Wilbur Ross is quite right here, we’ve a large financial services sector just gagging to be allowed to lend people money – so, Federal workers furloughed can and should just go get a loan to stay afloat. The problem with this is that while Ross is correct it’s somewhat impolitic to say this – that problem being that Ross is a politician these days and paid to be politic.
It’s entirely correct that those Federal workers are furloughed. Some in fact are told that they’ve got to keep coming into work but they’ll not get paid – not yet at least. Others are told that they shouldn’t even come into work. They’re not getting paid either. So, there’s a certain gap between monthly income and monthly expenses opening up.
Sure, we all keep saying that everyone should have a month or two of expenses put aside just in case. Just as we all know that rather too few people actually do so. Thus they’ll need to borrow to bridge that gap. So, go get a loan, that’s good advice:
Workers affected by the government shutdown should seek loans to pay their bills and financial institutions should make credit available, U.S. Commerce Secretary Wilbur Ross said on Thursday as employees were poised to miss their second paycheck.
A counterargument is that, well, who will lend the money to them? To which the answer is any retail banker worth their salt. For the effect of these layoffs and furloughs is that the wages do get paid when the political argument is over. December and January wages are indeed to be made up. So, a banker has a certain security here. He’s just waiting for the Federal government to issue the checks – and what’s wrong with Uncle Sam’s credit rating?
Ross, a wealthy former banker, told CNBC’s “Squawk Box” that he can’t figure out why some of the more than 800,000 unpaid federal employees need to rely on food pantries after missing paychecks during the shutdown, which entered its 34th day Thursday. “There are reports that there are some federal workers who are going to homeless shelters to get food,” host Andrew Ross Sorkin said. “Well, I know they are but I don’t really quite understand why because … the obligations that they would undertake say borrowing from the bank or credit union are in effect federally guaranteed,” Ross responded. “So the 30 days of pay which some people will be out ― there’s no real reason why they shouldn’t be able to get a loan against it.”
Some definitely won’t be able to get a loan. But that will be the people who were in credit trouble already. Someone not already teetering on the edge of distress would indeed be able to get some credit. As well as standstills with things like mortgages.
After all, this isn’t the first time such a shutdown has happened. It’s not an unknown for the financial community. It’s not even going to be an unknown for the workers themselves.
A food pantry opened by chef Jose Andres in central Washington has been swamped with workers seeking hot meals, while furloughed employees across the country have been visiting food banks and seeking other assistance.
The worry that people visit food banks has always puzzled. We want to have a system whereby those under financial strain can still get food and or a hot meal. We have a system whereby those under financial strain can get food and or a hot meal. We seem to have solved that problem – so why the anguish? It’s like complaining that homeless people get rehoused. We’d be seriously worried if they didn’t but that they do seems rather to solve the problem.
Hundreds of banks and credit unions have offered low- or no-interest loans against back pay to federal workers who will not be paid until the shutdown ends.
And the financial system is indeed providing those loans. So, we seem to have solved the problem.
Sure, we’ve not solved the problem of Trump demanding a wall and Pelosi insisting he can’t have one but that collateral damage of people not being able to gain loans to tide them over does seem to be solved. So, again, why the anguish? Is it just because it’s some top hatted capitalist who has been pointing out the obvious?