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Neiman Marcus files for bankruptcy

reuters.com

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Re: Neiman Marcus files for bankruptcy

#21

Post by icarus_camp »

_wldu wrote: post #10

I hope individuals and businesses start saving again. When I was a kid, everyone saved money. We spent it too, but we all saved for rainy days. Maybe that idea will make a come back now. Be prepared. You never know what may happen.

There is no incentive (for businesses) with bailouts though. You can't buy out your competitor during a downturn because the government bailout to your competitor is already in the mail. We don't see the airlines that saved for a rainy day going out and buying out the ones that have no cash reserve, because the latter were bailed out. So then the industry as a whole decides not to save because they know the bailout will be there.

We need some kind of law where if you take a bailout you give the Fed a controlling interest, you have something like 60 or 90 days to buy that interest back by repaying the bailout. After that other entities have the right to purchase that controlling interest and then they now own you.

Re: Neiman Marcus files for bankruptcy

#22

Post by seibelj »

sp332 wrote: post #3

First guess: private equity? Neiman Marcus, laden with debt after a private equity takeover, Yup.

When you make raising debt cheaper than selling equity, and central banks print endless money making servicing such debt even cheaper, why bother doing anything else?

Re: Neiman Marcus files for bankruptcy

#23

Post by pjc50 »

_wldu wrote: post #10

I hope individuals and businesses start saving again. When I was a kid, everyone saved money. We spent it too, but we all saved for rainy days. Maybe that idea will make a come back now. Be prepared. You never know what may happen.

All savings are someone else's debt, as a matter of accounting definition.

In some ways we are seeing a "savings glut", which is why interest rates are so low, but those savings are overwhelmingly from the minority of mega-rich.

If the public start saving en masse, and not in equity but just banking, interest rates will have to go negative, at which point people will really question why they should be doing it.

Re: Neiman Marcus files for bankruptcy

#24

Post by runT1ME »

_wldu wrote: post #10

I hope individuals and businesses start saving again. When I was a kid, everyone saved money. We spent it too, but we all saved for rainy days. Maybe that idea will make a come back now. Be prepared. You never know what may happen.

The tax code actively discourages savings for a corporation. If a company wants to make 5% on a relatively safe investment, they have to pay the corporate tax rate first, then invest the money. If instead they calculate a business expansion can bring them 5%, they can hire new employees/buy a business and not pay that tax and still get the 5%.

Re: Neiman Marcus files for bankruptcy

#25

Post by Retric »

onlyrealcuzzo wrote: post #13
contemporary343 wrote: post #7

Earlier quoted context omitted.

Same with J Crew.. real value creators these PE people are

PE does create value! They take over companies that are in a liquidity crisis. They bring buckets of cash with them that gets the company out of the liquidity crisis. Suddenly, the value of the company increases dramatically because creditors can't take advantage of it anymore. PE doesn't takeover companies they think can make it. Regular investors would do that. They take over companies that everyone knows are doome…

That may have happened in some specific cases, but companies susceptible to a leveraged buyout are not in a liquidity crisis. Look at say Toys r Us just before PE showed up and they had access to plenty of capital, they just didn’t have anything to spend it on.

If anything the reverse is true as PE tends to burden companies with so much debt they can’t innovate or downsize to fit changing markets.

Re: Neiman Marcus files for bankruptcy

#27

Post by _bxg1 »

chadash wrote: post #18
_bxg1 wrote: post #16

Earlier quoted context omitted.

There's also been a huge trend reversal on "conspicuous consumption". Even the wealthy now do their wealth-signaling through minimalism, instead of flash and excess. Self-proclaimed "luxury brands" have a dwindling market.

Do the numbers reflect this? I'm just looking at the stock prices of a few luxury companies like LVMH and and Kering and it seems they were are at all time highs prior to COVID.

Just my anecdotal impression; it's possible I'm biased by the extents of my bubble

Re: Neiman Marcus files for bankruptcy

#29

Post by ghaff »

_bxg1 wrote: post #27
chadash wrote: post #18

Earlier quoted context omitted.

Do the numbers reflect this? I'm just looking at the stock prices of a few luxury companies like LVMH and and Kering and it seems they were are at all time highs prior to COVID.

Just my anecdotal impression; it's possible I'm biased by the extents of my bubble

You probably are.

Go to Vegas and there are whole shopping malls where, to indulge in just a degree of hyperbole, I'd have to look hard to find something I could afford. Or at least would even consider affording.

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