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

Re:More than half of American retailers didn't pay their ren... by jdm2212 on Thursday June 04, 2020 @04:44PM (#23421522)

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 collect (insurance, bonds, you name it). Credit markets dry up, and all the Main Street businesses that are rolling over some of their debt find they can't borrow, so they file for bankruptcy. Normally, they'd take out loans to make it through bankruptcy and restructure... but no loans are available, so they liquidate.

EDIT: worth noting that this is less likely now than in '07-'08 because the Federal Reserve has been buying up bonds like crazy (that basically means financial institutions, governments and businesses are often able to get unlimited cheap credit) but if they scaled that back or stopped doing it, things are already so bad there would've been a credit crisis in March or April without a national rent/mortgage freeze. So imagine how much worse it would be with one.

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Re:More than half of American retailers didn't pay their ren... by squarerootof-1 on Thursday June 04, 2020 @04:57PM (#23421681)

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.

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Re:More than half of American retailers didn't pay their ren... by ubercow13 on Thursday June 04, 2020 @04:50PM (#23421588)

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

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Re:More than half of American retailers didn't pay their ren... by ars on Thursday June 04, 2020 @05:02PM (#23421745)

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?

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Re:More than half of American retailers didn't pay their ren... by chrisseaton on Thursday June 04, 2020 @04:53PM (#23421619)

Not many people ended up taking up these offers. Less than 10% I think.

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Re:More than half of American retailers didn't pay their ren... by popotamonga on Thursday June 04, 2020 @04:48PM (#23421569)

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

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Re:More than half of American retailers didn't pay their ren... by ars on Thursday June 04, 2020 @05:00PM (#23421719)

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?

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Re:More than half of American retailers didn't pay their ren... by throwaway_jobs on Thursday June 04, 2020 @05:07PM (#23421805)

Suspension of mortgage would help the landlord not the renter. The owner/landlord pays the mortgage not the tenant, the tenant pays rent to the landlord.

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Re:More than half of American retailers didn't pay their ren... by rwmj on Thursday June 04, 2020 @05:05PM (#23421782)

> Renters stop paying their rent so landlords go broke. Landlords stop paying their mortgages

But I said in my question: "if we suspended mortgage repayments for N months and rental payments for N months"

Landlords are not paying their main cost (the mortgage) so why do landlords go broke? They have some fixed overheads but those are usually a few % of the mortgage.

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Re:More than half of American retailers didn't pay their ren... by AnimalMuppet on Thursday June 04, 2020 @05:11PM (#23421860)

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

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Re:More than half of American retailers didn't pay their ren... by rwmj on Thursday June 04, 2020 @05:21PM (#23421978)

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.

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Re:More than half of American retailers didn't pay their ren... by refurb on Thursday June 04, 2020 @06:02PM (#23422482)

Your ignoring the flow of cash.

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

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Re:More than half of American retailers didn't pay their ren... by ljf on Friday June 05, 2020 @02:41AM (#23425717)

I would disagree - everyone didn't just stopping paying their mortgages. The issue was that it was uncovered how inappropriate a portion of mortgages had been and how toxic the investment mixes were. This realisation led to banks valuations changing and led to a run on banks. The property behind these mortgages was worth less than the mortgages supplied on them.

While the default rate increased in some areas, it was in no way universal, or as high as we see today in the retail property market. Also (currently) the property backing the mortgage has retained its mortgaged value. So these are not that similar scenarios

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Re:More than half of American retailers didn't pay their ren... by jotm on Thursday June 04, 2020 @06:00PM (#23422461)

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

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Re:More than half of American retailers didn't pay their ren... by jdm2212 on Thursday June 04, 2020 @07:12PM (#23423083)

That's what the Federal Reserve is doing, in effect, by offering zero interest loans to every city, business, and bank.

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Re:More than half of American retailers didn't pay their ren... by jeromegv on Thursday June 04, 2020 @04:58PM (#23421689)

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.

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Re:More than half of American retailers didn't pay their ren... by wmf on Thursday June 04, 2020 @05:14PM (#23421892)

All of them? The economy has been pushing everyone, including landlords, to lever up for decades.

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Re:More than half of American retailers didn't pay their ren... by bananabreakfast on Thursday June 04, 2020 @06:05PM (#23422514)

Property tax on commercial property is huge and lasts forever. Interruption of rent may force them to sell their property or be unable to afford their taxes.

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Re:More than half of American retailers didn't pay their ren... by devalgo on Thursday June 04, 2020 @07:23PM (#23423194)

>The whole banking system would collapse like in 2007-2008 because "everyone stops paying mortgages all at once" is basically what happened then.

This obviously ignores the issue with massively leveraged firms making poor bets on housing bonds. But lets be real, they'll get bailed out if there's any problem.

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Re:More than half of American retailers didn't pay their ren... by 5ociety on Thursday June 04, 2020 @04:48PM (#23421568)

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

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Re:More than half of American retailers didn't pay their ren... by jchrisa on Thursday June 04, 2020 @06:08PM (#23422560)

I like Holochain as they don't maintain a global ledger. Here is some reasoning why: https://www.wired.com/2014/07/document-coin/

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Re:More than half of American retailers didn't pay their ren... by 5ociety on Thursday June 04, 2020 @04:48PM (#23421573)

and whose better at designing systems than you and me?

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Re:More than half of American retailers didn't pay their ren... by Ididntdothis on Thursday June 04, 2020 @04:55PM (#23421644)

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

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Re:More than half of American retailers didn't pay their ren... by AnimalMuppet on Thursday June 04, 2020 @05:16PM (#23421921)

Unless you're an expert at designing systems as complicated as the entire economy, maybe a lot of people.

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Re:More than half of American retailers didn't pay their ren... by 5ociety on Thursday June 04, 2020 @05:28PM (#23422050)

because they're doing such a good job?

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Re:More than half of American retailers didn't pay their ren... by AnimalMuppet on Thursday June 04, 2020 @05:32PM (#23422092)

They don't have to be doing a perfect job for you to be able to do a worse one...

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[dead]

Re:More than half of American retailers didn't pay their ren... by AnimalMuppet on Thursday June 04, 2020 @06:03PM (#23422493)

The more I listen to you, the more grateful I am that you will never be given the chance. Someone who's so cocksure that he's sure he's smart enough to organize the entire economy is the last person I want to see given the chance.

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Re:More than half of American retailers didn't pay their ren... by DanBC on Thursday June 04, 2020 @06:50PM (#23422917)

People cannot downvote comments that are replies to their own comments, so any downvotes are not coming from AnimalMuppet.

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Re:More than half of American retailers didn't pay their ren... by AnimalMuppet on Thursday June 04, 2020 @07:02PM (#23423001)

To be fair, I did downvote his initial comments...

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