Another local lockdown business casualty

same here, not everyone is going to make it. some businesses need close to 100% of their former revenue, others don't know how to cut costs appropriately.

 

Storms knock down a lot of unhealthy trees and fragile structures......

 

mrs b and i were talking about this today, when a local restauranteur aid he couldn't make it without 100% capacity.
it seems to me that there is a lot of pain that is going to have to be absorbed by a number of entities.

for instance, lower rent, lower mortgage, lower profits at the top of the food chain. if not, each will have to live with their decision. where are you going to get new tenants? mortgagees? profits?
unless there's a quick economic turn around, stubborness could get expensive.

a bird in the hand?

 

Honestly I'm going to be amazed if any business with fewer than 200 storefronts survives this thing.

I don't get how they haven't all gone to their landlords and had the talk:

"Okay landlord, the new rent is 30% of the old rent."

*chuckle* "Heh, can't do it, friend"

"okay, enjoy the vacancy taxes"

Human work output has been limited by this bug. It naturally follows that everything humans produce will be limited until the science problem gets solved. There will be some clever exceptions in some niche industries here and there, but if we don't fundamentally reshape the way our economy works to fit this new reality, then all we've achieved is an explanation for why everything failed.

We already had the jobless recovery; we're about to see the recoveryless recovery. Frankly I'll be amazed if this is not still an urgent issue 10 years from now.

And I sincerely hope to be wrong and amazed.

 

what will happen to government when no one can pay their taxes? long term leins? no way will they cut anything.
afaik, our local government is basically closed, and everyone is being paid

 

I don't agree with you about cutting things. They might not choose to make cuts, but a municipality isn't so different from a barbershop or a bakery in that they can only miss so many pay periods before people just stop showing up.

I'm not touching the fairness aspect of it, but I think governments are going to have to get all Willie Sutton about taxation to stay out of massive general decline & lawlessness.

 

it's going to be interesting to watch. i've lived through several serious recessions. government has never really recognized the economic hardship of the people. but this time may be different. hard to tell at this point.

 

You forgot Part-II of the story.....where the landlord has to have the same conversation with the bank that's holding the mortgages, and while it's true that the banks can kick the payments to the right for a month or two....interest still accrues....(businesses often pay much more than homeowners) the insurance person still has to get paid every month, and the taxes are still being assessed.....etc....

Pretty soon the banker is looking at a 5-gallon bucket in their office that's filled with keys to empty buildings........
....again.

 

Oh, I haven't forgotten about that at all.

I frankly admit that I can't offer a careful and proper solution to the problem, but my point is that quite a few of those mortgages and taxes are not going to be paid, at least not anywhere near their previous rates, for an unknown and possibly very long time to come.

We can do the buckets full of keys and rampant hunger, crime and homelessness thing all over again, or we can do something different. I don't know what the something different is- above my pay grade.

I'm just taking the opportunity to point out that we've built a very inflexible finance system. However, we built it out of nothing but math and ideas- so we have the opportunity to rebuild it with better ideas that allow for sudden and sustained productivity drop-offs.

 

we could do a lot of borrowing, and it wouldn't have hurt so much but for the last 3 years being seriously in the red

 

I'm concerned.
I think concerned is a fair choice of adjective.
I'm concerned as we struggle to come out of this crisis, on all levels, how decisions will be affected by this being an election year. I think you have both parties factoring in the potential outcome, and how it may make them look in every decision being implemented and proposed. Both parties wanting the higher ground of being the engines of greatest recovery, or at least taking credit for being so.

Quite frankly I don't trust our government to be mature enough (on both sides) to not make the recovery and the crisis a highly politicized series of events.
And I guess my greatest hope, is that, that reality doesn't seriously hinder, delay, or derail things that should happen for the greater good of everyone.
Symbolically, this is a time when I think we need to reach out to each other with helping hands, not finger point at each other accusingly.

 

Actually?
Our financial system is remarkably flexible.....unless you fail to plan for the inevitable black swans.
There's a family that's been re-habbing distressed commercial real-estate in my beloved adopted home town.
They finished the first one just prior to the dampanic and their first tenants were........................(wait for it!).............a nail salon, a barber shop, and an independent insurance broker.
Oops....

Right now?
They're re-habbing building next to the first one....and it's going to be converted into another tri-plex with residential in the rear that they're going to put family into.
They're asphalting the parking lot as I type this.

The family patriarchs are first gen US citizens of Vietnamese extraction - LITERALLY in their case.
Naturally the current (and pending) economic stressers have attenuated their plans on the next buildings on main street that they had their eye on - BUT they have plans work hard...to save money and buy their next building a little later on....according to the word on the street.
I'm GLAD for what they've done thus far!
They turned two rather distressed buildings right in our downtown into attractive store fronts.
Their secret is VERY OBVIOUS to anyone who understands small business strategery as commonly practiced by many 1st gen immigrants.
1. Don't borrow anything you don't have a plan on repaying.
2. Hope is NOT a plan!

So far we've lost far fewer mom and pop businesses than I had anticipated, but that's probably because we're too far removed from urban areas hard hit by the bug.

The aftermath of this medical/financial upheaval will have winners and losers.
Some of the those will occur through blind luck, and others will be influenced more by preparation....or the LACK thereof.

I'm financially better off than I was before the Covids (for now!) because we live faaaaar below our means....BUT(!!) I'm having to put off two cancer screenings.
That may mean that I successfully dodged the bus that I saw comming, only to get hit by a bolt of lightning!
I know several people who are vulnerable to substance abuse and depression/PTSD.
THEIR infrastructure has been disrupted.
Others in my orbit are also having to rely more on local charity and food banks.....and dot.gov is STILL trying to fit 2 trillion dollars worth of relief into a hole normally meant for billions.
We're in the very VERY beginning stages of a world-wide one-two punch from the Covids and the resulting economic downturn....and none can yet say what will happen as a result.....but the "models" don't look promising.
The last time we went through something like this the world economy WAS inflexible.
There was a war.....a pandemic....a kudzu-like growth period and then a world-wide economic collapse that led to a much worse war.

HOPEFULLY some of the financial circuit breakers will attenuate the whip-saw ups and downs of the current crisis-recoveries.....and hopefully ALSO our local election results will have as little influence on those cycles as I hope they won't.

It's a GOOD thing this time around we don't have a near-peer dictatorial government that will use a world crisis to grab more territory and tighten the reins of power on their citizenry......huh?

 

i am also concerned that we haven't seen the worst of this yet. even for planners and savers, there could be a lot of pain when the government decides they need to print more money

 

Oh I'm quite certain of it. August/September will show us a lot, and even that won't be the biggest bite.

Yes, I think it is fair to be concerned that the fragile structure in question has a name that rhymes with 'few bless day.'

Not that it would all come down overnight. I may be the youngest one on the thread but it's obvious to me that these things take time.

 

plenty of time to get out of the market and into gold(man sachs)

 

I don't think we will.
With so much of the country opening prematurely, I strongly suspect the second 'wave' will be much worse than the first. After the second, or even third wave, depending upon how well we react to it, we will get a better idea of the long term damage.

 

There were three waves last time, and IIRC the second was the worst of the three.


Of course....we didn't know about masks or lockdowns THEN.....

 

was reading yesterday that some school systems are at least partially funded by sales taxes, and there are some serious shortfalls.
i never knew that, as around here, it's property taxes, which never go away

 

Here one business that has been around 90 years went out of business during month 1, the town was tearing down the historic building a week later.

in my home town a similar situation a larger business that had just finished renovating the office area went bust and the town was haphazardly tearing the factory and office space down a month later.

I watched as the tear down crew tried to bend a fully intact clean I beam because it was too long for the dumper.