31–40 of 278 posts
Earlier quoted context omitted.
isn't that the point of capitalism, the fit live the poor die? Let the poor malls die, if their business model fails. We shouldn't force a failed business to last longer than society needs it to, otherwise that's something beyond capitalism.
the point though they're making is that if they die, then it can massively affect the banks. The knock on effect could be huge.
Man, with (currently) four comments mentioning that this is "what bankruptcy is for", I think the point of the article might have been missed. This isn't some sneaky "one weird trick", and that's not the reason Bloomberg is reporting on it. In fact, the tone of the article to me is, "yup, companies do it all the time, but..." And the "but" is: But the moves threaten to upend huge swaths of the real estate market and…
It's a bit depressing to see the greed-by-framing here. I feel like the banks are playing musical chairs rather than trying to operate sustainably. It seems like a more efficient approach — one that is not as economically destructive to GDP after the pandemic — would be: 1. Retailer notifies their lease holders that a given location is impacted by public health closures, reducing revenues for products originating fro…
Everyone succeeds then. Might still need some stimulus for the bottom 10% of society but maybe not as badly.
This is exactly why we have bankruptcy! These businesses are failing and need to renegotiate their liabilities. This is expected and healthy if you want any retailers to have any hope of survival going forwards.
In the end, just keeping companies afloat through rare shocks might be the cheapest option.
Market economies create efficiency, not resiliency.
This is exactly why we have bankruptcy! These businesses are failing and need to renegotiate their liabilities. This is expected and healthy if you want any retailers to have any hope of survival going forwards.
> This is exactly why we have bankruptcy! You're not wrong, and under normal circumstances this would be a blip on the radar. However, the hundreds if not thousands of locations each of these companies plan to shutter will have an unprecedented effect on the commercial real estate market. Within months we will have thousands of property owners suddenly unable to pay their mortgages because they no longer have tenants…
I invest money into the market. Sometimes the market does poorly and goes down. My job as an investor is to accept risk when others do not. It is my money that disappears in these circumstances.
The general idea is for the riskier among us to lose money. The investing class reaps benefits when the economy is good, but they lose money when the economy suffers.
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When downturns happen, investors become frightened. Which is fine: it means more opportunities for me to buy back into the market. But accepting this year's losses is part of the plan.
Man, with (currently) four comments mentioning that this is "what bankruptcy is for", I think the point of the article might have been missed. This isn't some sneaky "one weird trick", and that's not the reason Bloomberg is reporting on it. In fact, the tone of the article to me is, "yup, companies do it all the time, but..." And the "but" is: But the moves threaten to upend huge swaths of the real estate market and…
I wouldn't worry about that. I fully expect the federal reserve to "fix" this by buying the toxic assets with printed money.
This is exactly why we have bankruptcy! These businesses are failing and need to renegotiate their liabilities. This is expected and healthy if you want any retailers to have any hope of survival going forwards.
> This is exactly why we have bankruptcy! You're not wrong, and under normal circumstances this would be a blip on the radar. However, the hundreds if not thousands of locations each of these companies plan to shutter will have an unprecedented effect on the commercial real estate market. Within months we will have thousands of property owners suddenly unable to pay their mortgages because they no longer have tenants…
It's basically the definition of bankruptcy that you need to renege on your obligations to someone. Landlords run that risk. They're hardly the ones losing the most -- think of the poor creditors and shareholders. The landlords are only losing the expense of finding their next tenant, plus any difference in the market rate when the original lease was signed and today.
The fundamental problem is that the models investors use to manage risk become useless in novel market environments that break historical correlations between investments. This is a long-tail risk that is difficult to manage.
When suddenly all of your investments are losing value at the same time, even if the models say the correlation between the assets is low, you end up in a very dangerous place.
This is essentially the same thing had happened during the mortgage crisis.
if only the government/bank could've put moratoriums top down, freezing all rent commercial and residential. We'd be in a much better place. Now we have economic collapse, 40 million looming evictions, people will starve, and freeze, or die in a shelter w/ the pandemic. Businesses are failing because they have to meet monthly recurring bills w/ or w/out actual sales receipts. They still need to meet payroll if they'r…
So if the downward trends had continued we'd have been in good shape and it would have been good timing. Of course, our covid control in the US has been a total disaster relatively to other much poorer countries even - we're still trying to figure out if masks are worth wearing (20 cents to maybe save a life).
Instead of handouts the layoffs would have been a fine option, folks would have received unemployment. But the overhead and disruption of firing folks, canceling their benefits, and then re-hiring them (maybe) etc is not insignificant. The handouts meant we are ready to go once everything resolves which was supposed to be a lot sooner than it is looking like it will be.