[jborichevskiy]

> The ability of my local Chinese place to serve customers is undiminished, my desire to eat Chinese food is undiminished, and all that's in the way is an ultimately temporary law.

Agreed on this. But the rent paid out during the period of reduced revenue coming in creates a delta that this loan is filling in. The loan still needs to be paid back (even assuming 0% interest). That extra money needs to come from somewhere: increased prices, increased traffic, or decreased expenditures.

[markdown]

A better way would be to suspend all debt collection and rent collection for x months. That will keep lots of small businesses alive, and employees on reduced salaries will still be able to feed their families if they don't have to worry about rent.

Throw in food stamps for the unemployed and you're most of the way to keeping a nation going.

[fraudsyndrome]

> A better way would be to suspend all debt collection and rent collection for x months.

I know this would help for people I personally know in this industry.

Dine in has been reduced almost entirely but takeaway orders hasn't deviated too much from the standard.

The reality here is that a lot of small hospitality businesses don't actually make much profit at all so it's unlikely that they'd survive too long with this forced reduced business. And it's always unhelpful to hear (in general not from you) comments like "maybe they should have saved up more earlier" or "they shouldn't be opening up a restaurant then" because a lot of times they can't work in any other industry - this is all they know.

Imagine having reduced business through no fault of your own yet you're still liable for paying the commercial rent of $1.2k per week. You can't sell the business because no one is buying. You can't sell it because you lose all the goodwill which is bad especially if you've spent any money renovating the place up to standard.

[GeorgeWBasic]

Far, far, far better. In fact, it's the only thing that might actually work. All this talk of loans is just people refusing to admit that a capitalist system (I hate saying that word) simply doesn't function under these conditions. The economy needs to be paused.

[chii]

The rental payment from a shop is income for the landlord. The income from the landlord is payment for his/her obligations - all the way up the chain.

If you force rental payments to stop, then who gets hit? The landlord is going to default on their obligations. So do you then bail them out? If the landlord defaults, the banks (presumably) will repossess the property. So it's just somebody else suffering, rather than the tenant.

The loans work, because the obligation to pay back this loan will come from a future where you have the capability. The govt is the eventual guarentor of this loan, and hence, they take the hit if the eventual future does not come to pass (e.g., the restaurant never regain their full business). The gov't can't take the full hit of all these defaults all at once, but they can if it is spread out. So a loan will spread them out into the future (even perhaps, far future), and the economy survives, even if a lot of the business that took the loan didn't.

[markdown]

> The income from the landlord is payment for his/her obligations

Read my post again. The rent holiday goes hand in hand with a debt holiday. That's the only way this works. Tenants don't have to pay rent, and landowners don't have to pay a mortgage.

Sure some businesses will fail as a result of this, but far more (on a massive scale) will fail if you don't do this.

[imtringued]

I don't think you've thought this through. What are the banks going to do if they don't receive their payments? How are you going to bail them out? With a loan? Why not give that loan to those who need it instead of kicking the can down the road?

[markdown]

> What are the banks going to do if they don't receive their payments?

They'll be bailed out by the govt as usual. Which is the point.. the govt has to keep humans fed and housed through this. This is the best way to achieve that end. Kicking the can down the road is exactly what needs to be done. The economic problems and readjustments can happen later. The immediate problem is people fucking dying.

[vkou]

Yes, with a six-month, zero-interest loan. We are already handing those out like candy, to deal with bank liquidity problems.

[GeorgeWBasic]

> If the landlord defaults, the banks (presumably) will repossess the property

As others have pointed out, this is not what any of us are saying. Those debts are paused too.

The loans DO NOT work, because most of these businesses are barely profitable at all. Now they have to recover to their previous levels of income AND pay back a loan? They can't. It's a ridiculous expectation.

[chii]

why is it ridiculous to expect a business to not make any profit after a crisis? The alternative is to close down the business, which, imho, is worse. At least, with the loan, a business that's barely making any profit can continue to barely make any profit after the crisis (but even less profit for the loan repayment). That's a better outcome than losing the business entirely. The employees remain employed, and the economy doesn't grind to a screeching halt into a depression.

[GeorgeWBasic]

This has already been explained to you, over and over again. The alternative is not to close down the business. It's to make it so the business owner doesn't have to pay anything during the crisis, except supplies for himself, so that the business doesn't close permanently. The loan is a really, really stupid idea, because it burdens the business more during the recovery, which guaranteed will be less profitable than before this, so it just delays the bankruptcies. You might as well have them not pay it back at all, but then why single out just business owners for free money? Why not everyone else too? And worse, everyone else runs out of money too because debts weren't paused, because enough people are stupid enough to think that loans are the way out of this instead of realizing that the economy doesn't work when nobody's buying anything but food and toilet paper, and pause it to prevent it from destroying itself. If this doesn't get done by the end of the month we're looking at another Great Depression.

[stainforth]

I see plenty of places that landlords just sit on waiting for some maximal amount of rent to be agreed to, only for the business to crumble under high rents, rinse, repeat.

[DoreenMichele]

You might want to read up on The Irish Potato Famine.

Some landlords were letting people stay rent free out of compassion because no one had money and it was tough all over and no one else was going to rent it. Then the government decided to bleed the landlords and insist it get paid if the unit was occupied, even if no rent was being paid.

Landlords had no choice but to begin evicting people. Things got ugly fast.

[wyattpeak]

That was a fairly unusual scenario though, where the government actively disliked their citizens, many politicians explicitly happy to see the Irish suffer, others viewing it as the will of God, and none of them dependent on Irish votes.

It's an indication of how things can go wrong with the government working against you, but I don't know that it maps well to the current pandemic.

[DoreenMichele]

The road to hell is paved with good intentions. The Irish example is a real world example of the government tampering in some way with landlords and it having unintended consequences that were disastrous.

[wyattpeak]

I don't think that's a reasonable reading of the event. Ascribing good intentions to Westminster with regard to the famine is unjustified. Some wanted to help, others distinctly didn't. It would be beyond charitable to suggest that all their actions were designed to minimise Irish suffering.

[DoreenMichele]

I don't think that's a reasonable reading of my comment. (Trying to be light-hearted here, not mocking.)

I wasn't ascribing good intentions to Westminster. I was saying that their intentions, good or bad, and the intentions of the current American government are irrelevant. What's relevant here is they did a thing and it got x result. So we should use that example to wonder what will really happen should we do a similar thing now.

[biztos]

If by “suspend” you mean cancel the debt due in the quarantine months than I definitely agree: in both moral and economic terms it would be best for the rent-seekers to take as much of the hit as possible.

But if it’s just a pause in collection, and you still owe that money, then it’s the same old margin problem: very few restaurants make enough money to repay that loan no matter who it comes from.

[markdown]

A business that was going to fail due to low margins without COVID19 shouldn't suddenly get to live because COVID19 destroyed the world economy.

It has to be a pause in collection (and interest), but at the end of the day the lender also has to get their money back.