3 ms·

Huh? If I default on my mortgage due to this pandemic, the loan is collateralized and the house is seized / a lien is put on it. Why, then, do corporations get

• xyzzyz 7y ago
  The government can require collateral, or equity with liquidation preferences, that's totally fine by me. I thought the issue raised by parent poster was why companies require so much debt for their operations, and the answer is, of course, that it makes perfect sense in most scenarios other than global pandemic and shutdown of everything.
  • chii 7y ago
    > it makes perfect sense it makes financial-risk/reward sense. But only because interest rates are at record lows, and there's evidence in the past that bailouts can happen for too-big-to-fail type companies. Essentially, these big employers can extort a country for a bailout, with the economy tanking as the weapon. If they cannot rely on the interest being low, and if they cannot rely on a lender of last resort like the FEDs, i'm sure they will be more fiscally responsible. Unfortunately, these risky behaviour these companies take are the result of years of poor monetary policy by the FEDs and lack of investment into increasing competition in all sectors of industry by the gov't.