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I hate that too, especially when it's megacorps. however I'd like to introduce two points of discussion: https://www.foxbusiness.com/economy/fed-bought-debt-f

I hate that too, especially when it's megacorps. however I'd like to introduce two points of discussion: https://www.foxbusiness.com/economy/fed-bought-debt-from-walmart-mcdonalds-berkshire-hathaway-and-microsoft-as-part-of-coronavirus-response https://www.foxbusiness.com/economy/fed-bought-debt-from-wal... first, Walmart is not the most outrageous of the list. coca cola is much worse. For all it's shortcomings, Walmart has a lot of domestic employees, around 1.5 millions. If the money from the fed directly went into welfare for these workers, it would have covered a couple months top, so it becomes a question of efficiency: if restructuring the debt buys a year or so before bankruptcy, it's still a net gain, under the assumption that being unemployed now would be much worse than being unemployed in 10 months after the current crisis is over. second, Walmart effectively is the American version of social welfare. It's the kind of job almost anyone can get to get back on their feet. It's not too big too fail, nobody should be, but it's also not so bad a company to have around.

harryh 6y ago
if restructuring the debt buys a year or so before bankruptcy Walmart is currently worth, checks notes, 336 Billion dollars. It is one of the most valuable companies in the world. It is in no danger of going bankrupt.
- clairity 6y ago
  yes, they should sell equity if necessary, not expect cheap debt from the government. shareholders especially need to feel the downsides of risky decisions too, otherwise it distorts pricing mechanisms and imbalances the proper allocation of capital across the economy.
  - harryh 6y ago
    They haven't expected cheap debt from the government. Large corporations routinely cary debt to finance short term cashflow needs. Right now Walmart has about 60B worth. The FED, as part of a large program of corporate debt purchases, has bought a grand total of about 9 million dollars worth of this. That's .015%. Whatever gave you the idea that Walmart had this expectation is wrong.
    - clairity 6y ago
      ah, sorry, i misread it as $9B, which would have been a significant portion of their outstanding debt.
      - harryh 6y ago
        Those 3 fewer zeros do make a bit of a difference. ;-)
    - pbhjpbhj 6y ago
      If it's $9 million why even bother, surely they could cancel a C-site bonus and cover that.
      - harryh 6y ago
        This wasn't a bespoke transaction between Walmart and The Fed. Walmart sells bonds on the open market all the time. The Fed just happened to be a buyer on that market this time.
nme01 6y ago
The problem is rather what message it sends i.e. please have a lot of risk appetite, never try to be cautious because in the good times, risk takers will outperform you and get you out of the market and in the bad times, risk takers won't have any disadvantage because FED will help them out. Unfortunately this is how it works in Europe as well. However in US at least the debt is "exported" abroad to a certain point. In Europe it's normal people's savings that will melt down to save the big corps.
wheelerwj 6y ago
walmart is a completely shit company to have around. It would be far better for society to have UBI than to prop up Walmart. Walmart can’t even pay most of the employees a living wage or any kind of insurance while simultaneously pocketing billions and billions in “profit” annually.
- basch 6y ago
  Walmart is the largest grocery store in the country. Just giving out UBI and collapsing Walmart, without some sort of replacement would make things even worse for people living on the edge of food deserts.
  - pbhjpbhj 6y ago
    Why do you think no one would buy their stores and continue the same business but with living wages and such?
  - rlucas 6y ago
    You have a point here, however: Step 1: Use scale-derived lower WACC and an army of lawyers as cudgels to destroy independent retail and grocery in exurban and rural communities. Step 2: "You can't get rid of us because without any other retail or grocery there'll be a food desert here!"
deleuze 6y ago
There's no way that buying corporate debt could ever be more efficient than direct cash payments to those employees. This is a bad argument.
xsmasher 6y ago
> Walmart effectively is the American version of social welfare. Disagree; Walmart is a leech on the system, extracting the value of the labor of these employees without paying the whole cost of it. Many Walmart employees need to use real welfare programs in order to stay alive so they can keep providing discount labor to Walmart.

harryh 6y ago

if restructuring the debt buys a year or so before bankruptcy Walmart is currently worth, checks notes, 336 Billion dollars. It is one of the most valuable companies in the world. It is in no danger of going bankrupt.

clairity 6y ago
yes, they should sell equity if necessary, not expect cheap debt from the government. shareholders especially need to feel the downsides of risky decisions too, otherwise it distorts pricing mechanisms and imbalances the proper allocation of capital across the economy.
- harryh 6y ago
  They haven't expected cheap debt from the government. Large corporations routinely cary debt to finance short term cashflow needs. Right now Walmart has about 60B worth. The FED, as part of a large program of corporate debt purchases, has bought a grand total of about 9 million dollars worth of this. That's .015%. Whatever gave you the idea that Walmart had this expectation is wrong.
  - clairity 6y ago
    ah, sorry, i misread it as $9B, which would have been a significant portion of their outstanding debt.
    - harryh 6y ago
      Those 3 fewer zeros do make a bit of a difference. ;-)
  - pbhjpbhj 6y ago
    If it's $9 million why even bother, surely they could cancel a C-site bonus and cover that.
    - harryh 6y ago
      This wasn't a bespoke transaction between Walmart and The Fed. Walmart sells bonds on the open market all the time. The Fed just happened to be a buyer on that market this time.

nme01 6y ago

The problem is rather what message it sends i.e. please have a lot of risk appetite, never try to be cautious because in the good times, risk takers will outperform you and get you out of the market and in the bad times, risk takers won't have any disadvantage because FED will help them out. Unfortunately this is how it works in Europe as well. However in US at least the debt is "exported" abroad to a certain point. In Europe it's normal people's savings that will melt down to save the big corps.

wheelerwj 6y ago

walmart is a completely shit company to have around. It would be far better for society to have UBI than to prop up Walmart. Walmart can’t even pay most of the employees a living wage or any kind of insurance while simultaneously pocketing billions and billions in “profit” annually.

basch 6y ago
Walmart is the largest grocery store in the country. Just giving out UBI and collapsing Walmart, without some sort of replacement would make things even worse for people living on the edge of food deserts.
- pbhjpbhj 6y ago
  Why do you think no one would buy their stores and continue the same business but with living wages and such?
- rlucas 6y ago
  You have a point here, however: Step 1: Use scale-derived lower WACC and an army of lawyers as cudgels to destroy independent retail and grocery in exurban and rural communities. Step 2: "You can't get rid of us because without any other retail or grocery there'll be a food desert here!"

deleuze 6y ago

There's no way that buying corporate debt could ever be more efficient than direct cash payments to those employees. This is a bad argument.

xsmasher 6y ago

> Walmart effectively is the American version of social welfare. Disagree; Walmart is a leech on the system, extracting the value of the labor of these employees without paying the whole cost of it. Many Walmart employees need to use real welfare programs in order to stay alive so they can keep providing discount labor to Walmart.