Busted retailers use bankruptcy to break leases by the thousands • Hacker News Board

Re: Busted retailers use bankruptcy to break leases by the thousands

#271

Post by munk-a » Fri, Aug 07, 2020, 7:39 PM UTC

linuxftw wrote: post #222

PaulDavisThe1st wrote: post #202

Earlier quoted context omitted.

Maybe. But if that's true, is the correct solution to crash-and-burn from the current scenario to some version of a "better" one?

The correct thing to do is let the market decide. If it's profitable to do something, people will do it.

The instances where it's been profitable to maintain a standing army are quite few and far between - and allowing the market to control fire extinguishing has led to some really perverse incentives.

There are things that we benefit from as a society that aren't realistic to accurately price for ethical reasons so I think this is quite too simplistic a statement.

Re: Busted retailers use bankruptcy to break leases by the thousands

#272

Post by jldugger » Fri, Aug 07, 2020, 7:53 PM UTC

jtbayly wrote: post #261

bleuedejapan wrote: post #253

Earlier quoted context omitted.

Considering that there will be a huge amount of unused, cheap real estate, and that only tech companies seem to be holding off the crisis, it is pretty much relevant - real estate will be a huge opportunity for tech.

Opportunity for what? Given the increase in WFH, tech companies are also using less real estate.

Opportunity for more datacenters? A lot of datacenters are built inside abandoned warehouses and other buildings: https://www.datacenterdynamics.com/en/analysis/recycled-buil...

These places tend to be connected to useful infrastructure like rail lines, and at least in the US, the internet kinda borrowed rail's right of way to lay fiber. Not sure how well connected malls are; they tend to be near highways so it might have a similar advantage?

Re: Busted retailers use bankruptcy to break leases by the thousands

#273

Post by valuearb » Fri, Aug 07, 2020, 9:16 PM UTC

WanderPanda wrote: post #155

valuearb wrote: post #123

Earlier quoted context omitted.

There is a lot less pain tricking down if the lenders and real estate owners take the brunt of it.

You are right, sadly Schadenfreude (gloat?) would mean a non-trivial relief to the pain of many people

My point was someone has to bear the losses. Forcing the owners to bear those losses means the rest of us don’t, which is a while lot less pain in general.

It’s like this. Suppose a real estate speculator in your town buys a mall, leverages it with debt to afford it, and becomes rich. They buy the biggest house in town, drive a Bentley, in general live well for a decade.

Then the pandemic happens, and some of their tenants stop paying. They personally signed for the mall mortgage, and are now in default.

They need $10M to recapitalize their loan, avoid foreclosure, and ride out the rest of this. So they come to the city council and ask it to raise property taxes by an average of $100 a year per person in the town so the city can loan them the $10M.

They explain by doing this they will keep the mall open, be able to work things through with the tenants, saving jobs, the mall, the bank, the city, even goddamn America! The speculator then sits back smoking a cigar to await his bailout.

Then the (secretly libertarian$”) mayor points out if the city doesn’t step up, the bank will sell the mall to a new owner, who will work with the tenants to keep the mall open, and sell the speculators mansion, Bentley and jewelry to help recoup their losses. And the citizens of the town will all be $100/year ahead.

Then he slams his gavel down and screams, “and there is no smoking in public meetings you arrogant leach!”

Re: Busted retailers use bankruptcy to break leases by the thousands

#274

Post by bsder » Sat, Aug 08, 2020, 12:01 AM UTC

pgrote wrote: post #260

bsder wrote: post #216

Earlier quoted context omitted.

> the government could have bailed out underwater homeowners Why reward people who gambled and lost? Bust them out. People will either buy the houses at more reasonable prices or (more likely in this case) the banks will renegotiate more reasonable terms with the original mortgage holders because they have too much supply and no buyers. > instead of pouring money into banks and letting people suffer. Thanks, Obama. T…

>Why reward people who gambled and lost? Bust them out. Why reward corporations and investors who gambled and lost? Bust them out. >People will either buy the houses at more reasonable prices or (more likely in this case) the banks will renegotiate more reasonable terms with the original mortgage holders because they have too much supply and no buyers. Other companies will buy the businesses at more reasonable prices…

> Why reward corporations and investors who gambled and lost? Bust them out.

Um, exactly?

As I said, the bank investors should have gotten wiped out.

The worst part is that a bank is probably the single business type that the Federal government can actually replace on a short timescale.

Re: Busted retailers use bankruptcy to break leases by the thousands

#275

Post by bleuedejapan » Sat, Aug 08, 2020, 6:33 AM UTC

jtbayly wrote: post #261

bleuedejapan wrote: post #253

Earlier quoted context omitted.

Considering that there will be a huge amount of unused, cheap real estate, and that only tech companies seem to be holding off the crisis, it is pretty much relevant - real estate will be a huge opportunity for tech.

Opportunity for what? Given the increase in WFH, tech companies are also using less real estate.

Tech enabled homes, for example. Converting malls into homes, and managing building complexes using a tech stack...

If you really can't figure out one single use for cheap empty space, man, you need take a step back and just play around with your imagination a bit :)

Re: Busted retailers use bankruptcy to break leases by the thousands

#276

Post by lmm » Sat, Aug 08, 2020, 2:04 PM UTC

PaulDavisThe1st wrote: post #264

lmm wrote: post #247

Earlier quoted context omitted.

To refuse to decide is even more simplistic. The free market offers a clear way to decide where resources are invested. If you're going to override that and prop up failing companies, what grounds are you going to use to decide, and why do you believe your process will be better? Letting the market decide at least ensures that completely useless companies go to the wall, and companies that people are willing to spend…

I don't propose propping up failing companies. I agree with others who have suggested that ensuring that individuals (i.e. employees/workers) are adequately protected so that the immediate aftermath of corporate failure doesn't fall on them. Remember: the usual reason why employees are not entitled to the same share of profits as investors is that "employees are not taking a risk". If we're going to start arguing tha…

Corporations are supposed to be easy-come, easy-go; the fact that it's easy to start new businesses should mean that if there's genuine need for a business then it's easy for a replacement to start. I wouldn't be surprised if e.g. a lot of bankrupt restaurants start operating again with the same kitchen and most of the same staff, because there's no reason for whoever ends up owning the place to do anything different (unless there's a long-term shift in people's behaviour - in which case we don't want the restaurants to re-open). So I think the main thing is to make sure it really is easy for replacement businesses to open (i.e. avoid situations like new businesses requiring a difficult license, or zoning that grandfathers in existing businesses but wouldn't allow similar new businesses), and to avoid having communities dominated by a small number of big companies (which mainly means not having the kind of tax loopholes that give big businesses advantages over small ones). Ultimately the losses have to be borne somewhere, and it's better that they fall on business owners and equity investors (who knew the risks they were taking) than anywhere else, even if spreading them out among taxpayers makes it looks like no-one would notice.

Re: Busted retailers use bankruptcy to break leases by the thousands

#277

Post by jtbayly » Sat, Aug 08, 2020, 7:19 PM UTC

bleuedejapan wrote: post #275

jtbayly wrote: post #261

Earlier quoted context omitted.

Opportunity for what? Given the increase in WFH, tech companies are also using less real estate.

Tech enabled homes, for example. Converting malls into homes, and managing building complexes using a tech stack... If you really can't figure out one single use for cheap empty space, man, you need take a step back and just play around with your imagination a bit :)

I can think of plenty of uses of empty space. Housing is just one of them. What I didn't come up with was any need that tech companies might have. (I hadn't thought of datacenter, which another commenter mentioned, but I doubt the space opening up will be particularly useful for that.) Regardless, I've not heard of any tech companies needing huge amounts more space recently. Starting a new housing company to use this space might make sense, but I doubt any of the tech companies have any desire to become housing companies. I guess I could be wrong. If they do, I'll be removing any investments I might have with them, though.

Re: Busted retailers use bankruptcy to break leases by the thousands

#278

Post by valuearb » Sun, Aug 09, 2020, 7:18 PM UTC

munk-a wrote: post #156

valuearb wrote: post #122

Earlier quoted context omitted.

I’m fine with bailing out companies as long as the owners and managers forfeit all their equity.

It's not an easy thing to find out who did what - trying to figure out which managers and owners were purposefully over-inflating equity to secure larger loans (or whatever) from those who were duped by the other managers and were just trying to keep the ship afloat is a really hard problem. And, in this fun world, you might find a terribly over-leveraged business where no one ever tried to act fraudulently but some…

If you are the owner or manager, it’s your job to ensure your business is appropriately funded. It doesn’t matters if you commit fraud, you also get to lose your equity for incompetence.