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Comment by cinquemb | Hacker News Reader

Large cheap loans from the federal reserve only they have access to and you don't.

Also helps when FRBNY in conjunction with the Tresury dept via state street and blackrock is buying their HY bonds (TMUS US87264AAT25 [Ba3], S US85207UAK16 [B1], CTL US156700BC99 [Ba3], LVLT US527298BF96 [Ba3], VOD US92857WBQ24 [Ba1] for just a few examples, all trading way over par) on you, the taxpayers behalf, on leverage, in the secondary market and thus helping to lower their ongoing borrowing costs.

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Consumers can get a mortgage with 3% interest rate.

Yeah, with the house as collateral (assuming one even wants a house) and a knock on their credit rating if they miss a payment they have to pay for 10-30 years… comparable to multi billion $ unsecured debt these folks can get at similar rates at current yields to maturity values for 5-10 years… lol

If you call the bank in advance - especially post Covid - a lot of times they won’t ding your credit for a missed payment. Besides, the two biggest things most people need credit for are home loans and car loans. You can get a car with less than perfect credit or even get a beater for cash.

And yet, somehow, being able to get two collateralized loans for peanuts in value are comparable to being able to get many uncollateralized ones rolled over for years (yes they were junk before covid) for billions…

No gross mis-allocation of resources or moral hazards as far as one eyes can see… surely the companies will use these funds much better this time for capex… lol

Total US mortgage debt and corporate debt are around the same size - roughly $15 trillion each. Mortgage and corporate bondholders have both seen principal losses in recent history. Fed support is pushing down both types of rates, and it’s not obvious to me that one is somehow unfairly pushed down more than the other.

Perhaps you are one of the few who can get an uncollateralized loan for billions to pursue endeavors that cannot pay for themselves and be able to continue to finance it with more uncollateralized debt…

It’s called VC funding - see Uber.

Equity for funding is not the same as a loan or debt on the capital structure, though it does have some overlap because if equity stake has no preferences in the event of compelete loss, it will be as worthless as uncollateralized debt, but, VC funding is far from the notional value of the uncollaterized debt that is allocated to relatively few endeavors out there today…

Perhaps if VC's funded many more things to the same notional as the uncollaterized debt extended globally (not "valuations", not re extending to the same companies after previous funding from the same one), I would agree to degree , if they faced 100% loss of value extended if the endeavors they funded didn't pan out (not considering firesales of assets that may have been used in such endeavors during the bankruptcy/liquidation process).

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