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- [00:00]
A
Foreign. Hello and welcome to the Banana Disruptions edition of Slate Money, your guide to the business and finance news of the week. I'm Felix Salmon of Axios. Emily Peck is here from HuffPost. Hello. Anna Shymansky is here from Breaking Views. Hello. We have been disrupted. Well, we tried to do our little disrupting thing by doing a Covid special 15 minute show on Wednesdays, but we've been disrupted by the ad market. So no more Covid shows on Wednesdays. We're going to talk a little bit about why that is in Slate. Plus we are going to talk about disruption to supply chains, not just in business bananas, but also much more importantly in toilet paper. That's coming up on this show. We are going to talk about the oil market and Trump tweets. But I think we are going to start with the massive stimulus bill and the small business money that is not going out to small businesses nearly as efficiently as people had hoped that it would. All of that coming up on Slate money. So let's start with what is for me the centerpiece of the $2 trillion stimulus package, which is the $350 billion that is going to small businesses, much if not most of which is going to wind up going straight to those small businesses in the form of loan forgiveness. You're a small business, you apply for a loan, you can get two and a half months of payroll and rent and utilities. And then as long as you keep those staff members on payroll, you can get that loan forgiven. So this is not a fed liquidity thing. This isn't a low interest loan thing. This is basically a grant dressed up as a loan. And it's super important for keeping millions of small businesses in business. And Emily, how's that going?
- [02:11]
B
Yeah, it's not going great, Felix. It's not going great. It was supposed to start Friday, but by Thursday, banks were going public with their complaints saying they haven't gotten enough guidance to know how to actually do this. They don't understand who qualifies, what kind of paperwork they have to do. I think banks are saying basically that they're not ready. And it seems like there's a lot of confusion. Meanwhile, there's a lot of pent up demand. Like banks are saying, you know, thousands of businesses are going to want loans. It's pretty crazy. So it's just another mess. The government, you know, tried to do something quickly and pass this multi trillion dollar stimulus, but getting this urgent relief out is proving to be, I don't want to say a disaster because it's still early and we know things take time to kind of smooth out, but it's kind of proving to be a mess so far.
- [03:05]
A
So one of my friends was like, I'm going to get on the website at 12:01am on Friday morning on like Thursday night and just get my application in super quickly. Because she assumed that it was all going to be done on a first come, first serve basis. We don't know that, but it looks like that might well be true in the end. All of the major banks, certainly JP Morgan Chase and Citibank, said they hadn't got the information they needed to be able to implement it. There seems to be a handful of community banks who were up and running on Friday morning, but no one really knows who they are. Bank of America has a place where you can apply for loans. But this is super interesting actually. If you are a small business with an account, a Bank of America, that's not enough. You, you need to have borrowed money from bank of America, so you need to have a small business loan from them or a credit card from them or some kind of line of credit or something like that. If you do all of your banking with bank of America, but your credit card is from American Express, say, then they won't give you the loan. And so then the question is, who do you go to for your loan? No one knows.
- [04:19]
C
And I think this is, it just kind of speaks to the problem of this entire program, which is that fundamentally the government wants to give out grants, but it can't say it's giving out grants. So it pretends it's giving out loans that are then going to through private banks. But private banks aren't in the business of giving out grants. Banks underwrite loans. And so you now have a situation where if you're a bank, you're like, well, what am I supposed to do? Am I supposed to just. I can't just give out money to anyone. And then if a bunch of these, these loans go bad and the people lay people off, then will I be forgiven? I don't know.
- [04:52]
A
Well, you will be if you're, if your underwriting was good. And this is the thing which the banks are really worried about. All of these loans are backed by the government. So if the loan defaults, if it's not forgiven and the small business goes into default, you should get your money back from treasury because there's a government guarantee. Maybe the problem is that the guarantee doesn't arrive for some unknown amount of time, possibly days, possibly weeks after you give out the Loan. So there's that interregnum, as it were. Like if, if you, if a business applies for a loan, you give them a loan, and then the government, for whatever reason, doesn't give you the guarantee, you're then on the hook for that loan. And if the loan defaults, you lose money on top of that. If you do get the guarantee, you still have that loan on your balance sheet. And you don't particularly want that loan on your balance sheet. And so you would love to be able to sell that loan to someone. But because the loan only has an interest rate of 1%, no one's going to pay you 100 cents on the dollar for that loan. And so you're going to lose money if you try and move that lo loan off your balance sheet.
- [06:03]
C
Yeah, exactly. And at the same time, we want banks to be giving forbearance to a lot of the, you know, the clients that they already have, that they've given loans to, but that those are then loans that are still on their balance sheet and then they're bringing these other loans onto their balance sheet. Banks have limited balance sheet. Especially if you're talking about smaller banks, that would probably be the best position to deal with small businesses because they would actually know the small businesses because they're in their communities. They're going to have a very hard time doing this. And I think that's why you also have a lot of smaller community banks who, who aren't taking part in this because the organization was just so mismanaged. No one knows what's going on. And I understand what the treasury wants to do in terms of getting this stuff out quickly, but this isn't a simple process, even if they want it to be.
- [06:46]
B
Can I ask you something I don't understand? Why wouldn't the government just directly hand out money to people to keep their payrolls going?
- [06:56]
A
So it's a good question, and there is a decent answer for that. Basically, if in order to apply for the loan, you fill out a very simple form, it's just one page really saying, this is how much I spend on payroll, this is how much I spend on rent, this is how much I spend on utilities, multiply all of that by two and a half months and this is how much I want in the loan. Your bank knows whether those numbers are basically true because you have that bank bank account and you use that bank account to make payroll and rent and utilities. The government doesn't know that. So if you were applying directly to the government for the money, the Government would have no way of being able to underwrite the loan at all, of being able to tell whether the numbers you are putting down for rent and payroll and utilities were remotely in the same ballpark as reality. Whereas your bank should be able to just take one look at that and go, yeah, yeah, that's right. And here's the money. In principle, they should be able to do that. In practice, it's a lot harder. And a lot of banks, as Anna says, are not really set up to be able to do this at scale. I, I know that in Hawaii, for just as one example, there are a lot of small businesses and there are no major banks in Hawaii. Like none of the major banks has a bank branch in Hawaii. And the Hawaiian lawmakers are seriously worried that literally no Hawaiian banks are going to be ready to disperse these loans before the $350 billion is used up by people on the mainland.
- [08:25]
B
Doesn't the government know rough information about businesses from tax filings?
- [08:30]
C
From taxes?
- [08:31]
B
Yeah, I still don't understand. I'm sorry.
- [08:35]
A
One of the, one of the problems is that from what I've been hearing, treasury and SBA are kind of bickering with each other on this, that they're not talking with unanimous voice. But just to be clear, treasury and SBA are two organizations who are deeply involved in trying to get this whole program out the door. If you wanted to implement what you were talking about, about the government knowing information about payrolls and rent and utilities and stuff, then you would need to include a third agency, which is the irs. And God help you if you try and get the IRS involved. That would just be a true nightmare.
- [09:13]
B
Right. It's, it's really embarrassing. I mean, do you, Sorry to keep asking open ended questions, but some of these European countries that are paying people to stay employed, how did they do it? Could we learn anything longer term from them?
- [09:29]
A
Yeah, the Denmark and New Zealand and places like that are doing it right. And I think what you see in those countries, especially in countries with prime ministers rather than presidents, you know, parliamentary systems, is that you have a much more centralized government apparatus that can do this kind of thing. In New Zealand, basically small businesses just woke up with a few thousand dollars in their bank account that wasn't there the previous day. They didn't even need to apply for it. But I have no, I just cannot imagine how that would even be possible in the United States.
- [10:03]
C
It's also a matter of principle, to a certain extent of why the US Government is doing it this way and not another way. I think if the US Government really wanted to, there probably is a much simpler way for them do it. But part of it is, for whatever reason, you know, the United States kind of just tends to want to work through the private system. And while I often think that is the right thing to do, I think in this instance it is in fact not the right thing to do. Because I do think it is just actually, like on the one hand, arguing with myself here, I'm like, on the one hand, I can understand working through the banks because they already have, you know, a lot of these procedures in place in terms of they make loans. But on the other hand, like, again, these aren't actually loans, so.
- [10:41]
A
Well, I mean, they are actually loans because you only get it forgiven if you manage to keep 90% of your stuff on payroll. And a lot of businesses are not going to be able to do that. But then the other thing is that just the banks are where the bank accounts are, right? If you want to pay money into a bank account, you need to go through the bank somehow. And that super deep sort of relationship between the government and individual businesses bank accounts is something which is much closer in a country like New Zealand than.
- [11:13]
C
It is in America, to a certain extent. But I honestly think it's less about logistics and it's more about how governments understand the relationship between the public and private sector.
- [11:22]
B
I agree. It seems crazy to me that they've structured this as a loan program when, as we've been saying for the past few weeks, like, you just need to give everybody money so that the economy kind of hangs on while we work through a pandemic. Like, why make it. Making it this complicated is so signature America.
- [11:42]
A
It's.
- [11:43]
B
It hurts me.
- [11:44]
C
It's so.
- [11:45]
A
I mean, I think. I think I can tell you what would happen if they did it the other way. If they just gave money to small businesses as a grant and the small businesses were sitting there and they were closed and they had no idea, you know, the small business owners had no idea how they were going to live and. Or even whether they were going to reopen. Then the financially and economically rational thing for the small business owner to do is to just take that money and put it into their personal bank account. Like, the whole point of this program is to keep employees on payroll. So unless you can give people a really, really strong incentive to use this money to. To keep people on payroll, even though those people aren't working right now, then it defeats the purpose and it just goes to the owners and it doesn't Go to the people that you want to keep on payroll so that when the country reopens, those businesses still have employees who can go straight back to work. That's the deep purpose of the bill. And if you just gave the small businesses money, it wouldn't achieve that purpose.
- [12:57]
B
Do you see this ultimately working out then, Felix?
- [13:00]
A
No. I mean, this is a complete disaster. I'm not saying that this is going to work out. I am saying that structuring it as a sort of contingent forgivable loan, I 100% understand why they implemented that structure. I do think that even with the most competent and technocratic administration in the world trying to get us a thing like this spun up in the space of one week would be an incredibly insanely difficult ask. And no one thinks that this is the most competent and technocratic administration in the world. So I am not at all surprised that the rollout is proving rocky. I do think that there's going to just be a huge amount of luck involved in who manages to get in there first to snaffle up that 350 billion. I do think a lot of people are going to wind up left, you know, out in the rain as it were, waiting to be able to apply. And I do think that ultimately because of that, there is going to be another tranche of money and that Congress is going to say, well, we, you, we ran through that 350 billion. Here's another 350 billion. I'm hopeful about that, but who knows?
- [14:14]
C
Yeah, and just to be clear, we also already have 10 million people who are applying for unemployment that clearly are not going to be kept on payrolls because they're already off of payrolls.
- [14:23]
A
Well, we don't know about that. Their money. Either way, they're not getting their unemployment checks.
- [14:31]
B
People are getting regular unemployment who've applied. But the unemployment on steroids that Congress put through in their third package, we're still waiting on the Labor Department to write guidance for how that works. So it's going to. And that's the unemployment payments that are an extra $600 a week for people who lost their jobs because of the pandemic that hasn't happened yet because they're still writing guidance for it. So it'll be like two, three weeks before any of those people see any money. And a lot of those people don't get normally get ui, like people like gig workers or independent contractors, part time workers. They're all waiting for their money also.
- [15:10]
A
So just to be clear, the way that this system is set up is that if a small business did lay off a bunch of employees or furlough a bunch of employees and those employees were allowed to file for unemployment claims, once the business gets this small business PPP loan, they can go back and rehire those employees and say, you're now back on payroll. And then they will move off of unemployment and onto payroll. That is the way it is designed to work. Whether it actually winds up working that way, we will have to see. But the only way that loan gets forgiven is if you bring those employees back onto payroll. It's okay to have fired them. You just need to be able to bring them back. So On Thursday at 10:32am, Donald Trump put out a tweet quote. Just spoke to my friend mbs. Of course, the Slate Money listeners know all about mbs. We had a whole episode about him. Just spoke to my friend MBS of Saudi Arabia, who spoke with President Putin of Russia. And I expect and hope that they will be cutting back approximately 10 million barrels and maybe substantially more, which if it happens, will be great for the oil and gas industry. That tweet I then retweeted saying, in terms of dollar value of assets affected, is this the most market moving tweet of all time? The markets went bazonkers on that tweet. I mean, just completely insane. Especially after Trump then followed up with a subsequent tweet saying, did I say 10 million? I meant maybe 15 million. Like just to put this in perspective, Saudi Arabia and Russia between them only produce about 10, 22 million barrels a day between them. And he's like, yeah, they're going to cut them by 15 million. No one really believed it or understood it. Very rapidly, both Saudi Arabia and Russia said, wait, what conversation between Putin and mbs? That wasn't a conversation between Putin and mbs. But the fact is that that tweet did end up causing the largest rise in oil prices in history. It moved trillions of dollars of the value of oil and also managed to send the stock market soaring. And so my thesis, and I think this is true, is that in terms of the dollar value of assets affected, this is the most market moving tweet in the history of all time. So let's start before we get onto the question of like tweets moving the market, which is a very kind of sexy question. Let's start with the basic question of like, what is going on with oil? Because how does one tweet send the oil market going completely bizonkers like this?
- [17:55]
B
It's my very rudimentary understanding that everyone is at home. No one's going anywhere, therefore, no one needs any of the oil. But for some reason, Saudi Arabia and Russia have decided to make more oil, to do more oiling.
- [18:12]
A
They're doing more oiling. Yeah. So we talked about this a little bit in the MBS episode, right?
- [18:18]
B
And then that's Trump at first thought that was good. As he tweeted a few weeks ago, gas prices are low. And he tried to get everyone excited about that, which was absurd because, like I said, no one's going anywhere. And now Trump has decided to make up other stuff because I think Pompeo, his Secretary of State, his administration has been trying to work on Saudi Arabia and Russia and try and get them to stop doing more oil and do less oil. And Saudi Arabia wants to do less oil because there have boats going around the world now filled with oil that no one wants, is my very, very crude understanding of the situation.
- [18:54]
A
Oh, I like what you did there.
- [18:56]
B
But Trump also seems to be reverting to his old playbook where he and his dad used to, like, make up stuff about various companies. They were going to buy or take over deals that were about to happen, and then they'd, like, play the stock market to make some money. It kind of feels like he. That's what he did yesterday with that tweet. I don't know. Maybe that's conspiracy theory in my head. So, yeah, just making stuff up.
- [19:18]
C
I don't think this was a, oh, I'm going to, like, have insider trading on the stock market. I think that's unlikely. But I think that it is interesting that he is meeting with people from the oil industry on Friday. You know, so it is interesting in.
- [19:30]
A
Person, by the way.
- [19:31]
C
Yeah, exactly, exactly.
- [19:33]
A
They're not bothering with the zoom call, because if something doesn't happen on television, then in this White House, it doesn't happen. So he needs to get them all to turn up to the White House in person. And, yeah, you're right that the main thing he seems to be worried about now is the oil and gas industry in the United States, where that has been wiped out basically by the low oil price. It's just not economic to produce American oil at these prices.
- [19:58]
C
Although, to be clear, like, this is actually part of the issue that Trump is going to continue to have with both Russia and Saudi Arabia is that I think there's going to be the understanding that's going to be like, okay, if we're going to cut production, what about your shale guys? But that's a lot harder A, because the US Government has less control over shale. And also, yes, right now it essentially is economically like they're losing money by pumping oil. However, if I'm a shale producer and I have a tremendous amount of debt that I need to service, I need liquidity, which means I will keep pumping so I can get cash so I can pay that debt, even if I'm actually losing money long term.
- [20:29]
A
It's not even those bails of oil. There's actually an even more fundamental reason why American producers are not cutting production, which is that it is very expensive to cap a well. It costs a lot of money to stop producing oil. And you damage the well when you do that. And the amount of oil that you wind up getting out of the well goes down significantly if you stop production. It's not like a water well where you can just stop taking water out of the well and then like the water is sitting there in the ground and you can just wait for the price of oil to go back up and then start taking it out of the ground again. It doesn't work like that. Once a well is pumping, you really want to keep that well pumping no matter what, because stopping it from pumping is extremely expensive. So that's one of the reasons why global oil production is not going down as a result of the slump in demand. And the slump in demand is massive. It's like on the order of 20 million barrels a day. Here's a really cool way of thinking about it that I hadn't really thought about. The way that we are fighting the virus is by stopping moving. We are all just staying at home. And the number one job of oil is to move people. You know, you put it in your car, you put it in your planes, you put it in your trains, and it moves people around. So the first thing that gets hit when the global economy stops moving is oil. Because that is the job of oil, is to move people. That's why demand for oil has plunged so much.
- [22:02]
B
Yeah, I mean, I haven't bought gas in over a month, I don't think. I don't know what gas prices are. What are they, Anna?
- [22:10]
C
How much of price of a gallon? I know how much crude is. I don't. I don't drive. I don't even have a license.
- [22:19]
B
Like, even if I wanted to get a bargain on gas, I don't have any room in my car to put the gas in. Like, so.
- [22:24]
A
But let's talk about, but let's talk about the, the conspiracy theory here, because a few months ago, Bill Cohen of antifair had this whole elaborate conspiracy theory that he, that Trump's friends were front running his tweets and the futures market and were making millions of dollars by knowing what he was about to tweet. And everyone kind of looked at it and laughed. This was, you know, as I say, the biggest market moving tweet of all time. And it really does look, if you look at the oil price chart, that this price of oil did start moving about five minutes before the tweet was sent. Now, we are living in very volatile times and the price of oil moves for any or no reason all the time. So the fact that it was moving five minutes before the tweet was sent is not proof of anything. But if you knew that tweet was coming, oh my God, how much money could you have made?
- [23:22]
B
So what are you saying, Felix? You're trying to say both things at the same time? Isn't he, Anna? Isn't he just saying both?
- [23:27]
C
I think so. I think so.
- [23:31]
A
So, I mean, it's hard for me. Like I, I, you know, like we are in the middle of an SEC investigation into senators who are inside trading their stocks, and rules against inside trading stocks are much stricter than rules against inside trading oil. It's, it's very hard to get prosecuted for inside trading oil. I don't think it's ever been done, to be honest. So, I mean, yeah, OPEC is a cartel and it just sits there in the world and cartels are meant to be illegal, but that doesn't stop OPEC from existing.
- [24:01]
C
Yeah, I think it would be very hard for, honestly, just because of the size of this market we're talking about. I just think it would be very hard for the conspiracy theory here to actually work. I'm not saying it's impossible, but it's close.
- [24:13]
A
Why would, I mean, I mean, it would be very easy, right, if you knew that the tweet was coming, it would be the easiest thing in the world to go long oil futures and make a ton of money. That wouldn't like, logistically speaking, it's easy. The only hard thing is knowing that the tweet is coming.
- [24:29]
C
Right, but you're saying there was enough volume that was actually moving the price before.
- [24:35]
A
There's always huge amounts.
- [24:36]
C
It's one thing if you. Of course. No, but I'm saying that I understand that if once, obviously once the tweet happens, if you bought beforehand, you're going to do exceptionally well because clearly you bought at a price. It's now at a much higher Price. That makes sense. But I guess I'm just saying if you're saying that people were buying beforehand and they were buying with enough volume to significantly or to. To move the price in advance of this, I guess. Who's doing that, Emily?
- [25:08]
A
Any. Any idea? I mean, like, it wouldn't even need to be Americans. Right? Like, it could have been just mbs, right?
- [25:16]
C
It could have been if.
- [25:17]
A
Because. Because even if MBS didn't talk to Putin and it looks like MBS didn't talk to Putin, it does seem that MBS did talk to Trump. MBS talks to Trump, makes a bunch of noises on that phone call about cutting production. There's no rules against MBS playing the futures market in oil. And then if he's like, if he's like, I'm just going to buy a whole bunch of oil futures in the hope and expectation that Trump is going to come out and do a crazy tweet, like, that's actually. I don't even think that's illegal. Right.
- [25:49]
B
That's actually smart. To me, it would.
- [25:51]
C
But it also would seem unlikely that he would know exactly five minutes or so before Trump was going to send out his tweet that this again, it's like, it's not impossible. I just feel like it's probably unlikely. And I think this is just Trump being stupid and the market's moving.
- [26:08]
B
I think it is Trump trying to move the markets, though. Like, is that.
- [26:12]
C
Yeah, yeah, I agree with you on that. Yeah, he know that. I'll agree with you on he front runs, which is. Which is bizarre when you think about it.
- [26:22]
A
Yeah, that was. This all happened on Thursday after 6.6 million people hit the unemployment rolls in one week. And that sent the stock market maybe down a little bit because, I mean, apparently that was priced in. But then the minute that the Trump tweet comes out being the stock market goes up. Yay. Well done, Mr. Trump. You've saved us.
- [26:41]
B
It does seem like that's what he. That's all he's good for is like trying to move the stock market with his tweets. He's like, oh, this will help. This will help the economy. I know what to do. I won't fix the small business thing or anything like that, but I'll do a tweet.
- [26:55]
C
Yeah.
- [26:56]
B
Yay me.
- [26:56]
C
2020. This is where we are.
- [27:00]
A
Emily, how's your toilet paper situation in Westchester?
- [27:04]
B
We are sitting pretty here in Westchester, Felix. We subscribe to toilet paper on Amazon.
- [27:10]
A
You subs, you have a toilet paper subscription.
- [27:13]
B
Yeah.
- [27:14]
A
Tell me what is more expensive, a toilet paper subscription or a New York Times subscription? And can you use the New York Times instead of toilet paper?
- [27:21]
B
No, we can't because we're on septic and I don't know the answer because it's on subscription and no one's looked at how much we're spending on toilet paper in a while. I'm very lucky person, I suppose. So we haven't struggled in the new reality of toilet paper shortages, but I assume you're asking me because you read the brilliant Will Oremus piece on toilet paper.
- [27:41]
A
Felix, we miss Will Oremus at Slate. He's now disappeared off to medium somewhere and he has come up with this theory after we have all been told for weeks that there is no toilet paper shortage and there's just a whole bunch of irrational hoarding and that's why the supermarket shelves are empty of toilet paper. He has now come out with this really quite compelling theory that there is a toilet paper shortage and there's no real way of fixing the toilet paper shortage. And Emily, what are we going to do?
- [28:14]
B
His theory is so brilliant, and it is. It just seems so correct that I can't believe it took this long for someone to figure this out. We're all at home so much more than we used to be and we're using the bathroom here in our home so much more. So obviously we all need more toilet paper. No one's in the office using the office toilet paper and Starbucks using the Starbucks. Starbucks toilet paper. So according to Will, Americans at home are using like 40 more toilet paper. So a duh, we're all out of toilet paper. Well, except me because I said, wait.
- [28:44]
C
But the, and, but then the businesses aren't buying it. So if you're talking about the, the global amount of toilet paper that is being used by the population, if I'm. Regardless of where I'm going to the bathroom, I'm using the same amount of toilet paper.
- [29:00]
A
Anna, thank you so much for asking that question because that is the best question you could possibly have asked because there is a very, very good reason why that doesn't work that way. Emily, what is the good reason?
- [29:15]
B
Well, it's two words you've heard before. Supply chain. There are two supply chains of toilet paper in the world. There's the commercial toilet paper supply chain and the residential toilet paper supply chain. And there are two different streams. Sorry. Of toilet paper. So, like, if the commercial. No one's using the commercial toilet paper, it's not like I can just go and buy it. And have it in my home. It's like that just builds up separately from the home use toilet paper, which is all different suppliers, different buyers, different producers. And you can't cross the streams. Don't cross, Anna. So you can have a shortage of the residential kind, but not the commercial.
- [29:55]
A
So, for instance, Anna, it's been a little while since I worked at Thomson Reuters, but as I recall, the bathrooms at Thompson Reuters are like many corporate bathrooms. And that the toilet paper dispensers are very large and they have these like, sort of like 4 foot wide or 3 foot wide big toilet paper dispenser things. And you get these massive rolls of toilet paper which are kind of crappy toilet paper. And that's what you're stuck with in the bathrooms. That's not what people buy at home. You know, it's a whole different product.
- [30:28]
C
No. So this, this makes total sense. I'm wondering though, if I say this because in my particular neighborhood, there is so much toilet paper at the grocery stores.
- [30:37]
A
All right? Everyone moved to Brooklyn. That's where the Brooklyn. That's where the toilet paper.
- [30:41]
C
I'm not telling you which grocery stores I'm talking about, but when I've been there in the last week, I'm like, they literally have mountains of toilet paper stacked in different places. However, it is very low quality toilet paper. We're not talking about nice stuff here. So I'm like wondering if you're getting shipments moved from. I don't know, but I'm just saying that I get what you're saying, but that's also not what I'm seeing on the ground.
- [31:07]
A
I do think that there is a bigger story here, though, because similar things have been said about food, that there are two very different supply chains. There's the individual supply chain into supermarkets where for food that people cook at home, and then there's the institutional supply chain for sending food to restaurants and fast food joints and all the rest of it. And you, again, you can't redirect all of those burgers from McDonald's into Westchester Homes. And this is actually causing food shortages. So just my local butcher was set up as a kind of an equivalent of a restaurant, basically with his fish supplier. And the fish supplier just stopped supplying fish. They're like, well, the way we, our business works is by supplying restaurants. And now all of our restaurants have closed, and so we're closing too. And so I couldn't even buy fish from my butcher because they weren't getting fish because their fish was part of the restaurant supply. Chain and not part of the individual supply chain. And I think this thing of like two parallel, very different supply chains and making it very different across those streams, it doesn't just apply to toilet paper.
- [32:26]
C
Oh, no, I think. And I think you're totally right about that. And I will also say I'm going to continue to use anecdotes here because same at my grocery stores, though, the price of groceries has increased so much to the point of like, I didn't even. Like, I didn't. I normally don't look so much at, like, the prices on the things because I'm like, whatever they cost, what they cost, it was literally like twice as much. So I think that. Yes, I mean, I do think that clearly there. And fair enough, look the grocery store, like, they should play their workers more with. I'm sure that's not where the money's going, but in theory it should. But yeah, I do think it makes.
- [33:00]
A
Is that for, like, produce or what?
- [33:04]
C
Well, to be fair, I should also say, like, what my groceries are, which is also, like, the price of oat milk has really increased and the price of almond milk. Try to find almond milk, you can't. But even, like, things like onions, like, just like. And like, try to get flour or yeast, you know, because apparently everybody's baking their own bread. But so, yeah, I mean, I do definitely think we are seeing that it's not that the products themselves don't exist in sufficient quantities. It's that the supply chains we have set up, the means by which they get to people and businesses are. That is the issue.
- [33:38]
B
Yeah. And it is there. I mean, it's. He convinced me that there is a legitimate toilet paper shortage because everyone is at home and needs more toilet paper. And there isn't enough because these companies are operating on super thin margins and they have everything calibrated just so. And meanwhile, the whole economy has been totally thrown off balance and all those calibrations are totally out of whack now. And all these. He had a good example about bananas also. Like, there's the kind of bananas that we buy and then the kind of bananas like restaurants and cafeterias buy. And there's like banana disruptions also. I mean, everything has been totally thrown out of whack.
- [34:18]
A
Let's have a numbers round. Do you have a number, Anna?
- [34:21]
C
I do. My number is roughly 12% because. So Carnival Cruise came to market with a debt issuance and it was originally being priced at around 12%. And I mean, on the one hand you say Carnival Cruise. Why would anybody be giving them, you know, in its like money at this point at any yield. But like technically they're still an investment grade company, which is questionable, but they technically are. And if you're thinking you could potentially get a 12% yield for an investment grade company, it's kind of shocking.
- [34:52]
A
Can I jump in and do cruise number myself? I was going to do a different number, but since you're doing a cruise number, I'm going to do a cruise number two. 81%, which is the UK cruise company Saga says that 81% of its capacity in cruises from September onwards has already been filled. I have this theory which we have talked about on this show before, that the post coronavirus life is going to look very different from the pre coronavirus life. And people are going to be much more reluctant to travel, to be in close quarters with each other, to go to Broadway shows, to get on planes and certainly to get on cruise ships. But apparently everyone who, all of the olds who are totally at risk of coronavirus, whose cruises were cancelled by Saga just turned around and rebooked them for later in the fall. So maybe I'm just 100% wrong about this.
- [35:52]
B
I actually think you are wrong.
- [35:54]
C
Well, but I just wonder how much of it is just that at the time when they were canceling, it was far easier to just rebook. And I'm sure companies were like, oh well, you'll get a better deal if you just rebook than if we totally refund you. So you had a lot of people at the time who just said, okay, yeah, I'll just rebook. But come six months from now or a year from now, are people actually going to go on those cruises that they just simply rebooked?
- [36:15]
B
I think if ever these restrictions on leaving our house are lifted, people are gonna be so excited and they're. And everyone's gonna go nuts. And I don't think people are gonna be hesitant to hang out together or anything. I think people are gonna be so starved for interaction that things are gonna be wild.
- [36:33]
C
That's what I, yeah, I kind of, I, I go back and forth, but I think that there is a strong argument for that. I just feel like it's hard to say. I really think it just depends on how long this lasts. Cause I think people have very short memories.
- [36:43]
A
I think, I disagree on that. I think that so many people have now had like deeply ingrained paranoia about touching anything that anyone else has touched or being near anyone and trying to stay six feet away from people that the idea that, you know, Donald Trump can give a press conference one day and say, hey, you're allowed out of your houses again. That that is in and of itself going to cause people to go out and start hugging each other and sharing bodily fluids. Like, I don't see it happening.
- [37:13]
B
Oh, when you put it like that, I just meant, like, go out to eat and like, to the movies or something.
- [37:18]
C
Well, because I also feel like it's going on forever. But because, like, just think about how many people are not following the rules as they are supposed to in terms of going out and going. Even if they going to parks or going to restaurants before the closet.
- [37:32]
A
I think it's like those, like, occasional. Again, like those occasional anecdotes of people are really glomming onto pictures of people who are breaking the social distancing rules precisely because, like, feeling judgmental about those people is part of how we're getting through the crisis. And those pictures are going viral. I don't think it's happening that much. And I think the much, much more common extreme is the opposite extreme of people, like, really retreating and being super paranoid. But, Emily, what's your number?
- [38:06]
B
Oh, right, we're in the numbers round. I forgot. My number is 9 million. That is the number of healthcare workers that are being left out of the paid sick leave provisions in the second stimulus bill, which I feel like I've been updating you guys on throughout this thing has become an incredible disappointment. So the Department of Labor just put out guidelines for the, for how the sick leave will work. And there was like an exemption in the law that said, you know, emergency responders and healthcare providers might be exempted from this. They won't be allowed to have paid sick leave or paid family leave if they have a kid home from school that they have to watch. So, okay, fine. But then the Labor Department just went wild in defining what a healthcare worker is to the point where it's anyone who works any place that is even remotely healthcare. Ish. So like a janitor in a hospital can't get sick leave, or like a pharmacy clerk can't get sick leave, or someone in a medical school can't get. No one can get this sick leave that they made a big deal about putting about enacting. 75% of workers don't get the sick leave in the stupid stimulus bill. Like, I'm actually really upset about this. It's particularly galling because who is even working outside their homes right now besides these healthcare workers who are on the front lines of an epidemic who are most likely to get sick. And then the government's supposed to be helping people, people stay healthy and safe and they carve out this big exemption for them. I find it very upsetting. I wrote a story about it. So if anyone.
- [39:43]
A
So I mean, my question for you is, is, is this a cock up or a conspiracy? Like, are they trying to do this to save money? Or like, what would be the sort of malign intent behind this? Or is it just a complete up?
- [39:59]
B
I think it's a conspiracy is a very strong word. But the White House, Republicans and business groups really made a big stink about not liking putting any kind of mandate on businesses, especially now when they're struggling. Now that makes sense. So the government could have stepped in and said, okay, we'll pay for all this, don't worry about it. It's a mandate only in that you have to give it, but we'll give you money for it, don't even worry. And they did give them tax credits. I think there's just a strong dislike for this kind of policy coming from business and coming from Republicans and that's what put the kibosh on it. And they held their nose and voted for it and then they just undercut it however they could. So, yeah, I think on the scale of cock up to conspiracy, we're leaning conspiracy here.
- [40:44]
C
Yeah.
- [40:45]
A
On which note, I think we will wrap up Slate Money for this week. We're going to have a sleepless segment about the ad market, which is a little wonky, part of the media market, which is worth talking about. But for everyone else, thanks very much for listening to Slate Money. Thanks very much to Jessamy and Molly for producing Keep the Emails Coming. We are, as ever, slatemoneylate.com and we will talk to you next week on Slate Money.