Simple Fix to the Coronavirus Financial Mess: Suspend the Calendar

The modern calendar is one of the most enduring of human institutions, as old as Christianity itself.   Only an historically monumental and compelling event could cause it to be modified. That event is here now.  No, it’s not the Coronavirus.  It’s the inexplicably radical, suicidal overreaction to it and the emerging financial catastrophe it is producing.

Our government’s go-to solution to self-caused problems is to spend our grandchildren’s money.  In an attempt to put back what it took away, having dictated who can continue to work and who cannot, the spend is in the multiple trillions this time.

In the current era, the government seems incapable of acting without creating winners and losers. In the 2008 crisis, the government allowed the loss in housing values to fall solely on borrowers.  Even though Financial Accounting Standards Board (FASB) rules, properly applied, called for marking down the value of collateralized mortgage investments to lenders as well.

The loss in housing values could have been spread across all players in the game by refinancing every loan at the new collateral value.  The lender -- who should have already realized its own loss as required by market-to-market rules anyway -- would have re-booked the asset at its new value and the homeowner’s net worth would have declined by an equivalent amount.  Borrower and lender would have shared the loss in asset value equally, the systemic shock would have been suppressed and our grandkids would not have been sent that particular bill.  Sounds fair, doesn’t it?  But bureaucrats and politicians are not known for bold, fair, creative solutions.

Instead, lenders foreclosed against long-gone collateral values and forced millions from their homes.  The collateral was eventually marked down anyway.  This grab for the chips cost homeowners, lenders and shareholders hundreds of billions more than necessary.  On top of that, expensive new bureaucracies were created to prevent the exact same circumstances from ever happening again.  By the way, did we ever learn who got all that TARP money? And what about the “shovel-ready” infrastructure projects? Where are they today?

Throughout history, the bold have left their mark and not one of them had a bureaucrat's mindset.  In the sixth century AD, for example, a bold monk named Dionysius Exigus devised the Anno Domini dating system.  Until then, the calendar was named after the reigning monarch and its years numbered from the date of ascendancy.

Dionysius objected to memorializing the late emperor Diocletian in this way because he had mercilessly persecuted Christians.  He removed the problem by replacing the system that enabled it.  Dionysius understood that time marches on but how we count it and what we name its segments is arbitrary and artificial.  In October 1582 Pope Gregory XIII – the President  of the United States of his time -- understood that too.  When the Julian calendar proved inaccurate, he replaced it with his own.  The Gregorian calendar, determined by the Earth's revolution around the sun, with its provision for leap years, stopped the drift of the calendar with respect to the equinoxes.  The emerging modern commercial world demanded precision and Gregory delivered it in this bold, imaginative way.

Now it is time to think boldly by fiddling with the calendar again.  Our government already has gone part way there by demanding a virtual halt to commerce and free assembly.  It is a multi-trillion-dollar overreaction to a nasty flu.  In a replay of the 2008 bias favoring capital holders, the government has ordered us to stay at home.  For many of us, this suspends our incomes too.  But it has not ordered our creditors to suspend collection of debts.  Winners and losers.  Our mortgages, contracts, rents and interest accruals continue.  The “in,” for many, stops, but the “out,” for all, continues.  Commerce pauses but the calendar does not.  March becomes April and April, May.  Our bills continue to come due.  In an attempt to correct this foreseeable consequence, the government will throw a lot of money around.  Some of us might get a thousand bucks.  But even if all of us do, that will run about 320 billion for us, the wages class, and about 1.7 trillion to split among the congressionally favored and the asset class. 

Why not just suspend the calendar?  And thereby -- along with it -- mortgages, contracts, rents and any other obligation or routine pegged to the calendar.  Decree that, say, April 5, shall last for 30 days.  Pause the out right along with the in. 

Think about it.  We mess with the clock twice a year.  Why not the calendar too?  Just for this one, extraordinary time.

No one's bills come due if the calendar is frozen at 11:59:59 PM on April 5.  No one gets a paycheck either.  No one gets laid off.  No one goes to work.  No one pays a mortgage.  No interest, royalties or rents accrue because it remains April 5, for 30 straight days.  Employers don't need to meet payrolls because employees don't need a paycheck.  No one gouges or profiteers.  Financial time just stops.

The calendar resumes in 30 days -- or when the COVID-19 curve is flat enough -- on 12:00:01 AM on the day that would have been May 5 but which, by decree, is only April 6.  Later, congress can legislate our calendar back to meteorological normalcy.  Assuming we don’t want to celebrate Christmas on November 25 or Independence Day on the 4^th of June.

We don't have to figure out who gets bailed-out and who doesn't.  We don’t have insider bad guys enriched from the public trough.  We all give and get, forgive and forgo -- person or corporation -- to the same degree.  The government doesn't put another trillion or two on our tab.

We can work out the little quirks and unforeseens.  We all draw upon savings for perishables and otherwise use up what we’ve got.  Some will need government help for that.  Nearly everyone and everything is on pause.  Medical professionals, police and fire, grocers, pharmacists, farmers, utility and transportation workers and others will continue to work and get paid.  These perennially reliable stalwarts will all earn an extra, tax free, double-time, month's worth of income this year.  For them 2020 will bring fourteen months of income but just twelve months of bills.  For the rest of us, it will be twelve and twelve.  No loss. No gain except to the few who are asked to keep the rest of us safe and healthy.  City, county, state and federal governments and tax credits can pay or reimburse the direct costs, and, of course, for the public kitchens and shelters for the unfortunate few.

It will cost something, but it won’t be anywhere near $2 T.

Postscript:  Since this article was written on March 11, 2020, some major businesses have begun to think in a similar way.  A major restaurant chain says it will quit paying rent.  Some major banks are suspending mortgage payments (but continuing to accrue interest).  These unilateral solutions are messy and they invite retaliation.  The pause won’t work unless it includes nearly everyone.  Otherwise there will be demands to honor contracts.  Lawyers will be called in.  If we just suspend the calendar instead, the most we’ll all have to do is to turn the system dates on our computer systems back to April 5 before going to bed for thirty days in a row.  Oversimplifying a bit.  But that’s really about it.

Copyright 2020 by Just a Man with an Opinion 
email: onemansopinionblog@outlook.com

Disclosure: The sections on the history of the Anno Domini system and the Gregorian calendar were paraphrased from Wikipedia.