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That's sort-of how it's supposed to work? The price at the time was the market-determined value considering the uncertainty of recovery. As you mention, there w
by IfOnlyYouKnew 8y ago
That's sort-of how it's supposed to work? The price at the time was the market-determined value considering the uncertainty of recovery. As you mention, there were multiple hedge funds, so they would have been competing to buy up these coupons, making me suspect the price at the time reflected the best knowledge of the fund's situation and the law available at the time.
It sure seems unjust post-hoc. But I can't really think of any improvements. The rate of recovery is somewhat extraordinary, as demonstrated by the appearance of it in the press. And it would not have happened without giving organisations with deep pockets the incentives to try to effect it.
- numlocked 8y agoYeah, I sort of agree. But two things: 1. The article shares a bunch of anecdotes about individual investors receiving their money back, which is surely true, but not necessarily representative of what’s happening overall. 2. Unfortunately it probably wasn’t priced strictly by “odds of recovery” (and also I suspect there was information asymmetry there) but also based on liquidity needs. Large institutions can wait for cash. Retail investors can’t necessarily. Yes, yes time value of money blah blah. Still seems asymmetric.
- blr246 8y agoThis "asymmetry" is one of the reasons why having capital makes you powerful, and living paycheck-to-paycheck (maximum need for liquidity) makes you powerless.
- fierro 8y agoMore capital allows you to balance risk better (in this case, buying a bunch of IOUs, vs an individual holding one)
- forapurpose 8y agoIt's supposed to work that way for oil futures, but I'm not sure 'justice futures' are a good thing. People have a right to be made whole; their need, and the justice system's unreliability and delay in delivering it, shouldn't be exploited by people with deeper pockets, IMHO; not everything should be priced on the market. It could become (or be) another way the poor or non-wealthy are excluded from justice and are practically denied their rights.