More than half of American retailers didn't pay their rent in April and May • Hacker News Board

Re: More than half of American retailers didn't pay their rent in April and May

#111

Post by satvikpendem » Thu, Jun 04, 2020, 9:59 PM UTC

serf wrote: post #43

jawns wrote: post #38

It feels like a huge wave just crashed, and many people standing waist-deep in the water think things are on the upswing now -- when really they're about to get sucked into a powerful undertow. Judging by the state of the stock market, many investors seem oblivious to the magnitude of the effects of the pandemic. The S&P 500 lost more than a third of its value in the pandemic crash. Yet the index is now two-thirds of…

>Given the harsh economic reality, I'm very bearish right now. as am I. I've more-or-less frozen my trading until a) a recovery plan is clear and being executed or b) until it is more clear we've hit a real bottom. All these hopeful spikes that do not correlate to the economic reality are probably going to throw a lot of people through hoops until any real roof or floor is hit. It sucks because I keep having these "b…

Time in the market beats timing the market. If you continue to invest regularly even in a down market you will eventually make more than those who target peaks and dips.

Re: More than half of American retailers didn't pay their rent in April and May

#112

Post by uoaei » Thu, Jun 04, 2020, 10:00 PM UTC

ohyes wrote: post #75

uoaei wrote: post #65

Earlier quoted context omitted.

The parallel here, to me, is that the stock market is solely based on investors' perceptions of reality, not reality itself. As soon as investors realize that their investments are untenable, they will pull out, triggering an accelerating freefall until we hit terminal velocity. The economy is unhealthy but people can be convinced to ignore that because it's not easy to see the holistic conditions of the US economy o…

Right, but we don’t want that. How can we avoid that?

The roadrunner is achieving prosperity. He goes far, fast. He keeps winning because he is obeying his animal spirits[1] -- literally running on roads. The coyote pursues prosperity, but rather than using his animal spirits, which would tell him to hunt like a coyote does, he instead repeatedly requisitions absurd contraptions that are manufactured by "Acme." We presume (because the cartoon is on TVs in America, and America's mythos is pervasive and ever-present) that Acme is a private company which uses the free market to drive its innovation and development cycles. Acme's advertising is presumably based on their mail-in order business, which at the time was heavily oriented toward homemakers and other "normal people." These contraptions invariably have negative unintended consequences, and yet Wile E Coyote turns to them in the next episode for the next great promise in technology, never learning his lesson.

The metaphorical business cycle plays out in every episode: Coyote puts his trust in the Solution To His Problems; he spends money and time buying and setting up the contraption that will Solve His Problem; he deploys it, but because of external (usually environmental) conditions it fails; Coyote is worse off than before because he over-extended himself. Coyote in this case would be a small business owner or similar everyman who is trying to figure out and out-play the game to get rich.

I guess the lesson here is to create an economy that is amenable to the localized, instinctive decisions made by each of its participants, and not to spend time on manufacturing conditions for success by setting up extremely efficient but otherwise very finicky systems, but rather to pursue it step by 3-toed step. The fancy contraptions (quantitative easing being an obvious and recent example) never end up working as intended and instead make life harder for workers in aggregate.

[1] https://en.wikipedia.org/wiki/Animal_spirits_(Keynes)

Re: More than half of American retailers didn't pay their rent in April and May

#113

Post by jotm » Thu, Jun 04, 2020, 10:00 PM UTC

jdm2212 wrote: post #10

rwmj wrote: post #2

Purely as a thought experiment, if we suspended mortgage repayments for N months and rental payments for N months, what bad (or good) effects might we see?

The whole banking system would collapse like in 2007-2008 because "everyone stops paying mortgages all at once" is basically what happened then. Renters stop paying their rent so landlords go broke. Landlords stop paying their mortgages. Mortgage-backed securities go into default. Anyone with lots of exposure to mortgage-backed securities folds. Their counterparties in all sorts of financial arrangements can't collec…

What if everybody gets a loan, minimal/no interest with delayed repayment? Just pretend it's not a handout, but actual debt that will be repaid... someday? Just a thought

Re: More than half of American retailers didn't pay their rent in April and May

#114

Post by refurb » Thu, Jun 04, 2020, 10:00 PM UTC

pjc50 wrote: post #89

ping_pong wrote: post #63

Earlier quoted context omitted.

The US by definition can't default on its own debt. It's literally impossible because all debt is in USD. If the US gets into the situation where it doesn't have enough money to pay off its interest payments, the only one solution is to print more money to pay off the debt. This will lead to #2 in your list, which is actually just #1. When the US starts printing money, it will lead to a lot of destruction of assets b…

It can default on its debt by .. refusing to pay it. Remember all the debt ceiling fiasco and the furlough of federal workers? It would be a huge moment of voluntary stupidity, but anything's possible.

The debt ceiling had nothing to do with not paying debt, it was caused by not taking on more debt and thus the gov't didn't have the funds to run.

Re: More than half of American retailers didn't pay their rent in April and May

#115

Post by stormbrew » Thu, Jun 04, 2020, 10:01 PM UTC

chkaloon wrote: post #58

stormbrew wrote: post #56

Earlier quoted context omitted.

A complete rent, mortgage, and property tax holiday/pause for the duration of the emergency, along with universal income assistance at the individual (not corporate) level. As is, only some of those things were done in some places, which almost certainly leads to conflict.

Problem is, there's always two parties in every transaction. Holiday for the rent payer is a death knell for the landlord. Mortgage holiday is the same for the bank and its bondholders/depositors.

And I addressed the two parties in that particular chain that don't have access to the central bank's reserves (rent and mortgage holding landlord). Landlords that don't hold mortgages don't need anywhere near as much assistance.

In particular, the conflict I mentioned in the last sentence was directly alluding to the problem of only giving a rent holiday without a mortgage holiday to go with it. It's actually kind of hard to believe you read my really short post in its entirety, because you're arguing quite a strawperson here.

For banks or lenders that don't have direct access to the central bank's reserves they will need to sort that out between themselves or possibly with further legislation, but it's a much much easier problem to solve than individual renters going insolvent en masse because their landlord is still demanding rent while they can't leave the house.

Re: More than half of American retailers didn't pay their rent in April and May

#116

Post by jotm » Thu, Jun 04, 2020, 10:01 PM UTC

Ididntdothis wrote: post #4

rwmj wrote: post #2

Purely as a thought experiment, if we suspended mortgage repayments for N months and rental payments for N months, what bad (or good) effects might we see?

This would make sense to me. Why are some businesses being shut down and have to deal with income losses and others like landlords can keep going and demand their income? This seems fundamentally unfair to me.

I wonder how many people asked that during the World Wars? Why do they have to suffer because some rich assholes decided they need every industry to support the war.

Re: More than half of American retailers didn't pay their rent in April and May

#117

Post by vondur » Thu, Jun 04, 2020, 10:02 PM UTC

ikeyany wrote: post #46

chkaloon wrote: post #34

I am afraid we are in a real Wile E Coyote moment here. You know, where he's suspended in air for a few seconds before he goes crashing to the ground? Our crash may come in the fall when UI payments stop and the rent floats become unsustainable. About the time the second wave hits. https://66.media.tumblr.com/bbbf0aec68490ae2679ef489709c3d18...

> fragile ... the word is fragile. We've built an insanely fragile economy. Take a look. There's been no war. 100% of the (not so great) US infrastructure that was there before SARS-COV-2 is still there. We've lost about 100k people, which is horrific but in the scheme of things at "USA" scale, and with the skewed demographics, not much of a hit to the economy. And yet the economy is staggering and it's likely to get…

I'm going to say most of the businesses at the smaller end of the scale would never have enough money to continue paying employee's without any income coming in. I think everyone kinda knew that shutting down the economy was going to be bad, unless it was only done for a very brief period. If the government can get no strings attached money to companies to pay their employees and get them to open as fast as possible we may come out of it.

Re: More than half of American retailers didn't pay their rent in April and May

#118

Post by refurb » Thu, Jun 04, 2020, 10:02 PM UTC

rwmj wrote: post #54

AnimalMuppet wrote: post #41

Earlier quoted context omitted.

That doesn't help the mortgage holders, though...

The normal way payment holidays work is the missing months are added at the end, and the interest (historically incredibly low at the moment) accrues as normal. So the mortgage holders are not really out of pocket here. Nor are the landlords since they can charge another tenant at the extended end of their mortgage term.

Your ignoring the flow of cash.

The mortgage lender was counting on receiving the mortgage payment in May 2020, not in May 2045.

Re: More than half of American retailers didn't pay their rent in April and May

#119

Post by grogenaut » Thu, Jun 04, 2020, 10:02 PM UTC

pgodzin wrote: post #98

freehunter wrote: post #95

Earlier quoted context omitted.

No, it’s due to people not going to movie theaters and not going to Home Depot and not going out to eat at restaurants. You know, things they would normally do but haven’t been doing because it’s not essential.

They are definitely still going to Home Depot

Agreed, home depot is hopping

Re: More than half of American retailers didn't pay their rent in April and May

#120

Post by chkaloon » Thu, Jun 04, 2020, 10:02 PM UTC

aazaa wrote: post #37

> Bed Bath & Beyond, Famous Footwear, H&M, and the Gap, AMC and Regal movie theaters, and 24 Hour Fitness gyms have all missed payments, jeopardizing the stability of their property management companies and municipal governments that rely on property taxes, The Post's Heather Long reported. All roads lead to the Federal Reserve. Stores defaulting on rent payments starves landlords for cash. Landlords unable to servic…

Regarding #2, or rather inflation, is it a hidden way to transfer wealth from one generation to the next? Older savers see their wealth dissolve away due to inflation, while the younger generations are held somewhat stable by rising wages. It's unfortunate, but probably the least painful way out of this.