Planes, employees, and marketing power, for example, all outlive the bankruptcy.
A bankruptcy wipes out speculators and what should be sophisticated investors. They can take it, and this is what they signed up for.
The company that emergence from bankruptcy does so without the debt it had heading in.
I've provided the below link as an example; ignore the limits, they would not be adhered to for my example due to extraordinary circumstances.
Disclaimer: Huge fan of Chamath coming out and telling it how it is on CNBC.
It’d be an entirely different story if pensions hadn’t been gutted and everyone tossed to the wolves with 401ks over the last 40 years.
If you want to wipe out retirement assets and top it up with social security instead, again means tested, that’d be a reasonable approach. But you can’t tell folks their only option is 401ks and to be diligent savers, and then burn them to the ground out of moral hazard.
The goal is to wipe out investors to whom hundreds of millions of dollars means nothing to their quality of life.
You're arguing all sides now. I didn't propose a policy that would greatly harm retirement savings, you did. You proposed protecting 401ks with government backing. I stated that doing so would be a boon to the top 20% at the expense of everyone else.
EDIT: /u/HarryHirsch's comment here [1] explains succinctly what I intended to explain but did so poorly.
[1] https://news.ycombinator.com/item?id=22835580 ("You could nationalize the pension system. Considering the fact that on average the 401(k) balance is a few tens of thousands and that there is a retirement catastrophe coming, that wouldn't be the bad idea. The downside is that the stock market would be affected negatively since demand for stock would drop.")
Maybe it would be better to require retirement accounts to be invested in broad indexes to be eligible for a insure for a certain amount of money value. I don’t see how it could be done fairly on single stock base without having big discussions about what kind of events will be covered.
Maybe it is time people paying into pensions and 401k's begin to understand they are scams enshrined in law to prop up the financial industry.
Maybe if mainstreet stopped giving their money to wallstreet to mismanage in the first place there would be no need for future bailouts to begin with as wallstreet runs a muck with pension and 401k funds. These are the very same bankers who continued to buy toxic mortgages in 2008 with Client funds as the banks were selling off any positions they had in the very same assets.
It is possible to achieve the first without the second. You can have federal insurance (like FDIC/SIPC) that fades out rather than has a strict cutoff (you get 100% of the first 100k, 80% of the next 400k etc etc).
There's some boundary where you "should" have been sophisticated and deserve to lose some money (probably near the point where you have a high end accountant look for deductions or are an accredited investor).
Yes, this is "unfair" to people who had very high paying jobs. But it's easy to argue that the current tax code is also "unfair". It's a question of "how unfair, and unfair to whom" not "we need this to be completely fair / preserve the status quo".