Yeah, not because of the virus, they just cook marshmellows perfectly.
#CNBC U.S. shouldn't bail out hedge funds, billionaires during coronavirus pandemic: Chamath Palihap
- Thread starter ajacobson
- Start date
Yeah, not because of the virus, they just cook marshmellows perfectly.
the prophecy may just come true; coming soon to a bank near you:
For all those with debts, it's the dream
for all those with money, it's the nightmare I'm a billionaire, 2 years ago I could buy an aircraft carrier, but these days only worth 1 mars bar and a pint of milk LOL
I do agree with the ripple effect it can cause in the industries and the jobs that could be further lost. However the main point is that there are companies/hedge funds that take excessive risks and/or only have a plan A but no plan B when a black swan event occurs. These entities reap higher gains when they are right and do well during normal times, but there should be a price to pay for taking excessive risk and mismanagement. ie. The toxic companies and hedge funds should be allowed to fail.
Hedge funds should be allowed to fail for bad decision making and investors rightly burnt for not doing due diligence. Companies running critical infrastructures(Airlines,pharma,etc) should be allowed to go bankrupt and become state owned, preserving the jobs. At a later time these companies could be auctioned off to the public and become listed again.
Employees at other bankrupted companies that are not critical should be supported by government funded payroll during this period. The government is still spending money but funneling it only towards the innocent office workers caught in the mismanagement fiasco. This ensures the bad actors (CEO, upper management, Bond and shareholders) rightfully pay the price for their decisions.
The current message the Fed is giving out to the big corporations right now is "gamble all you want and we will bail you out at all costs". Rewarding bad behaviour results in a growth of more bad behaviour.
Not sure what "state owned" implies but if it implies like businesses like the U.S. Post Office although its not owned by the state but its treated like a government owned entity that's too big to fail while it losses millions every year. Actually, it lost 2 billion dollars the prior year.
Not good business practice.
Thus, when critical companies like Airlines, Autos, Pharma do fail...most states can not manage their own state let alone a critical industry. People will keep their jobs but the company will just suck the life out of the state...keeping it always in the red.
Simply, there must be a better solution if bail outs are not the solution nor is state owned business a solution considering the reputation of management by most states in the U.S. are very bad...as in poorly manage.
wrbtrader
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The proposed solution has already been mentioned. See the bolded quotes of my earlier reply.
Numerous studies have shown that State owned companies are unproductive/less profitable compared to public listed or privately held companies. It is easy to explain why. State owned companies are not incetivised to make profit. Whereas owners and shareholders invest in companies to make money and will appoint the right CEO aligned to their objectives. Take your example U.S. Post vs FEDEX/DHL.
Hence my suggestion to temporarily nationalize it during this period and later auction it out to the public.
Until the exchange gets hacked and your hedge is stolen, or simply vanishes into the ether it came from. I think he's a little *high* man.
