1/ The only time I disagreed with @chamath.

Yes, big companies are largely owned by investment firms. But those investment firms represent assets of regular people (pension funds for companies, states, governments) just as much as family offices.

2/ 2Q19 asset breakdown:
Top 1% (>$10M) = $36T
50th-99th percentile = $80T

90th-99th percentile = $43T
50th-90th percentile = $37T https://www.bloomberg.com/news/articles/2019-11-09/one-percenters-close-to-surpassing-wealth-of-u-s-middle-class

3/ Sure, we can let every company fail that‘s partially owned by an investment firm and pretend the equity is billionaires—but telling equity owners “too bad, they can’t go to the Hamptons” ignores regular people make up >50% (up to 70%) of the equity owners and beneficiaries.

4/ Equity owners getting wiped out at this scale isn’t going to disproportionally effect billionaires who will lose a comma. It’ll effect regular people who will have no commas.

Equally as reckless to ignore debt owners. Follow the breadcrumbs and see who’s really holding it.

5/ Chamath says “speculators” that own the debt can get wiped out as if they belong to faceless billionaires. In reality, people would be shocked to learn a lot belongs to regular people too.

The irony of vilifying “speculators” is that Chamath is one too, as most of us are:

6/ Discern truth from half-truths & know the source of the latter arises from conflicts of interest

Chamath, a billionaire mostly in cash right now to speculate, has the most to benefit from advocating for large bankruptcies: once in a lifetime opp. to acquire large cheap assets

7/ Beating the tried and true drum of ‘let the billionaires fail’ is good for popular support and aligns with his incentive bias as a billionaire eager to scoop up distressed asset, but it’s not the reality of this situation of who will fail.

8/ If saying only the “people” matter and the people are already taken care of in a bankruptcy or restructuring, I’d ask who?

Employees who will be laid off? Employees who’s pension funds can get terminated in the process? Or the pension funds of others who owned the asset?

9/ Bankruptcies are not an benign feature in economics.

Saying people will be taken care of in bankruptcy is short for ‘the newly laid off will get unemployment & pension funds are insured’—both of which are severely unfunded for this & would need their own gov subsidy/bailout.

10/ Not bailing out companies doesn’t nullify the cost to government. It just changes the recipient of the government checks while prolonging the disruption and cost. The costs just gets transferred from companies to gov.

He is right that bankruptcy means changing hands:

11/ Bankruptcy will transfer ownership from 1 speculative investor to new speculative investor (I wonder who). It’s advocating for a wealth transfer from 1 purported group of ‘billionaires’ to another, like himself, while regular people absorb the disruption/equity destruction.

12/ Hand waving bankruptcy is akin to Martin Shkreli’s argument: price gouging is benign & victimless, only effecting big bad insurance co. w/o mentioning the tree of effected, ultimately regular folks.

Now replace insurance co. w/ investment firms; drug pricing w/ bankruptcy.

13/ Dozens of big bankruptcies this year won’t clean up boards, CEOs, or hedge funds. It’s the wrong tool and they’re only operating within the confines set by the public.

Public holds the bag if the public’s system incentivizes things like tax-free buybacks over taxed dividends

14/ I don’t know the solution but it’s clear we need to incentivize proper governance.

Maybe tax companies on the buybacks or shareholders on buybacks to realize those as capital gains like dividends. Mandate greater pension requirements. Incentivize the storing of cash.

15/ So far nearly everyone is bailed out: Big companies, small businesses, independent contractors, employed, and unemployed.

This discussion is for what the next wave of bailouts currently being drafted should look like.

16/ Looking at the bailouts during the last recession as a case study, as controversial as they were I think they worked. It staved off more destruction. It shortened the recovery period. And the fed reserve was more than made whole again from what they recouped.

17/ Amtrak hasn’t been profitable in 40 years of existence and receives subsidies (reoccurring bailouts) every year because society prioritized the service as a critical asset. Does the US really not want the airlines after this ends (besides Spirit)? Or deal with the disruption?