President Trump: The NEW one and only politics thread

Plus bailouts and government checks for everyone. Now go pass it, Congress, so we can get the checks out this week.

 

I will be a broken record. ... But time for us to think about. ... Boeing.

Trump just now (paraphrasing). ... We have to help Boeing. Great American company. It's the greatest company in the world. ... Who could have seen this coming and now Boeing is getting hit in 15 different ways.

It's true that Boeing's business is a dumpster fire because of the 737 Max fiasco and now the coronavirus. It is burning through what little cash it had left to try to survive and it tapped out its revolving line of credit and there is no more credit available to it, in this environment.

But how did Boeing, a company which was selling a boat load of airplanes very profitably before the Max problem hit its business, get into a situation where it was so cash poor and unable to survive any kind of hit?

$43.4 billion worth of stock buybacks between 2013 and 2019 on the back of the zero interest rates everyone thought was such a brilliant idea. If it hadn't been for the Max, they would have kept buying back stock beyond that. Everyone was drunk on Boeing stock for 6, 7 years. They were returning cash to shareholders, inflating the stock price, and what could possibly go wrong?

But now, I have the president of the United States telling me that I need to pony up to bail out that company -- we need to socialize that behavior -- because it's so fricking vital to the country. It's a company that could have been sitting on tens of billions of dollars right now to weather bad fortune. It made the choice not to operate that way. If we want free markets, it requires FAILURE. Failure is the incentive for companies to NOT behave recklessly. When the immediate response to everything is "bailouts" (and we can't bailout everything and monetize the debt we are collectively weighing ourselves down with; it's a death formula), you are giving the exact opposite incentive. Financially engineer a higher stock price at the expense of your business, and no worries, you'll get bailed out if anything goes wrong.