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

 
icehorse
 
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icehorse
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22 March 2020 16:04
 

I’ve been wondering how a logical. thoughtful government would handle the upcoming economic problems that are sure to come in the next few weeks and months.

What I was wondering is if a simple suspension of all loans and rent payments might minimize the pain all around?

 
 
Twissel
 
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Twissel
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23 March 2020 05:37
 

Given that rent is also a form of income, this could only work if there is a UBI for the duration.

 
 
Antisocialdarwinist
 
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Antisocialdarwinist
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23 March 2020 08:13
 
Twissel - 23 March 2020 05:37 AM

Given that rent is also a form of income, this could only work if there is a UBI for the duration.

That’s what I’m thinking, too. One man’s rent expense is another’s income. On the other hand, if the only reason you need the rental income is to pay the building’s mortgage—which is also suspended—that’s a little different.

It’s an idea that sounds good in theory, but the devil is in the details.

 
 
icehorse
 
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icehorse
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23 March 2020 08:21
 
Antisocialdarwinist - 23 March 2020 08:13 AM
Twissel - 23 March 2020 05:37 AM

Given that rent is also a form of income, this could only work if there is a UBI for the duration.

That’s what I’m thinking, too. One man’s rent expense is another’s income. On the other hand, if the only reason you need the rental income is to pay the building’s mortgage—which is also suspended—that’s a little different.

It’s an idea that sounds good in theory, but the devil is in the details.

Ain’t that the truth!

To add a bit to the OP, the broader - very roughly formed - idea is: How could we hit the “pause” button on the economy to avoid having millions, maybe 10s of millions of people lose their homes during the “shelter-in-place” period of time?

So perhaps in broad strokes: “suspend ALL loans and provide a UBI for food and utilities” could be the core of a strategy?

 
 
mapadofu
 
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mapadofu
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23 March 2020 20:55
 

A related idea https://www.washingtonpost.com/business/2020/03/22/economy-stimulus-coronavirus/?fbclid=IwAR2nOJa-z0dm8Cl5bNyp8hOJ62RitNFwgKEu4X1ooguz0GzHusAt0WQtGso

“Even in normal times, lenders and landlords — at least the good ones — regularly offer forbearance to businesses that hit a rough patch. Leases or loans are renegotiated so that the money they would have received during the hiatus is recouped gradually, through higher monthly rent checks or loan payments for the balance of the lease or the term of the loan. That’s relatively easy to do when it’s a few tenants or borrowers who are in trouble. It’s much harder when large numbers of debtors and tenants come knocking on the door pleading for forbearance all at the same time. ...

So how could the government give lenders and landlords the incentive and the liquidity to offer widespread forbearance? The quickest and most efficient way is by offering them tax credits, which is just an indirect and politically disguised way of sending them enough money to make them whole if they are willing to do the socially responsible thing.”

 
icehorse
 
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icehorse
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24 March 2020 09:30
 
mapadofu - 23 March 2020 08:55 PM

A related idea https://www.washingtonpost.com/business/2020/03/22/economy-stimulus-coronavirus/?fbclid=IwAR2nOJa-z0dm8Cl5bNyp8hOJ62RitNFwgKEu4X1ooguz0GzHusAt0WQtGso

“Even in normal times, lenders and landlords — at least the good ones — regularly offer forbearance to businesses that hit a rough patch. Leases or loans are renegotiated so that the money they would have received during the hiatus is recouped gradually, through higher monthly rent checks or loan payments for the balance of the lease or the term of the loan. That’s relatively easy to do when it’s a few tenants or borrowers who are in trouble. It’s much harder when large numbers of debtors and tenants come knocking on the door pleading for forbearance all at the same time. ...

So how could the government give lenders and landlords the incentive and the liquidity to offer widespread forbearance? The quickest and most efficient way is by offering them tax credits, which is just an indirect and politically disguised way of sending them enough money to make them whole if they are willing to do the socially responsible thing.”

Anything that boils down to loans, seems to me to be missing the point. I think we need to hit the “pause” button on the whole economy.