Requires Congress to act, as they have fiscal policy authority (versus the monetary policy authority granted to the Federal Reserve).
If neither are assisting, you have to play hardball yourself. Banks and commercial REITs have more to lose right now than retail tenants, hence why those businesses are firing the first shot and putting their offer to landlords on the table. “Pray I don’t alter the deal further”
Did the recent money-market bailout fall under the Fed's remit? Yes, the mechanism was different, but they were basically acting like the FDIC in that they were rescuing household savings.
In times of crisis, folks are going to argue any actions the Fed takes are within their remit [1] (accepting equity securities as collateral for short term cash through a primary dealer facility?). The vast majority of households do not use a money market fund; their savings are in FDIC deposit accounts or credit unions.
If you want government insurance, use a government insured account, or let’s do away with the idea that some types of assets will be allowed to fail; the Fed will simply step in and backstop the entire economy with “unlimited support”.
Aside from the economic effects of the epidemic, I would consider this to be part of the public health response. If retail stores don't need to pay rent, they're going to feel less pressure to stay open and get customers in where they can infect each other.
Yes. That is the whole concept of lender of last resort. The goal is to avoid a panic fueled fire sale where prices become decoupled from anything resembling fundamentals and instead collapse as everyone acts in concert to irrationally unload otherwise valuable assets. By acting in this capacity the government can allow the market price seeking mechanisms of capitalism to operate on an appropriately longer time horizon.
The government is uniquely situated to do this because 1. It can use future tax revenue over the long term to pay for supporting the broader economy in the short term thereby providing redistribution over time, 2. Can address the entire economy in a systematic fashion rather than having individual actors chaotically rush to negotiate individual deals, and 3. Can print money to prevent markets from seizing up when panic sets.
The alternative is to let everything just liquidate with the resulting mass panic, cash shortages, bank runs, needless bankruptcy, supply chain disruptions, and eventually massive reduction in demand making the market smaller for everyone.
The liquidationist mindset was dominant in the 1920s and espoused by Hoover’s Secretary of the Treasury. Some argue this made the Great Depression far worse than it needed to be. We largely avoided that in 2008 because the government stepped in.
>By acting in this capacity the government can allow the market price seeking mechanisms of capitalism to operate on an appropriately longer time horizon.
This makes it sound like the Market is primary to the State, where observation/history very much paints things as being the other way around. I don't know as one should even be talking about the Market doing anything in this case seeing as the preconditions for it's stable existence are coming into question.
Thats a valid point, I am not suggesting the Market is primary in all things, merely the narrow function of price setting. In the US, the Market is primary for price setting in ordinary times. Very rarely does the US government set prices. You're right though, when push comes to shove, unstable market conditions such as War, financial panic, the Government has stepped in to mandate setting stable prices. Still it would be better if the government can create stable market conditions.
If neither are assisting, you have to play hardball yourself. Banks and commercial REITs have more to lose right now than retail tenants, hence why those businesses are firing the first shot and putting their offer to landlords on the table. “Pray I don’t alter the deal further”
This does not work for residential leases.