- Joined
- Jan 5, 2010
- Messages
- 2,103
- Points
- 83
Should government issue debt moratorium law in light of COVID-19?
Means: all debt repayments temporarily suspended and payment of principal date is extended by 3-6 months, so all interest and redemption are extended by law by 3-6 months?
Property and plant rent is halved (50% as the next step, 25% discount off rent as a start for this month).
Better than Central banks print money (Japan) and buy zombie stocks from stock market or stupid USA treasury buy bonds of zombie companies and ends up have to pay interest on the borrowed $$$ to the FED or the zombie company debtors issue even more bonds to rob tax payers money (and expect US treasury to buy up their nonsense junk bonds as well).
According to one straits times commentary, world debt is now at record high of 3x GDP, much worse than the Lehman crisis time because of low FED interest rates resulting in the investment in junk bonds by many pension etc funds as a result.
So a domino default on debt, WORSE than the 2008 Lehman brothers crisis might ensue as a result, thus to prevent an even worse contagion from massive loss in trust in the government / huperinflation, then government should just make the rich and the elderly pay for past governments mistake of reducing FED interest rate by placing a moratorium on repayment of all debt until the COVID-19 situation stabilises and boarder lockdown are reversed.
Of course banks also don't pay interest on bank deposits for this period as well as all old loan repayments and interest is suspended for the period as well. (people also cannot withdraw their fix deposit unless within 1 year of expiry etc).
Or maybe all loans be repaid at smaller interest, e.g. have an interest rate control at say 1% for old loans and nobody can recall an old loan, so there is no urgency to repay old loans and new loans maybe fix at 2% interest at max. Since savings deposits don't attract such high interest, people will just leave their savings and current account intact (no bank run to withdraw cash).
Means: all debt repayments temporarily suspended and payment of principal date is extended by 3-6 months, so all interest and redemption are extended by law by 3-6 months?
Property and plant rent is halved (50% as the next step, 25% discount off rent as a start for this month).
Better than Central banks print money (Japan) and buy zombie stocks from stock market or stupid USA treasury buy bonds of zombie companies and ends up have to pay interest on the borrowed $$$ to the FED or the zombie company debtors issue even more bonds to rob tax payers money (and expect US treasury to buy up their nonsense junk bonds as well).
According to one straits times commentary, world debt is now at record high of 3x GDP, much worse than the Lehman crisis time because of low FED interest rates resulting in the investment in junk bonds by many pension etc funds as a result.
So a domino default on debt, WORSE than the 2008 Lehman brothers crisis might ensue as a result, thus to prevent an even worse contagion from massive loss in trust in the government / huperinflation, then government should just make the rich and the elderly pay for past governments mistake of reducing FED interest rate by placing a moratorium on repayment of all debt until the COVID-19 situation stabilises and boarder lockdown are reversed.
Of course banks also don't pay interest on bank deposits for this period as well as all old loan repayments and interest is suspended for the period as well. (people also cannot withdraw their fix deposit unless within 1 year of expiry etc).
Or maybe all loans be repaid at smaller interest, e.g. have an interest rate control at say 1% for old loans and nobody can recall an old loan, so there is no urgency to repay old loans and new loans maybe fix at 2% interest at max. Since savings deposits don't attract such high interest, people will just leave their savings and current account intact (no bank run to withdraw cash).
