1. I'm pretty sure that states can decide to not evict tenants (thereby severely hurting landlords who possibly have multiple mortgages to cover the rentals.
2. Did any other country uniformly cancel all rent?
Suspending evictions means the debt is still piling up, so the threat of needing to eventually pay or becoming homeless does not go away. As for landlords, mortgage payments (another form of economic rent) would then be suspended. The freeze needs to actually travel up the debt chain, rather than it suffering some small hiccup while being generally expected to continue.
Other countries have more of a safety net, and less of an inflationary treadmill. A better safety net (eg continuing direct subsidies for the unemployed, and expanding them to cover small business rent) is another option, and probably the more practical one. But there is this American tendency to characterize such things as deliberate meddling with some default state of affairs. So I am mainly pointing out that this needing to feed the debt black hole is itself a result of explicit federal policy.
Some like Germany safeguarded salaries instead by ensuring that workers remained employed. That's to say that they recompensed firms for salaries on condition workers remained employed during the lockdowns.
The US should have more leeway because it has the world's reserve currency.
I haven't worked it out but I'd like to hear why the Fed or Treasury (let's just say federal govt) couldn't simply replace lost real estate loan payments by adding to banks' balance sheets.
how is Germany's solution any different than giving unemployment benefits for furloughed employees? Regarding the Fed, they _could_ just print gobs of money, and probably nothing bad will happen in the near future. But if you want examples of why printing gobs of money is bad, just looks at the many other countries that tried that. Also, I would think that if the fed decides to print gobs of money, it would be bad for them to allocate all of it to repaying bank mortgages. I would much prefer the money gets distributed to the people (eg. $1,200 per person) or as loans to keep small businesses afloat until after the pandemic
It doesn't hurt mortgaged landlords much if they don't have to pay the mortgage while rent is stopped.
Non-mortgage landlords might hurt if they depend on the income. But that's not much different from other businesses whose income stream stopped, and the same rescue packages could be applied, e.g. furlough etc.
In the UK, rent was not stopped, but landlords were allowed to stop paying their mortgages. That seems unfair to me.
mindslight|5 years ago
Other countries have more of a safety net, and less of an inflationary treadmill. A better safety net (eg continuing direct subsidies for the unemployed, and expanding them to cover small business rent) is another option, and probably the more practical one. But there is this American tendency to characterize such things as deliberate meddling with some default state of affairs. So I am mainly pointing out that this needing to feed the debt black hole is itself a result of explicit federal policy.
malloryerik|5 years ago
The US should have more leeway because it has the world's reserve currency.
I haven't worked it out but I'd like to hear why the Fed or Treasury (let's just say federal govt) couldn't simply replace lost real estate loan payments by adding to banks' balance sheets.
ponsin|5 years ago
jlokier|5 years ago
Non-mortgage landlords might hurt if they depend on the income. But that's not much different from other businesses whose income stream stopped, and the same rescue packages could be applied, e.g. furlough etc.
In the UK, rent was not stopped, but landlords were allowed to stop paying their mortgages. That seems unfair to me.