I'm absolutely not a big fan of collectivism, but sometimes, individualism just doesn't work. Sometimes, you have to step in and solve problems collectively. No, it won't be fair, yes it will be one-size-fits-all, no you can't please everyone. Suck it up, buttercup.
Whether you like it or not, we're in this current shit together, all of us.
Stop interest on all loans for 90 days. Defer principal on all loans by 90 days. In 90 days, payments start up as before (and just end 90 days later). Same thing bubbles for all contracts. Leases and rents are free for 90 days. Contracts switch from net 30 to net 120 terms. Etc.
You pause the cycle of debt.
It works for home mortgages, small businesses, airlines, and almost everyone else. And it avoids the need for a 2 trillion bailout / stimulus package. It allows much more targeted aid at a fraction of the cost.
It ain't rocket science.
Banks get payments 3 months later. They can also get 0% interest loans from the fed.
Why do they fail?
It feels very weird. Why does it matter whether businesses or banks receive the 0% interest loans? It's just a shell game. You didn't solve anything but yet you make your own solution sound better.
If you want an echo chamber, then by all means bump this down to -50 with no further explanation.
If we can pause the economy, preserving all employment contracts, lease agreements, loan agreements, etc, then we're in a much better position for restarting the economy once quarantines and lockdowns can be lifted.
But you would rather let everything burn down because existing contracts must be honoured as-is because won't somebody think of the poor bankers?
Most people need their monthly salary to survive. We already need several hundred billion dollars just to shore up unemployment insurance funds, which just pay for a fraction of people’s salary.
This has nothing to do with “the poor bankers”. Mostly it had to do with small businesses which make up the backbone of the American economy and which are collapsing at an extremely alarming rate.
The government can’t just press a big magical pause button on the DVR. The government can try to pickup some of the bills, or it can loan money out at good rates, or it can fire cash bazookas directly into people’s checking accounts, but even the Fed can’t just print enough money to single handedly keep the entire economy afloat while legally restricting people from doing business.
As long as everyone has stopped buying anything and everything discretionary, businesses will be failing and unemployment will skyrocket. Unemployment is a massive drag on GDP because consumer spending is the majority of consumption.
GDP of -25% is not just a “tighten the belt and we’re gonna deal with this” type of event. It’s not merely a question of “we have to do this to save lives” because shooting the economy in the gut actually costs lives too.
You put people out of work and into financial insolvency, and their general health is very negatively affected, and some of them will die. Look at the opioid crisis, for example.
Beyond that, you have discretionary spending, which can be cut.
And finally, you have essentials: food, medicine, and similar. That's a tiny, tiny fraction. That's what we need to bail out.
Yes, there will be long-term consequences of lost production, which will shrink our economy a little bit. But that's fundamentally different from debt defaults, bankruptcies, and evictions. Hitting a pause button avoids all of that.
It's too simple of an idea. What you are looking for is the time equivalent of printing money. Right now that's magical, it's a deus ex machina event. It's implausible. You have to innovate it, and until then it's a fantasy.
That's correct. We stop everything for 3 months to get rid of the virus.
Or almost everything.
> almost all home and commercial property sales stop
Have you tried buying or selling a house these days? In most parts of America, you can't -- the registries of deeds aren't open for business with coronavirus. This is already stopped.
> What you are looking for is the time equivalent of printing money
It is like a time-equivalent of printing money. By virtue of the time-limit, it doesn't have nearly the same inflationary pressure. We need to relieve a short-term financial crunch, and the stimulus, zero interest, etc. all do that, but when the crunch is over, that stuff explodes into inflation. This cleans itself nicely.
> It's too simple of an idea
What's wrong with simple ideas?
Or are we also expecting that grocery stores provide food on credit that they are not expected to collect on any time soon?
You don't actually need to immediately record the deed to buy/sell real estate. I believe this used to be the norm back when remote towns would batch up all their new deeds and send them to the county seat by horse.
Targeted aid is a code word for bailout.
But of course, the track record suggests the actual solution we get will look more like neo-feudalism.
So are you saying that we do not have to pay rent either?
No, that's the complete opposite of what I'm saying. Keep paying rent if you can pay rent.
But I understand that it's extremely difficult for some people to accept a solution that's unfair for some individuals, even though it's the solution with the least amount of total negatives. As collective solutions tend to be.
How in the hell is anyone going to know if retailers or people can actually afford to pay rent?
"OMG everyone is going to totally take advantage of this!"
Not everyone, but yes, plenty of people and business will.
"OMG that's unfair."
Yes, I acknowledged that from the start. The whole point of my argument is that this might still be preferable to the alternative, it might still be better than sticking to what's 100% fair, because collectively we might emerge stronger from this crisis if struggling businesses are afforded leniency, while the rest of us keep paying our bills on time.
But thank you for perfectly illustrating my sidenote on how this way of thinking is completely alien to many Americans.
We have come to a compromise that keeps both parties fed.
You've bought an asset which is not returning as expected for the time being, but has for the past n years. What do you expect now, a bailout?
We wanted a free market for housing and ended up with EUR 500k studios in Paris. Can't people wrap their minds around the fact that house prices also go down?
I bet if you and your tenants got together, you could acquire enough food for all of you.
You’d buy groceries with your emergency fund. As a self employed person it is your responsibility to do this for yourself.
> You’d buy groceries with your emergency fund. As a self employed person it is your responsibility to do this for yourself.
Its everyone's responsibility to have an emergency fund. Why is the answer that the landlord should rely on his/her fund instead of the tennant relying on their fund to pay rent?
On either side of the table, I'd hope for the fastest return to an ideal situation.
Luckily my company is doing fine, and I can work from home, so my income is still stable. Hopefully that makes it easier for the guy I'm paying rent to, to be easier on his other tenants that can't afford to pay.
It's one of those "I might need it myself someday" kinda things.
We really kick the lowest people into the dirt here and the place we do it the most is housing. It makes our economy extremely unstable, not to mention it's pretty unpleasant to know that you're only a couple mistakes away from being in a similar situation and to be around a bunch of people who feel the same way. It doesn't need to be like this, the US is mostly trees and all but the most dense places have lots of room for growth. We've prevented it and now it's time to pay for our mistakes.
Are we spilling ink for the sake of the owners of these retail spaces? Do you think they are going to be any better off if these retailers just stop paying rent, and go out of business, instead?
Instead of grousing, the landlords should be petitioning for their mortgage payments to be suspended for this time period.
It means it's easy to suggest a solution that costs you nothing personally.
If burning everything to the ground because pausing the economy is somehow unimaginable, then a lot more people will be unemployed, a lot more businesses will go bankrupt, and to restart the economy a couple of months from now, a lot of tax money will have been spent in unemployment benefits, food stamps, and various stimulus packages and bailouts. That's my tax money being spent, given that I'm keeping my job and my salary.
If a pause means it takes less tax money to get the economy up and running again, to get everyone back on their feet, back in jobs, back to paying rent, back to getting salaries, then that's a good thing for me as well, even though it's "unfair" and "collectivist" and "socialist".
Now, I'm not saying a pause is the best solution I'm not an economist, I have no idea. I'm saying it's a solution, and you shouldn't dismiss it on reflex just because it's a collectivist solution.