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re: Re It's "immoral" to strategically default on one's mortgage
Posted on 12/14/11 at 11:09 am to Bayou Tiger
Posted on 12/14/11 at 11:09 am to Bayou Tiger
The original post compared strategic default on a collateralized obligation to declaring bankruptcy as a method to strategically default on non-ollateralized obligations. Going back to American Airlines and its bankruptcy, the question that I ask myself is what causes the least harm? Running American Airlines into the ground does not benefit anyone. It just delays the pain. If the company can be saved, then the damage to all parties can be reduced. The issue is how to spread the pain equitably.
2
Posted on 12/14/11 at 11:30 am to Poodlebrain
quote:
the question that I ask myself is what causes the least harm?
So you believe individual actions should be judged on what causes the least collective harm?
quote:
Running American Airlines into the ground does not benefit anyone.
I'd say it benefits the creditors that continue to get paid in the interim.
quote:
It just delays the pain. If the company can be saved, then the damage to all parties can be reduced. The issue is how to spread the pain equitably.
As mentioned earlier in this thread, it doesn't seem like the "least harm" is having a taxpaying citizen trapped in a negative equity situation, greatly reducing his labor mobility and increasing the stress on him and his family.
Posted on 12/14/11 at 12:22 pm to Poodlebrain
quote:
Going back to American Airlines and its bankruptcy, the question that I ask myself is what causes the least harm? Running American Airlines into the ground does not benefit anyone. It just delays the pain. If the company can be saved, then the damage to all parties can be reduced. The issue is how to spread the pain equitably.
One thing not touched on in the corporate BR scenario is pension obligations, which often are transferred to the PBGC, which is funded by companies with ongoing pension plans. The non-BR employers will have to pay higher contributions to the PBGC in the future and the PBGC is underfunded as is. Waiting for it to ask for a bailout in the future.
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