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Obviously. It needs to be enshrined in law. Stress tests, like for banks. It would also be more efficient / profitable for banks to keep lower capital reserves.
by tomp 7y ago
Obviously. It needs to be enshrined in law. Stress tests, like for banks. It would also be more efficient / profitable for banks to keep lower capital reserves...
Edit: alternatively, countries could be much more trigger-happy when it comes to banning flights from potentially infected areas where some kind of virus starts - basically a lot of false alarms. Companies would simply have to adapt.
- whatshisface 7y agoAnother possibility: don't do any industrial bailouts and let high-risk investors take their medicine. Next time, risky businesses will find it more expensive to get capital, as investors realize some things they weren't thinking about before.
- MereInterest 7y agoThe problem is how long it takes for that to occur. If the bankruptcies occur immediately, then people learn. If the bankruptcies occur 30 years down the line when a rare event occurs, then the high-risk investors are the only ones left in the market.
- whatshisface 7y agoIf investors can comprehend the 30-year T-bill, then they can price in a bankruptcy expected 30 years in the future. If we can sit here and figure out on our own that a business that will fold if its revenue decreases by 10% for longer than a month is not worth as much as its P/E ratio would naively suggest, then surely other people can figure it out too.
- admax88q 7y agoIf you can have 30 years of better returns and try to sell right before the next pandemic, you can bet most investors will go for that. People already invest on much shorter timelines than 30 years.
- deleted 7y ago[deleted]
- whatshisface 7y agoThey can't sell right before the next pandemic. Do you remember the attitude right before this pandemic?
- hello_moto 7y agoThere are reasons why US prefers to bail Boeing. US is always concerned about espionage and dependencies on other countries with respect to national interest. An example would be the whole Huawei+5G debacle. What if Boeing goes bankrupt and the only reliable plane makers are PRC companies (usually state-backed, even if it's not explicit)?
- whatshisface 7y agoIf Boeing goes bankrupt all of the assets are still there and all of the employees still remember how to do their jobs. A company collapsing is a pure-paper action that means "fire everyone in charge." In some cases, depending on how the corporate governance is set up and on who holds the equity, it's the only way they can be fired. If the US wants to help out US manufactures for strategic regions, it can apply the usual "made in USA" government purchasing rules, or maybe a tariff.
- naasking 7y agoThe problem is, while all this paper shuffling is taking place, state-backed players like Huawei can dominate a market in the interim. Not a good outcome to say the least. I agree that some structural change is needed, but it doesn't have a trivial solution.
- nxc18 7y agoBoeing needs to be broken up. Parts critical to national security can be federalized. The rest can be restructured to restore competition to the market and eliminate the 'single point of failure'. Boeing's efforts to consolidate the entire US aerospace industry into one company have hurt our society. https://en.wikipedia.org/wiki/Category:Boeing_mergers_and_acquisitions https://en.wikipedia.org/wiki/Category:Boeing_mergers_and_ac...
- catalogia 7y ago> Boeing needs to be broken up. Parts critical to national security can be federalized. Where that division line might be isn't clear to me. For instance the 737 is both a civilian airliner and a military maritime patrol aircraft (as the P-8: https://en.wikipedia.org/wiki/Boeing_P-8_Poseidon https://en.wikipedia.org/wiki/Boeing_P-8_Poseidon)
- mschuster91 7y agoThat would leave millions upon millions of people without jobs and trigger an economic recession against which 2008ff looks like a joke.
- blululu 7y agoMaybe a moot point in the current market?