance. but i forget jonestown and heroine and VietNam and sadness and i make my own bad times too misty for my own good.

    so thanks you all for putting up with me. Wolf, thanks most of all for putting up with me. you’re right and you’re also wrong. like you shorting out too early last time, my timing is also often too early. that makes it like you never knew anything to begin with so that’s where i am now.

    i see much needed change coming, but right now the consciousness is not there.

    first you need to realize WHY this system? WHY this god? why were you fine with that god BEFORE and not now that it’s turned against YOU?

    this is that old saw…”they came for the Jews and i said nothing and they came for the Blacks i said nothing, the Catholics? i said nothing… then they came for ME and no one was left to speak up for me.”

    so we’ve gotta let this play and burn itself out.

    anything i say or add or help is just distraction from the agony that needs to be felt in order for it to transcend to real and lasting empathy and not just virtue signaling.

    so i’m signing out for now. / the gods be willing i’ll visit back if i’ve anything to report on the low.

    but Wolf’s got it covered: we’re fucked in ways we didn’t even KNOW we cold be penetrated. in sausage making fun they have contrived entirely new and perfectly functional holes just for laughs.

    i can’t even come up on that MIND SET, noname. so yeah. i get blue trying to “find a way” around the ways set up to bleed, dehumanize, use me. but Wolfstreet reporting on the reality of people and money sometimes gets to be like a cookbook on how to EAT people.

    keeps coming back to soylent green, biomass, and now we’re the SAUSAGE in a self-consuming sausage making economy. thanks for that, Dan Romig.

    may the gods be with each and every one of you as you figure out your own way of riding against with or whatever this is–



    • VeryAmused says:

      What just happened here?

      • kitten lopez says:

        i just realized via Wolf and Romig that They’re already way ahead of us and that my belief in any faux return of “we the people” is fallacy and cute. there will be no real return of manufacturing or investment in america and they cannot even help it because they are re-made in their own fucked up IMAGE. have you tried to read through these US tax books? i am and i resent how they are training me to think in order to be legit. it’s why i quit computers; i resented being molded into someone else’s logic or their WORLD.

        thus they’ve shifted from a making things economy because they’ve been completely trained to STRIP assets. according to Wolf’s story above, even the so-called elite corporate lackeys are helplessly being bled to serve a soulless god that even they know will destroy them and their own children in the end. / but they cannot help it or they don’t care or they’re beyond caring.

        so i am saying “bye” here and other places because as an artist, i cannot give too much of myself right now as i focus in and think and plot my own game for our own aging future in a brutally declining america. when i used to write novels, i’d say bye and disappear for 4 to 6 months at a time.

        the computer and commenting and following comments dilutes my energy and focus when i’m trying new scary things out in the Real World.

        so THAT’s what happened, VeryAmused. Petunia and Unamused have been trying to tell me REALITY for a long ass time and i’ve been loathe to change my “pioneer class” (as my father calls us) beliefs. (smile)

        that’s megalomaniacal fooooood for a LEO.

        i see the energy against men as further assault on the entrepreneurial spirit of audacity and dreaming and manifesting real things, and the taxes and (man i sound like a right wing conservative) but i’m seeing how everything is against the small business and this is killing small business and killing the SPIRIT. i’m seeing how what Bloomberg said about the people on the debate stage all being politicians and never starting a business…

        i’m not backing Bloomberg, hell to the no, but this doesn’t bode well for new business when we’re officially at a new age of huge P/E stripping scams as with Boeing. they’re setting up to strip the US of any assets it has left.

        i didn’t trust this coronavirus shut down response because america doesn’t care about its people. it didn’t before and it doesn’t NOW. so i’m not buying that they suddenly care about old white folks that aren’t forced to work at Amazon in their RVs.

        but mostly i don’t trust PEOPLE. i think that they’ve made everyone into unquestioning followers. look at everyone with their masks hissing at others who don’t virtue signal even while alone.

        no. we’re still among children.

        i lost my mind and nearly my life when i went into battle with baby kittens. never ever again. biggest waste of energy.

        so THAT’s just what happened. Wolfstreet is my oracle. my sign on what’s really going on under the blather. what’s really going ON.

        • tom says:

          A big thank you. Just an ole sh*t digger and a life time mom & pop business . Not a writer. But you certainly summed up things perfectly.

        • VeryAmused says:

          Oh, I see, reality just slapped the @#$% out of you.

          I feel your pain.

          Substances can help.

        • RD Blakeslee says:

          “but mostly i don’t trust PEOPLE. i think that they’ve made everyone into unquestioning followers. look at everyone with their masks hissing at others who don’t virtue signal even while alone.”

          Not everyone, kitten. Not you, not me and not a lot of other individuals. That’s the point kitten – it’s an individual thing with the non-followers.

        • kitten lopez says:

          Daddy, you’re right. it’s why i’m not AS blue. i’m still sad because it didn’t have to be this way, you know? all this for what? x

        • kitten lopez says:

          and Very Amused, unfortunately i’m way past the substances. i’m okay. i’m giving up megalomaniacal thinking. i’m actually good. i’m in SF with my best friend and (shrug)… i’m okay. but i want/need others to be okay.

    • noname says:

      Paging Kitten Lopez, Paging Kitten Lopez

      Was hoping you’d show up soon—you keep things real.

      Nope, not trying to ‘top’ you. I meant you needed to find some grounding to recognize the high so you can anticipate and prepare for the low.

      And yes, Kitten Lopez, I can read you like a book.

      I wasn’t suggesting substances. “I’m just emotional”—“I like me with all my moods”, Stevie Nicks.

      You got Petunia to return, why would you leave? I hope you stay—I need someone else who gets it.

      “I wanted cheap rents and a renaissance”—coincidentally, I had a vision of a neat housing concept myself, inspired by your spirit, but I too petered out before long. It sounded great in the bath tub, but I also am low on energy.

      I’m delighted you found and read my comment.

      • kitten lopez says:

        oh no, no name! don’t peter out. on the contrary! i will write more below…

  49. Bobber says:

    After the Fed’s latest injections, there is more debt in the system as the article points out, but there is also more assets in the system (i.e., more printed money).

    This is sustainable, so long as consumer price inflation does not get out of control, and we haven’t seen any inflation yet.

    The financial games will cease only when consumer price inflation begins to rise. At that point, the Fed will be in checkmate and the reckoning occurs. Interest rates will have to rise, debts will have to be reorganized, stocks will fall, and the economy will begin with a clean slate.

    • VeryAmused says:

      Consumer price inflation has been out of control for awhile. This out of control inflation (rent, food, energy, day care, education, etc.) has been papered over with increasing levels of unsustainable debt. The “more assets” have gone to a select few at the top and are fairly irrelevant.

      When the vast majority of a populations ability to service this debt diminishes significantly so goes the economy and probably the stock market. This process has begun and unless we start serious UBI or get back the majority of the jobs lost very quickly, at the same salaries, inflation does not have to move an inch for this whole thing to go boom.

  50. tommy runner says:

    the big red button that says ‘don’t push’ now has a thumbprint on it. out of self/national preservation, conceivably bailouts become bail ins as the hybrid system slips from the closet.
    (nice to hear the report)

  51. sunny129 says:

    There was a lot comments about Fed cannot/will not/ not allowed under the law, to buy Corporate Bond ETfs like LQD, HYG JNK etc.

    They ALL ARE plain WRONG!

    Responding indirectly to Jeff Gunlach’s late Friday tweet, in which the bond king observed something we had noted previously, namely that “the Fed has not actually bought any Corporate Bonds via the shell company set up to circumvent the restrictions of the Federal Reserve Act of 1913” adding that this “must be the most effective jawboning success in Fed history if that is true”[..]moments ago the The New York Fed announced on its website that it expects to begin purchasing eligible ETFs, most notably the LQD and JNK as part of its emergency lending programs in “early May.”

    I posted a link to ZH which got deleted!? It is a shame!

    I read ZH with a discern filter to accept or not, certain articles. I have a MBA background and able to filter out the fake and hyperbolic posting s there. It is a problem for only those without critical thinking ability!
    Been in the mkt since ’82!

    • Wolf Richter says:


      READ THIS — it explains, as I do every week when I cover the Fed’s balance sheet, that the Fed uses SPVs to buy anything it wants to, and it also points out exactly what it has and hasn’t bought:

      • sunny129 says:

        thanks for the response.

        I have posted more updates above, on this issue.

        Guess, wait for the next Thursday or the next one!

        • Wolf Richter says:

          The Fed says what it may buy; and then there is what the Fed actually buys. But they’re not necessarily the same. To find out what the Fed actually bought, rather than what it said it might buy, we have to wait till Thursday afternoon every week, which is when it releases its weekly balance sheet. It lists its loans to the various SPVs separately. So I track what it is actually doing with each SPV, though I still don’t know what exact bonds or ETFs it bought.

          I can’t wait for the TALF SPV to show up. That hasn’t yet happened either. But it’s likely to also become operational in May.

  52. sunny129 says:

    Knowledge has become much more commoditized because of greater transparency and more training. To get a real alpha edge, you have to go from knowledge to insight. To do that, you need imagination; you get paid for imagination. And to develop imagination, you need to have a broad context, and a broader understanding across the asset classes. You need to do deep analysis, deep thinking.
    -Sir Michael Hinze, Chairman, Senior CIO of CQS AM, March 2018 via Barron’s

    • RD Blakeslee says:

      … and to do that thinking, you have to be a silk purse, not a sow’s ear (old folk saying: “You can’t make a silk purse out of a sow’s ear”)

      (Here come what kitten calls the “virtue signalling hisses”)

  53. kitten lopez says:

    to NO NAME: no! don’t peter out. on the contrary: i beg you to also take more baths so you can stare at the walls and double down on it. /

    i am doing Giacometti to my ideas and dreams: whittling down to get at the barest essence of REALITY. so i realize if i’m going to be a part of re-localizing the economy with my artistic vision, i have to be relevant to the folks here in my town in front of my face. i have to feel what is relevant here …and now? i have a lot of power and energy but it’s very fragile and i used to joke with my former muse, Mark Lammers, that “i can only see PRETTY things” and that’s where i am now. / i have to scare myself and be willing to embarrass myself shamelessly to counteract the Death forces.

    you do the SAME since you’re already taking BATHS. i can’t even take showers anymore or go for the kind of life that doesn’t have room or time for BATHS and the magic that comes from such an indulgence.

    i am revising my dream of some collective american decision where americans learn something from this and stop treating the weakest poorest most struggling citizens like Nxxxxxs.

    but i’m doubling down on my investment in some kind of economic and artistic underground or parallel economy. no, i’m MORE megalamaniacal about me and what i can pull off here in my town. but i’m sad about the bigger direction.

    and seeing “pretty things” now is POTENTIAL, LIFE, and i must look away from Death and any vampires that exhaust or don’t feed me.

    i’m scared. so i need to focus in and make a vision, a set of plays… “if not this… then that” because when i pull the zip tie and GO, i need to know my perimeters or i could end up splat against the wall.


    • noname says:

      a sense of rebirth, keep us informed and updated.

      i will take your advice on my baths. they’ve been my escape, but lately just a chore.

      “i must look away from Death and any vampires that exhaust or don’t feed me.” I had this thought 5 years ago and I let it escape… thus, stuck I remain.

      i think you’re limiting yourself in SF… yet not sure i could see you elsewhere.

      • RD Blakeslee says:

        Truly independent thinkers can be oppressed by their environs, but there minds cannot be limited.

        My mind (and body and *chuckle* sacred honor) has chosen avoidance, as has Petunia’s (see below). Less oppression, that way.

        • noname says:

          “Truly independent thinkers can be oppressed by their environs, but there [sic] minds cannot be limited.”

          So you’re agreeing with me when I said “i think you’re limiting yourself in SF”?

          I live in the middle of a Korn field; I know oppression. That’s how I could tell even one of the great (or formerly great) cities, SF, was limiting for K.L.

          I recently was going to suggest a type of city K.L. should look into, but thought that would be a pretty bold move on my part. It appears others seem to feel the same way. K.L. might be surprised by the artsy communities of the country—yet she might be beyond artsy. Imagine her influence. But, I sense a move would be shocking to a fragile K.L.

        • noname says:

          I meant to say
          “I live in the middle of a Korn field, yet I know oppression.”

    • Petunia says:


      Here’s another reality you need to face, to add to the list of new found ones. You live in a technocratic town that doesn’t value what you do. Get the hell out of there! There’s a reason why Picasso lived in Paris. Paris allowed artists to thrive.

      I left NYC when I realized I was the wrong ethnicity, the wrong religion, the wrong sex, and eventually had the wrong political affiliation. I faced the fact they weren’t going to change and I let myself be pushed out by reality. I have never looked back.

      Here’s my back from the past outlook. People who are entrepreneurial, will not stop being who they are or doing what they do, they will go underground. The underground is a parallel system. It exists right along side of the “real” economy, but only some see it. It doesn’t have set hours, set locations, and it definitely doesn’t pay taxes. Our small business people have finally got the message loud and clear. They ain’t in the club, so don’t bother dressing up for it.

  54. Fat Chewer. says:

    I’m seeing “Trade on oil” ads here. An ad that says “Your capital is at risk” sets new standards in advertising honesty.

  55. Lisa2020 says:

    The CARES Package in the US is basically a defunding of the IRS, and Social Security Trust Fund for a minimum of the rest of 2020. However, based on past legislation such as the Patriot Act, I suggest that Congress has totally cooperated in Trump’s DEFUNDING and STRIPPING of any additional assets to the IRS and SOCIAL SECURITY TRUST FUND.

    “Deferral of employment tax deposits and payments through December 31, 2020
    The Coronavirus, Aid, Relief and Economic Security Act (CARES Act) allows employers to defer the deposit and payment of the employer’s share of Social Security taxes and self-employed individuals to defer payment of certain self-employment taxes. These FAQs address specific issues related to the deferral of deposit and payment of these employment taxes. These FAQs will be updated to address additional questions as they arise.”

    ALL EMPLOYERS (my emphasis) per item#3 on the IRS link:
    “may defer the deposit and payment of the employer’s share of Social Security tax. ”

    Sure, repayment is supposed to occur within a 2 year window. However, with many, even the biggest of the biggest tied up in courts for one reason or another, if not bankruptcy, will eventually PROBABLY NOT pay any further taxes into IRS, or SS.

    • Wisdom Seeker says:

      Don’t panic. I’m not a lawyer, but from what I’ve seen, the IRS still gets its due in a bankruptcy scenario. Usually with interest.

  56. kitten lopez says:

    since we’re far in After Hours Territory here, i want to continue/finish the conversation that Petunia and Noname started, because it’s related to this report of Wolf’s above, and HOW i use this information from Wolfstreet as a pipsqueak:

    to keep it from being even waaaay longer, i’m going Michael Engel here…

    1. while on tour back east in 2011, as i’m sewing my costumes, pops mentions he’s fixing sewing machines he finds at garage sales and drops them off at battered women’s shelters so they have economic options besides returning to abusive relationships for financial need. / i realize brilliant idea for ME, this “owning means of production” thing.

    2. my career goes down in horrid flames. i despair. i beg James to wheel me to a psych ward and leave me there to die a drooling Pink Floyd album death. only thing i like to do besides start fights or refuse to back down from one, is dance outside, go to the gym, take long baths, and design my own dance clothes for the gym.

    2a. i test my clothes by washing and drying at the laundromat. well, dryers DO in fact kill everything elastic like lycras: within months years of hand applique and cool dancing things simply deteriorated. so i get beat up by some gentrifying guy who is saving his irritated wife working at home. cops wave and chat with me. compliment me on zine i made of earlier cop who gave me a bogus ticket. i was so scared of him further fucking with me, i made a ton of zines and dropped ’em off at the police station with the hopes that i’d hit the mark and have him leave me alone. if you can mock someone WELL they may back off; they may also spend the rest of their lives hunting you down and stalking you like i got in NYC and he made me quit the biz altogether. not worth ANY of it.

    / so back to…

    2b. i still went to laundromat, but i rode home between cycles instead of dancing in front of my favorite mural in front of san francisco taqueria, and i started washing my handmade clothes in the bathtub after i was done, and i started taking better care of me and everything i touched.

    3. bath becomes place where i revise my dreams and how i am with folks. i decide who i’ll apologize to and whatever i decide in the tub is a good idea, i have to step up and do it in real life even though it often involves me embarrassing myself, like the other day when i decided to apologize to the techy girl next door for saying if her boyfriend’s gonna gentrify he oughta be nice and introduce himself when i deign to meet him. i know/ i’m such an asshole. / so i took a bath and realized i had to come clean and admit i was a bitch and i was sorry i went beyond anything i accused her man of doing. i yelled this out the window across our backyards so that everyone could hear me in the other open windows and in the park. they needed to see that i would not explode from apologizing and being a bitch and trying to be better next time. the girl smiled and appreciated it.

    4. two baths later and i had to come back and write this to you noname, even though i don’t want to, because you control-f’ing me told me i’d LONG since overstayed here as i’d become a monkey and that’s the last thing i want to do is DISTRACT you or any secret freaks from doing whatever you need to do, whatever ideas the bathtub gods tell you, you cannot afford to cancel genius thoughts out…

    5. how i use Wolfstreet is: i’m “opposite girl.” i have to see what is going on and how EXTREME so i know what they’re courting what magic what energy what they’re trying to INCENTIVIZE me to do… and i see how that feels in some testing ways. i play act at things. then i FEEL them how they feel in my body because my HEAD will rationalize all sorts of bullshit because i’m as cheesy and cheap and lazy as the next person.

    6. so they’re stripping the united states and they SAY they’re about business blah blah blah? you cannot tear down and build UP at the same time. they are two entirely different energies and inspire different feelings MOTIVATIONS and outcomes. so Death is now the official name of the U.S. game. Petunia said this when she said small business in america knows to not bother to dress up; they’re not invited.

    7. which means that i now have a whole new set of potential ALLIES as an artist. so i’m being Realistic that the new name of the game is not even Wall Street anymore; they’re just the fucking cute cheerleaders on the sidelines of the propping up and fucking of america til she’s dead then they’ll make money on the snuff film RIGHTS and go all the way til they’re making glue out of the bone marrow. this is what Unamused was on about and Petunia was rolling her eyes at me for not getting.

    8. so to BALANCE that energy that direction that INCENTIVE that reality (because now that there’ll be a new era of private equity stripping INDUSTRY, there’ll be a new over paid set of asshole superheroes to follow), i go tits out in the POSITIVE direction because people will respond to pure OPPOSITE of that. there’s no point in half-stepping this or it doesn’t work as a …tactic. and thing is, it goes beyond “tactic” when you do it for REAL, because you WILL I PROMISE YOU you will find the RIGHT and PROPER PEOPLE for wherever you need to go in going against the Death Undertow

    9. the bath is to think plot plan dream. you have to use the bath to wash off embarrassment and wanting to “belong.” when you go this way it’s way lonelier than any lockdown. you have to swagger before embarrassment and even COURT it now to go anywhere to get anything.

    10. but i decided to start my own field of casual men’s tailoring. i have never seen such a field. but i am an artist and arrogant and i don’t like even NEEDING money much less ASKING for it. so i decided i would do what NO ONE does anymore, which is custom fit to the body, do a set of patterns and make a basic custom “kit” for a tshirt/jeans casual man.

    i learned the custom fitting in itself was like art and adoration and making LOVE and ADORING and visualizing the BEST in a person and so i’ll turn my business idea into something you can’t just walk up and buy, but i’m word of mouth and if i’m not feelin’ you i don’t have to work on you.

    but i re-make you! it’s an experience the entire thing.

    it’s a mixture of art and prostitution. perfect. same game different look.

    11. but “scaling” an idea for me now means that i’m learning the highest end level of a skill that’ll work for me in a concentration camp or high couture. and that any business model that i set up for ME, i can start an economy of apprentices who can do lower end local mending work to learn business and the craft while developing their own AESTHETIC.

    12. i’ve used these last 9 years to get over losing everything i had and my dreams and i’m GLAD. i broke a tooth from the stress and the only relief i had was from dancing or taking many and long baths. / you have to dream and underpin your ideas with facts. everyone twists the facts to their story, like with the covid numbers, so you do it TOO.

    13. when you think you’ve gone insane and misinterpreted the numbers, ask if you’d do whatever you’re doing ANYWAY, and if so, you’re ahead. i can’t run after quick and easy ideas because i need something so far AHEAD of me, it’ll take me ideas to answer my initial questions and curiosities, IF AT ALL.

    14. men’s clothing why? because men are not cheap and they know quality even when they look like slobs. men like the small of their backs to be shown; they didn’t even know such things were possible or could be ASKED for. / this is why you need down time to stare and not know anything: you need to look into the WHY of everything. men feel neglected and when i merely touch them, gay or straight, they practically melt and get like little boys. so i have to make clothes that protect them and make them swagger again. women don’t need to swagger. .they are swaggering and don’t care about fine clothes anymore; women brag about how LITTLE they pay for things now. and do you see newscaster women? they consistently have breast darts that point inches above or below their apexes. Judy on PBS newshour isn’t smart or hard hitting except on Republicans who treat her with too much respect to fight back, she and Nancy Pelosi know how to DRESS. fucking pelosi had a matching pink mask for her pink pant suit… OF COURSE SHE DID!

    15. so if i can get a cool funky men’s custom thing going on that is local and special, then i will have shown the MOST EXTREME example of my “owning means of production” idea and how it’d look in 2020.

    15a. so then others can get in on a similar type of business and we do shows and events and maybe we have collaborative deals with commercial real estate folks because i’d like to teach entrepreneurship not employeeship to those who aren’t good employees, and maybe a bunch of people can buy their own buildings together or apart… i don’t KNOW. / i got this part of the idea from Jewish folks having to learn money biz because it’s portable.

    15b. i WANT competition and others to do well with this because right now no one at the gym even knows to ASK for such a thing and i’m mobbed everytime i fit people for practice at the gym. so when it opens and we get to touch again, i’ll do beta testing on gym customers

    15c. but i attract attention and start parties even though i like small gatherings and conversations, so i’m gonna use that ability to start a THING. an underground THING. just like my mentor did and i saw up front and close.

    15d. and like Petunia said, small struggling business people are gonna be more open to interesting things so maybe there’ll be tours of musicians artists artisans performers? i’d had this idea back when i was touring in 2011 as a publisher i wanted to create a tour CIRCUIT among small independent places that had a funky sensibility and the sense to do something together. but like Wolf shorting things too early last time, my timing is often waaaaaay off. but i’m rushing because shit did pop and my opening is NOW.

    16. and the online- ready to wear stuff i MAY deign to put online for sale, it’s all designed to BE SEEN. because in an era of heavy industrialization and cheapness, things are in only a few colors for men: navy, grey, black.

    seeing the MONOCULTURE, i have to go OPPOSITE. bright colors, hard work, details you can’t get in china or ANYWHERE BUT HERE.

    17. THAT’s why i say baths are good. going OPPOSITE to survive takes a strong stomach but you have to have that IMAGINATION and INSIGHT to go BEYOND their story, their narrative, where they are incentivizing you to go. / i come to wolfstreet to see why are they incentivizing me to.. be an OBEISANT EMPLOYEE???

    18. because then you will pay for your own tracking device and admit it’s for the “greater good of all” if you are tracked or surveilled while working at home, and you’ll use all your creativity to get around being surveilled instead of coming up with something NEW. you will feel like putting on a mask will save you and others while the U.S. of A. is propping up it’s own mother to have unspeakable things done to her in the name of making another dollar.

    19. so there, noname AND Petunia. i have shared with you my dreams that i’d do regardless of WHAT happened in the world. the only thing about the coronavirus lockdown i agree with, is that THIS NEEDED TO HAPPEN ANYHOW–that the economy would be ravaged based on #metoo like automatic firings. so it’s good for other reasons.

    20. so go all out, noname. there is nothing UNSEXIER than a person who spent their life on the sidelines sitting on their hands because they didn’t wanna dance, look bad, foolish, too happy or IN LOVE, or embarrass themselves for having human reactions. / i think overly enthusiastic bombastic puppy dog like men are gonna have to make at least an underground comeback if anything good’s gonna happen ever again. / that’s what I’M betting on. i don’t think i look bad even when i fuck up. i think i look hella cool next to a world of people with their heads bent over their magic phones waiting for something more interesting than themselves to happen.

    20a. and Petunia and Noname, San Francisco is a PERFECT challenge. why go somewhere i don’t know the vibe? i’ll just be another carpetbagger. i know what i can do HERE. and it’s hella harder. i LIKE that. and there’s more money for the look i wanna do on men. men here will pay for cashmere tshirts. (i’m not making cashmere tshirts. maybe merino wool eventually)


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