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I'll pick saving lives over saving lenders and credit ratings, thanks.
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So would I. But guess who won't? Lenders.
I'd credit that guy a lot more if he'd put a date on when he thinks it'll be safe to relax lockdown strictures. But he's not. He's just making an argument of absolutes with no benchmarks. He argues that until we have a vaccine or a dependable treatment, we can't open. And in the next breath he suggests that people who want to relax directives are going to destroy the country.
What he misses is that if we wait for a vaccine or dependable treatment, we will destroy the country. He's full of strong sentiment, but not much logic or science.
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And you realize that countries with the earliest most severe lockdowns had low death rates and the ones that just fucked around have had skyrocketing death rates?
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Yes. I think a severe lockdown in my state saved lives. But that's not an argument for why, having now bent the curve, we shouldn't consider relaxing directives a bit and letting people resume their lives in small reversible increments over the next thirty or so days.
I'm only arguing we start dipping a toe in the water. This guy is arguing against the idiots protesting in Michigan. My argument is nothing like theirs.
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Really sorry if preserving life is inconvenient to someone's finances -- Just kidding Actually don't care who goes broke if we are saving lives.
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Who do you think goes broke here? Lenders? Eventually, yes, some. But not first. Here's how the cycle works. Assume we're talking about a dermatology clinic, or a restaurant. Assume as the guy in the video says, consumers don't show up for a few months.
1. Business defaults on lease;
2. Landlord w/o revenue defaults on mortgage;
3. Lender sues on mortgage;
4. Landlord sues business;
5. Business is closed, so landlord cannot recover anything;
6. Landlord goes bust and loses building;
7. Building is sold to bottom feeder backed by, if not a division of, private equity (private equity has $1.5 trillion in dry powder right now) as part of REO portfolio wholesaled by lender.
You can use this same spin cycle on the residential real estate side (single and multi-unit structures).
The problem is lenders. Lenders are blunt thinkers, employing blunt instruments. They don't care that the world has frozen because of a pandemic. They want their fixed payment, and if they don't get it, they seek their collateral.
Now, all of this could be fixed, and we could wait the necessary time we need to get to a vaccine or dependable treatment. But you know who will never wait out the time needed? Lenders. Wall Street. Private equity.
What I described above is exactly how Mnuchin, a talentless but connected kid of an ex-Goldman partner, made $400 million after the 2008 crash by throwing people out of their homes and flipping or renting them to others.
I'm not trying to save lenders or investors. You've heard me argue numerous times about a need for forgiveness or extended forbearance. I'm arguing for the people who are going to get killed here, which you accurately note are The Poor and Working Class.
Because lenders and private equity shits will not wait, businesses have to be opened sooner to shorten the time frame in which they cannot meet expenses. Sick as it sounds, we need consumers to be more aggressive and risky rather than neurotic. And if FL's beaches yesterday are an indication, it looks like a lot of them will be happy to oblige. Coupled with a decrease in virus spread accruing from warmer weather and UV light, a hopeful sentiment might buy businesses a boom in the summer to build up reserves for a potential second spike in the fall or winter. If we stay closed all summer and delay that boom into 2021, you don't want to live in this country anymore. It'll be ugly in a way Hollywood script writers can't imagine.
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The real problem is that this has never been a functional democracy. If you are rich and can weather the storm you'll get more. If not, here's a dollar, GFY.
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Agreed.
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And you use the words "herd immunity" like Thanos.
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It's a harsh reality, but thinking we can or will wait for a vaccine or a dependable treatment is delusional utopianism. Unless, of course, you know a way to stop Wall Street and private equity from turning this into a predator's bonanza. Do you? Are you aware of any policy that'll keep them from defaulting everyone they can and gobbling the assets at fire sale prices? Because that's what they're licking their chops and waiting to do right now.
Personally, I think a national renters' strike and mortgage strike would bring lenders and Wall Street to their knees and rob them of leverage. But the Prisoners Dilemma built into that makes it seem unlikely.
