Michael Broukhim

Go west, young man

Notes &

Fail remains the only viable option… or else we get this: A 29-year-old man who works for a large investment management firm and was at Bagatelle’s brunch one recent Saturday and at Merkato 55’s the next, put it another way: “If you’d asked me in October, I’d say it’d be a different situation, and I don’t think I’d be here. Then the government gave us $10 billion.” Companies don’t have reason to create value now. Perversely, they only have incentives to loot and pillage what remains of their instutitions, relying instead on the political process to ensure their survival and “prosperity.” What deal could possibly be as lucrative as continued failing followed by billion dollar checks? Let companies fail, create a process to guarantee the depositors and bondholders (and whoever else) that need to be spared, and let the markets figure out the rest. There’s your roadmap.

Fail remains the only viable option… or else we get this:

A 29-year-old man who works for a large investment management firm and was at Bagatelle’s brunch one recent Saturday and at Merkato 55’s the next, put it another way: “If you’d asked me in October, I’d say it’d be a different situation, and I don’t think I’d be here. Then the government gave us $10 billion.”

Companies don’t have reason to create value now. Perversely, they only have incentives to loot and pillage what remains of their instutitions, relying instead on the political process to ensure their survival and “prosperity.” What deal could possibly be as lucrative as continued failing followed by billion dollar checks?

Let companies fail, create a process to guarantee the depositors and bondholders (and whoever else) that need to be spared, and let the markets figure out the rest. There’s your roadmap.