So stop all payments. Nobody pays rent, landowners don’t pay their mortgages, banks don’t pay interest. Companies don’t pay dividends, bonds don’t pay interest. Just stop using money to organize productive activity for a few months until the coronavirus curve flattens.
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.
This is the kind of solution I would like to see. But you just know, there's a number of people with the power and influence to decide whether or not something get's done DESPISE the idea that people are allowed to have a roof over their head, eat food, and be happy without paying them anything.
And no one pays for goods either? I suppose it does make things simpler in the long run if everyone just starves. No need to worry about restarting the economy in three months, there won't be anyone left by then to care.
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.
This doesn't work. Credit is an essential part of the modern economy and not everything can be shut down. For people to consume even the very basics, lots of intermediate transactions need to be made using credit and if you cease interest payments entirely, no one will lend and the system will freeze. Keep in in mind that no government actually has any authority to do this either, as credit markets are global. To unilaterally cease payments and order ceasing of payments is akin to (but actually worse) national default, which will completely disintegrate the financial markets globally. Even for ordinary people around the world to just survive, we still need international trade.
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.
> We need legislation to ban rents for COVID-19-affected businesses.
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.
You fail to realise that in a lot of cases the landlord is also the one who gave himself the mortgage.
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.
It's really concerning here that so many comments basically amount to let's ban all landlords. It's really dumb, people clearly have not thought it through.
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.
The article is dumb. If the statement "Landlords don’t employ anyone; their benefit to society is frankly pretty marginal" was true, why did the author willingly sign his rent or lease contract (which binds him to pay a large regular payments for a long period)... Why would he do it if there is no benefit!?
The "benefit" obtained by rent is, mainly, permission.
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.
Because the landlord got there first and staked a claim to the parcel of land, that they then don't use themselves for anything except charging others for the privilege of using it. I mean you can see how it's not a super compelling arrangement even though landlords have made it impossible to avoid in desirable areas.
Placing the burden on landlords will unintentionally lead to greater concentration of wealth. Property owners with mortgages will be forced to sell (at a loss, if there is a glut of properties on the market). The buyers will be those who already have a lot of cash, or who are otherwise in a strong enough financial position to wait out the crisis.
Proposal: set an immediate 3% interest rate ceiling on all credit cards. This eliminates the immediate cash crunch that everyone is feeling. If a cc company complains, nationalize them.
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.
This makes a lot of sense. Rentiers are among the worst. My rental contract is so strict that it is insane. For example, I have to give 60 day notice, but those 60 days have to begin on the 1st of a month. It can't be 2nd or the last day of the previous month, it has to be the 1st.
Rentiers deserve no protection, especially when everyone else is bleeding
I've been a landlord. I absolutely was not wealthy.
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.
[+] [-] kadonoishi|6 years ago|reply
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.
[+] [-] Ghjklov|6 years ago|reply
[+] [-] sschueller|6 years ago|reply
The best solution would be for the government to pay the bottom and have the payments "trickle up".
[+] [-] adverbly|6 years ago|reply
As a dev, this terrifies me. I can't imagine how many bugs this might cause in financial software.
[+] [-] nybble41|6 years ago|reply
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.
[+] [-] candybar|6 years ago|reply
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.
[+] [-] NicoJuicy|6 years ago|reply
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.
[+] [-] taleodor|6 years ago|reply
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.
[+] [-] Scoundreller|6 years ago|reply
If everyone says “not us, somebody else!” there will be no redistribution.
[+] [-] swat535|6 years ago|reply
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.
[+] [-] LatteLazy|6 years ago|reply
[+] [-] 6510|6 years ago|reply
[+] [-] Veen|6 years ago|reply
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.
[+] [-] pornel|6 years ago|reply
[+] [-] unknown|6 years ago|reply
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[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] cutler|6 years ago|reply
[deleted]
[+] [-] appleiigs|6 years ago|reply
[+] [-] jlokier|6 years ago|reply
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.
[+] [-] ianlevesque|6 years ago|reply
[+] [-] ianlevesque|6 years ago|reply
[+] [-] pouty-gazelle|6 years ago|reply
[+] [-] unknown|6 years ago|reply
[deleted]
[+] [-] vearwhershuh|6 years ago|reply
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.
[+] [-] justaguyhere|6 years ago|reply
Rentiers deserve no protection, especially when everyone else is bleeding
[+] [-] t-writescode|6 years ago|reply
They probably don’t accept the first of the month if it’s a Sunday, either, right?
[+] [-] cutler|6 years ago|reply
[deleted]
[+] [-] charonn0|6 years ago|reply
[deleted]
[+] [-] newen|6 years ago|reply
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[+] [-] drenginian|6 years ago|reply
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?
[+] [-] t-writescode|6 years ago|reply
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.
[+] [-] DoreenMichele|6 years ago|reply
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.
[+] [-] charonn0|6 years ago|reply
[+] [-] nunez|6 years ago|reply