7 ms·

>But the moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities. And? Ser

by pgrote 6y ago

>But the moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities. And? Seriously. We either have to choose to be a market that is somewhat free or not. At this point, the government is choosing winners and losers. It is a repeat of 2008. Oh no, it is too big to fail. Someone will come by with the investment to buy what is left. Perhaps they will run it better. Prepare better. We're going through this with airlines and cruise companies now fighting for more money and loans from the government. Perhaps Delta grew too large to be what they are now. Maybe there are too many malls in existence. Maybe the method in which we collateralize mortgages doesn't make sense anymore. Our economy has developed the too big to fail mindset and forgotten, largely, you can lose.

patmcc 6y ago
>>>And? It's a news story, there doesn't have to be any underlying editorial message. Sometimes the news is just "thing happens".
- koolba 6y ago
  For most publications that time past a long time ago. There’s a limited space so even “presenting the facts” has an editorial bias when you decide which facts you are presenting. The extreme example of this is a political news site that dedicates its entire site to posting anything that paints its opponents or their positions in a negative light. They can all be “thing happens” stories, but the filter alone gives it an angle.
  - seanmcdirmid 6y ago
    The article here is not of that kind. Business publications tend to be the most report-fact-based, simply because their readers don’t make money by deluding themselves with confirmation bias.
  - Wowfunhappy 6y ago
    Well, you have the existence of this article as a counterpoint. :)
  - beojan 6y ago
    > For most publications that time past a long time ago. The exception would be Bloomberg, or the Financial Times. Publications read for information to make decisions on.
munk-a 6y ago
The US has never been a free-market and, honestly, the vitriol that folks use when talking about socialism has just hurt efforts to apply sane regulations that would help stabilize the market. The US still uses SSNs for everything because everyone is too afraid of government identification to pursue a more sane approach, the result is a government issued identification that is poorly designed for what it's used for and extremely insecure. The same thing happens with our economy, instead of taking sane measure to fight against the penultimate death of capitalism (the slide into oligopolies) the vitriol against any form of government intervention has placed us in a situation where heavy handed government intervention is regularly required - we're avoiding a soft form of socialism and ending up with having to intervene like a planned economy about once every decade. I really hope this can be solved by some smart people without trying to enlist wide-spread political support since I don't think that support is ever going to materialize.
- throwaway0a5e 6y ago
  >The US has never been a free-market Pretty much every market in the US has been insanely free, like "just don't kill people quickly and we don't care" free at some point. They all stopped being free when they got big. Then government got involved and regulation, regulatory capture and whatnot happened (I'm intentionally glossing over the details because they vary by industry and I don't want to pass judgement).
  - davidf18 6y ago
    Suggest you read some microeconomics, specifically about rent-seeking, a market failure or market inefficiency typically but not always caused by politics. As a simple example, consider that NYC taxi medallions were limited by NYC city council to about 13,000 and as a result, the market value of a medallion was about $1.2 million. Then Uber/Lyft came and relieved the politically induced rent-seeking market failure of hailable vehicles in NYC and now medallions are worth a fraction of what they had been. Real estate including housing costs in NYC, Boston, DC, Seattle, SF, LA, and much of state of CA are not free markets, but again through rent-seeking, politics has created an artificial scarcity of land by use of zoning density restrictions primarily but also overuse of historic landmark status.
rrrrrrrrrrrryan 6y ago
When corporations start buckling during sharp economic downturns, everyone's first instinct is always "let them burn." But it's often not a choice between letting entire swaths of our economy collapse, and dumping absurd amounts of our tax dollars to prop up these poorly-run companies. We can give them loans with strings attached, force them to go through bankruptcy, wipe out the shareholders but preserve the structure of the company, bail them out but subject the industry to much greater regulatory scrutiny, etc. Personally, I wish we had a straightforward way to bail out a company and have the U.S. government take ownership in the company until the stake can be safely unwound, or the too-big-to-fail company can be broken up. Theoretically, with a controlling stake and the corresponding board seats, you could force out the lousy management that didn't take adequate precautions as well. It'd kind of be socialism-esque nationalization of industries with extra steps, but Japan has been doing a similar-style thing since the 90s, and I can't imagine it would be any worse than the relatively strings-free bailouts we've seen, or the collateral damage and runaway collapse that would occur from letting a monstrous chunk of the economy fail all at once.
- frandroid 6y ago
  Or you know, make up for the missed opportunity of 2008/2009, where the government could have bailed out underwater homeowners so that the bailout would have trickled up to the mortgage holders, instead of pouring money into banks and letting people suffer. Thanks, Obama. Canada's CERB and CECRA have been doing wonders to keep ordinary people either afloat or employed, trickling up to small businesses all over. (I don't mind your plan either, but it involves more per-company hand-holding than simply giving out generous unemployment and employment-support benefits)
  - bsder 6y ago
    > the government could have bailed out underwater homeowners Why reward people who gambled and lost? Bust them out. People will either buy the houses at more reasonable prices or (more likely in this case) the banks will renegotiate more reasonable terms with the original mortgage holders because they have too much supply and no buyers. > instead of pouring money into banks and letting people suffer. Thanks, Obama. That wasn't possible as liquidity also died. Solvent businesses couldn't give people paychecks because the banks had no cash. You had to bail the banks. HOWEVER, what needed to happen was that the bank investors needed to get busted out. That was where Obama went wrong.
renewiltord 6y ago
Well, they would rightly argue that if you want to ensure market freedom, then you should let them keep their doors open and let people decide whether to attend and let people decide whether they want to work. Just free parties making decisions. If you decide you're going to force a shutdown and result in the unemployment of millions, you're going to have to ensure they have jobs to come back to.
jldugger 6y ago
>>But the moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities. >And? And if you're a trader reading Bloomberg news, maybe factor that into your trading decisions, or something. Not every piece of news is a call for government regulation.
- jader201 6y ago
  Sounds like the underlying question behind the “and?” is, why is this news on HN? As has been stated, this happens, it’s what bankruptcy is for, and is not all that shocking or worth particular notice here.
  - bleuedejapan 6y ago
    Considering that there will be a huge amount of unused, cheap real estate, and that only tech companies seem to be holding off the crisis, it is pretty much relevant - real estate will be a huge opportunity for tech.
    - jtbayly 6y ago
      Opportunity for what? Given the increase in WFH, tech companies are also using less real estate.
      - jldugger 6y ago
        Opportunity for more datacenters? A lot of datacenters are built inside abandoned warehouses and other buildings: https://www.datacenterdynamics.com/en/analysis/recycled-buildings/ https://www.datacenterdynamics.com/en/analysis/recycled-buil... These places tend to be connected to useful infrastructure like rail lines, and at least in the US, the internet kinda borrowed rail's right of way to lay fiber. Not sure how well connected malls are; they tend to be near highways so it might have a similar advantage?
      - bleuedejapan 6y ago
        Tech enabled homes, for example. Converting malls into homes, and managing building complexes using a tech stack... If you really can't figure out one single use for cheap empty space, man, you need take a step back and just play around with your imagination a bit :)
tcbawo 6y ago
You could look at it from the perspective of adapt or die. But you can also look at certain industries/companies like an endangered species. Once the last rhino dies, it's gone forever. Not a totally straightforward decision.
- nugget 6y ago
  I understand why we’d want to save the airlines (for instance) from extinction, but why bail out the current equity holders as opposed to an orderly, Government-backed restructuring in bankruptcy court?

by pgrote 6y ago

patmcc 6y ago

>>>And? It's a news story, there doesn't have to be any underlying editorial message. Sometimes the news is just "thing happens".

koolba 6y ago
For most publications that time past a long time ago. There’s a limited space so even “presenting the facts” has an editorial bias when you decide which facts you are presenting. The extreme example of this is a political news site that dedicates its entire site to posting anything that paints its opponents or their positions in a negative light. They can all be “thing happens” stories, but the filter alone gives it an angle.
- seanmcdirmid 6y ago
  The article here is not of that kind. Business publications tend to be the most report-fact-based, simply because their readers don’t make money by deluding themselves with confirmation bias.
- Wowfunhappy 6y ago
  Well, you have the existence of this article as a counterpoint. :)
- beojan 6y ago
  > For most publications that time past a long time ago. The exception would be Bloomberg, or the Financial Times. Publications read for information to make decisions on.

munk-a 6y ago

The US has never been a free-market and, honestly, the vitriol that folks use when talking about socialism has just hurt efforts to apply sane regulations that would help stabilize the market. The US still uses SSNs for everything because everyone is too afraid of government identification to pursue a more sane approach, the result is a government issued identification that is poorly designed for what it's used for and extremely insecure. The same thing happens with our economy, instead of taking sane measure to fight against the penultimate death of capitalism (the slide into oligopolies) the vitriol against any form of government intervention has placed us in a situation where heavy handed government intervention is regularly required - we're avoiding a soft form of socialism and ending up with having to intervene like a planned economy about once every decade. I really hope this can be solved by some smart people without trying to enlist wide-spread political support since I don't think that support is ever going to materialize.

throwaway0a5e 6y ago
>The US has never been a free-market Pretty much every market in the US has been insanely free, like "just don't kill people quickly and we don't care" free at some point. They all stopped being free when they got big. Then government got involved and regulation, regulatory capture and whatnot happened (I'm intentionally glossing over the details because they vary by industry and I don't want to pass judgement).
- davidf18 6y ago
  Suggest you read some microeconomics, specifically about rent-seeking, a market failure or market inefficiency typically but not always caused by politics. As a simple example, consider that NYC taxi medallions were limited by NYC city council to about 13,000 and as a result, the market value of a medallion was about $1.2 million. Then Uber/Lyft came and relieved the politically induced rent-seeking market failure of hailable vehicles in NYC and now medallions are worth a fraction of what they had been. Real estate including housing costs in NYC, Boston, DC, Seattle, SF, LA, and much of state of CA are not free markets, but again through rent-seeking, politics has created an artificial scarcity of land by use of zoning density restrictions primarily but also overuse of historic landmark status.

rrrrrrrrrrrryan 6y ago

When corporations start buckling during sharp economic downturns, everyone's first instinct is always "let them burn." But it's often not a choice between letting entire swaths of our economy collapse, and dumping absurd amounts of our tax dollars to prop up these poorly-run companies. We can give them loans with strings attached, force them to go through bankruptcy, wipe out the shareholders but preserve the structure of the company, bail them out but subject the industry to much greater regulatory scrutiny, etc. Personally, I wish we had a straightforward way to bail out a company and have the U.S. government take ownership in the company until the stake can be safely unwound, or the too-big-to-fail company can be broken up. Theoretically, with a controlling stake and the corresponding board seats, you could force out the lousy management that didn't take adequate precautions as well. It'd kind of be socialism-esque nationalization of industries with extra steps, but Japan has been doing a similar-style thing since the 90s, and I can't imagine it would be any worse than the relatively strings-free bailouts we've seen, or the collateral damage and runaway collapse that would occur from letting a monstrous chunk of the economy fail all at once.

frandroid 6y ago
Or you know, make up for the missed opportunity of 2008/2009, where the government could have bailed out underwater homeowners so that the bailout would have trickled up to the mortgage holders, instead of pouring money into banks and letting people suffer. Thanks, Obama. Canada's CERB and CECRA have been doing wonders to keep ordinary people either afloat or employed, trickling up to small businesses all over. (I don't mind your plan either, but it involves more per-company hand-holding than simply giving out generous unemployment and employment-support benefits)
- bsder 6y ago
  > the government could have bailed out underwater homeowners Why reward people who gambled and lost? Bust them out. People will either buy the houses at more reasonable prices or (more likely in this case) the banks will renegotiate more reasonable terms with the original mortgage holders because they have too much supply and no buyers. > instead of pouring money into banks and letting people suffer. Thanks, Obama. That wasn't possible as liquidity also died. Solvent businesses couldn't give people paychecks because the banks had no cash. You had to bail the banks. HOWEVER, what needed to happen was that the bank investors needed to get busted out. That was where Obama went wrong.

renewiltord 6y ago

Well, they would rightly argue that if you want to ensure market freedom, then you should let them keep their doors open and let people decide whether to attend and let people decide whether they want to work. Just free parties making decisions. If you decide you're going to force a shutdown and result in the unemployment of millions, you're going to have to ensure they have jobs to come back to.

jldugger 6y ago

>>But the moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities. >And? And if you're a trader reading Bloomberg news, maybe factor that into your trading decisions, or something. Not every piece of news is a call for government regulation.

jader201 6y ago
Sounds like the underlying question behind the “and?” is, why is this news on HN? As has been stated, this happens, it’s what bankruptcy is for, and is not all that shocking or worth particular notice here.
- bleuedejapan 6y ago
  Considering that there will be a huge amount of unused, cheap real estate, and that only tech companies seem to be holding off the crisis, it is pretty much relevant - real estate will be a huge opportunity for tech.
  - jtbayly 6y ago
    Opportunity for what? Given the increase in WFH, tech companies are also using less real estate.
    - jldugger 6y ago
      Opportunity for more datacenters? A lot of datacenters are built inside abandoned warehouses and other buildings: https://www.datacenterdynamics.com/en/analysis/recycled-buildings/ https://www.datacenterdynamics.com/en/analysis/recycled-buil... These places tend to be connected to useful infrastructure like rail lines, and at least in the US, the internet kinda borrowed rail's right of way to lay fiber. Not sure how well connected malls are; they tend to be near highways so it might have a similar advantage?
    - bleuedejapan 6y ago
      Tech enabled homes, for example. Converting malls into homes, and managing building complexes using a tech stack... If you really can't figure out one single use for cheap empty space, man, you need take a step back and just play around with your imagination a bit :)

tcbawo 6y ago

You could look at it from the perspective of adapt or die. But you can also look at certain industries/companies like an endangered species. Once the last rhino dies, it's gone forever. Not a totally straightforward decision.

nugget 6y ago
I understand why we’d want to save the airlines (for instance) from extinction, but why bail out the current equity holders as opposed to an orderly, Government-backed restructuring in bankruptcy court?