I don't want my tax money used to bail out landlords. Let the lenders foreclose. If the landlords didn't want to deal with loans then they should have paid cash for the properties.
I'm interested in my tax money being used to help stabilize the local population to minimize harm to them during this time and thereby minimize unrest and keep the whole of it safer.
If my money is going to be going to making missiles and weapons for overseas, some of it can come back and pay for rough times instead.
A less drastic solution, which doesn't require much money, is to just force lenders to allow landlords who lost tenants or whose tenants can't pay to allow the landlord to defer loan payments (extending the final date of the loan).
It's not exactly fair to landlords who own the properties outright, but, I can live with that.
Many commercial property mortgages already contain clauses allowing the borrower to defer payments if they don't have a tenant. For those that don't, well they should have negotiated better terms before taking out the loan.
>>It's not exactly fair to landlords who own the properties outright, but, I can live with that.
Well of course you're OK with that, you're obviously not a property investor who worked to get free and clear. What if instead we levied a special premium salary fee on technology workers who make more than the median salary? Not really fair but us worker bees are OK with it...
You can live with endangering the banking infrastructure? The place where all your hard earned money is stored at? This will end with a bank bailout because nobody wants to lose their money because some idiot decided to implement deferment of loan payments.
How will preventing lenders from foreclosing prevent harm? If anything, it will allow people to purchase property since prices will reduce as there is more supply in the market.
It would be nice if it actually worked that way, but about 25% of US government spending are debt and not taxes in a normal year. So these bailouts doesn't come from your taxes, they are pure government debt that will crash the economy sometimes in the future when the government stops propping up the gdp via endless debt accumulation.
Imagine if they were honest instead and said "We pay these bailouts now and increase taxes from 30% to 50% for the next 10 years to make up for it", how many would be happy?
> If the landlords didn't want to deal with loans then they should have paid cash for the properties.
If the tenants didn't want to pay rent, they should not have signed leases.
Why is it that tenants can get a break on their obligations but landlords can't? Why are tenants more deserving of help? Most landlords are not rich. They are providing a service to their tenants, who cannot afford to purchase buildings and would have no hope of opening a business if there were not landlords around willing to rent things out.
Owning real estate is an investment, not a right. It's no different than any other investment. If I have a loss on leveraged stock investments should the government bail me out?
We are not talking about investment losses here. We are talking about breach of contract. A renter signs a contract promising to pay rent.
The value of the building, whether it drops or increases, is the investment component of being a landlord. That is not in dispute here. If a building drops in value the landlord just has to deal with it. But until now, if someone promised to pay rent and did not do it, a landlord could sue them, or evict them, because the landlord would be the victim of a breach of contract that has nothing to do with investment value.
What is in dispute here is that people who promised to pay rent are being allowed to stop paying, but landlords who promised to pay their mortgages are not allowed to stop paying. That's not fair.
It's not good for the economy either, because most businesses can't afford to buy property and need to rent from landlords, and we are now making it very unattractive to be a landlord.
I disagree with your conclusion. If landlords think owning land is too risky, they’ll sell their properties, supply will increase, prices will drop and new buyers will come in to take advantage of the low prices before the market inevitably recovers.
Owning land is lucrative in NYC and that’s unlikely to change anytime soon.
Because landlording is an investment, having shelter is a necessity. The landlords should carry the risk of tenants failing to pay.
If we stopped relief to everyone, tenants would stop paying, rents would crater, and landlord would be ruined much moreso than tenants, it's just the nature of investment.
The investment component of being a landlord is the value of the property. The ability to enforce contracts, e.g. that when a tenant promises to pay they must pay, it not part of the investment component of being a landlord. That is not an investment, but rather a contract between two parties.
Rent is revenue. Investment is based on the value of the underlying asset. They are not the same thing.
Our society has always assumed that the investment has a risk element but the rent is ensured by law and there are remedies if it is not paid -- remedies which are now being suspended for tenants paying landlords, but not for landlords paying their mortgages.
You keep saying this, but is the value of the property not what someone is willing to pay for it? If nobody can/will pay rent, the property is worthless. The risk you take on as a real estate investor isn’t just that of the property value, it’s also the risk of not having a tenant.
If you have a tenant, they can’t pay, then they leave and you can’t find another renter for a year, you’ve made a bad investment even though your property value hasn’t changed.
Risk of not having a tenant has nothing to do with the current situation. The current situation is the possibility of being stuck with a tenant who will not pay the rent and cannot be removed, indefinitely.
At first these rent forgiveness measures were supposed to last a few months. Now we are nearly in the 10th month of the pandemic and these measures are being renewed. There are tenants who have not paid rent since March. Most landlords would rather have no tenants at all, than have tenants who do not pay rent for almost a year yet force their landlords to continue to provide for them by paying for maintenance, and insurance, and property tax, and the mortgages.
I totally get your point, but if an established tenant with a previously successful business cannot afford rent, then who could?
It seems more like “well nobody is going to be able to rent it anyways, so we might as well keep the businesses alive so that recovery can happen”. If those 90% of businesses all went under, then there would be nobody left to pay any rent even after a recovery starts to happen. Creating a law that advantages the renters prevents the landlords from screwing each other, and the entire market, by putting the companies out of business. Those companies need to survive so that the market can bounce back more quickly. And the landlords would get screwed either way.
I do also think that mortgages should be paused, but that’s secondary in importance, in my opinion. Sorry you got downvoted, I think your opinion is also valid, and this does really suck for landlords too.
Over the course of a given rental, unless the property was purchased almost immediately before a real-estate crash or rental crisis, the amount of cashflow generated by a tenant will cover the majority of the volume required to generate equity in the property.
In certain cases, the financing for commercial real estate, for instance, will literally substitute the credit rating of tenants for those of the landlords - because ultimately that's where the money is coming from.
If a landlord is rendered insolvent, they aren't even rendered destitute; they sell or refinance the property to generate liquidity. If many landlords do the same thing, the volume of real estate on the market increases, the price of real estate drops, and the market is now on it's way to pricing in the effects of the shock which caused the crunch.
The fact that we've been spewing money at asset holders for over a decade is why real-estate metrics are so out of line from historical cycles.
Which would make sense except there are plenty of metropolitan areas which are not physically constrained or suffering horrendous zoning issues which also have the issue.
The world exists outside the particular clusterfuck that is the SF bay real estate market.
This ignores the fact that if there were such obvious financial incentives, then restaurant owners would simply just buy said properties.
'Property management' is a real thing and businesses don't want to necessarily own property.
Managing property is a service like any other - and rates for their goods are market based - just like any other market.
"If a landlord is rendered insolvent, they aren't even rendered destitute;" - ? why do you assume that? Property owners are often leveraged like many other businesses. If x% of their portfolio goes bust - they go bust.
There might be opportunities to make things a little bit more fair one way or another, but it's not rational to single out one form of business as being 'better or worse' than another.
What could be reformed is the fact that economic rent is not really valuable for society at large. 'Trading playing cards' benefits nobody, we should be investing in value creating operations.
>This ignores the fact that if there were such obvious financial incentives, then restaurant owners would simply just buy said properties.
They do when they have the capital.
>"If a landlord is rendered insolvent, they aren't even rendered destitute;" - ? why do you assume that?
Because I've been through the books of multiple major banks, REITs, investment funds, commercial owners, commercial tenants, private individuals with residential real estate portfolios, etc.
You have to be incredibly negligent to lose money in an industry where your assets have been skyrocketing in value for over a decade.
> it's not rational to single out one form of business as being 'better or worse' than another.
But it is. If a business decreases social welfare (like cartels enabling coordination to jack up prices) the government should regulate it away. Most of what landlords do is cause friction in the real estate market (and hurting everyone else in the process) in hopes to gain some more mpney from it.
> A renter signs a contract promising to pay rent.
They should use the force majeure clause to terminate their contracts and the landlords could sue if they don't like that. A pandemic is not unlike a flood or earthquake. This is exactly why such a clause exists in contracts.
My boss negotiates a lower rent during a crisis. It’s fair enough. Would the landlord prefer a smaller amount to none at all?
> They should use the force majeure clause to terminate their contracts and the landlords could sue if they don't like that. A pandemic is not unlike a flood or earthquake. This is exactly why such a clause exists in contracts.
If they terminate their contracts they need to move out. That's not what is happening here. Tenants are trying to stop paying, but also stay in the property for free, indefinitely.
> Would the landlord prefer a smaller amount to none at all?
As was explained a week or so ago by somebody in that business on Reddit: for commercial real estate, many landlords would prefer none at all over a smaller amount, because the loan is written with the assumption of a certain rent per unit, and if the average rent goes down, it breaches the loan conditions and the loan is revoked (or something like that.)
Because landlords are trying to profit off of the conditions created by the broader local community. They make a bet on which space created by the community will allow them to extract more rent than the cost to maintain the building and pay the loan, and later sell the property for more than they paid.
Tenants are either members of the community who want a home, or are trying to provide a service to the community.
One group is trying to speculate on the value others will provide and get a cut, and they're able to do this because as they've ensured scarcity of affordable space. It's extraction
If there were no landlords, it would be impossible to start a business in NYC without buying a building. Most businesses would never be able to afford that. Thank goodness there are landlords who are willing to rent out their buildings!
It's not either or, you don't have to have individual ownership for properties. A landlord can be replaced by a neighborhood cooperative that redirects the value produced from the building back into the community (schools, public service funding, etc.)
Private ownership and rent contracts is only one way of many to solve the problem of granting access to space without outright purchase.
Also, providing a service and extracting value from others work aren't mutually exclusive. Consider this: a foreign organization extracts natural resources, refines them, sells the new product back to the localsy (and other outside communities) for large profits that are mostly redirected outside of the native community.
I would clearly call that extraction, the fact that they also provide a service to the community doesn't negate that.
The S&P 500 and NASDAQ are both up year to date. The government has already taken actions, including injecting trillions of dollars into the economy, to bail out shareholders.
> Why bailout any investor? Risk is part of investment.
The damage caused by this pandemic is so rare it is less than a 1-in-100-years event (1918 pandemic killed millions, but businesses were typically shuttered only for weeks at most, not 6 months).
Certainly bailouts for natural disasters are quite common in other respects. And if the government were to seize your property via eminent domain, they owe you money. Why shouldn’t they also in justice pay out if they order your business shuttered for a half a year?
God no. They've been sitting on empty buildings for years. It's time for them to default on the underwater loans and let people actually put the wasted space to use.
Every city in the US has a similar issue including the one near where I grew up and it's the weirdest most broken thing. I remember many times walking down streets flanked by empty buildings with homeless people sleeping outside.
Thats not how any of this works. The problem with a market is you have a rate that if something is below it its not profitable for people to live in a place. Idk why people blame the building owners.
And people who do this are always people with perfectly good couches in their living rooms but would never let a homeless person sleep there, but want others to give up a entire building.
That would work in a normal market but the realestate market hasn't been allowed to correct because we keep bailing it out by having the fed buy up all the debt. This raises rent because it decreases the supply (people can just hold onto buildings as investments and not bother renting them out or wait for someone willing to pay something that should be above market value) and also raises inflation.
Let me explain it to you simply: The landlords made a bad investment, bailing them out forces everyone else to pay for it. In the "it's my property" sense it's identical to forcing someone to house homeless people (although the comparison still isn't the same because the landlords generally don't live in the buildings they're renting out.)
I always found it curious how large employers in Manhattan would be moving out because the rent was too high.
Simultaneously buildings would be converting into condos because they were unable to fill vacant commercial space. As an example, two buildings where I worked had this happen: 70 Pine Street (AIG) and 75 Wall Street(JPMorgan.)
I am not sure about NYC, but commercial property taxes are usually very high, and borne by the tenants; this may be a factor in the employers moving out.
The problem is that what is actually going on in NY - and many other markets - doesn't remotely resemble a properly functioning market: https://www.youtube.com/watch?v=NdfmMB1E_qk
tl;dr: 2 years free rent with the condition that the tenant doesn't ask for a lower price. due to language in the contract the rent can not go beyond a specific (low) value. the loan isn't held by the bank but immediately restructured and sold as a CMBS (https://en.wikipedia.org/wiki/Commercial_mortgage-backed_sec...)
The way you think markets work don't always apply to land. Land (distinct from buildings) is one of the few resources for which ownership without utilization or improvement is not only profitable but sometimes optimal.
If they have been sitting on empty buildings for years, why would they want renters now? I expect they would just continue to keep their buildings empty and continue to be unaffected by this pandemic.
I know a few property-owning/landlord families. They own multiple properties, both residential and commercial.
Some of those properties are profitable to rent out. Some are not. You rent out the profitable ones. You don't rent out the ones that are not profitable, you just wait until they're worth significantly more than what you paid for them. When they are, you sell them, and you buy more property. Each property leverages the subsequent properties, in terms of both the mortgage credit you have access to, and actual money gained accumulated from rent and sales.
Would you also bail out those who bet on black and got red?
When you bail out something like Ford you keep it running and collect tax revenue. If you don't, factories stop and the business essentially disappears.
When a landlord goes bust nothing happens, other the financial loss for the landlord.
When 1/3 of NYC gets foreclosed the new tenants will swarm to rent the places at a discount and reopen the cafes and everything else as soon as they're allowed to operate.
Restaurants provide jobs, probably 20ish jobs per restaurant. If every restaurant closed down, that's something like 12 million unemployed people who can no longer find employment at those restaurants.
Some of those employees might even make enough money to pay taxes and not get their tax money back.
What do you think the solution is, rather than just slamming someone's theory on what to do?
Yah, those numbers just cover rent. If you want to cover payroll as well those numbers are going to skyrocket.
If you think that's a good use of money, well, make your argument. But please include a cost while doing that. You can't just say "bail them out" and not say how much that will cost.
Maybe it's affordable, maybe it's not - but be upfront with your numbers.
It’s doable the same way VC funding for startups is doable. Post vaccine, we expect this industry to thrive again. Bail out the immediate financial commitments, and provide interest free federal loans that don’t have to be repaid for up to three years (similar to student loans). Hell, similar to the loans we gave too big to fail banks once upon a time.
I’ve paid for unjust wars in my lifetime and I’ve paid for global financial scams in my lifetime, so I’m prepared to pay for simple restaurants surviving the apocalyptic numbers we’re hearing (60% of restaurants not reopening according to Yelp).
Let's walk forward some more. Every restaurant in the country goes out of business and stops paying rent. People still want to eat out, so when it becomes legal to serve that market again new restaurants will reopen - and likely with cheaper rent. In the interim, commercial property investors get the shaft.
Those unemployed cooks and wait staff won't be unemployed for long, and perhaps throwing money at commercial rents isn't the best way to help them.
You still falling for that taxes trope? It will never come out of taxes. Politically impossible. No presidential regime will take the fall for that. No generation will take the fall for that.
That kinda money is just printed Zimbabwe style. The governments left pocket owes its right pocket.
If people are scared and won't go to restaurants and bars then why continue to keep them closed? You are saying that patronage is already down so why even restrict them?
Give people and businesses a choice in the matter.
This is about letting individuals and businesses make their own decisions without the government forcing them to close.
That would be fine and dandy if the decision to engage in risky behaviour only affects the individuals and businesses making them. However, this is not the case in reality.
This isn’t about people making decisions for themselves. It’s about preventing the spread of infectious disease.
You might be fine, but if you are asymptomatic, you can directly harm or kill others and not even know it.
That being said, I’m not sure what the best policy is. It doesn’t seem feasible to have a complete lockdown that extends for many months. So we have to be clever, keep learning, and find good solutions. We can minimize the risks and prioritize health while allowing society to function in an altered fashion.
> This isn’t about people making decisions for themselves
Making decisions for ones self is exactly the principal that the USA was founded on.
> You might be fine, but if you are asymptomatic, you can directly harm or kill others and not even know it.
See also: Drinking, condom-less sex, smoking, and junk food. All of these things directly or indirectly harm others and if this is about public safety then it's time yourself and others start movements to ban them.
The "you may be hurting people indirectly" argument never worked and it's getting more brittle with time.
Have you considered that your favored interventions are, in addition to being extremely harmful to society in every measurable way, probably also completely ineffective in altering the outcomes? Sweden didn't do a thing and is basically done with this nonsense, presumably for all time from the looks of the plots; Massachusetts is still mostly locked down and has 4x the death rate. Lockdown fetishists should be greeted with "citations needed."
The correct numbers are 5743 (2020-08-01) ? 5865 (2020-09-21), i.e. 122 or a growth of only about 2%, which is indeed very good. Only Ireland, Italy, China, Belgium are better (and 18 outlier countries adding zero to one deaths only because they each have less than 83 deaths absolute). So, following that definition of "done", I agree Sweden meets it.
But at what cost? Its deaths per capita quotient is horrendous! The thirteen worst countries are:
|deaths 2020-09-21|pop in million|deaths/1000 capita
San Marino 42 0.0339 1.24
Peru 31369 32.5105 0.96
Belgium 9950 11.5393 0.86
Andorra 53 0.0771 0.69
Bolivia 7654 11.5131 0.66
Spain 30663 46.7368 0.66
Chile 12379 18.952 0.65
Brazil 137285 211.0495 0.65
Ecuador 11095 17.3737 0.64
United Kingdom 41877 67.5302 0.62
US 199862 329.0649 0.61
Italy 35724 60.5501 0.59
Sweden 5865 10.0364 0.58
The average for that column is 0.12 and the median is 0.04. It's a really bad trade-off for Sweden to let five to sixteen times more people die than usual just to achieve a small growth rate a couple of months into the pandemic; this does not make any sense. For comparison, Germany's growth in deaths in that time frame was also quite small, namely 2.5%, but they have an under average death quotient of only 0.11.
Did you read my parent comment right above? I don't claim to know exactly what the policies should be. And I explicitly stated that hardcore lockdowns that extend for months don't seem like a good idea.
I was just trying to push and get some clarity into how just-juan-post thinks about it, as clearly there is some obvious disagreement and I wondered what circumstances they think justify different interventions.
The point of a lockdown is to stop people who think like you from hurting others. If we could trust people to act responsibly we wouldn't need to lockdown so strictly, but in example after example someone who thinks like you will ruin it for everyone.
Regardless, the US has largely already decided to be on your side and let you make your own decision about how to act during a pandemic, and the results speak for themselves. A wholesale failure. Good job, you win, 200,000 people are dead, is that enough patriotism for you?
Drink driving is banned, smoking is banned in many situations and only thanks to tobacco lobbies and tax income is it not entirely banned. Having sex doesn't affect passers by, just the active participants. Junk food you choose to eat yourself, you don't hurt others with it. It can cost taxpayer dollars in medical funding though, if you want to take that angle. There are hundreds of laws to stop people from making choices that hurt others, so even if your examples weren't so flimsy they would still be moot.
This is a once in a lifetime pandemic, it will pass, take it on the chin and accept that you might have to do something to help others. You will get your choice back soon enough. The choice to be a carrier during a pandemic affects everyone. Why is it individual liberty to choose to spread disease but public will when people die from it?
Please don't explicitly state things like this, it only leads to more polarisation. Keep people guessing at your personal political preferences, they should not have any impact on whether what you say is deemed 'acceptable' or not.
I realise this but the solution is not to wave the don't shoot, I'm with you flag. The real solution is to get the discussion to revolve around the message instead of the messenger. This is a culture change and as such it takes time and you'll have to suffer the (no so) occasional downvote-into-oblivion experience but so be it.
Here comes some ethically questionable but effective advice to stay alive in the HN jungle: if you're low on karma points you just post a few karma-whoring replies to top up the counter. Once you can breathe again you can state your mind freely until that karma counter goes down towards the red zone again after which you need to top it up again. It is very unfortunate that this is needed to stay alive here for those who have not yet built up a sufficient buffer of points but things being the way they are there is no other way for those who like to speak their mind on the edge of the sometimes very narrow Overton window.
- Journalists and individuals need to use FOIA actions against their state and local governments to see e-mails to see what the true numbers are. That Nashville situation is absurd and we all know it's happening at a bunch of other places.
- Middle class / "regular people" need to start speaking openly and questioning and discussing the lifestyle restrictions and closures.
- A message of safety indirectly spreads a message of fear. Stop with all of the unnecessary post-Covid new normal "safety" things.
I mean, the alternative is to only post on technical topics, where there's a lot less need for the "right" opinions (unless you hate Rust, I guess ;) ).
If only that were true, but political issues have crept into many technical topics in such a way that it is hard to avoid them altogether. Maybe a 'political' flag on politicised (sub)threads can help, together with an option to hide such threads. On some days it will be very quiet here for those who have chosen to hide politics but that only makes them more productive.
If mask usage was strictly mandated then lockdowns would be unnecessary. Instead, the topic of masks has been pulled into a ridiculous debate.
I suspect most lockdown supporters live in a comfortable and spacious environment where they work from home. The cost of lockdown is huge for business owners, domestic abuse victims and those with mental illness. There is increasing research that points to the cost of lockdowns being greater than the benefit.
Widespread spread mask usage in Japan and South Korea has proven very effective as well at controlling the virus and allowing life to go back to normal
I agree with you, however it is connected to the original argument because people have demonstrated they won't wear masks, so you need lockdown instead. If people would wear masks, business could go on.
The cost of lockdown is high, I don't think anyone is disputing that. It's a tradeoff, but we don't really know what's going to be best long term. It's hard to measure without all the data, and who gets to choose the metric for success? Is it economic damage, or social damage, or damage to public health that we're aiming to minimize? I think the answer is that they are all competing goals, and everyone is going to be using a different metric to measure success.
I thought the point of the lockdown was to flatten the curve? “Just 14 days to flatten the curve,” if I remember correctly.
How could anyone, including the government, have planned for or implemented a social safety net or bailout for something that has gone on literally 12 times longer than anyone said it would?
I'm all in for banning smoking, but unfortunately drug addicts tend to become violent if they're cut off. It's much less damaging to society to do that one slowly over time.
To be fair, the US is in kindof a weird position with respect to Covid 19. It's a perfect storm of 1) good testing (at least better than the developing world) and 2) inconsistent and ineffective responses to Covid.
I don't dispute that the US has performed poorly here, but the 25%/5% stat needs to be contextualised by the fact that other countries who have done really poorly (e.g. Brazil), have much less testing than the US has.
"We can observe trends from the number of deaths reported each year, on a weekly basis. When we see large deviations in the numbers for a time period, we call that excess deaths. Looking at 2020 since March, the raw number of excess deaths is 200,000 more people than a normal year. When we try to understand that, COVID-19 is the most rational and likely explanation. If you don't believe it's COVID-19, try to pinpoint why this year has been so different than any other. Why would a new disease that kills people not be the cause?"
Excess mortality has nothing to do with testing, you are entirely correct there.
However, most Covid deaths are counted as deaths post a positive test. Therefore, the tests provide the denominator for potential deaths.
The US has lots of testing (though probably not enough) and an overall poor response to the pandemic, causing the 25%/5% statistic, and hence my point.
There is a lot of things that can indirectly harm others. Unless you can show that opening up is much more dangerous to others than those other things, it makes no sense to selectively ban opening up. Given bars and restaurants are already open in other states (and other countries) without any significant increase in deaths compared to California and New York, where's the data showing opening up bars and restaurants is dangerous?
Once SARS2 is history it will be interesting to compare the approach in places like NYC to those in e.g. Florida. I suspect the latter will come out on top when it comes to efficacy of the approach while the former will end up both bankrupt as well as looking for a new mayor and governor. Especially given the number of retirees living in Florida these results are remarkable, when the epidemic (as in 'local version of the pandemic') began I suspected FL would end up topping the mortality lists. A number of bad decisions were made in the beginning - e.g. allowing infected elderly people to be sent into care homes where they infected others - which have been haunting state and local government ever since and probably gave rise to the continued lockdown measures - a classical example of someone closing the barn doors after the horses escaped.
I live in Sweden where similar mistakes were made in the beginning, in this case mostly caused by personnel in care facilities not following the mandated personal protection measures which caused them to spread the infection between infected and 'clean' departments, facilities and people. In contrast to NYC this has not led to more draconic lockdown measures, probably because the problems in those care facilities were recognised. Unfortunately they were not dealt with in time which has led to a large number of vulnerable people getting infected. Apart from these (grave) mistakes it now looks like the Swedish approach might start to show its merits given the low infection rates here compared to surrounding countries. Things can still change but currently the number of new infections in Sweden is lower than that in surrounding countries.
You might be fine, but if you are asymptomatic, you can directly harm or kill others and not even know it.
No, this is a rumour that was long since debunked.
Asymptomatic transmission does not exist. Basically no cases have been traced back to that and the WHO no longer supports the concept. WHO officials months ago pointed out this was "very rare" (read: doesn't happen, considering how noisy testing and contact tracing are). This story summarises:
They (the WHO) distinguish this from "pre-symptomatic transmission" which means you will develop symptoms in a day or two, but are infectious a bit before that happens. This happens with many viruses. It's entirely normal. In the UK right now flu is twice as deadly as COVID, same is true of many other places.
So you have a choice. You can never go out again in case you are about to come down with flu and un-knowingly, via a long and complex chain of events, kill a disabled child. Or you can accept that there's nothing unusual currently happening beyond media and government hysteria, and go to a restaurant before they're all gone.
> If people are responsible and won't go to restaurants
See here's the thing: Just because you and others like you have a certain definition of "responsible" doesn't mean it should or does apply to everyone.
Should we ban skydiving because it's irresponsible? Condom-less sex?
This is about choice. Re-open and let people and businesses choose.
If it were possible to ensure everyone who would potentially be exposed to covid-19 as a result of your decision to engage in high-risk activities had given informed consent, I'd be fine with letting people decide for themselves.
Since that isn't the case, your comparison is patently absurd. Skydiving isn't contagious.
No, this is about the common good, where personal choices might have a disproportionate impact unto others.
I don't care if you don't care about getting infected or not, I do care if you get infected and spread that to others that don't hold your values.
Society and populations don't work well with personal responsibility when their actions' impacts are too far removed from their personal sphere, if you kill someone 3rd hand because you infected someone who worked in a care facility: how are you going to know and act accordingly?
This bullshit about personal freedoms and responsibility in the middle of a pandemic tells me more about the people who don't have a holistic view of society but this ideologue monologue about personal freedom, this is your value, this isn't how society work yet.
This is a story about the ability of human kind to work together to defeat a common enemy.
So far we have failed. The reasons for that failure are many, but it has become clear over this 6+ months that a coordinated top-down plan is what we’re lacking.
The “libertarian” approach like you mentioned has been tried- every relaxation of covid restrictions has been followed by acceleration in the case count. Turns out prayers and positive thinking were unsuccessful in limiting virus transmission.
Be honest Juan, when was the last time you really made your own decision anyhow?
Epidemiology is not accomplished by allowing people to make personal choices, because your average guy has no understanding of either epidemiology or statistics.
As we have already seen, what actually happens is that a small number of people with vocal delusional beliefs do wildly risky things that endangers everyone else.
Ignoring the whole "we should open/we should close" debate (I'm not an expert in economics or virology) it's perfectly possible for the vast majority of people to not want to go to bars/restaurants and to need to chose, as a group instead of individual, to close them to lower spread. I.e. >50% doesn't always have the same outcome as 100%
People do get a choice in the matter but part of that is people get a choice whether they want to act independently or enforce a choice (to some level) as a group.
Most people advocating for reopening would kick restaurant employees off of unemployment. Those employees are the people in the equation with the least power, and the most exposed to the risk.
I see no reason to believe this. Restaurants are pretty packed in the places that reopened, and they were pretty packed in NYC until literally the day the lockdowns started.
> Restaurants are pretty packed in the places that reopened
Not true of where I live in San Francisco
> they were pretty packed in NYC until literally the day the lockdowns started
That's before people got scared because NYC was literally the first place for this to happen and most people had no idea what was going on. You can see how restaurants performed in countries that remained open, like Sweden, where you can find lots of people talking about how their sales dropped 80% despite no lockdown. For a low margin business, that kills.
nyc and other municipalities really bungled the categorization of risk. restaurants and bars shouldn't have been lumped together in the first place.
most restaurants could have employed some modest measures and stayed open at 80-90% capacity (which may be below break-even for some, but probably enough to ride out the pandemic with price hikes and/or modest gov loans), as risk is isolated between tables (no, that one hypothesized case of down-blower transmission is not proof of significant risk) and you shouldn't be sharing breathing space with people you don't trust. people who would eat at a restaurant together likely ate together in private anyway when restaurants were shuttered.
bars, on the other hand, by their very nature make it very difficult to contain transmission risk, because the whole point of a bar is to lower your guard to promote mixed socialization. distancing, talking gently, limiting respiratory ejections, and/or wearing a mask just don't go together with drinking and carousing. (private parties then likely became a primary transmission vector, but there's no way to stop private parties without truly draconian measures.)
we could have let restaurants save themselves by remaining open, and tackled the remaining, more manageable issue of closed bars with supplemental programs.
I feel like this might ignore that a good portion of restaurant sales are from the bar. Chilis, Applebees, to an extent BJs Restaurant. I feel only a few companies have adopted to the fact that you can deliver alcohol. There's no reason that those bar sales, can't be from the restaurant over postmates or uber eats.
> There's no reason that those bar sales, can't be from the restaurant over postmates or uber eats.
Except for the prices, maybe? While it is true that most restaurants make most (or even all) of their profits with drinks, customers probably realize that they are paying 200% markup for a zero-effort service if they ordered beers from a restaurant instead of getting them themselves...
It's not enough to just point out or dismiss different risk factors as if they're all the same, and both sides of this debate on restaurants seem to be guilty of this in some circles. Evaluating risk, done appropriately, is more complicated and involves at least weighting the risks of specific dangers of different options.
The CDC just said yesterday that they confirm airborne transmission, and from the case of the choir whom was 6 feet apart, it sure makes it seem beyond one table worth.
The question isn't whether it's possible at all. It is, I don't dispute that, but even post-vaccine we'll never reach a point where it's impossible to transmit the virus. The question is how high the risk is relative to other things.
"The U.S. Centers for Disease Control and Prevention (CDC) on Monday took down its guidance warning on possible airborne transmission of the novel coronavirus, saying that the draft recommendation was posted in error."
> "'Implementing safe practices to reduce exposures to SARS-CoV-2 during on-site eating and drinking should be considered to protect customers, employees, and communities and slow the spread of COVID-19,' Fisher and colleagues concluded."
which is exactly in line with opening restaurants with modest measures.
the study only provided impetus to look closer at restaurants as potentially not insignificant localities of spread due to self-reports citing slightly higher restaurant patronage in the 2 weeks prior. they declined to put forth any conclusions on prevalence or mechanisms for spread in restaurants because they didn't study those things. they only presented some statistics on the self-reports. that's it.
If a restaurant hikes the price, I am never going back there.
Paying £15-£20 with service charge for a steak or burger is already insane. They can't ask for more, especially at the peak of a crisis where there is no money to pay for it.
HN don't get but it but every young graduate is desperate and might not get a job for years while the rest of the workforce got laid off or is under reduced salary.
Only related because NY, but NY state covid 19 new cases have been incredibly flat since June. I would think they'd trend closer to zero, up some, or just bounce around more. Normally, new cases are driven up by complacency and down by fear or policy, but there doesn't seem to be either happening quickly and subtly enough to keep new cases between 500 and 1000 for so long, and r0 should be metastable, so keeping it in that range for so long is unexpected.
I support looking at the science, and this means looking at it both ways; not just cherry-picking doom and worst case scenarios while ignoring best case scenarios.
We can't afford to let an "overabundance of caution" kill businesses and our economy, for good.
That seems plausible. Both New York and New Jersey have lots of high density areas, yet their numbers are very flat now. There's also some speculation that some people might have a natural immunity.
That might explain it--this is just a baseline level of spread and herd immunity knocks it down. It also begs the question of how to loosen restrictions because if NYC actually hit herd immunity for the current level of social interaction, not relaxing restrictions is unethical. You can't keep everything closed forever, and if there's a sign you've hit herd immunity, 3+ months of this is it. It might also be what spread looks like post-vaccine. How to know you're at that point where you can reopen is tricky.
To add to this, Sweden isn't seeing the big surge that France and Spain are seeing (among others, including Belgium and the Netherlands, both at or near record highs). Sweden's cases have dropped lower and have stayed there. Given their comparatively open approach to the virus, they should be seeing a surge. While it's possible it'll show up in the near future as it again spreads across parts of Europe, I think it's also plausible they've reached a partial herd immunity. The commonly repeated premise that you need ~60% to reach herd immunity is plainly false, that's a calculation meant for a vacuum. In reality people aren't numbers on a sheet or living in a vacuum, all people don't behave the same way, don't spread a virus the same way, aren't all similarly at risk, some large percentage of the population may already have immunity thanks to prior exposure to other coronaviruses, and so on.
The 60 percent figure is people living their lives normally. Currently most people are social distancing, wearing masks and large gatherings have been cancelled. Under these circumstances 20 percent may well be herd immunity. But if Madison square garden was open and the subway was packed with people not wearing masks, its not clear that 20 percent would be enough.
I'm one of those who tested positive for IgG antibodies in April. Same in June, August. These were Mount Sinai's quantitative research tests, with a high titer. I donated plasma twice. The only symptoms occurred in mid March. Then I got an Abbott qualitative IgG test earlier this month, because I was about to fly to Italy. Still positive. Once there, to end quarantine before the customary two weeks, I got two negative swabs and another Abbott test, but this time they also tested IgM (short term response), which quite surprisingly still came back positive. Since this was the first time it ever got checked, it's not clear if I was IgM positive for the entire six months or I got some exposure in August or early September that didn't result in symptoms or infection.
I don't know what this means or if I'm just a rare case, but my inkling is still to explain NYC's current rates with mask wearing and reduced indoor interactions. I guess we'll see in the next four to six weeks.
> my inkling is still to explain NYC's current rates with mask wearing and reduced indoor interactions
Stockholm, Sweden has better numbers than New York yet people don't wear masks here nor are stuff closed. So you can't really say for sure that New York's numbers are thanks to those.
I don't know how to compare and control for different population mobility between the two or any other pair of cities in the world, which is why I mentioned that we'll see in a few weeks, i.e. comparing NYC to itself.
It's not antibody immunity. That's why I said we don't understand. 20% is nowhere near enough to explain the patterns we're seeing.
The good news is that even though we don't understand it, the NY experience does point towards a potentially more muted second wave in areas which were hit hard the first time round (as long as they take precautions at least), but we just don't know enough to be sure - anyone who is sure about the outcome at this point is probably overconfident and wrong.
20% of the total population is probably 60% of choiceless and careless. Percentage of the population that are exposed to a potential Covid infection, either due necessity (essential workers and so on) or stupidity is much less than 100%.
Someone who has been barricaded inside of their home since February most likely doesn't have antibodies, but at the same time is not a potential Covid spreader.
20% is nowhere near enough to explain the patterns we're seeing.
... according to epidemiologists who have been utterly discredited, no. According to other epidemiologists (and just lay amateurs) who have built better models, 20% appears to be about the right threshold when taking into account non-homogenous social mixing and t-cell immunity.
But you don't really need anything fancy to figure this out. Just look at the observed data, messy and contradictory though it is. When antibodies reach 20% the epidemic stops, in many places not just NY.
In Nashville they closed bars and restaurants for 6 months because .004% of the cases came from bars and restaurants.
We need to give people choice.
If we wait until we get a vaccine it will be Fall 2022 and many Americans won't get it. What then? No bar and gym re-openenings until X percent of the population is verified to be vaccinated? Mandatory vaccination checks on entrance? Punt again and find reasons not to re-open until 2022?
> In Nashville they closed bars and restaurants for 6 months because .004% of the cases came from bars and restaurants.
You're taking the number of cases that they've managed to contact trace to bars (difficult, especially if lots of cases all at once). You're then dividing that by the total number of cases, including the ones after they closed bars and concluding that it was the incorrect choice.
There’s email chains that came out showing that they knew the bar numbers were low and buried them. Then lied about it when asked.
Whether you think it was the correct choice or not is politics. It was not data driven nor supported by any actual exposure data that they collected, they knew that was the case, and tried to cover it up.
In Nashville, TN (USA) bars and restaurants are closed to stop the spread of the virus. In e-mails obtained by a local television station, and later confirmed authentic by legal council, the e-mails discussed how only 80 of the 20,000 positive cases could be traced to bars and restaurants.
> Tennessee Lookout reporter Nate Rau asks, “The figure you gave of 'more than 80' does lead to a natural question: If there have been over 20,000 positive cases of COVID-19 in Davidson and only 80 or so are traced to restaurants and bars, doesn’t that mean restaurants and bars aren’t a very big problem?"
A day after the story broke they allowed bars and restaurants to re-open:
You're done because we both know the math is correct, my argument is sound, and you don't like that. I see it often in these types of debates. It's easier to walk away from a losing position than to defend it.
I'm not sure what you think I changed but the math is fairly straight forward.
Nashville metro is 2 million people. There were 80 cases confirmed traced to bars and restaurants. They were keeping bars and restaurants closed because they were "hotspots".
When you take 80 and divide by 2,000,000 you get .00004 or .004%. Therefore, the government was keeping bars and restaurants shut down because .004% of the infections came from bars and restaurants.
They restricted indoor recreation for 2 million because of 80 cases.
Actually your argument is not sound as the person you are replying to already pointed out in a previous response to you that you seem to have missed. You actually contradicted yourself. Note:
"There were 80 cases confirmed traced to bars and restaurants."
"[80] of the infections came from bars and restaurants."
Those two statements are not the same as each other - the first, from the authorities, is true, the second, from you, is almost certainly not true unless every single infection from a bar or restaurant was actually traced.
Please, please don't use "you stopped responding, so I'm right". It is one of the most infuriating (and also pretty insulting) things you could have said. People stop responding because they have better things to do with their time, and/or because they know an interaction is bad for them or for the other person (e.g. is enraging them), and/or because they took a while to work out that they were arguing with someone who cannot change their mind, and/or even because they can't face being wrong. There are dozens of reasons for refusing to engage in a pointless and enraging discussion.
I wonder how much people changed their behavior in sunbelt states in July when cases were on the rise. I don't remember lots of new restrictions or lockdowns. New cases just kinda peaked.
I'm cautiously optimistic that the past week in the US is a blip from Labor day. Both peaks and troughs are improved from two weeks ago, but up from the week before.
There's definitely a dynamic with x% of the population distancing always, x% of the population not social distancing always, and then a certain percent that are oscillating between getting afraid and then feeling safe again - and that's what is keeping the replication rate around 1.
There were supposed to be spikes after spring break, Memorial Day, 4th of July, Labor Day, back to school, the Sturgis bike rally. There were a blip...if that.
Rather than biting our nails at daily numbers it's time to allow for individual choice and remove the government restrictions. It's clear that the virus is not nearly as potent as people think and we're prolonging this due to fear and politics - not science or numbers.
Individual choice is not really applicable in this situation. Everyone that gets sick becomes very likely to get someone else sick. You're not just choosing for yourself, you're choosing for them, which isn't good.
And there have been lots of spikes among the groups that actually changed behavior drastically, especially in places like colleges.
For some definition of "hard time:" Sweden. On the other hand Spain and France are pulling an America right now. They're currently worse than the US for new cases per capita.
What's really crazy is that movie theaters in this state aren't allowed to open, but still have to pay their property taxes (which will likely bankrupt them).
I have no love for some of them, but bullshit is bullshit.
I thought it was obscene for some studios to charge upwards of $30 for their movie, and then not kick back some of that to theatres. It probably wouldn't take much to tide them over. They aren't running much in the way of expenses other than rent.
Would have been a great tag to their sales pitch. But it's like they don't even think about theatres.
Subsidizing the restaurants without getting anything in return seems like a misallocation of capital.
Allowing 'creative destruction' on a massive scale is harmful to social stability and frankly just cruel. People didn't plan for it, because it is implied in our various social contracts that they don't need to(and that may be wrong, but this is not the time to fix that).
We should consider subsidizing the restaurants to continue to do what they do best: provide food. We need to meet in the middle and provide some assistance while still getting 'wealth'(desired goods and services in this case) but not fully subsidizing empty buildings and idle employees. The delivery or pick-up models work in a pandemic, but they fail to provide enough profit to keep businesses open. Let's bridge that gap.
This isn't the time to test out your ideologically pure political/economic/social theories. We need to be pragmatic and get our people and economy through this crisis.
You can't end with "this isn't the time for ideology" after three paragraphs of YOUR ideology.
For some restaurants, takeout is easy and they can make it work! For others, it really really isn't. What about bars, where most money is made on alcohol?
You got it backward. These restaurants all presumably paid taxes and employed people, some for literally a century. Why do you expect them right now, when they're suffering the most, to "give something back" if they don't want to die?
Because they paid taxes and employed people. It's like an insurance company that drops you as soon as you file a claim... you pay into a pool, expecting it to be there when you need it.
This is an unheard of situation, don't forget. The government (rightfully so, in my opinion) is forcing these restaurants to shut down dining. It's not like they're shutting down because they're "lazy".
Businesses don't pay taxes or employ people in the expectation of being bailed out, they pay taxes (like everyone else) in the expectation of goods and services from the Government. You may expect bailouts for restaurants as a Government service, but the vast majority of people do not.
As a business owner in a 1st world country, for paying taxes I expect infrastructure, security and a functioning legal system.
Security is much more than safety from invasions from other nations. It is a guaranteed safety net for when things go wrong; this covers everything from health care, to unemployment, to services for the homeless, and yes it includes helping businesses that collectively employ tens of thousands of people in times of crisis.
You are considering the past and the present. The bailout is solving a problem in the present that, if not solved, guarantees they have no future.
You want guarantees and there aren’t any. If you three want cover for yourself or policy makers, that’s fine. We can tweak the rules a bit to avoid some bad press. We market it as a prorated, forgivable loan if they continue to operate for a year after this is over. That should cull the dozens of restaurants that were likely already about to close before this all happened, who see the handout as a way to avoid bankruptcy.
Enough of the rest have a future we get to look forward to.
Well you're mixing up something if you have to ask "what do you think restaurants are for". They are for providing food. The thing they are currently failing to give back is... providing food.
You might disagree with that idea but you shouldn't be confused by it.
Your accusation of a "pretty dim view" sounds like you think the claim is that restaurants never give back. But that's not it at all.
> You want guarantees and there aren’t any.
What? "make them provide food" has nothing to do with "guarantees", and also this is not my opinion that I am explaining for you.
Frustration in a time of triage. You don’t discuss Philosophy or process while a patient is bleeding out in the table. We should be copycatting solutions we’ve already hashed out before.
As others have also asked, why are we discussing this now instead of six months ago? If we had anyone with any leadership in either the Legislative or Executive Branch of the Federal government, we wouldn’t even be having this conversation.
These are state issues, not federal issues. Other states have handled things differently, with different results. NYC chose a different path from e.g. Florida (which is closer to the 'Swedish' approach) which has led to a different outcome.
I can understand the frustration, but not the tone. We are discussing this here today because it arrived on the front page of HN today. We are not a triage team - we are a bunch of people trying to understand the world better. Kindness goes a long way to understanding - if you want people to see things from your side, I suggest not attacking their questions but instead question their views.
While restaurants provide food, they may not necessarily be providing quality food. Quarantine has caused some to take a hard look at their diet, and learn to prepare healthy meals at home, and reduce consumption of processed foods. Restaurant food tastes good, but is often excessive in things like sodium. Dietary recommendations likely wouldn't support eating restaurant food regularly, as people have done without questioning it.
We should just use the same objective approach as we use for classifying other drivers: anyone going faster than me is a dangerous asshole and anyone going slower than me is a dangerous idiot.
It reminds me of way back in 2000 when the NDP Party of Canada (left wing) said "we need to tax the rich way more" and a reporter finally asks "what do you mean by rich?" and the NDP leader inferred "a family of four making more than $60,000".[1]
That turned some heads, especially among the labor unions who typically vote NDP and typically make more than that.
> Among Americans with the highest incomes – a subset of upper income adults who are in the top 7% of the sample’s adjusted income distribution – about a third (34%) of those who say there’s too much economic inequality say the government should raise taxes on people like them to deal with this, while 64% say this should not be done.
This surprised me. So I'm curious, for those who are making in the top 7% and believe there is too much income inequality (over about ~$145,000/yr) -- and I do suspect there are a few of us here, you don't think that a plan to reduce income inequality involves taxation on that level of income?
When someone proposes to address a problem by giving the government lots of money, I'm always skeptical. Why should we expect them to spend that money wisely? I'm not opposed to raising taxes if there's something important to spend the money on, but the words "income inequality!" aren't IMO a sufficient description.
Large amounts of government money go towards discretionary transfers like medicare, medicaid, social security, SNAP, etc. Is your claim that you think vast amounts of that money don't get to where they're supposed to go?
I think most of these programs are characterized by extremely low administration costs as a percentage of budget.
My claim is that raising taxes won't by itself bring an effective program to fight income inequality into existence. The poll question is like asking "should the federal government expand its office space to deal with income inequality" - how's anyone supposed to know without an explanation of what it'll be used for?
> that raising taxes won't by itself bring an effective program to fight income inequality into existence.
Raising taxes on rich people changes the post-tax distribution to have less inequality, so it does literally bring into place a program to "fight income inequality." Given the fact that most government revenue goes towards social security, medicare, medicaid, you already know what it will be spent on and there already are effective programs.
How would taxing the rich more and spending it on Medicare reduce income inequality? The low income might get better/more healthcare, but they don't get any more income from that spending.
It was a pedantic point - but taxing the rich intrinsically reduces the inequality of the post-tax income distribution because the difference between the top and the bottom is less.
> The low income might get better/more healthcare, but they don't get any more income from that spending
Lots of reasons - one is expenditures on healthcare by the employer, another is lost income due to injury/illness that preventative care could have prevented and that's before you start looking at medical expenses.
When people discuss fighting income inequality, they're generally referring to structural obstacles, not the precise dollar amounts of the post-tax income distribution. If we increase Social Security funding by 10% with a haircut to all incomes above $100k, but don't change the underlying division between rich professionals who choose whichever job most satisfies them and poor millennials who never expect to achieve career satisfaction, I don't think we've successfully fought income inequality.
> they're generally referring to structural obstacles,
I agree, and I'm not saying that 10% increase to social security fundamentally changes the underlying division. I think more drastic action is needed. But I wouldn't fight against a haircut on incomes over $100k that expanded the lower limits on medicaid (which many poor millennials take advantage of), even if income inequality still existed at the end.
Are rich, left-leaning professionals really under the illusion that the sort of policy change needed to fight structural inequality will lead to no change in their own relative purchasing power because there are even richer baddies out there to tax?
Again, the fundamental question is whether structural inequality is indeed a problem that can be solved by government spending, and I don't think it is.
One of the reasons, I assume, is that plenty of those making >$145,000 live in HCOL areas and after paying for housing, childcare expenses, etc, they don't feel very "rich". So they likely agree the rich should pay more, they just think they are one of them.
> So they likely agree the rich should pay more, they just think they are one of them.
1. Pew adjusts for COL in its income distribution, so no.
2. HCOL are HCOL because they are desirable. It's not just a higher cost of living for the exact same quality of life.
> they don't feel very "rich"
I think the point is that there is a psychological phenomenon where objectively very high-income people don't "feel" rich. Even after "housing, childcare expenses, etc," six figures is relatively affluent in my book. Also this was $145,000 for a single person, so I'm not sure childcare would factor in for most people.
Well shit, that's what I get for skimming the report.
I don't disagree with you at all. It's not reasonable to say "the middle class have a single family home in the mid-west, so if I don't have a single family home in SF, then I don't even have a middle class lifestyle".
And yes, a single person in a HCOL area making >$145,000 per year, is well off. It's just that well off in a HCOL area means owning living in a 2-bedroom apartment, rather than a 3,000 sq ft home.
But what about the overlap? And tax the rentier bracket's what?
The reality is that that professional/managerial bracket has a large proportion of both the wealth and income in America, just because there are so many compared to the extremely wealthy large-scale owner class.
Tax the rentier bracket's rent income. The overlap need not be considered.
> The reality is that that professional/managerial bracket has a large proportion of both the wealth and income in America
This is irrelevant. Tax policy should not be judged by what proportion of total wealth or income it collects, but by the economic incentives it creates and the externalities it offsets.
I agree, we just have different perspectives on which consequences are relevant, and on which timescales.
Optimizing for "size of resource collected" at time 0 affects the system and each agent's incentives within that system, usually leading to the kind of adversarial loophole-chasing/closing we see with income tax and tax havens.
Optimizing for economically sound incentives will lead to higher "impact" (by my definition, reduction of externalities, inefficiency, and inequality) in the long run for a dynamic system, imho.
The commonly used definition, even among non-economists, comes from the OECD and Eurostat. You are rich if your equivalised household income is over 150% of the median.
Many restaurants are actually very inefficient food producers, and specialize in providing a nice setting for a date or other dining experience. Other restaurants specialize in providing a place for people to hang out with colleagues after work, or a place for recreational sports teams to have a meal after the game. These business models have been destroyed, and nobody will pay for the 'services' which cannot be delivered.
Does anyone know what happens in practice with places where restaurants run in a space where the landlord defaulted?
If the place is repossessed, I expect a bank which takes over the space would have more gain from literally anyone paying anything for the place until it's sold. On the other hand, I'm not sure the partial rent would be relevant at all to the bank which likely has no issues with sitting on an empty property. What's likely to happen in practice?
The Fed creates new emergency program / SPV that purchases foreclosed properties from banks, leases it to the original landlord at near-zero rates; until the outlook is more table equity value becomes positive again and then this 'troubled asset' will be sold back to the original bank.
Basically, expect several years of mortgage holidays for property owners, through the Fed.
To inflate the property market, the Fed will continue to purchase mortgage backed securities, (they currently own 1/3 of all MBSes) driving down the cost of interest, which increases borrowing power and demand, and drives up home prices.
It's ridiculous that we couldn't coordinate a rent/mortgage forgiveness plan alongside all the customer bans put in place across the country. If a restaurant can't stay open, they shouldn't pay rent. If the property owner isn't getting rent, they shouldn't have to pay mortgage. And so on, up the entire chain.
The Federal Reserve seems primarily focused on keeping asset prices high. Their policies seem to react directly to downward pressure in the equity markets.
When you consider that the appreciation of these markets only serves to widen the wealth gap, it becomes clear that the Fed's mandate is to preserve the wealth of the rich. They're pursuing "trickle down" economics at full speed, despite the overwhelming evidence that "trickle down" is a myth.
The US population is too busy arguing over race issues and partisan politics to realize the financial system is stealing from the poor and giving to the rich.
> The Federal Reserve seems primarily focused on keeping asset prices high
Pshh - the Fed is focused on hitting unemployment and inflation targets. Low yields in the credit market shifts investment demand towards equity.
The "downward pressure in the equity market" is also deflationary pressure and accompanied by a rise in unemployment. Just because the two coincide doesn't mean the Feds principal goal is high asset prices.
The race issues are part of the financial theft. Racism is used as a tool of division to keep the poor fragmented, people are rightfully trying to destroy that tool.
Top of the chain is "dumb money". Like pension funds and municipal or foreign funds. Those got destroyed in 2008.
The Fed can only absorb so much (currently at a record 30% of mortgage bonds). Banks and the financial markets are not stupid and quickly resell everything. In 2008 they were caught with just ONE batch of mortgage backed securities and it bankrupted a couple. It's not going to happen again.
It's dismaying how GP proposes such a terrible idea. And what worries me the most is the majority of voters have the same feel-good ideas. We are going to get screwed from both sides.
Right - the money handed out isn't going to save businesses that cannot operate safely. Movie theaters and gyms to name a few others also fall into this category.
When you go up that chain you will eventually run into a very serious monetary crisis that would crash the banks, the real estate market, and the entire economy.
No, you would end up with another bank bailout, except this time the banks didn't do anything wrong and it was the government's fault for screwing up the pandemic response. In other words, it would be compensation for the government's failure, not a bailout.
Everyone wants to blame someone - e.g. its the governments fault! In reality, its just an external force that everyone is dealing with, a plague, if you will - its not anyone's fault; it just must be faced, that during a plague, there will be suffering, and there will be casualties. It's that simple.
No, it is not that simple. There are various ways to respond to a plague, and some are better than others. Some responses result in far more casualties than others, in addition to the economic damage. We can all see that some governments responded well and others did not.
No country is coming out of this unscathed. Even the ones that kept their cases low are going to be in a world of economic hurt. And they have far few ways to weather the storm than Western countries.
You're kidding, right? Look at unemployment rates in the EU or Japan compared to the US. These are all first-world countries and yet there is still a vast difference in outcome.
There are various degrees of being scathed. "Everyone gets scathed" is not an argument. Some did way, way better than others.
The US made a different set of choices to Western Europe with respect to unemployment. Europe (mostly) chose to maintain existing employment, while the US chose to make unemployment benefits much more generous.
In a short pandemic world, it's likely that the European strategy will perform better, while in a long pandemic world, the US strategy may perform better.
I do agree with the OP though, it's far too early to tell (except letting the unemployment benefits lapse in the US was almost certainly a bad idea).
Why is unemployment rate the definition of "success"? The US expanded unemployment insurance payment significantly. So if the gov't is giving businesses money to keep workers "employed" or just pay them through unemployment insurance, why is one better? It's still a gov't transfer to workers at risk.
And again, I wouldn't call out a "winner" just yet. Those decisions will likely have vastly different impacts post-epidemic.
> we can all see that some governments responded well and others did not.
Can we, though? We are not even half time yet (most likely). How are we going to judge a government in the beginning of a pandemic as if the pandemic was already over? Maybe what looks like a poor strategy now will turn out to be the best later. Same true for the economic bailouts, some countries went harder than others, and it's not yet clear which will work better.
There are some anomalies that's difficult to explain (Sweden, for example). Sure, we can retrofit some model, and imagine we have it all figured out, but could you have predicted it correctly?
What is the anomaly? Sweden has done substantially worse than all of its neighbors in both lives/health and economic impact. Which was exactly what many people predicted.
It's not clear Sweden has done substantially worse than its neighbors [0] and regardless we're not through this and different countries and counting a number of things differently.
5 years from now when we look at the death certificates from nations with reliable death certificate records, we might have a better idea.
What about all the reits? A lot of bonds are backed by mortgages. If no one is paying rent then aren't all property owners in serious trouble? What about the massive tax hit for all local governments from property taxes. This isn't a simple problem.
You're going to have to explain that one in detail for me. We have now generated trillions in liquidity for corporations. Maybe I'm dumb; walk me through how this would "crash the banks", real estate, and "the entire economy".
It creates a cascading effect. There's an insane debt bubble and a lot of that debt will lose rating, so many investors will drop it creating a feedback loop. Dumb money have to drop it because of their mandate and/or rules, even if this is bad for their other assets (i.e. more debt they hold).
This would be the dumbest idea right now. I hope government agencies worldwide can resist the attack from media.
[Don't get me wrong, fuck banks, evil hedge funds, and speculative landlords, but they are barely going to be hit by something like this.]
Banks will never, ever get caught with bad debt again. They learned the lesson in 2008. There's even regulation blocking that. This will be "dumb money" so our pensions and government funds. These take ratings agencies at face value and have no nuance and very slow to move on news like GP's feel-good idea.
Which country implemented rent/mortgage forgiveness? The US implemented mortgage deferral, plus SBA loans for rent for small businesses. The lack of general rent deferral was to force larger companies to bear some of the cost of shut downs. France and Germany didn’t do appreciably more—they simply imposed deferrals or moratorium on eviction.
It’s a problem when you consider the trillions more the fed sent to loans for big businesses + banks, buying stocks, and buying mortgage bonds (which also kinda went to banks).
It is, kind of obviously, not exactly the same thing, and the 51% of Wikipedians who agreed about the content of that article agree, because it does not support the point you're making. Instead of attempting an axiomatic derivation of the term, you could just link to an actual discussion by economists of the term, most of which make the distinction between the layperson use of the term "rent" and Ricardo and Krueger's definition.
It’s “the same” in the sense that it’s an example of rent-seeking. Here's another definition [1]:
> David Ricardo introduced the term “rent” in economics. It means the payment to a factor of production in excess of what is required to keep that factor in its present use. So, for example, if I am paid $150,000 in my current job but I would stay in that job for any salary over $130,000, I am making $20,000 in rent.
Similarly, a landlord charges rent in excess of what it costs to maintain the land and building. Unless I’m misunderstanding Ricardo’s definition, that fits neatly inside of it.
By that interpretation any profit making is rent seeking.
A landlord is not “rent seeking” just by charging rent. For instance they are providing value in the form of risk arbitrage in most cases.
The only case a landlord is purely rent seeking in the economic sense is if they only captured the difference in value of their properties due to external factors.
Right, as I understand it, the "economic rent" (ER) of an apartment lease would be the extent to which the cost of the lease was inflated by artificial scarcity (as opposed to just supply and demand). There are, then, rent-seeking things you could do as a landlord/developer, but in a well-functioning market where you're competing with lots of other landlords, the price of a lease reflects the market value of occupancy and does not include ER.
Similarly, one of the classic examples of ER is wage premiums paid to closed-shop union members: the clearing price for the labor involved is, say, $20, but your union bumps that up to $25; the extra $5 is ER. There is directly substitutable labor that could be acquired at a discount to union labor, but closed-shop rules lock in the extra rents.
I always see the argument of "when all the mom & pop landlords are gone, major corporations will own everything, so we have to protect them".
That consolidation is going to happen anyways. It's inevitable. The only factor is how long it takes for it to happen, and how big the payout will be for small landlords when they finally decide to cash out. There's much more at stake for the renters.
Forcing small landlords into choosing between selling immediately or facing bankruptcy in the near future is morally preferable to putting the burden on renters. The world isn't really a worse place if a landlord has to liquidate their assets at a 150% net profit now instead of 320% in ten years (after accounting for all rent collected and taxes paid).
If they had the capital to afford a commercial property in the first place, this won't be potentially life-ruining. You can't assume the same for a non-chain restaurant or grocer that serves as the owner's livelihood.
I don't think that consolidation is inevitable at all, Americans are increasingly disillusioned with big business and there is a slowly growing anti-corporate sentiment being expressed (albeit opportunistically) by politicians as varied as Liz Warren, Ron Wyden, Marco Rubio and Trump. Matt Stoller's Substack is a great resource to learn more: https://mattstoller.substack.com/
Landlords were/are bailed out in US. Landlords are businesses. MY LLC got a 30 year very low fixed interest loan, first 10K of loan automatically forgiven, based solely on the LLC's income from last year. The loan amount was roughly 60% of last year's revenue. Oddly enough, actual lost revenue was about equal to the loan amount, but the gov't had no way of knowing that and didn't even ask.
I'm sure every landlord in the country signed up for that or one of the several other coronavirus relief options. Any wonder why the stock market is up? That's a lot of free money sloshing around.
Germany put a moratorium on evictions, allows deferral of some taxes, pays small and medium businesses up to three months of lost revenue (up to 150k€) and the state owned development bank gives out low interest loans to affected businesses.
Most of these businesses could barely keep up during the best of times; the vast majority of them will never be able to repay a single months missed rent, let alone half a years worth.
Mortgage and eviction deferral have only put off the inevitable; without forgivance or direct cash infusions, they’ll still fail, probably right after the last whisps of political will to fix this disappears.
Providing space for rent, especially to restaurants, is a gamble already in normal times. So one could argue that missing payments is part of the natural risk property owners have to bear.
On the other hand one could argue, that a government has to pay damages for business lost if they implement regulation shutting down that business.
At least, that is something that is part of modern international trade agreements. I know I shortened the argument here.
What I am trying to get to is the fact that there are no easy answers and that potential solutions will necessarily be colored by political leaning. This is a situation that is new and not solved with an easy fix.
This is over simplified. It's better to lose a finger to an infection or cancer, versus have it spread to all parts of the body. Its the same thing with fiscal policy.
I think it’s unsurprising that big changes to the legal system can’t easily be made on an ad-hoc, emergency basis. But that’s no excuse for not preparing for the next crisis.
Contracts should have a “disaster clause” suspending payment during an officially declared disaster. Perhaps Freddie Mac and Fannie Mae could require this for home mortgages?
> Q: If a contract does contain a Force Majeure clause that includes “epidemic” or some form of the “other causes beyond the reasonable control of a party” language, does that mean one or more of the contract parties do not have to perform, as a general rule?
> A: Not necessarily. First, it should be noted there is not much jurisprudence in the U.S. that address “epidemics” as a Force Majeure event. So the courts have not, to date, had an opportunity to provide clear interpretation or guidance. That is likely to change soon. Second, there needs to be a real causal connection between the occurrence of a Force Majeure event and a party’s ability or inability to perform under the contract. By way of an over-simplified comparative example, consider today’s situation, where there is undoubtedly an “epidemic” of COVID-19 occurring. Most homeowners cannot simply stop paying monthly home mortgage payments even if the loan documents contain language that includes “epidemic” as a Force Majeure event. This is because the Force Majeure event, as expressly stated in the contract, has not directly created an effect that excuses the homeowner’s performance – to pay monthly installments to the mortgage company. In contrast, if a public school district engages a consultant to observe and evaluate students’ use of a new technology in the classroom, and the contract contains similar Force Majeure language, the government’s decision to temporarily close all public schools because of the epidemic precludes the consultant from completing the evaluation.. Very likely, the Force Majeure clause would excuse the delay in the consultant’s performance.
> In between these very simple examples are countless real-world situations that will likely arise as businesses try to predict their respective futures.
> For this reason, we turn to testing the hypothesis that variation in the share of small businesses with existing bank financing explains the variation of PPP loans approved across states. The top panel of the figure below shows the share of small businesses with bank financing in 2019, while the bottom panel shows the share of firms receiving PPP loans.
> We can see that there is strong similarity in shading between the top and bottom panels, consistent with the lenders’ preference explanation. This relationship is further confirmed in unreported regressions. Our interpretation is that banks’ preference for their own customers causes the PPP to favor firms with existing lending relationships.
That's exactly what an economic contraction is. A long chain of payments not being made (regardless of one's legal obligation to do so). Breaking the chain causes new problems.
It reduces spending and purse strings get tightened. When the mortgage doesn't get paid, the mortgage backed security isn't getting its repayments. The retirees living off the dividends from the REIT don't get paid. Then the retiree spends less in the economy, which would've paid the restaurant worker's wages.
When the chain breaks, the whole system is impacted. Think of it as a graph. When payments aren't flowing from one node to the next due to crisis, the solution is to have the government ensure those payments be made via taking on debt in bad times (and less borrowing in good times).
Yes, but let's be honest, most retirees today aren't living off dividends. Except for those who are indirectly living off them through pension plans. And those huge pensions and funds will be the first to receive a bailout.
The vast majority of the ownership of the stock market is owned by the very wealthy.
Most of main street's wealth is in their home, and while home values dropping can hurt them, these assets aren't usually income generating.
Economics isn't that simple, you can't invent demand out of thin air and printing money is a very short term solution with huge long term impacts.
Dealing with debt is risky, whether you are the lender or the borrower. I completely agree with opinions that it is utter BS that the government effectively bailed out banks and corporations while leaving the rest out to dry, but the solution isn't further bailouts.
Life sucks sometimes, governments can't fix that. A pandemic spreading fast enough to bring broad shutdowns doesn't come free, and unfortunately small businesses sitting on piles of debt and tight margins are the first to bleed. Economic systems have pros and cons; with Capitalism we often get accelerated growth and innovation but the downside is that when things go south it can be a much faster and deeper cut.
> ... following six months of partial — and in some cases total — closure due to COVID-19 shutdowns.
At the risk of appearing churlish -- given the preponderance of nation states around the world that had significantly shorter full lockdowns, and the USA's apparent predilection for litigation, it sounds like an excellent opportunity to make a compelling case against the causative elements.
Welcome to the everything bubble. We now have to choose whether people hurt in nominal or real terms. I think we will collectively decide to hurt real wealth rather than nominal wealth. All the two-sided obligations work out better that way. The difficulty of avoiding taxation on real wealth is probably for the 'greater good'.
What leverage do landlords have in enforcing payment, if no one would move in if they evict a business? I certainly would only pay very discounted rent until society reopens and I think it would be insane for anyone to suggest otherwise.
This is what I don’t get. You’ll pay more attracting a new tenet than if you just forgave rent until the time came that the property could hold a viable business again.
Not surprising. Restaurants were marginal businesses during the best of times; reducing capacity by 25-50% is a death sentence for all but the most profitable ones.
Things in the US seems absurd from an outsider perspective due to ideological beliefs.
On the same month, you can read two articles coming from the US:
1) Jeff Bezos Becomes The First Person Ever Worth $200 Billion
2) Almost 90 percent of NYC bars and restaurants couldn’t pay August rent
It doesn't take much thinking to conclude that there is something messed up with resource/capital allocation in this economy. But there are fanatic capitalist in the US with a blind/irrational faith in the "invisible hand" that is as dogmatic as praying for Zeus in greek mythology.
Even worst, they can't even get their population to wear masks like many other countries to at least slow down the transmission, mainly due to another set of extreme dogmas and tribalism.
It seems that superpowers can't help but get decayed from inside. With time and enough arrogance, world power societies tend sink in their own delusion when the rest of world pragmatically catch up and pass them by.
Hypothetically, Bezos could own all of the bars in NYC, decide they are now a bad bet, and not pay their rents. He could invest elsewhere while those businesses go bankrupt. It would be wise of him, in this hypothetical, to deploy capital to a place where it would obtain better returns than propping up a broad cross-section of marginal businesses.
To your last paragraph, all superpowers eventually fade. Look on my works ye mighty and, etc.
Again I'm not pointing at Bezos, he contributed a lot of great innovation to society and I'm a big user of Amazon services, I merely pointing out that things are really out of balance. And this inequality trend was bad before Corona and it just got way worst. So something seems fundamentally broken.
Throughout most of human history wealth/power has been wildly skewed into a small number of hands. The historical anomaly is that equality today has become pervasive to the point that we find inequality to be noteworthy. Current trends may be reversion to the historical mean without anything being fundamentally broken.
It's been a hell of a good few centuries for much of humanity. We should keep it up, of course, but a reversion is normal in a dynamic system with feedback even when an upward trend is "sticking".
But my understanding that that human society were mostly hunter gatherers, with little resources to speak of and there is no concept of capital ownership and accumulation since there is nothing material to accumulate, it is only after the agricultural revolution (ownership of land and slaves) and industrial revolution (ownership of machines and oil) and information revolution (ownership of data) that capitalist started accumulating and owning more and more resources. Therefore, I really don't think capital accumulation is the natural order of things, just as fat accumulation in today's carbs rich society is not what the human body is designed for.
I understand your perspective, but I think, and with all respect, it is defeatist mindset. There is sure a better modern economical systems specially with the improvements in human capability to make decisions using AI and modern technology.
Kings and pharaohs accumulated capital even if they didn't use the word. We're something like 10,000 years into amassing resources at scale in the hands of the few.
This growth coincides with states, incidentally, and is the subject of the very cool book https://www.amazon.com/Against-Grain-History-Earliest-States.... That book combined with https://www.amazon.com/gp/aw/d/022647822X (as a state, like a dog, must compete in an ecological niche) and an archeology professor that liked to point out that "progress" is a recent Western invention (vs recorded history) inform my perspective here.
I am not saying that we shouldn't strive for better, just that I don't see a fairly short reversal, on the timescale of a lifetime, as a compelling reason to scrap the approaches that collectively have brought us this far.
I agree, I also don't see fairly short reversal either, but I do see a future possibility.
I think I get your point now, you're saying that the current inequality existed since humans started accumulating resources (age of kings and pharaohs) and the strive for more economically equal societies is a very recent goal.
Where I think we differ though, and correct me if I'm wrong, that you seem to implicitly imply that the current inequality is the natural order of things, given it's prevalence in modern human history. However I think it is the opposite, in that it is a recent trend, yes, 10k years is recent relative to 300K+ years of humanity, and there is nothing really natural about it, it is a byproduct of an aging human created socioeconomic systems, and not some physical law of nature, and it could and should be improved, that I think is the critical task of modern economists (and I'd love to read some books on that topic if any).
I'll start reading the suggested books, I enjoyed the argument you presented because it puts the current inequality in the larger historical context.
I take only the 10,000 year historical view because I see the rise of states as a massive regime shift in human society. I don't think humans will go pre-state ever again. I can see us defeating death well before we defeat taxes. Taxes imply some power concentration which is equivalent to wealth concentration and therefore the existence of material power/wealth inequality.
I don't have any books to suggest on modern economics. I would gladly take any recommendations that you have.
That is a very good point as well, I'm now onboard with your perspective, I think it useful way to look at the current inequality trend. Let me try to rephrase your points (and correct me if I'm wrong):
1. The establishment of the state, in its most primitive form around 10k years ago, mark a significant evolution in humanity history and could be considered the starting point of the concentration of power and by extension economical resources, thus the birth
of the capitalist. (This was a good takeaway for me).
2. Given the long history of this economical structure and inequality; the concentration of resources in the hands of few, one could conclude:
a) the current trend toward equality is recent and modern attempts (I'm onboard with this as well now)
b) the reversal of the inequality will not be easy in the short-term, it is built-in with the state which is here to stay. (I agree with this statement as well)
However, what I'm thinking now, is why some modern societies/states (like in europe) seem to be way more economically balanced than others (say the US)? doesn't that weaken point 2.b? are they developing better economical systems? What do you think?
That's a nice summary and better said than I did it. I don't claim the state is an evolution, just different and impossible to undo once the concept is brought into existence. Think nuclear technology. Nuclear can't be undone either, at least in the knowledge sense and someone striving for weaponry. (No claims on nuclear as good or bad.)
European examples do not weaken 2.b. There are still large wealth disparities to be found.
Another good point. I think this is sufficient for me to adopt your view point. Thanks for this discussion, I learnt something new about economic inequality.
It doesn't take much thinking to conclude that there is something messed up with resource/capital allocation in this economy
Well, yes. The government forbids people from using local businesses and forces them on pain of terrible retaliation to buy from online services, and Jeff Bezos is very good at running those. That is a messed up allocation of resources but it's not Bezos' fault the government made so many of his competitors illegal to use.
"Meanwhile, 90 percent reported they have been trying to negotiate their leases, but their landlords wouldn’t budge."
This is alarming. It may seem like just another statistic lost in a bigger article, but it's symptomatic of a ticking time bomb in NYC, and commercial real estate more broadly.
tl;dr - the loans on these restaurants are all bundled into commercial mortgage backed securities (sound familiar?) and sold to wholesale investors, and the landlords are unable to change the terms of the lease, or the banks will revalue the underlying asset based on a multiple of the rent, and the owner will either essentially get margin called, or end up with negative equity, and default on the loan.
Can someone from Wall Street please add their thoughts?
It is irrational behavior for these landlords to evict or pileup unrealistic future obligations. On the other side of covid it will be far better to have an existing in place restaurant or bar tenant than to try and lease space in a glut market and take on lots of tenant onboarding costs.
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