Quarantini

13 thoughts on “Quarantini”

  1. “I estimate that half the shops in the neighborhood are closed for good at this point and it remains to be seen how many of the remainders will still be operating six months from now. Perhaps the ones that survive will be all the stronger as a result, but it’s too soon to tell.”

    Any successful business that couldn’t survive this long clearly did not have much financial capital invested in it, given the relief program available for EXISTING businesses. The greatest asset of such businesses was probably the business owners, and aside from those who decided to retire, that asset still exists.

    But can they open new businesses? Will their credit be damaged by shutting down and not paying their lease, after they were ordered to shut down? Note that all the public money is for the dwindling number of EXISTING businesses. What about NEW businesses? What about new people opening businesses? The government sees the new as a cash cow to be put through a ringer. And it’s bi-partisan.

    1. The PPP monies are meant to be used primarily for payroll and a smaller portion for operating costs. If used as required the loans may be forgiven. But these were only to help a business keep from shutting down while we were all sheltering in place. There’s no guarantee that customers will return in numbers anything like before. I know dentists, who while they are likely to survive, tell me that they expect business to be way down for the rest of this year. As Johnny notes, if half the businesses have shut down likely more will follow. San Francisco’s supervisors also propose increasing the gross receipts tax rates because as companies’ gross receipts have collapsed so have tax collections. That, of course, may not pass, but you could probably line the supervisors up, put a lens in the ear of the near one and far one, and use them as a big telescope.

      “If that means we get to enjoy a slightly reduced version of the old city we’re okay with that. The city isn’t for everyone, but it suits us just fine.”

      Which to be fair, probably excludes most of those local business owners who’ve gone out of business or are likely to do so.

        1. Small business owners often personally guarantee their leases. While there are legal requirements that the landlord try to find a tenant to mitigate the losses a defaulting tenant might incur, there is no question that their homes are on the line and not just a couple of hundred FICO points.

          1. Small business owners also personally guarantee business loans, either for business real estate or business personal property. In BK you might protect an automobile, but not your home equity. Of course, when your business income stops you probably have to stop paying your home mortgage eventually too.

            Been there, done that, got the t-shirt. But it’s not the end of the world.

  2. These are complex systems. In national recessions, rust belt cities tend to see population loss stabilized and sometimes there’s even growth as the outflows are halted. I suspect the next few years will be okay for Chicago, et al. The opposite will play out in the destinations – rust belt suburbs, certain sun belt cities.

    And the housing units also don’t evaporate. The relative desirability just changes. If SF becomes less desirable, the well-heeled leave and middle & working classes fill the void.

    The wildcard is if suburban square footage ever begins to be get chopped & subdivided into boarding houses at scale. That’s the only way I see enough units flooding the market to really hallow out cities.

  3. Yep. Restaurants here in Tulsa have been open for some time. They usually only have every other table available for seating to ensure social distancing but yesterday I noticed one that simply did away with that and opened the full dining room. It’s hard to tell how this is all going to play out but right now people just want to interact and be social.

    1. Tulsa eh? I hear they are thinking of going with school two days a week, and limiting high school to kids bright enough to pass tests and athletes. But taxes are low, and have been slashed substantially from already low levels.

      1. You can always get a cheap beer and very affordable tacos and Chinese food in San Francisco. But fancyffancy and drink is expensive. What you buy when you order a $25 cocktail is the atmosphere and company of fellow patrons. You’re basically renting space. Take away the other people and it’s not such a good deal anymore.

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