33 ms·

Millions of Americans skipping payments as wave of defaults and evictions looms

416 points by evo_9 6y ago

0x8BADF00D 6y ago
Yet the S&P500 is still green. The Fed continues to print in order to delay the inevitable. Either a currency crisis or hyperinflation.
- boromi 6y ago
  Bingo, there's also been a huge influx of retail investors fueling the earlier Bull rise
  - MiroF 6y ago
    This is just not how the stock market works. "More investors" doesn't trigger price increases.
    - boromi 6y ago
      Markets go up when the amount of bullish positions outnumber the amount of new bearish positions
      - MiroF 6y ago
        Depends on the size of the various positions. If a bunch of new (and naive) investors enter the market with irrationally bullish positions, institutional investors will short and profit off of the fundamentals. Bad positions are just an opportunity for arbitrage.
- mullingitover 6y ago
  Savings rates are through the roof right now, I would worry more about a deflation spiral.
  - ed25519FUUU 6y ago
    You may be biased as a WFH/silicon valley type (continuing to produce income despite shelter at home). The median checking account balance was $3,400 in 2019, and that was before COVID19 struck. There's a lot of people who were already barely hanging on, and now covid and demonstrations have pulled the rug out from under them. We're only 2 months in. Things will get worse before they get better. 1. https://www.valuepenguin.com/banking/average-checking-account-balance https://www.valuepenguin.com/banking/average-checking-accoun...
    - pkaye 6y ago
      > The median checking account balance was $3,400 in 2019, and that was before COVID19 struck. Does that count money market and savings accounts? And given interest rates are so low I wonder if people invest in more riskier stuff.
      - Avicebron 6y ago
        People need capital to invest. A lot of people are floating by with that 3,400, not strategically holding only 3,400 in their bank account while they make their fortune on risky investments.
    - Avicebron 6y ago
      Yeah, most of the US is one medical emergency from absolute financial ruin. It's amazing to see how disconnected the economy is from the lived experience of the majority of people.
      - MattGaiser 6y ago
        > Yeah, most of the US is one medical emergency from absolute financial ruin. Most Americans have health insurance of some form.
        Avicebron 6y ago
        If I have 3,400 to my name and my deductible is 2,000 (common from what I've seen). And my rent is 1,500 due next week, I'm not in good shape financially.
- qeternity 6y ago
  Or worse: BAML had a great piece recently that QEternity (cough) has actually stoked deflation by reducing low-risk asset yields to zero, which forces many savers to save more as relatively risk-free income disappears, which lowers consumption and thus inflation, prompting more QE...rinse and repeat.
  - aaronblohowiak 6y ago
    Oooh, do you have a link?
- arberx 6y ago
  Or deflation, a bigger worry as consumers might be expecting lower prices in the future and delaying purchases. Leading to a deflationary spiral.
  - mindslight 6y ago
    Given the natural resource depletion caused by our economy, plus technological progress implying that we all should be working less, how is this remotely worrying? We've had strong deflation in the tech sector for over four decades, and the results have been fantastic.
- cft 6y ago
  I wonder who downvotes this and why.
  - pphysch 6y ago
    "Lalala I cant hear you, stonks go UP" probably
  - diogenescynic 6y ago
    Probably someone who actually looked into what QE actually does--it's more deflationary than inflationary. Look at Japan--they've been doing forms of QE for decades. These Fed printing money, inflation trolls are almost never right even though they've been screaming about it for decades.
    - kovacs 6y ago
      Trolls? Sounds like YOU need to understand what QE is. From Wikipedia... "Quantitative easing (QE) is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity." Sounds pretty inflationary to me. Especially when they buy up illiquid mark to fantasy assets that nobody wants and unloads them on the taxpayer to foot the bill while their buddies get a wad of cash to redeploy, into the stock market as it turns out. How is that not inflationary exactly? Oh, the destruction of those bad assets? Yeah I suppose but the socialization of that across America hides that and what's left is pumped up asset prices that cause the average American to have to work even harder to save up to buy and get worse returns because the fed's buddies got in first and drove prices higher. Have you happened to look at the price of assets since 2008 vs. the actual recovery of the economy? Have you seen that S&P earnings were flat to down for the past 4 years going into this crisis? Yet what's happened to stocks? That's right they've tripled since 2009. Go look at any piece of real estate now almost anywhere vs. 10-20 years go and tell me there's been no inflation. I realize it's different everywhere but the idea that we've had "low inflation" over the last 10 years is completely laughable because the calculation removes the highest cost items. The fed has effectively destroyed any price discovery on any assets. It's taken increasingly larger amounts of QE to goose the fake economy. And now for its encore it has overreacted to save their buddies and decided to lower rates to zero and tell the world that it will never let assets fall. How in the world is that not inflationary when you're flooding the market with free money and enabling those at the top to buy up assets and run up prices? Every single person that works to earn USD and saves USD should be livid and rioting in the streets for the theft that's been, and continues to occur. Also, your example of Japan isn't apples to apples. The US has the world's reserve currency and can print as much of it as it wants, Japan does not. Japan is a nation of savers so getting them to spend is harder than a US citizen. We may have short term deflation and that's what the fed is scared of but make no mistake about it what they've done is inflationary as they will well overshoot whatever deflationary impact any failures have. Hell, they've made it clear that's what they're gonna do.
- CPLX 6y ago
  Hyperinflation is not typically something you're going to worry about in a demand collapse situation.
  - MiroF 6y ago
    None of these people have a solid grasp of macro, it's really no use arguing.
- MattGaiser 6y ago
  Household incomes rose because of the stimulus. https://www.bea.gov/news/2020/personal-income-and-outlays-april-2020 https://www.bea.gov/news/2020/personal-income-and-outlays-ap... https://tradingeconomics.com/united-states/personal-savings#:~:text=Personal%20Savings%20in%20the%20United,percent%20in%20July%20of%202005 https://tradingeconomics.com/united-states/personal-savings#.... So millions are defaulting, but millions of others are awash in newfound cash and savings.
  - thephyber 6y ago
    That bump was for the April period. May isn't likely to look as rosy.
- viburnum 6y ago
  Not every inflation is a hyperinflation. Look at inflation in America in the 1945-1951 or the 1970s. It wasn’t the end of the world. A little inflation is easier to deal with than mass unemployment and bankruptcy.
- MiroF 6y ago
  The Fed targets inflation and can do so pretty precisely - massive amounts of QE are in order to combat deflationary pressure in the economy right now.
- anm89 6y ago
  There is massive demand for dollars worldwide, specifically related to dollar denominated debt and commodities contracts and the first part is likely to get more intense if there is a global recession. I'm a gold bug libertarian end the fed kind of guy and even I don't think we are at any risk for hyperinflation. That is definitely not to say these policies can't have seriously negative consequences but I don't think hyperinflation is one of them, at least not for the US in the next decade.
- elevenoh 6y ago
  The inevitable increase in productivity brought by the promise of robotics, ai & automation? ;)
walterbell 6y ago
If there is no spike in infections within two weeks, from areas which had large public protests in the past week, can millions of Americans be helped by restarting the economy?
- csommers 6y ago
  Unlikely. A fair number of people are multiple payments/rent behind, not to mention still missing their unemployment checks.
- danans 6y ago
  > can millions of Americans be helped by restarting the economy? That's already happening. The current slow reopening is restarting the economy in order to help millions of Americans get back to work. For example, the jewelry store in my neighborhood in CA is now open, but for 1 customer at a time (OK in their case because even before the pandemic they controlled the number of people inside). However, the breakfast diner nearby with closely packed tables is still shut down. Even if they could open, the owner has to figure out how to run that business with appropriate social distancing. An additional problem is that the economy was fragile even before the lockdown. Many employers likely won't rehire nearly as many people as they let go. Those who are still hiring have slowed down their hiring rate. And until people feel safe consuming services and gathering in public like they did before, the main street economy can't recover fast enough to employ everyone who was laid off during the lockdown. This is why government support for laid off workers must continue until enough confidence exists that things are safe, even without the lockdowns, and that might take years for some sectors of the economy.
- daenz 6y ago
  I suspect we will be told that the protests were necessary and for a greater good that outweighed spreading coronavirus, and now that they're over, we should all go back into lock down to prevent further spreading, and anything else is reckless and literally killing people.
- aphextron 6y ago
  >If there is no spike in infections within two weeks, from areas which had large public protests in the past week, can millions of Americans be helped by restarting the economy? Daily new infections have more than doubled here in North Carolina in the last two weeks since "reopening" [0]. We have had more new cases in the last two weeks (2200) than in the entire length of lockdown from March until then (2000). The death rate has massively spiked beginning May 24th, exactly two weeks (the median time from infection to death) from May 9th, the day the governor relaxed restrictions [1]. The dream of this thing just magically going away is absolutely delusional. [0] https://www.nytimes.com/interactive/2020/us/north-carolina-coronavirus-cases.html https://www.nytimes.com/interactive/2020/us/north-carolina-c... [1] https://www.nytimes.com/interactive/2020/us/north-carolina-coronavirus-cases.html#deaths https://www.nytimes.com/interactive/2020/us/north-carolina-c...
rhexs 6y ago
Guy has what looks like a luxury truck and is apparently having trouble deciding between food and his car payment. Sell the car, get a cheap used beater, reduce expenses, keep looking for a job. Not sure what NPR wants me to take from this example.
- CPLX 6y ago
  Car payments don't work like that. And that's not even addressing the fact that the entire country went into economic free fall, so "Just sell the X" isn't quite the advice it used to be.
- Guest42 6y ago
  Hiring is very slow at the moment and the beater would likely require a lot of maintenance and have a high price tag although I agree that it’s smart to drive cars that are more economical.
  - Alupis 6y ago
    Anecdotal, but I keep hearing about restaurants and other small businesses that can't convince their employees to come back to work. Something about the unemployment benefits + CARES Act bonus being more than they were earning while working...
    - Avicebron 6y ago
      Well maybe that should be a red flag for the economic situation of many many people that should cause some inspection on how we structure and think about work.
    - korethr 6y ago
      Also anecdotal, but unemployment + CARES Act did in fact result in one of my housemates bringing in more from the two than they did from their employer. But, they went back to work anyway when their employer called them back from furlough, because 1) in my state, IIRC, refusing an offer for work cancels one's unemployment benefits, 2) they knew they the structure of having a regular job again would be much better for their mental health than not working.
burger_moon 6y ago
>He says a call center worker told him that he didn't qualify for any help because he was late on a car payment last year. When NPR contacted Ford, the company said that is not its policy. And after reviewing the case, the company is now letting Baird skip his next car payment, which he says is a big help. It appears Ford operates on the Google customer service spectrum of only helping those who can gain support of public outcry. What I would like to see is a response from Ford that they will open an investigation to review everyones requests which have been denied for skipping payment.
- noad 6y ago
  Like when Wells Fargo investigated their mortgage department and found no problems, right? Or when Google investigated Andy Rubin and decided he wasn't that bad and protected him for three more years? Why on earth would you ever trust a corporation to police themselves? They always lie, they always fail.
  - thephyber 6y ago
    It can't hurt to expect companies to actually troubleshoot their own policies. We don't have to expect that it's the only recourse (eg. government regulation, civil suits, public brand shaming, etc).
    - MintelIE 6y ago
      Sure it can, you’ll just end up demoralizing yourself. Expect companies NOT to troubleshoot their policies, and then when one occasionally does you’ll be pleasantly surprised. If you expect them to police themselves, most of the time you will end up being disappointed.
    - noad 6y ago
      I have seen no evidence of any positive outcome from companies policing themselves, only negative results and coverups. I'm sure there have been a few instances, somewhere, there must be, right? I just don't recall reading or hearing about them in my entire life, ever.
avancemos 6y ago
Lockdowns are effective as tourniquets, but indefinite or long term use was never logical. There should have been more forward-thinking and pragmatic options pushed earlier. We will now see the natural repercussions of lockdown-centered policies.
- cycrutchfield 6y ago
  Nobody was ever advocating for indefinite or long-term lockdown policies. That's a strawman.
  - CPLX 6y ago
    I would characterize basically all the the lockdowns as indefinite.
  - avancemos 6y ago
    Which universe do you live in? “Los Angeles County, which has recorded the highest number of coronavirus cases and deaths in California, has extended stay-at-home orders indefinitely.” https://www.sfchronicle.com/bayarea/article/LA-to-extend-stay-home-through-July-while-two-15265751.php https://www.sfchronicle.com/bayarea/article/LA-to-extend-sta...
  - avancemos 6y ago
    Also: “ Durham leaving stay-at-home order in place indefinitely” https://spectrumlocalnews.com/nc/triangle-sandhills/news/202.. https://spectrumlocalnews.com/nc/triangle-sandhills/news/202.... NJ stay at home order continued indefinitely | FOX 5 New York https://www.fox5ny.com/news/nj-stay-at-home-order-continued-.. https://www.fox5ny.com/news/nj-stay-at-home-order-continued-.... And many many more...
    - deleted 6y ago
      [deleted]
  - bagacrap 6y ago
    I guess it depends on how you define long term. I do have friends who think the lockdown should last in its current form (ie extended holiday with extra $600/week for the unemployed) until there's a vaccine. Flattening the curve was the refrain but we seem to have forgotten that.
bshipp 6y ago
This is just the start. Landlords would be smart to work with tenants to share some of the loss and renegotiate temporary adjustments to keep at least some revenue coming in because the heady days of high demand for rental units is likely behind us for a while. It'll be worse in downtown areas. I've heard from multiple firms that are looking at downsizing their expensive office space and continuing to allow employees to work from home. if a person doesn't have to work downtown they will often choose not to live there either. COVID is going to change the face of urban real estate. So if you have a tenant, they're gold and do what you can to keep them.
- cft 6y ago
  In California for example, due to state-wide rent control, it's very dangerous for a landlord to lower rents. I would rather offer 6 months free rent than lock into permanent nonadjustable lower rent situation.
  - leereeves 6y ago
    If a lot of landlords start exploiting that loophole, I wouldn't be surprised if the law were revised to be based on the average rent over a year, or something similar.
    - wtvanhest 6y ago
      That really would be the best legislation. A simple calc of the rent of the first 12 months of the lease becomes the base rent.
    - GhostVII 6y ago
      I think the only effect of that would be to prevent landlords from giving free months of rent - better to lose a tenant than permanently have lower rents which may not be sustainable.
    - favorited 6y ago
      They wouldn't have to change it, because that is factored in. The law states: "In determining the lowest gross rental amount pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the owner of such unit of residential real property and accepted by the tenant shall be excluded." So if your rent is $3k/month, and the landlord gives you 3 months rent-free, your rent according to AB 1482 is still $3k.
api 6y ago
I know people who are skipping payments just to be in solidarity with people who can't pay. They see it as an act of protest not only of inequality generally but of the fact that no matter what happens the financial industry will get a limitless bailout at the expense of everything else. Not paying is a way of getting a piece of that bailout. I agree with the latter point. We've seen in the past 10 years or so that the regular economy will be sacrificed to save the financial industry. This has resulted in a complete decoupling of the two. The regular economy can be in a state of total collapse and the stock market goes up. (By "the financial industry" I mean top politically well connected banks, not necessarily smaller private equity or smaller financial institutions. Those will crash and burn and be sold off in fire sale prices to larger banks that get bailed out, just like 2008.) If we ever have real leadership again, one of the tasks before that real leadership is going to be undoing the loss of integrity and trust created by the 2008 bailouts. Like the second Iraq war, people have yet to even grasp how much damage was done in those years.
- pengaru 6y ago
  > I know people who are skipping payments just to be in solidarity with people who can't pay. So they're donating what would have been spent on rent to an appropriate cause? Surely they're not keeping the money if it's just that. /s
  - rabidrat 6y ago
    Yeah they're donating the money to their self-in-3-months, who has even less than they do now, with no job and no prospects and no bailout on its way.
    - api 6y ago
      Exactly. They're thinking of it as an act of simultaneous self-preservation and civil disobedience to the fact that bailouts are only for huge banks and corporations. The perception, which is at least somewhat true, is that Wall St. and DC will be saved and the rest of the country can burn. From what I've seen, the 1% vs the 99% is catchy but wrong. The reality is more like the 0.01% vs the 99.99%. We are probably nearing the point where we will see actual change, since we're approaching a place where the wealth distribution hockey stick is so steep the upper middle class and "merely rich" will start seeing themselves as "the 99%." You'll see working class and hippies marching with lawyers, doctors, and owners of businesses that make "only" a few hundred million a year (and don't have lobbyists). Wish it didn't have to get that bad, but that appears to be the case. We'll probably do something about CO2 when NYC is underwater.
opportune 6y ago
I imagine a huge cash crunch is coming up soon as deferred payments come home to roost. We can’t continue kicking the can down the road forever. If people are over leveraged or insolvent we have to bear the pain eventually. It’s part of the credit cycle and it’s how savers get their foot in the door regarding asset ownership. Otherwise we will have basically embraced some absurd worst-of-both-worlds kind of socialism in which we bailout the people who are leveraged and over-exposed-to-risk at the expense of future generations and savers. The Fed/Government can probably kick it down the road until November though.
- MattGaiser 6y ago
  For mortgages I don't see why the deferrals are a problem as long as they are just tacked on to the end of the mortgage. It is going to be a major problem for renters.
  - opportune 6y ago
    If people don’t have their jobs immediately come back after all the restrictions are lifted then they’ll still be unable to make future payments. Correct though that renters will be hurt more, though it will likely have less systemic effects.
- entangledqubit 6y ago
  I've been expecting a "cash crunch" too but the Fed seems happy to keep making me wrong.
  - opportune 6y ago
    If the actual economy (gdp, not equities) doesn’t make a v-shaped recovery then it’s inevitable. I think the shakeup of who gets rehired for which jobs is going to cause some personal bankruptcies regardless. Basically if Acme co laid off 5k people, the 5k they rehire to resume operations may be a different set of people.
- anm89 6y ago
  We've been in that worst world since 2008 and will likely not be leaving any time soon.
ngngngng 6y ago
I'm so extremely grateful that I accepted section 8 tenants into my rental units. Most of these tenants have nearly all of their payment covered by the government and they just have to pay $100 or $200 on top of that to cover what the government won't. These tenants are often not accepted by landlords because they're thought to cause more issues. Mine are great. They keep the units spotless, mow the lawn for me on my multi unit properties. When I have a tenant like this, I never raise their rent, and if they can't pay the hundred bucks the government won't I sure don't care.
- hanoz 6y ago
  I don't suppose the struggling non state supported private renters whom you outbid to buy these houses, which they might otherwise have been able to afford to buy themselves, but who are now paying rent to some other landlord instead, are quite so enamored with your altruistic enterprise.
  - ngngngng 6y ago
    I actually lived in this multi unit property when I first bought it. My wife and I were newly married and buying a multi unit property qualified us for a 3.5% down payment which was much more management than >=10%. Also, I live in a rural part of America where property values are relatively stable because there's so much room to build. There are ample new homes available and new homes cost about $100 per sq ft. Existing homes are unable to rise above this except for extreme circumstances.
  - amiga_500 6y ago
    You said something negative about landlords. You can really see from the rash of landlords on this post why hacker news is hugely pro landlord.
- the-dude 6y ago
  Is this in Soviet US?
- dmarlow 6y ago
  > if they can't pay the hundred bucks the government won't I sure don't care I used to have this same mentality. Until the person who was renting one of my properties decided to lie about certain issues (like claiming a shampoo bottle lodged down one of the toilets was there for years). When I decided to not renew the lease with that tenant, they decided to cause considerable damage to our property. Sometimes, when things come easy to people, they don't appreciate it. Holding people accountable helps them lift themselves up too.
deleted 6y ago
[deleted]
beervirus 6y ago
I have a commercial tenant who was forced to shut down their business during the lockdown. I just waived rent until they were allowed to reopen. You can't get blood from a turnip, and I really don't want to force them into default and try to find another tenant in this environment anyway. Almost everybody is taking a haircut this year.
- nickff 6y ago
  I think that's probably the smart move, at least for commercial property in this situation. The waived rent is essentially an insurance premium against the risk of vacancy coming out of the recession.
- londons_explore 6y ago
  Isn't the smarter move to defer payment of the rent for a few years? One day, they'll be able to pay, and then you'll get paid.
  - beervirus 6y ago
    Smarter? Eh, probably. I dunno though. It's a small enterprise that doesn't do a lot of business even in good times. I'm ok helping them out. It can be my good deed for the decade.
  - vkou 6y ago
    If they are a low-margin business, the only way they'll be able to pay up, is if inflation makes money worthless. A high-margin business with low cash on hand, that's temporarily impacted by COVID is another story - they might be able to pay up later.
  - thephyber 6y ago
    There are also tax concerns that might affect a decision on whether to write down a loss this year versus some time in the near future.
- m4rtink 6y ago
  Here in Czech Republic there is a program where government pays 50% of busines rent as long as the property owner agrees on a 30% discount and the tennant pays 20%. The program covers March to June (three months) with most businesses having to be closed for about six weeks from that and restaurants fully reopening only recently. IMHO this is a really good idea while not giving money away due to each party covering a part of the deal.
tinza123 6y ago
As a passive real estate investor I'm seeing bidding on new sales has actually been more competitive than ever in my area (Atlanta GA). A lot of houses are selling above asking prices with 8-10 offers on the table. I am not sure if people genuinely think it is a good time to buy, or is it mostly FOMO.
- poulsbohemian 6y ago
  I sell real estate in Washington state. What you are describing has been our norm for a while. I am curious - is this a new phenomenon you are seeing in Atlanta? Is it at all price points and areas of the city? Would be interesting to see the data.
  - tinza123 6y ago
    I'm not sure how it compared year-to-year, but at the beginning of the COVID thing, house prices did drop a little with quite some offers cancelled (even pending ones, according to some of my agent friends).
- entangledqubit 6y ago
  How do things look without using the questionable guidance of "asking price"? "Asking price" (and the notion of above asking) often seems like real estate agent reality distortion to me. Mortgage rates are super low, so some may see this as getting an asset they can leverage in an improved environment later.
  - tinza123 6y ago
    I mean listing price is the most direct measure of the market temporature, not saying it's 100% accurate but it does represent the sentiment. Mortgage rate is indeed low, but not that significant compared to before (< 1% compared to 6 month ago I think). I'm hesitating to bid because 1) price is still high 2) unemployment benefits will run out in 2 months, and I do think teh COVID effects have a long tail, that takes time to pan out. Thus the curiosity about the thought behind the "hot" market right now.
pnw_hazor 6y ago
A wave of more layoffs will happen as soon as the Paycheck Protection quiet period ends. After June 30, companies that took PPP money are free to fire people without repercussion.
- wysewun 6y ago
  this is true. will probably happen at my workplace as well unfortunately. the PPP was a stopgap which helped a bit, but sales are still not back to normal to help pay for full staff.
- thephyber 6y ago
  I like to remind people that in 2008, Bear Stearns fell in March. Most of the the economy didn't realize the financial system problems until late August. I'm waiting for a very large shoe to drop in a few months. How big will depend on whether consumers feel comfortable about their jobs+health.
  - uoaei 6y ago
    > How big will depend on whether consumers feel comfortable about their jobs+health. This is a very frightening sentence because obviously not many consumers feel comfortable about either right now.
  - bsanr2 6y ago
    Titanic Syndrome. Everything's going under, but the people on the upper decks are still enjoying their late-night cigars while the boiler crew is drowning. It's an interesting phenomenon (and, I'm sure, has a better name than the one I just made up).
    - fabianhjr 6y ago
      https://en.wikipedia.org/wiki/Cascading_failure https://en.wikipedia.org/wiki/Cascading_failure
      - 6y ago
Throwaway8588 6y ago
The impact of this is going to be extremely bi-modal. Working class people are going to be decimated. No income and the cost deferral cliff. Middle class (office workers are least) and upper class people will do very well. They still have their jobs and their costs have collapsed. I am no longer paying for gas, childcare, bussing fees, car insurance, and all manner of other things. I can shop at Costco now that I have more time, saving me even more. Nobody is buying lunch out as we now have tons of saved time to make food ourselves. I used the crisis to squeeze by suppliers of internet and cell phone and whatnot. We now save 40% of our take home pay. Personally the crisis has been great for me.
- novok 6y ago
  How did you get cell phone and internet discounts?
  - thephyber 6y ago
    Many companies have advertised that "our customers who are affected by COVID can contact customer support for ..." type of PR messages announcing discounts/deferments. I actually started collecting the URLs, but there are so many it's not worth centralizing. Verizon: https://www.verizonwireless.com/support/covid-19-faqs/#bill https://www.verizonwireless.com/support/covid-19-faqs/#bill AT&T: https://about.att.com/pages/COVID-19.html https://about.att.com/pages/COVID-19.html Cox Cable: https://www.cox.com/residential/support/coronavirus-response.html#coronavirusFrequentlyAskedQuestions https://www.cox.com/residential/support/coronavirus-response... Comcast Xfinity: https://www.xfinity.com/prepare https://www.xfinity.com/prepare
- pcurve 6y ago
  I think any savings will be temporarily. Long term effect will be deflationary and wages will eventually go down.
- blueblisters 6y ago
  This seems to be true. Massive income inequality will in turn cause more civil unrest.
troughway 6y ago
US and Canada are going to soon realize that all the govt did was buy temporary peace. Not sure how either country will lift from this without having a negative impact, as not only was it giving emergency funds to people, but in a lot of cases giving up to 200-300% of what they earned prior. It will be a shitshow.
sytelus 6y ago
Meanwhile stock market is preparing to for its record high :).
- gshubert17 6y ago
  > Meanwhile stock market is preparing to for its record high :) Yes, and I don't understand it. The S&P500 is within 8% of its all-time high (3393). Even without a second wave of coronavirus cases and deaths, the current levels of unemployment, defaults, and bankruptices, I can't see what supports these asset price levels. Any ideas?
  - yingw787 6y ago
    I've heard that all that QE and tax cuts from '08 and '20 goes into assets that are valued by rich people. Healthcare, real estate, college, financial securities, which drives up prices due to inflation. I'm not sure if I'm totally right, seems a bit too simple, but it makes enough sense to me. That money has to go somewhere, right? Add that demand with demand from rich people from other countries for the same services (who might just loot their country and therefore aren't subject to the same domestic economic pressures) and prices keep going up.
    - dodobirdlord 6y ago
      The interest rate on government bonds is negative or basically negative through most of the world. Stock markets outside of the US have been struggling for a while now. There isn't really anywhere to get any sort of return these days, so the money ends up in the US stock market where it seems to get at least some sort of return.
  - gbear605 6y ago
    Part of it is that there’s nowhere else to put the money. Currently we’re in a situation where no one has a way that they can spend money to make more of it.
  - MysticFear 6y ago
    Stock market is a future prediction machine. The price isn't the current valuation
seanconaty 6y ago
How many HN readers are landlords?
amiga_500 6y ago
Seems like working in IT isn't enough, judging from the number of landlords on this post. Almost as if all productivity gains flow into land in our current system!
mrtweetyhack 6y ago
They'll just protest that away too
person_of_color 6y ago
Yet the stonks go up.
yalogin 6y ago
Will this effect the economy and the stock market at some point? That is not clear to me. The way the stock market is going it makes me quite scared. The whole thing might just collapse under its own weight at some point.
elevenoh 6y ago
Skipping payment != need to skip payment.
JackPoach 6y ago
This is one of those cases when delaying solving a problem can turn out to be a good thing. And in the end, a jubilee (debt forgiveness) might be inevitable. Which is likely to be a good thing too, especially if it covers student loans and other things that aren't cleared by bankruptcies.
xbmcuser 6y ago
This is the main reason I have been scratching my head thinking how the hell is NASDAQ going up. Though might just be sour that I didn't go back in after getting at the right time
tjomk 6y ago
I'm likely out of touch here, but at least for the person mentioned in the article, why does he need a huge SUV? If the crisis hits and you cannot re-pay the bills, that would be the first thing I'd get rid of. It doesn't look like he needs it for work, and he could just get away with a used Honda Civic or a similar smaller car that doesn't require much gas, expensive insurance, and most importantly monthly loan payments. During the last financial crisis I sold lots of stuff that was dear to my heart but wasn't essential like motorbike, mtb, etc. Is it the cultural gap that I'm not seeing as a European? Or something else?
- MandieD 6y ago
  If he's like a lot of Americans, he's "upside down" on the truck - as in, he still owes more on the loan than he could realistically sell the truck for. That would leave him still in debt, but now without a vehicle, even if he could be content with a 10 year old Civic or Corolla. The wisdom of having purchased such a large vehicle on credit to begin with is another discussion entirely. Americans are, on average, far more relaxed about owing a lot of money on a vehicle than, say, Germans. I grew up assuming a car payment was just part of adult life; my husband, a German, was raised to believe that borrowing for anything other than property was foolish. I've since come around to his point of view, and am the reasonably content co-owner of a 12 year old Fiesta, though considering our upgrade options as we have a baby on the way. Why a large truck in the first place? A lot of American men, especially in the South (where this guy is), consider small sedans to be unmanly. If they're overweight like most Americans, they also think they're going to sit more comfortably in a larger vehicle. Plus, SUVs and trucks are less expensive in the US than they are over here - for what I'd have to pay for a new Corolla hybrid station wagon (my current coveted car) in Germany, I could get a Toyota Highlander mid-sized SUV in the US, which Toyota doesn't even bother trying to sell here.
  - tjomk 6y ago
    Gotcha! Thanks for a thorough explanation

416 points by evo_9 6y ago

Yet the S&P500 is still green. The Fed continues to print in order to delay the inevitable. Either a currency crisis or hyperinflation.

boromi 6y ago
Bingo, there's also been a huge influx of retail investors fueling the earlier Bull rise
- MiroF 6y ago
  This is just not how the stock market works. "More investors" doesn't trigger price increases.
  - boromi 6y ago
    Markets go up when the amount of bullish positions outnumber the amount of new bearish positions
    - MiroF 6y ago
      Depends on the size of the various positions. If a bunch of new (and naive) investors enter the market with irrationally bullish positions, institutional investors will short and profit off of the fundamentals. Bad positions are just an opportunity for arbitrage.
mullingitover 6y ago
Savings rates are through the roof right now, I would worry more about a deflation spiral.
- ed25519FUUU 6y ago
  You may be biased as a WFH/silicon valley type (continuing to produce income despite shelter at home). The median checking account balance was $3,400 in 2019, and that was before COVID19 struck. There's a lot of people who were already barely hanging on, and now covid and demonstrations have pulled the rug out from under them. We're only 2 months in. Things will get worse before they get better. 1. https://www.valuepenguin.com/banking/average-checking-account-balance https://www.valuepenguin.com/banking/average-checking-accoun...
  - pkaye 6y ago
    > The median checking account balance was $3,400 in 2019, and that was before COVID19 struck. Does that count money market and savings accounts? And given interest rates are so low I wonder if people invest in more riskier stuff.
    - Avicebron 6y ago
      People need capital to invest. A lot of people are floating by with that 3,400, not strategically holding only 3,400 in their bank account while they make their fortune on risky investments.
  - Avicebron 6y ago
    Yeah, most of the US is one medical emergency from absolute financial ruin. It's amazing to see how disconnected the economy is from the lived experience of the majority of people.
    - MattGaiser 6y ago
      > Yeah, most of the US is one medical emergency from absolute financial ruin. Most Americans have health insurance of some form.
      - Avicebron 6y ago
        If I have 3,400 to my name and my deductible is 2,000 (common from what I've seen). And my rent is 1,500 due next week, I'm not in good shape financially.
qeternity 6y ago
Or worse: BAML had a great piece recently that QEternity (cough) has actually stoked deflation by reducing low-risk asset yields to zero, which forces many savers to save more as relatively risk-free income disappears, which lowers consumption and thus inflation, prompting more QE...rinse and repeat.
- aaronblohowiak 6y ago
  Oooh, do you have a link?
arberx 6y ago
Or deflation, a bigger worry as consumers might be expecting lower prices in the future and delaying purchases. Leading to a deflationary spiral.
- mindslight 6y ago
  Given the natural resource depletion caused by our economy, plus technological progress implying that we all should be working less, how is this remotely worrying? We've had strong deflation in the tech sector for over four decades, and the results have been fantastic.
cft 6y ago
I wonder who downvotes this and why.
- pphysch 6y ago
  "Lalala I cant hear you, stonks go UP" probably
- diogenescynic 6y ago
  Probably someone who actually looked into what QE actually does--it's more deflationary than inflationary. Look at Japan--they've been doing forms of QE for decades. These Fed printing money, inflation trolls are almost never right even though they've been screaming about it for decades.
  - kovacs 6y ago
    Trolls? Sounds like YOU need to understand what QE is. From Wikipedia... "Quantitative easing (QE) is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity." Sounds pretty inflationary to me. Especially when they buy up illiquid mark to fantasy assets that nobody wants and unloads them on the taxpayer to foot the bill while their buddies get a wad of cash to redeploy, into the stock market as it turns out. How is that not inflationary exactly? Oh, the destruction of those bad assets? Yeah I suppose but the socialization of that across America hides that and what's left is pumped up asset prices that cause the average American to have to work even harder to save up to buy and get worse returns because the fed's buddies got in first and drove prices higher. Have you happened to look at the price of assets since 2008 vs. the actual recovery of the economy? Have you seen that S&P earnings were flat to down for the past 4 years going into this crisis? Yet what's happened to stocks? That's right they've tripled since 2009. Go look at any piece of real estate now almost anywhere vs. 10-20 years go and tell me there's been no inflation. I realize it's different everywhere but the idea that we've had "low inflation" over the last 10 years is completely laughable because the calculation removes the highest cost items. The fed has effectively destroyed any price discovery on any assets. It's taken increasingly larger amounts of QE to goose the fake economy. And now for its encore it has overreacted to save their buddies and decided to lower rates to zero and tell the world that it will never let assets fall. How in the world is that not inflationary when you're flooding the market with free money and enabling those at the top to buy up assets and run up prices? Every single person that works to earn USD and saves USD should be livid and rioting in the streets for the theft that's been, and continues to occur. Also, your example of Japan isn't apples to apples. The US has the world's reserve currency and can print as much of it as it wants, Japan does not. Japan is a nation of savers so getting them to spend is harder than a US citizen. We may have short term deflation and that's what the fed is scared of but make no mistake about it what they've done is inflationary as they will well overshoot whatever deflationary impact any failures have. Hell, they've made it clear that's what they're gonna do.
CPLX 6y ago
Hyperinflation is not typically something you're going to worry about in a demand collapse situation.
- MiroF 6y ago
  None of these people have a solid grasp of macro, it's really no use arguing.
MattGaiser 6y ago
Household incomes rose because of the stimulus. https://www.bea.gov/news/2020/personal-income-and-outlays-april-2020 https://www.bea.gov/news/2020/personal-income-and-outlays-ap... https://tradingeconomics.com/united-states/personal-savings#:~:text=Personal%20Savings%20in%20the%20United,percent%20in%20July%20of%202005 https://tradingeconomics.com/united-states/personal-savings#.... So millions are defaulting, but millions of others are awash in newfound cash and savings.
- thephyber 6y ago
  That bump was for the April period. May isn't likely to look as rosy.
viburnum 6y ago
Not every inflation is a hyperinflation. Look at inflation in America in the 1945-1951 or the 1970s. It wasn’t the end of the world. A little inflation is easier to deal with than mass unemployment and bankruptcy.
MiroF 6y ago
The Fed targets inflation and can do so pretty precisely - massive amounts of QE are in order to combat deflationary pressure in the economy right now.
anm89 6y ago
There is massive demand for dollars worldwide, specifically related to dollar denominated debt and commodities contracts and the first part is likely to get more intense if there is a global recession. I'm a gold bug libertarian end the fed kind of guy and even I don't think we are at any risk for hyperinflation. That is definitely not to say these policies can't have seriously negative consequences but I don't think hyperinflation is one of them, at least not for the US in the next decade.
elevenoh 6y ago
The inevitable increase in productivity brought by the promise of robotics, ai & automation? ;)

walterbell 6y ago

If there is no spike in infections within two weeks, from areas which had large public protests in the past week, can millions of Americans be helped by restarting the economy?

csommers 6y ago
Unlikely. A fair number of people are multiple payments/rent behind, not to mention still missing their unemployment checks.
danans 6y ago
> can millions of Americans be helped by restarting the economy? That's already happening. The current slow reopening is restarting the economy in order to help millions of Americans get back to work. For example, the jewelry store in my neighborhood in CA is now open, but for 1 customer at a time (OK in their case because even before the pandemic they controlled the number of people inside). However, the breakfast diner nearby with closely packed tables is still shut down. Even if they could open, the owner has to figure out how to run that business with appropriate social distancing. An additional problem is that the economy was fragile even before the lockdown. Many employers likely won't rehire nearly as many people as they let go. Those who are still hiring have slowed down their hiring rate. And until people feel safe consuming services and gathering in public like they did before, the main street economy can't recover fast enough to employ everyone who was laid off during the lockdown. This is why government support for laid off workers must continue until enough confidence exists that things are safe, even without the lockdowns, and that might take years for some sectors of the economy.
daenz 6y ago
I suspect we will be told that the protests were necessary and for a greater good that outweighed spreading coronavirus, and now that they're over, we should all go back into lock down to prevent further spreading, and anything else is reckless and literally killing people.
aphextron 6y ago
>If there is no spike in infections within two weeks, from areas which had large public protests in the past week, can millions of Americans be helped by restarting the economy? Daily new infections have more than doubled here in North Carolina in the last two weeks since "reopening" [0]. We have had more new cases in the last two weeks (2200) than in the entire length of lockdown from March until then (2000). The death rate has massively spiked beginning May 24th, exactly two weeks (the median time from infection to death) from May 9th, the day the governor relaxed restrictions [1]. The dream of this thing just magically going away is absolutely delusional. [0] https://www.nytimes.com/interactive/2020/us/north-carolina-coronavirus-cases.html https://www.nytimes.com/interactive/2020/us/north-carolina-c... [1] https://www.nytimes.com/interactive/2020/us/north-carolina-coronavirus-cases.html#deaths https://www.nytimes.com/interactive/2020/us/north-carolina-c...

rhexs 6y ago

Guy has what looks like a luxury truck and is apparently having trouble deciding between food and his car payment. Sell the car, get a cheap used beater, reduce expenses, keep looking for a job. Not sure what NPR wants me to take from this example.

CPLX 6y ago
Car payments don't work like that. And that's not even addressing the fact that the entire country went into economic free fall, so "Just sell the X" isn't quite the advice it used to be.
Guest42 6y ago
Hiring is very slow at the moment and the beater would likely require a lot of maintenance and have a high price tag although I agree that it’s smart to drive cars that are more economical.
- Alupis 6y ago
  Anecdotal, but I keep hearing about restaurants and other small businesses that can't convince their employees to come back to work. Something about the unemployment benefits + CARES Act bonus being more than they were earning while working...
  - Avicebron 6y ago
    Well maybe that should be a red flag for the economic situation of many many people that should cause some inspection on how we structure and think about work.
  - korethr 6y ago
    Also anecdotal, but unemployment + CARES Act did in fact result in one of my housemates bringing in more from the two than they did from their employer. But, they went back to work anyway when their employer called them back from furlough, because 1) in my state, IIRC, refusing an offer for work cancels one's unemployment benefits, 2) they knew they the structure of having a regular job again would be much better for their mental health than not working.

burger_moon 6y ago

>He says a call center worker told him that he didn't qualify for any help because he was late on a car payment last year. When NPR contacted Ford, the company said that is not its policy. And after reviewing the case, the company is now letting Baird skip his next car payment, which he says is a big help. It appears Ford operates on the Google customer service spectrum of only helping those who can gain support of public outcry. What I would like to see is a response from Ford that they will open an investigation to review everyones requests which have been denied for skipping payment.

noad 6y ago
Like when Wells Fargo investigated their mortgage department and found no problems, right? Or when Google investigated Andy Rubin and decided he wasn't that bad and protected him for three more years? Why on earth would you ever trust a corporation to police themselves? They always lie, they always fail.
- thephyber 6y ago
  It can't hurt to expect companies to actually troubleshoot their own policies. We don't have to expect that it's the only recourse (eg. government regulation, civil suits, public brand shaming, etc).
  - MintelIE 6y ago
    Sure it can, you’ll just end up demoralizing yourself. Expect companies NOT to troubleshoot their policies, and then when one occasionally does you’ll be pleasantly surprised. If you expect them to police themselves, most of the time you will end up being disappointed.
  - noad 6y ago
    I have seen no evidence of any positive outcome from companies policing themselves, only negative results and coverups. I'm sure there have been a few instances, somewhere, there must be, right? I just don't recall reading or hearing about them in my entire life, ever.

avancemos 6y ago

Lockdowns are effective as tourniquets, but indefinite or long term use was never logical. There should have been more forward-thinking and pragmatic options pushed earlier. We will now see the natural repercussions of lockdown-centered policies.

cycrutchfield 6y ago
Nobody was ever advocating for indefinite or long-term lockdown policies. That's a strawman.
- CPLX 6y ago
  I would characterize basically all the the lockdowns as indefinite.
- avancemos 6y ago
  Which universe do you live in? “Los Angeles County, which has recorded the highest number of coronavirus cases and deaths in California, has extended stay-at-home orders indefinitely.” https://www.sfchronicle.com/bayarea/article/LA-to-extend-stay-home-through-July-while-two-15265751.php https://www.sfchronicle.com/bayarea/article/LA-to-extend-sta...
- avancemos 6y ago
  Also: “ Durham leaving stay-at-home order in place indefinitely” https://spectrumlocalnews.com/nc/triangle-sandhills/news/202.. https://spectrumlocalnews.com/nc/triangle-sandhills/news/202.... NJ stay at home order continued indefinitely | FOX 5 New York https://www.fox5ny.com/news/nj-stay-at-home-order-continued-.. https://www.fox5ny.com/news/nj-stay-at-home-order-continued-.... And many many more...
  - deleted 6y ago
    [deleted]
- bagacrap 6y ago
  I guess it depends on how you define long term. I do have friends who think the lockdown should last in its current form (ie extended holiday with extra $600/week for the unemployed) until there's a vaccine. Flattening the curve was the refrain but we seem to have forgotten that.

bshipp 6y ago

This is just the start. Landlords would be smart to work with tenants to share some of the loss and renegotiate temporary adjustments to keep at least some revenue coming in because the heady days of high demand for rental units is likely behind us for a while. It'll be worse in downtown areas. I've heard from multiple firms that are looking at downsizing their expensive office space and continuing to allow employees to work from home. if a person doesn't have to work downtown they will often choose not to live there either. COVID is going to change the face of urban real estate. So if you have a tenant, they're gold and do what you can to keep them.

cft 6y ago
In California for example, due to state-wide rent control, it's very dangerous for a landlord to lower rents. I would rather offer 6 months free rent than lock into permanent nonadjustable lower rent situation.
- leereeves 6y ago
  If a lot of landlords start exploiting that loophole, I wouldn't be surprised if the law were revised to be based on the average rent over a year, or something similar.
  - wtvanhest 6y ago
    That really would be the best legislation. A simple calc of the rent of the first 12 months of the lease becomes the base rent.
  - GhostVII 6y ago
    I think the only effect of that would be to prevent landlords from giving free months of rent - better to lose a tenant than permanently have lower rents which may not be sustainable.
  - favorited 6y ago
    They wouldn't have to change it, because that is factored in. The law states: "In determining the lowest gross rental amount pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the owner of such unit of residential real property and accepted by the tenant shall be excluded." So if your rent is $3k/month, and the landlord gives you 3 months rent-free, your rent according to AB 1482 is still $3k.

api 6y ago

I know people who are skipping payments just to be in solidarity with people who can't pay. They see it as an act of protest not only of inequality generally but of the fact that no matter what happens the financial industry will get a limitless bailout at the expense of everything else. Not paying is a way of getting a piece of that bailout. I agree with the latter point. We've seen in the past 10 years or so that the regular economy will be sacrificed to save the financial industry. This has resulted in a complete decoupling of the two. The regular economy can be in a state of total collapse and the stock market goes up. (By "the financial industry" I mean top politically well connected banks, not necessarily smaller private equity or smaller financial institutions. Those will crash and burn and be sold off in fire sale prices to larger banks that get bailed out, just like 2008.) If we ever have real leadership again, one of the tasks before that real leadership is going to be undoing the loss of integrity and trust created by the 2008 bailouts. Like the second Iraq war, people have yet to even grasp how much damage was done in those years.

pengaru 6y ago
> I know people who are skipping payments just to be in solidarity with people who can't pay. So they're donating what would have been spent on rent to an appropriate cause? Surely they're not keeping the money if it's just that. /s
- rabidrat 6y ago
  Yeah they're donating the money to their self-in-3-months, who has even less than they do now, with no job and no prospects and no bailout on its way.
  - api 6y ago
    Exactly. They're thinking of it as an act of simultaneous self-preservation and civil disobedience to the fact that bailouts are only for huge banks and corporations. The perception, which is at least somewhat true, is that Wall St. and DC will be saved and the rest of the country can burn. From what I've seen, the 1% vs the 99% is catchy but wrong. The reality is more like the 0.01% vs the 99.99%. We are probably nearing the point where we will see actual change, since we're approaching a place where the wealth distribution hockey stick is so steep the upper middle class and "merely rich" will start seeing themselves as "the 99%." You'll see working class and hippies marching with lawyers, doctors, and owners of businesses that make "only" a few hundred million a year (and don't have lobbyists). Wish it didn't have to get that bad, but that appears to be the case. We'll probably do something about CO2 when NYC is underwater.

opportune 6y ago

I imagine a huge cash crunch is coming up soon as deferred payments come home to roost. We can’t continue kicking the can down the road forever. If people are over leveraged or insolvent we have to bear the pain eventually. It’s part of the credit cycle and it’s how savers get their foot in the door regarding asset ownership. Otherwise we will have basically embraced some absurd worst-of-both-worlds kind of socialism in which we bailout the people who are leveraged and over-exposed-to-risk at the expense of future generations and savers. The Fed/Government can probably kick it down the road until November though.

MattGaiser 6y ago
For mortgages I don't see why the deferrals are a problem as long as they are just tacked on to the end of the mortgage. It is going to be a major problem for renters.
- opportune 6y ago
  If people don’t have their jobs immediately come back after all the restrictions are lifted then they’ll still be unable to make future payments. Correct though that renters will be hurt more, though it will likely have less systemic effects.
entangledqubit 6y ago
I've been expecting a "cash crunch" too but the Fed seems happy to keep making me wrong.
- opportune 6y ago
  If the actual economy (gdp, not equities) doesn’t make a v-shaped recovery then it’s inevitable. I think the shakeup of who gets rehired for which jobs is going to cause some personal bankruptcies regardless. Basically if Acme co laid off 5k people, the 5k they rehire to resume operations may be a different set of people.
anm89 6y ago
We've been in that worst world since 2008 and will likely not be leaving any time soon.

ngngngng 6y ago

I'm so extremely grateful that I accepted section 8 tenants into my rental units. Most of these tenants have nearly all of their payment covered by the government and they just have to pay $100 or $200 on top of that to cover what the government won't. These tenants are often not accepted by landlords because they're thought to cause more issues. Mine are great. They keep the units spotless, mow the lawn for me on my multi unit properties. When I have a tenant like this, I never raise their rent, and if they can't pay the hundred bucks the government won't I sure don't care.

hanoz 6y ago
I don't suppose the struggling non state supported private renters whom you outbid to buy these houses, which they might otherwise have been able to afford to buy themselves, but who are now paying rent to some other landlord instead, are quite so enamored with your altruistic enterprise.
- ngngngng 6y ago
  I actually lived in this multi unit property when I first bought it. My wife and I were newly married and buying a multi unit property qualified us for a 3.5% down payment which was much more management than >=10%. Also, I live in a rural part of America where property values are relatively stable because there's so much room to build. There are ample new homes available and new homes cost about $100 per sq ft. Existing homes are unable to rise above this except for extreme circumstances.
- amiga_500 6y ago
  You said something negative about landlords. You can really see from the rash of landlords on this post why hacker news is hugely pro landlord.
the-dude 6y ago
Is this in Soviet US?
dmarlow 6y ago
> if they can't pay the hundred bucks the government won't I sure don't care I used to have this same mentality. Until the person who was renting one of my properties decided to lie about certain issues (like claiming a shampoo bottle lodged down one of the toilets was there for years). When I decided to not renew the lease with that tenant, they decided to cause considerable damage to our property. Sometimes, when things come easy to people, they don't appreciate it. Holding people accountable helps them lift themselves up too.

deleted 6y ago

[deleted]

beervirus 6y ago

I have a commercial tenant who was forced to shut down their business during the lockdown. I just waived rent until they were allowed to reopen. You can't get blood from a turnip, and I really don't want to force them into default and try to find another tenant in this environment anyway. Almost everybody is taking a haircut this year.

nickff 6y ago
I think that's probably the smart move, at least for commercial property in this situation. The waived rent is essentially an insurance premium against the risk of vacancy coming out of the recession.
londons_explore 6y ago
Isn't the smarter move to defer payment of the rent for a few years? One day, they'll be able to pay, and then you'll get paid.
- beervirus 6y ago
  Smarter? Eh, probably. I dunno though. It's a small enterprise that doesn't do a lot of business even in good times. I'm ok helping them out. It can be my good deed for the decade.
- vkou 6y ago
  If they are a low-margin business, the only way they'll be able to pay up, is if inflation makes money worthless. A high-margin business with low cash on hand, that's temporarily impacted by COVID is another story - they might be able to pay up later.
- thephyber 6y ago
  There are also tax concerns that might affect a decision on whether to write down a loss this year versus some time in the near future.
m4rtink 6y ago
Here in Czech Republic there is a program where government pays 50% of busines rent as long as the property owner agrees on a 30% discount and the tennant pays 20%. The program covers March to June (three months) with most businesses having to be closed for about six weeks from that and restaurants fully reopening only recently. IMHO this is a really good idea while not giving money away due to each party covering a part of the deal.

tinza123 6y ago

As a passive real estate investor I'm seeing bidding on new sales has actually been more competitive than ever in my area (Atlanta GA). A lot of houses are selling above asking prices with 8-10 offers on the table. I am not sure if people genuinely think it is a good time to buy, or is it mostly FOMO.

poulsbohemian 6y ago
I sell real estate in Washington state. What you are describing has been our norm for a while. I am curious - is this a new phenomenon you are seeing in Atlanta? Is it at all price points and areas of the city? Would be interesting to see the data.
- tinza123 6y ago
  I'm not sure how it compared year-to-year, but at the beginning of the COVID thing, house prices did drop a little with quite some offers cancelled (even pending ones, according to some of my agent friends).
entangledqubit 6y ago
How do things look without using the questionable guidance of "asking price"? "Asking price" (and the notion of above asking) often seems like real estate agent reality distortion to me. Mortgage rates are super low, so some may see this as getting an asset they can leverage in an improved environment later.
- tinza123 6y ago
  I mean listing price is the most direct measure of the market temporature, not saying it's 100% accurate but it does represent the sentiment. Mortgage rate is indeed low, but not that significant compared to before (< 1% compared to 6 month ago I think). I'm hesitating to bid because 1) price is still high 2) unemployment benefits will run out in 2 months, and I do think teh COVID effects have a long tail, that takes time to pan out. Thus the curiosity about the thought behind the "hot" market right now.

pnw_hazor 6y ago

A wave of more layoffs will happen as soon as the Paycheck Protection quiet period ends. After June 30, companies that took PPP money are free to fire people without repercussion.

wysewun 6y ago
this is true. will probably happen at my workplace as well unfortunately. the PPP was a stopgap which helped a bit, but sales are still not back to normal to help pay for full staff.
thephyber 6y ago
I like to remind people that in 2008, Bear Stearns fell in March. Most of the the economy didn't realize the financial system problems until late August. I'm waiting for a very large shoe to drop in a few months. How big will depend on whether consumers feel comfortable about their jobs+health.
- uoaei 6y ago
  > How big will depend on whether consumers feel comfortable about their jobs+health. This is a very frightening sentence because obviously not many consumers feel comfortable about either right now.
- bsanr2 6y ago
  Titanic Syndrome. Everything's going under, but the people on the upper decks are still enjoying their late-night cigars while the boiler crew is drowning. It's an interesting phenomenon (and, I'm sure, has a better name than the one I just made up).
  - fabianhjr 6y ago
    https://en.wikipedia.org/wiki/Cascading_failure https://en.wikipedia.org/wiki/Cascading_failure
    - 6y ago

Throwaway8588 6y ago

The impact of this is going to be extremely bi-modal. Working class people are going to be decimated. No income and the cost deferral cliff. Middle class (office workers are least) and upper class people will do very well. They still have their jobs and their costs have collapsed. I am no longer paying for gas, childcare, bussing fees, car insurance, and all manner of other things. I can shop at Costco now that I have more time, saving me even more. Nobody is buying lunch out as we now have tons of saved time to make food ourselves. I used the crisis to squeeze by suppliers of internet and cell phone and whatnot. We now save 40% of our take home pay. Personally the crisis has been great for me.

novok 6y ago
How did you get cell phone and internet discounts?
- thephyber 6y ago
  Many companies have advertised that "our customers who are affected by COVID can contact customer support for ..." type of PR messages announcing discounts/deferments. I actually started collecting the URLs, but there are so many it's not worth centralizing. Verizon: https://www.verizonwireless.com/support/covid-19-faqs/#bill https://www.verizonwireless.com/support/covid-19-faqs/#bill AT&T: https://about.att.com/pages/COVID-19.html https://about.att.com/pages/COVID-19.html Cox Cable: https://www.cox.com/residential/support/coronavirus-response.html#coronavirusFrequentlyAskedQuestions https://www.cox.com/residential/support/coronavirus-response... Comcast Xfinity: https://www.xfinity.com/prepare https://www.xfinity.com/prepare
pcurve 6y ago
I think any savings will be temporarily. Long term effect will be deflationary and wages will eventually go down.
blueblisters 6y ago
This seems to be true. Massive income inequality will in turn cause more civil unrest.

troughway 6y ago

US and Canada are going to soon realize that all the govt did was buy temporary peace. Not sure how either country will lift from this without having a negative impact, as not only was it giving emergency funds to people, but in a lot of cases giving up to 200-300% of what they earned prior. It will be a shitshow.

sytelus 6y ago

Meanwhile stock market is preparing to for its record high :).

gshubert17 6y ago
> Meanwhile stock market is preparing to for its record high :) Yes, and I don't understand it. The S&P500 is within 8% of its all-time high (3393). Even without a second wave of coronavirus cases and deaths, the current levels of unemployment, defaults, and bankruptices, I can't see what supports these asset price levels. Any ideas?
- yingw787 6y ago
  I've heard that all that QE and tax cuts from '08 and '20 goes into assets that are valued by rich people. Healthcare, real estate, college, financial securities, which drives up prices due to inflation. I'm not sure if I'm totally right, seems a bit too simple, but it makes enough sense to me. That money has to go somewhere, right? Add that demand with demand from rich people from other countries for the same services (who might just loot their country and therefore aren't subject to the same domestic economic pressures) and prices keep going up.
  - dodobirdlord 6y ago
    The interest rate on government bonds is negative or basically negative through most of the world. Stock markets outside of the US have been struggling for a while now. There isn't really anywhere to get any sort of return these days, so the money ends up in the US stock market where it seems to get at least some sort of return.
- gbear605 6y ago
  Part of it is that there’s nowhere else to put the money. Currently we’re in a situation where no one has a way that they can spend money to make more of it.
- MysticFear 6y ago
  Stock market is a future prediction machine. The price isn't the current valuation

seanconaty 6y ago

How many HN readers are landlords?

amiga_500 6y ago

Seems like working in IT isn't enough, judging from the number of landlords on this post. Almost as if all productivity gains flow into land in our current system!

mrtweetyhack 6y ago

They'll just protest that away too

person_of_color 6y ago

Yet the stonks go up.

yalogin 6y ago

Will this effect the economy and the stock market at some point? That is not clear to me. The way the stock market is going it makes me quite scared. The whole thing might just collapse under its own weight at some point.

elevenoh 6y ago

Skipping payment != need to skip payment.

JackPoach 6y ago

This is one of those cases when delaying solving a problem can turn out to be a good thing. And in the end, a jubilee (debt forgiveness) might be inevitable. Which is likely to be a good thing too, especially if it covers student loans and other things that aren't cleared by bankruptcies.

xbmcuser 6y ago

This is the main reason I have been scratching my head thinking how the hell is NASDAQ going up. Though might just be sour that I didn't go back in after getting at the right time

tjomk 6y ago

I'm likely out of touch here, but at least for the person mentioned in the article, why does he need a huge SUV? If the crisis hits and you cannot re-pay the bills, that would be the first thing I'd get rid of. It doesn't look like he needs it for work, and he could just get away with a used Honda Civic or a similar smaller car that doesn't require much gas, expensive insurance, and most importantly monthly loan payments. During the last financial crisis I sold lots of stuff that was dear to my heart but wasn't essential like motorbike, mtb, etc. Is it the cultural gap that I'm not seeing as a European? Or something else?

MandieD 6y ago
If he's like a lot of Americans, he's "upside down" on the truck - as in, he still owes more on the loan than he could realistically sell the truck for. That would leave him still in debt, but now without a vehicle, even if he could be content with a 10 year old Civic or Corolla. The wisdom of having purchased such a large vehicle on credit to begin with is another discussion entirely. Americans are, on average, far more relaxed about owing a lot of money on a vehicle than, say, Germans. I grew up assuming a car payment was just part of adult life; my husband, a German, was raised to believe that borrowing for anything other than property was foolish. I've since come around to his point of view, and am the reasonably content co-owner of a 12 year old Fiesta, though considering our upgrade options as we have a baby on the way. Why a large truck in the first place? A lot of American men, especially in the South (where this guy is), consider small sedans to be unmanly. If they're overweight like most Americans, they also think they're going to sit more comfortably in a larger vehicle. Plus, SUVs and trucks are less expensive in the US than they are over here - for what I'd have to pay for a new Corolla hybrid station wagon (my current coveted car) in Germany, I could get a Toyota Highlander mid-sized SUV in the US, which Toyota doesn't even bother trying to sell here.
- tjomk 6y ago
  Gotcha! Thanks for a thorough explanation