Economics question: Would suspending ALL loans and rent help keep the wheels on?

[Shad]

We're in unprecedented territory here.

Only in part.

What I'm wondering about is not STOPPING payments, merely SUSPENDING them - across the board.

I used stop as in suspend collection. Government still does not have that power in Western nations.

 

[icehorse]

I used stop as in suspend collection. Government still does not have that power in Western nations.

for the sake of discussion, let's say that the government had such power for temporary measures during emergencies. In that case, what do you think of a temporary, across the board, suspension?

 

[Shad]

for the sake of discussion, let's say that the government had such power for temporary measures during emergencies. In that case, what do you think of a temporary, across the board, suspension?

I wouldn't support across it across the board as many companies do not rely upon consumer customers and direct points of purchases like the average citizen or small business. Such companies use large bulk orders that can be over the course of years instead of individual sales in a piecemeal fashion. Depend on contract payment may be made after a contract is signed. Ergo some companies already have some of their yearly revenue regardless of what the outbreak did. In addition I would need action covering mortgages as many are tied to rental properties. Without relief suspension merely passes the buck due to legal difference between rent and mortgages

 

[icehorse]

I wouldn't support across it across the board as many companies do not rely upon consumer customers and direct points of purchases like the average citizen or small business. Such companies use large bulk orders that can be over the course of years instead of individual sales in a piecemeal fashion. Depend on contract payment may be made after a contract is signed. Ergo some companies already have some of their yearly revenue regardless of what the outbreak did. In addition I would need action covering mortgages as many are tied to rental properties. Without relief suspension merely passes the buck due to legal difference between rent and mortgages

right, well it seems like it's "mortgages and loans all the way down" In other words there are many layers of loanees and loaners, and I'm imagining suspending ALL of the layers.

 

[Revoltingest]

We're in unprecedented territory here. What I'm wondering about is not STOPPING payments, merely SUSPENDING them - across the board.

Instead of stressing lenders & landlords, why not require
that employers (both companies & governments) just
continue paying workers even when they aren't working?
This way, no one is harmed. We all win.

But if rent & loan payments by borrowers & tenants are to
be suspended, government should make up the lost income
to the lenders & landlords. Once again, everyone wins.

 

[Shad]

right, well it seems like it's "mortgages and loans all the way down" In other words there are many layers of loanees and loaners, and I'm imagining suspending ALL of the layers.

This pushes the buck to bank thus we have come right back to aid to banks. Banks will have reduced funds thus this limits lending especially to those on government aid. When people start taping savings and investments banks will need to pay those out. As I said before banks in the US only need to have a limit amount of currency available which is no where close to equaling the amount a bank holds on paper. Banks will need to liquidate assets which will be at a lose as investments are risky at this time. This can create a domino effect. This is why the government is injecting aid into the banks as loans as in the end government is on the hook not the bank. The bank is a middleman as far as aid goes. That is granting banks do not play games with aid.

Canada's government put aside 150b in the event banks need more aid. The idea is to buy mortgage contracts from the banks. Government is also backing loans from banks as a co-signer so banks can rid themselves of a contract buy another contract buyout by government at a later date after the outbreak and lockdowns are over

 

[Shad]

Instead of stressing lenders & landlords, why not require
that employers (both companies & governments) just
continue paying workers even when they aren't working?
This way, no one is harmed. We all win.

A lot of business sectors do not have the funds to pay employees without revenue from customers. Small low quality retail and low cost barbershops/salons are one bad month away from closing in good times in many places. Now a lack of customers and closure puts a lot of business on the brink of collapse.

 

[Revoltingest]

A lot of business sectors do not have the funds to pay employees without revenue from customers.

What! You dare argue economics over people's well being!

Small low quality retail and low cost barbershops/salons are one bad month away from closing in good times in many places. Now a lack of customers and closure puts a lot of business on the brink of collapse.

Hmmm.....I guess you're right.
Any solution shouldn't exacerbate the problem.


Does these posts sound dripping with sarcasm?

 

[icehorse]

@Shad @Revoltingest

I can't help but thinking that what you're saying is all based on what we've been told by bankers all of our lives. Something vaguely along the lines of "the economy will crash unless we have endless growth". Do either of you have links to proofs that back up these economic truisms? I'm not trying to be snarky here, I just have a sense that there are ways to skin this economic cat other than what bankers say there are.

 

[Heyo]

Nope. Saying nationalize it is not an argument nor does it infer it is an rational alternative. Make an argument otherwise you are merely asserting in the shallowest of ways.

1. It has been done and works outside of the US.
2. Stocks can be sold whenever it is economical or politically convenient.
3. Regulations can be implemented by reformulating contracts, no laws necessary. Oversight is direct.
4. I think it is a better incentive for companies to be cautious. Nationalization is a far worse threat for companies than simple bankruptcy.
5. It is practically the same as if a private investor "saves" a company.

 

[Heyo]

Instead of stressing lenders & landlords, why not require
that employers (both companies & governments) just
continue paying workers even when they aren't working?
This way, no one is harmed. We all win.

I have posted it elsewhere: reduced hours compensation (connected to unemployment insurance).
US - 3.3 million unemployed due to corona
Germany - 0 unemployed due to corona

 

[Shad]

@Shad @Revoltingest

I can't help but thinking that what you're saying is all based on what we've been told by bankers all of our lives.

I am looking at history involving horrible practices by banks and government enablers.

Something vaguely along the lines of "the economy will crash unless we have endless growth".

None of my points are about endless growth. My points are above preventing a collapse where citizens lose not the CEOs.

Do either of you have links to proofs that back up these economic truisms?

Why? I never promoted it.

I'm not trying to be snarky here, I just have a sense that there are ways to skin this economic cat other than what bankers say there are.

You are making a giant assumption which is just standard rhetoric from the left. It is parroting, nothing more. It is devoid of thought and consideration of what I actually posted. Your response leads me to believe these topics are over your head if you think I am promoting endless growth.

 

[Shad]

1. It has been done and works outside of the US.

USSR collapsed. NK is a ****hole. Next!. Now provide examples instead of vague statements. Example in the middle of a crisis mind you.

2. Stocks can be sold whenever it is economical or politically convenient.

Stocks have value not determined by government. If no one wants to buy you have no sale. No one is going to invest in a business that is tanking.

3. Regulations can be implemented by reformulating contracts, no laws necessary. Oversight is direct.

To change a contract government is not party of requires law or voluntary action by parties involved. Regulations are law. You are merely asserting without knowledge like an authoritarian, nothing more. Try again.

4. I think it is a better incentive for companies to be cautious. Nationalization is a far worse threat for companies than simple bankruptcy.

That is a threat of tyranny, nothing more.

5. It is practically the same as if a private investor "saves" a company.

Nope as a private investor does not create law, have a force of armed employed as enforce law, a military, prints money and control the lives of people as government.. Try again.

 

[Shad]

What! You dare argue economics over people's well being!

My bad. Should I follow everyone else by putting up vague statements and just say "It's the economy stupid"? /s

Hmmm.....I guess you're right.
Any solution shouldn't exacerbate the problem.

It isn't so much the solution but the bias of those making suggestions. Many posters have an anti-bank and anti-corporate bias because they have been told what to think. Thus every corporation is some mega-multinational that is evil in their head while having a scrooge mcduck vault.Government has made it impossible for corporation to sit on large sum of money. Liquidating asset right now is a going to come with a loss. Aid can be controlled better and be offset by central banks interest rates.

Does these posts sound dripping with sarcasm?

I had to get a bucket.

 

[Revoltingest]

@Shad @Revoltingest

I can't help but thinking that what you're saying is all based on what we've been told by bankers all of our lives. Something vaguely along the lines of "the economy will crash unless we have endless growth".

Clearly, you've not been reading my posts. I've long said that
growth is not a sustainable model.. I oppose endless growth.

Do either of you have links to proofs that back up these economic truisms? I'm not trying to be snarky here,

You'll have to describe any truism you want me to justify.
Otherwise how can I possibly respond?

I just have a sense that there are ways to skin this economic cat other than what bankers say there are.

I haven't even heard any bankers speak about this.
So I'm not basing my views on their opinions.
I speak as a lender & a landlord.
It's what I do.

Who's telling you what to believe?

 

[Revoltingest]

I have posted it elsewhere: reduced hours compensation (connected to unemployment insurance).
US - 3.3 million unemployed due to corona
Germany - 0 unemployed due to corona

Hey, don't take my sarcastic suggestion seriously!
It confuses & frightens me.

 

[Shad]

I have posted it elsewhere: reduced hours compensation (connected to unemployment insurance).

EI has been expanded in a number of nations including the US.

 

[Heyo]

USSR collapsed. NK is a ****hole. Next!. Now provide examples instead of vague statements. Example in the middle of a crisis mind you.

GB - State-owned enterprises of the United Kingdom - Wikipedia
France - Category:Government-owned companies of France - Wikipedia
Sweden - List of government enterprises of Sweden - Wikipedia
Germany - State-owned enterprises of Germany - Wikipedia

Just a small sample. Some of those aquisitions have been made to avoid those companies going under.

Stocks have value not determined by government. If no one wants to buy you have no sale. No one is going to invest in a business that is tanking.

Right. That's why the government buys them so they don't have to go bankrupt. When the company has stabilized, the stock value goes up again.

To change a contract government is not party of requires law or voluntary action by parties involved. Regulations are law. You are merely asserting without knowledge like an authoritarian, nothing more. Try again.

When he government is owner of a company it can offer its workers better contracts. That will be voluntary but who is going to object if the contract is better. Even if the company is later sold, the contracts remain unless the new owners offer an even better one.

That is a threat of tyranny, nothing more.

I guess that's how hard core capitalists see it. A very strong incentive to not get into such a situation.

Nope as a private investor does not create law, have a force of armed employed to enforce law and a military, print money and control the lives of people as government.. Try again.

And that is a counter argument against the state owning corporations why?

Btw: even the US has bought companies in the past:
State-owned enterprises of the United States - Wikipedia

 

[icehorse]

You are making a giant assumption which is just standard rhetoric from the left. It is parroting, nothing more. It is devoid of thought and consideration of what I actually posted. Your response leads me to believe these topics are over your head if you think I am promoting endless growth.

why the tone dude? get over yourself.

 

[Shad]

GB - State-owned enterprises of the United Kingdom - Wikipedia
France - Category:Government-owned companies of France - Wikipedia
Sweden - List of government enterprises of Sweden - Wikipedia
Germany - State-owned enterprises of Germany - Wikipedia

None of which formed in the middle of a crisis. Like I said saying nationalize it is not an argument. Try again.

Just a small sample. Some of those aquisitions have been made to avoid those companies going under.

None of which were formed in a crisis nor say how nationalizing an industry will resolve this crisis. Try again.

Right. That's why the government buys them so they don't have to go bankrupt. When the company has stabilized, the stock value goes up again.

Assertion. You are assuming the best case scenario based on nothing.

When he government is owner of a company it can offer its workers better contracts. That will be voluntary but who is going to object if the contract is better. Even if the company is later sold, the contracts remain unless the new owners offer an even better one.

Irrelevant.

I guess that's how hard core capitalists see it. A very strong incentive to not get into such a situation.

Assertion.

And that is a counter argument against the state owning corporations why?

Read my post and what I was replying to again then try again.

Btw: even the US has bought companies in the past:
State-owned enterprises of the United States - Wikipedia

Again not created in a crisis nor does anything indicate nationalization was to resolve a crisis. Try again

Yawn. You have no argument for how this will resolve the crisis. You merely assert it will. Yawn. Try again