If all payments are stopped for three months, then it’s simply hitting the “Pause” button on the whole money system. There are no economic data for that quarter. GDP is meaningless, unemployment is meaningless. That quarter is a big fat missing data point.
Three months later everyone comes out of their houses and goes back to work. Paychecks resume, rents resume, landlords resume paying their mortgages, and no one ever catches up on any payments from the missing period. Just pretend we skipped three months ahead via a sci-fi time knot.
The best solution would be for the government to pay the bottom and have the payments "trickle up".
Make the distinction between financial capital and money. Money as medium of exchange continues to be used. Money as financial capital assets is paused for the duration of the crisis.
What’s the function of capital? To allocate labor to the highest-value uses. We can’t be bothered with that during a pandemic.
Capital allocation is important, and it is long-term. The pandemic is about short-term physical survival. Providing food water medicine electricity is straightforward enough that it can be done through command, and through the sheer momentum of our existing systems.
We need to drop back to a simpler version of our physical economy for awhile, where people sit in their houses and only use basic necessities. Once it’s all clear we can come out and resume the previous activities; but how exactly do we effectively pause the non-essential activities?
This article is pointing out, rightly, that landlords and rents are non-essential. So pause them along with the rest of the non-essential activities.
From article: “[businesses have gone] from regular trading to zero revenue in a week. My own sector, events, is literally illegal. Bars, restaurants and lots of others are in the same position or soon will be.”, “Some of our landlords have agreed to push a percentage of our rent back to later in the year, but it still has to be paid back. So we’ll pay double rent as we emerge into what will be a catastrophic recession.”
I agree the government paying his staff helps the staff and helps fix his other issue “My own business is spending every last cent of our cash to keep our 60-odd staff employed in some way, even though we’re not allowed to do what we do.”
Surprise, it's the landlords! And on taxpayers' dime, at that.
Paying the bottom is what needs to be done. But we also need to halt the flow of money around real estate.
As a dev, this terrifies me. I can't imagine how many bugs this might cause in financial software.
Money can freeze in place, but people still have needs which must be met in a timely manner and by freezing all monetary transactions you've thrown away the best means we have to organize the effort of satisfying those needs.
At a high level, credit and money are simply means to align incentives across a wide variety of actors and ensure cooperation. While theoretically it's not impossible to reorganize the economy as not to need it, it would effectively require a complete command economy and I don't think anyone would be able to do this effectively in the short term without completely destroying any semblance of the market economy in the long run.
The obvious play here is just to pay individuals (not businesses) enough money and access to healthcare in the medium term and to let businesses (that aren't obviously strategic to national interests, those can be considered separately) do what they need to do. There are already legal mechanisms in place for businesses to avoid paying creditors and landlords. This is a strange plea for a handout. If the market changed as to make their rent abnormally low relative to their profits, they wouldn't be paying extra rent.
For residential tenants, rent forgiveness at least makes some sense, though I think direct payments to individuals are fairer and avoid cascading effects. For businesses that during the good times keep all surpluses for themselves as profits, to argue for rent forgiveness during the hard times is comical.
Both Trump and KC properties ( his son in law) are landlords. There is a documentary on Netflix about it ( fyi: it's really bad)
And I'm pretty sure they are not "in the game" to make it better for the average American.
Edit: if downvote, please explain why. I'm 100% sure his self interest isn't seperate of his function. Additionally, the family involvement in the white House and Trump not seperating his business as previous presidents did, IS a perfect example to proof my point.
Nothing indicates the opposite.
This only works if the government mandates full moratorium on both rents and mortgages. That also means that no interest on mortgage is accrued during this time.
Otherwise, landlords are screwed in the same way as tenants - they can't pay mortgage and the property may turn into foreclosure. More so, frequently landlords are screwed even more - because it may be hard to get rid of non-paying tenant especially during this time. So tenant may get sort of temporary free pass by just not paying rent.
Bottom line - Landlords are not the right target of this rage. Appeal to Governments, not to Landlords.
If everyone says “not us, somebody else!” there will be no redistribution.
Unfortunately, what I see instead here in Canada is heavy subsidies for large banks who are just passing it as more debt to everyone else. May do even more harm long-term.
Quite a lot of commercial real-estate is owned by financial institutions and when it isn't the trust fund shareholder is also on the board of directors of the bank.
Landlords have mortgages and a host of other associated costs. If this were made a policy in the UK, you'd have a huge number of small-time buy-to-let landlords going bankrupt and losing their nest-egg to the bank.
When the authoer says landlords don't provide much benefit to society, I think they are comparing against a society in which landlords don't exist.
The author pays rent because they have no choice if they want permission to use a property; all available properties are owned by landlords.
(You can tell it's more about permission than service provided, because there are so many empty buildings, and many people would be delighted to be permitted to just go ahead and use them.)
In the alternative society where landlords don't exist, the author would not need to pay for permission. The "marginal" benefit is other things of value, such as making a nice place, and upkeep and repairs, which many landlords don't do much of.
Then take six months to put together a comprehensive debt-forgiveness program that looks at income, family situation, etc. Forgive things like food, rent, etc. Slowly increase the interest rate cap as the economy recovers.
We need ongoing money in peoples hands now to put everyone at ease that they aren't going to be out on the streets in a week with their kids, not a piddling one-time payment in a month.
Rentiers deserve no protection, especially when everyone else is bleeding
They probably don’t accept the first of the month if it’s a Sunday, either, right?
I find it amusing that I am getting downvoted. Everything I said here is true. In places like NYC, it is not easy to get a half decent apartment without paying through the nose. I've heard it is worse in SF, but I haven't lived there, so can't comment.
Maybe people here own more than one home that they rent and get pissed at anything negative that is said about landlords. But the thing is, I've rented most of my life and despite being an ideal tenant (always pay rent on time, no parties/pets/noise ... and so on), all I have experienced is a serious headache while looking for apartments. All the downvotes isn't going to change that.
By definition if you are wealthy enough to own property beyond one house then you’re wealthy enough to survive this.
And if you can’t afford to, then sell it and suffer like all the other real business owners are suffering.
Why should landlords be a protected species in all this?
If you sell it for less than your mortgage, you’re still on the hook for that loan, too.
The situation is complicated and ‘just sell it’ comes with other problems.
The biggest expense renters typically have is ..... rent. And for many businesses it’s a major expense too.
Governments are desperately coming up with financial support packages for what? To give to landlords?
I bought a house to live in because it was the most affordable solution. When we moved for my husband's career, it got rented out and we became renters elsewhere because we couldn't afford to sell. The market had tanked, our house value had dropped and we didn't have enough equity to sell it without losing our shirts.
Not all landlords are filthy rich. Even if they are, if they are heavily invested in real estate and everyone stops paying them, they will soon be in real trouble themselves.
No one has a Scrooge McDuck swimming pool of money. Rich people tend to have equity in the form of stocks and real estate. When the economy tanks in a big way, they aren't immune from the effects.
This is why a lot of people jumped off of ledges when the stock market tanked in 1929. They knew they were suddenly wiped out and couldn't face living that way.
