You can't run a national economy with half of your workers stuck at home and not producing - OR CAN YOU?

Here we are about a month into the recognized part of the COVID-19 pandemic in the United States, and we are looking at at least a month and a half of "social distancing", and ironically, the more successful we are at social distancing, the longer the economic disruptions will last before there is "herd immunity."  We are only about two weeks into the mandatory closure of schools and businesses, and people are justifiably worried that the lack of people working and generating income will cause an economic catastrophe.

The fundamental thing that most of us get intuitively is that with half of us not making money, and not spending, how do you keep the entire economy from falling down like a house of cards.  Can you run the United States economy with one hand tied behind its back?  I argue that yes, you can, and yes we have already done it. We did it for four years during World War II. 

In World War II, we had full employment, but half our economic output was going into the war effort. We were producing at maximum volume, and yet, as far as our domestic economy is concerned, half of that production did nothing to benefit the domestic economy.  What if we pretended for the sake of economic planning, that all those people staying home because of social distancing were simply producing weapons that we weren't using, or they were part of our expeditionary force, which happened to not be fighting? 

The economy survived, and to a certain degree thrived because people were bringing in wages.  Those wages were paid directly or indirectly by the government. The government paid for these wages by raising taxes, selling war bonds, and deficit spending.  We also had rationing of certain items and price controls. 

There was nothing inherently wrong in the 2 trillion dollar emergency spending package that Congress passed in its first attempt at addressing this crisis; but what has to be done is to plan an economy over the next year and a half that looks a lot like the economy we had in World War II, but the difference will be we won't actually produce weapons we don't need.  We will, however, produce on an emergency basis all of the things that we find we do need, and if the excess labor is available, we build stored value from that labor in the form of long term public works progress which turns our current expense into long-term assets. 

There are some signs that some countries get this concept. Canada is planning on paying its citizens a stipend of $2,000/month, for example.  We have to get over the mental hump that not only is this possible, that it is sustainable over the likely course of this pandemic.  I think there is not better way to get people over this hump than to point out that not only can it be done, we've done it before, right here in the United States. 

Nextgear, Automotive Finance Corporation and the Covid-19 Pandemic

Attorney Keith Hagan and I have been defending dealers from suits by Nextgear for over two years. Nextgear has been filing about 1,000 suits per year in Hamilton County, Indiana, and that's in good economic times.  Automotive Finance Corporation (AFC) has been filing quite a few less than Nextgear in Marion County, Indiana.

We have generally been successful in cutting deals with Nextgear when our clients have enough assets or cash flow to make a serious offer.  AFC has been a tougher nut, but we have completed deals with them too. 

With the COVID-19 shutdowns, we are living in a different world now, but I'm not sure Nextgear has gotten the Memo. Nextgear is continuing to file lawsuits as if everything is normal.  Everything is not normal.  Independent dealers are looking at 3 months or more with virtually no revenue. Even thoughs who have left the business and are trying to make a new life find that bringing home a living income will be tough. 

I predict that the vast majority of the dealers and guarantors that Nextgear sues over the next 6 months, will ultimately just file bankruptcy.  We will still take cases from dealers who want our services (and we lowered our fees), but I will urge them not to settle if it means taking food off their table. 

If Nextgear wants to keep its customer base, it should suspend floorplan fees and curtailment requirements immediately. Otherwise, instead of 1,000 dealers to sue next year, they will have at least 10,000, or half their customers. 

If there is any good news for the folks who are sued by Nextgear, if after they get a judgment against you you eventually pick yourself up and turn around your financial life and start making a good income, it is possible to negotiate with Nextgear to get a discount on the judgment owed. We can help you with this.  As part of the deal, we can negotiate issues relating to the KO book.

I will update this post later, but I wanted to get something down to let people know that if they feel trapped by their floorplan lender, in the wake of the corona virus crisis, they aren't alone, and the system will have to adapt to make it possible to move forward. 

Are you an Indiana owner of a “bricked” Flywheel bike?

News outlets reported hat Flywheel apparently settled a patent dispute with Peloton eyeing to swap Flywheel by “bricking” all the at-home Flywheel bikes. According to news reports, Peloton is offering to swap a Flywheel bike for a refurbished one.

Buyers of Flywheel bikes who bought them new need to know that their bikes had an implied warranty of non infringement. Arguably, this means the right to a refund and, if the bike was financed through the seller, the buyer may have the right to a refund or the right to set off payments if the bike was financed by the seller. If our are from outside Indiana, don’t call me, but if you are an Indiana resident who has this problem, feel free to contact me.

https://apple.news/A0EtiC6XyTtWL_bILe611uw

Skype Unauthorized Charges

I have repeatedly had problems with Skype imposing unauthorized charges on my credit card.  Once you sign up for anything with Skype it is crazily difficult to cancel and make it stick.  It is worse than the old America Online.  

I googled "Skype" plus "Unauthorized charges" and it came up with 121,000 hits.  Skype is now owned by Microsoft. Microsoft needs to crack down on this company that has much worse business practices.  

Note do NOT call or email me if you have a problem with Skype, but feel free to comment in the comments to this post. I am not in a position to file a class action against Skype.  Instead, file a complaint with the Federal Trade Commission.   http://www.ftc.gov