“We apologize for the inconvenience caused by your BlackRock Airlines flight crashing into a mountain, but you really should have expected it - it’s right in the name.”
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I mean, at this point they might as well let monkeys fly the planes, get an unaccountable bailout for every crash, AND use a subsidiary to short themselves and all their insurance policies, too.
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The relevant question is why do some people supposedly deserve bigger bailouts than other people
The private equity guys are getting their $1200 like everybody else, aren’t they?
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And to your point…a large or well-connected fund can create the situation it needs or simply get info the rest of us don’t get. Show of hands, who knew how bad the pandemic was going to be — or that there was going to be a pandemic — in January when some players made their moves? See also how many of these gangsters made bank during Brexit, short-selling or investing as needed to cash in.
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Both of which happened at Apple, but their reserves were so vast and growth markets so robust that it didn’t really make a dent. The acquisitions were basically future feature sets as opposed to potential pivots like HP grabbing Palm to reposition themselves as a software company. That didn’t last long.
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This is one of the key features of Hedge Funds. They’re high risk high reward. That’s why they only let people with money to lose invest in them. Bailing them out makes zero sense.
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Yeah, he could have emphasized that more, but I’m guessing he figured it was blindingly obvious. That is, after all, the nature of speculation - it’s in the name.
Well yeah, but more to the point - what is speculation? And the answer is, engaging in risky financial transactions in the hopes of making profits. The assumption of risk is a fundamental part of their game; to bail them out when things go south is like letting people gamble but also making up any loses (while also letting them keep all the money from any wins). If you do that, if there’s no possibility of loss, it ain’t speculation/gambling. It’s just giving them money for no reason.
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The point I wish he hammered was that what the giant corporations, hedge funds, private equity and especially the airlines have done for 12 years was gorge themselves on ultra-cheap debt and either engaged in or insisted upon stock buybacks, which serve no business function other than to goose stock prices and enrich insiders through bonuses and speculation. These select few haven’t engaged in savvy business investment and hard to foresee strategy. They’ve gorged on the Federal Reserve’s largess for their own benefit and nobody else. These businesses and funds are hollowed out by the insiders knowing full well that in tough times, Uncle Sam would make their wealth transfers (and that is what the last 12 years consist of) full force good.
If these entities aren’t allowed to die, they will simply swallow any viable business going forward, and that will kill the real economy.
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Yeah, but that’s not how it’s supposed to work. Making pension funds invest on the stock market is another symptom of American capitalism.
The existing companies already set the bar too low, and I don’t think most people would care or expect a (even) worse service.
IIRC, some of the airlines already went bankrupt in the recent years and all the assets changed hands, but the organization and the brands remained the same.
Privatize the gains, but socialize the losses. That’s the game.
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It’s not so much that the hedge funds deserve to go bust, as that they didn’t particularly deserve to be all that wealthy in the first place. All those buybacks, leveraged buyouts, and other financial “engineering” are just signs that Wall Street has more money than it can effectively find productive uses for. The big lie since Reagan is that all the economy needs is to give Wall Street more money to invest and grow the economy. But instead of building new factories and hiring more people to turn raw materials into finished products, most of that money has been going through Wall Street in a giant circle jerk creating an ever greater concentration of wealth in this country.
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Well, I have a very conservative portfolio that is mostly immune to the travails of the stock market. I also got a return of about 2% for most of the last two decades. That’s not going to be acceptable to most people and are utterly unacceptable returns to anyone managing a defined benefits pension plan (“we need you to up your contributions to 50% of your current salary.”)
Security costs, and the more security you want, the costlier it is. Should we have scaled everybody’s pension back by a factor of two (which is what I have essentially done) to protect against Black Swans of this magnitude?
Obviously pension funds should be somewhat conservative in their strategies. But in an era where anything not in the stock market or real estate is essentially losing money against inflation, it’s not terribly realistic to force people to invest so much for their pension (because the real return is essentially 0%) that they need to live their present in poverty (for whatever definition of poverty one uses for one’s social class).
Lots of my parents generation figure that anyone who doesn’t have 6 months worth of earnings in the bank was already speculating with their future, no matter how dire their life was while trying to build that security cushion. Others felt if that security blanket was in the bank, that was also foolish speculation, because depending on banks was taking foolish risk.
There is no bright line between what is speculative risk and what are reasonable expectations, just a continuum. And even the blurry line changes with time. It’s worth thinking upon that before blithely assuming that you know the perfect line that separates the undeserving from the deserving, and that everyone on one side is a greedy villain trying to be bailed out for their foolish speculation and on the other side are hard-working innocent victims who chose responsibly at every turn.
We’ll have to draw a line somewhere, and I suspect I’m fairly close to where the consensus is. But trying to make caricatures of those on either side of the line does not serve the long term interests of anyone interested in responsible governance.
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