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Sure, that is fair. My point is that Bank of America itself would never extend loans to these businesses. It must mean there is some fundamental issue with the
by 0x8BADF00D 7y ago
Sure, that is fair. My point is that Bank of America itself would never extend loans to these businesses. It must mean there is some fundamental issue with the economics of the business. This is the same Bank of America that was expert in packaging dogshit BBB bonds. The fact that the latest stimulus bill enables these types of loans means a lot of these businesses that do not have a profitable business model will stay afloat. These are malinvestments enabled by the government. Shitty management will never be punished for their incompetence. Don't you want a world where incompetent managers are punished by the market for their incompetence? I certainly do.
- gumby 7y agoMany were probably running ok in steady state but will die due to all their customers vanishing (For endogenous reasons) unless something happens. And their employees will all become unemployed. It’s the ultimate in liquidity shocks and is an otherwise uninsurable risk excerpt if the whole economynis used in an attempt to fight it. If I took your attitude where should people live: not in California where earthquakes are more likely than the average, nor the Midwest where tornadoes are, nor near an ocean where storms could happen, nor mountains where landslides can happen.
- 0x8BADF00D 7y ago> If I took your attitude where should people live: not in California where earthquakes are more likely than the average, nor the Midwest where tornadoes are, nor near an ocean where storms could happen, nor mountains where landslides can happen. There are actuarial models that deal with these types of risks. The bigger risk for a bank is if your business model isn't sound.