Compassionate capitalism is our mantra around but the pandemic has really complicated things, especially when it comes to private property rights. As the pandemic drags on, who is right? Renters or landlords?
Chapter 19 Of U.S. Bankruptcy Code?
We suspect there is going to have to be new and special legislation, maybe adding a Chapter 19 to the U.S. bankruptcy code, to clear the arrears built with rental forbearance. We have friends on both sides, landlords who are not getting paid and renters who cannot afford to pay.
It’s complicated but someone will eventually have to take the hit — that is, the loss of rental income, both from residential and commercial properties.
Our priors are that a big chunk of the stock of rental arrears will find its way back to the banks and the Fed will take it off their balance sheets with the miracle of the digital printing press. Gold, baby!
The real estate lobby is very powerful.
Land Of Make Believe
Stunning, but not surprising, how all these issues have been ignored and swept under the rug. The debts that are accruing and not yet reported are in extend and pretend mode. How the PPP loans are just a hidden form of unemployment insurance and distorting the unemployment rate — keeping the reported data lower than the actual number of unemployed.
We are truly living in the land of “suspended animation.” And, we get it, the policymakers are just plugging holes trying to keep the boat afloat but they do need a long-term comprehensive and bold plan, which addresses both the health and economic crisis.
We suspect one is coming at 12:01 pm Eastern on January 20, 2021.
Left Is Rising
It doesn’t take a genius to figure out which direction the political winds are blowing after viewing the following photo.
See the article here