Governments around the world have been scrambling to find a way to effectively plug the gaping hole between contracted lease terms, and the millions of tenants who, as a result of government mandated shut-downs do not have the capacity to pay rent. As the initial stages of lockdown were implemented, immediate focus was placed on providing income replacement for 100’s of millions of citizens around the world. Countries like the UK, Australia and New Zealand acted quickly to implement programs that would see a percentage of weekly salaries paid by the government in lieu of company salaries, or outright cash payments in place of a working wage.
Aside from the totally predictable outcome that saw a small element of welfare recipients now being paid more handsomely to stay at home than they ever were while working, the programs are lauded as socialist-style master-stroke, often penned by unionists and bureaucrats who’ve waited their entire lives for the opportunity to implement a state-based ‘universal income’ system, regardless of how necessary it actually was. If there was ever an instance where a socialist utopian element could implement what is effectively a ‘universal wage’, it would be when governments arbitrarily shut down economic activity due to pandemic!
Now that the wage and living costs (excluding rent specifically) have been deftly handled by governments who have necessarily indebted future generations with gargantuan levels of debt, there’s the pesky matter of rents, and how they’re going to be paid by (1) businesses which have been shut-down and (2) citizens who are slowly having welfare benefits called away amidst easing restrictions and/or government austerity exhaustion. Zerohedge reports that the US is on the cusp of a diabolical ‘eviction wave’ which is scheduled to strike in coming weeks as unemployment cheques begin to dry up. There is a high probability that before this coming Friday, Congress will manage to pass another monstrous welfare package designed to avoid this ‘eviction wave’, although as these benefits are directed to individuals alone, tens of thousands of commercial leases are still up in the air. One wonders if we have seen the tip of the iceberg relative to commercial real-estate value collapse, or will there be another government (see: taxpayer) funded bailout? Read more…
Chart of the Day
Yahoo Finance’s Dan Howley and Aikiko Fujita discuss antitrust concerns and the Big Tech hearing on Capitol Hill.