The Federal Reserve should stop buying mortgages and put their cash into restaurant gift cards.
The housing market has gotten enough help from the nation’s central bank — perhaps too much considering the bubblish-pricing we’ve seen. The Fed has used every tool it has to keep mortgage rates at historic lows, well below where they should be. That aid includes buying over $1 trillion in mortgages.
If the Fed can bail out the housing market, why can’t it do the same for still-suffering restaurants?
The pandemic pain at the grill is steep, according to stats collected by the Independent Restaurant Coalition, which supports replenishing the federal Restaurant Revitalization Fund.
More than 90,000 U.S. restaurants and bars have closed. Industry losses top $280 billion but targeted aid has only been $29 billion. Half the owners couldn’t pay September’s rent. And to make it worse, costs are soaring. Ponder beef and veal’s 57% price jump or grains (up 55%) or eggs (up 37%) or cooking oils (42%).
Now look at employment figures: U.S. restaurants employed 11.5 million in November, still down 750,000, or 6% off pre-pandemic levels. California eateries had 1.26 million workers, down 225,000 or 15% since February 2020. Yes, almost one-third of restaurant jobs losses came in California.
Plus, business isn’t much better of late in many parts of the nation. The omicron variant has scared off some diners. Just look at reservation stats from the OpenDoor service comparing the past three months’ activity to a year earlier.
Nationally, OpenDoor counted 8% fewer reservations. California’s down 8%, too, the 17th-worst performance of the 40 states tracked. New York was hardest hit, down 32%. Nevada was best, up 35%.
And ponder some California dining hubs. San Francisco reservations are off 48%, trailing only Minneapolis’ 52% drop among 47 markets tracked. Los Angeles is down 20%, the 18th biggest drop. Beverly Hills was off 14%, No. 24. And San Diego was up 1%, the 15th-best outcome.
Biggest winner? Las Vegas, up 32%.
So how would the Fed’s bailout buy these gift cards? Well, some financial innovation is required.
Wall Street was smart enough to learn how to (ahem, profit from) mortgages packaged into tradable commodities. So can collecting gift cards — a far simpler financial widget — for mass resale be all that difficult?
The Fed could then resell the gift cards to recoup their investment — perhaps directly to citizens or to major retailers or government agencies in charge of feeding the nation’s poor and hungry.
Yes, it’s a ridiculous idea. But so is trying to keep the economy humming by offering subsidies to folks with good jobs, solid credit histories and spare cash.
You know, house hunters and homeowners seeking loans to buy or refinance a residence.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
Source: Orange County Register
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