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

#21

Post by Ididntdothis » Thu, Jun 04, 2020, 8:55 PM UTC

5ociety wrote: post #16

5ociety wrote: post #13

Earlier quoted context omitted.

It kind of sounds like we need a different money system?

and whose better at designing systems than you and me?

We may do better than the bankers who like to design fragile systems as long as they can make boatloads of money :)

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

#22

Post by viscanti » Thu, Jun 04, 2020, 8:57 PM UTC

airza wrote: post #15

freeone3000 wrote: post #7

Earlier quoted context omitted.

Ah, but comrade, paying rent itself is inherently unfair. It allows for profit off merely having bought something sooner than another had a chance to. If the rent stops now, why should the rent start back up?

I guess you're being sarcastic, but what value is being provided to society by having landlords rent houses out to people who would rather buy them?

The opportunity cost of the downpayment (and also the fact that lots of people wouldn't have the money for a down payment anyway). Generally the returns from property investing are relatively low compared to other investments.

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

#23

Post by squarerootof-1 » Thu, Jun 04, 2020, 8:57 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…

I would like to add to your comment and highlight that this isn't similar to 2007-2008 as those loans were made to people who should never have gotten them in the first place and had no hope to pay it off. Those loans were straight up losses, whereas here, the loans are still good and some companies are even earning interest by delaying mortgage payments. But if too many people stop paying at the same time, the system will collapse and we'll have a repeat of GFC.

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

#24

Post by rwmj » Thu, Jun 04, 2020, 8:57 PM UTC

mkolodny wrote: post #8

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?

People who make a living by renting out a room/floor would need government assistance to survive.

Why? They wouldn't be paying rent to their landlords either.

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

#25

Post by jeromegv » Thu, Jun 04, 2020, 8:58 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's the proportion of commercial landlords that have a mortgage to pay? Because when their building is already paid, interruption of rent isn't really impacting them.

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

#26

Post by nradov » Thu, Jun 04, 2020, 8:58 PM UTC

airza wrote: post #15

freeone3000 wrote: post #7

Earlier quoted context omitted.

Ah, but comrade, paying rent itself is inherently unfair. It allows for profit off merely having bought something sooner than another had a chance to. If the rent stops now, why should the rent start back up?

I guess you're being sarcastic, but what value is being provided to society by having landlords rent houses out to people who would rather buy them?

Anyone who wants to buy a rental house is free to do so. Just make an unsolicited purchase offer to the landlord for more than the net present value of all expected future rental income. Most landlords are willing to sell their properties, even when they're not currently listed on the market.

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

#27

Post by [deleted] » Thu, Jun 04, 2020, 8:59 PM UTC

airza wrote: post #15

freeone3000 wrote: post #7

Earlier quoted context omitted.

Ah, but comrade, paying rent itself is inherently unfair. It allows for profit off merely having bought something sooner than another had a chance to. If the rent stops now, why should the rent start back up?

I guess you're being sarcastic, but what value is being provided to society by having landlords rent houses out to people who would rather buy them?

[deleted]

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

#28

Post by viscanti » Thu, Jun 04, 2020, 8:59 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.

Things like property taxes and maintenance are fixed costs for property owners. Those can eat up 50% or more of the rental income. So if renters aren't paying, even property owners who don't have a mortgage have high fixed costs that they have to pay.

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

#29

Post by ars » Thu, Jun 04, 2020, 9:00 PM UTC

popotamonga wrote: post #14

jdm2212 wrote: post #10

Earlier quoted context omitted.

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…

In my country they just declared 1 year no mortgage payments for everyone who needs.

What country is that? Is everything government owned? Because how can a landlord possibly manage that? And why is the landlord the one asked to help the tenant, isn't that the job of government?

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

#30

Post by ars » Thu, Jun 04, 2020, 9:02 PM UTC

ubercow13 wrote: post #17

jdm2212 wrote: post #10

Earlier quoted context omitted.

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…

Doesn't seem to be happening in the UK yet, where many mortgages are suspended.

Suspended, but interest keeps accumulating, and will eventually have to be paid? Because banks can handle a bit of that, if the bank is able to borrow from a central bank.

Or suspended and never paid?