To anyone who thinks that the airlines couldn't have seen this coming or avoided catastrophe without a bailout: 1. The airline industry has gotten so concentrated in the past couple of years that Buffett bought into it. Buffett doesn't buy businesses that can't generate returns.
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2. Credit was not only at historically cheap rates, but was extremely available 2 months ago. Airlines EASILY could've stockpiled cash for an "unforeseeable risk" 3. Speaking "unforeseeable risks", all of the following events happened in the past 20 years: A. 9/11 B. SARS
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C. 2010 eruptions of Eyjafjallajökull D. Countless pilot strikes E. Ukraine/Iran missiles Air travel is regularly suspended by "unforeseeable events".
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Anyone who has been in business for a while knows it's only a matter of time before you get unlucky. That's why you need cash on hand. Bailout is better structured than the GFC's, but the American taxpayer is the sucker here.
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Replying to @Molson_Hart
This might be ridiculous and isn't really thought out, BUT would the country be better if companies over some market cap/rev/whatever had to have a certain ratio on their balance sheet to make them healthier?
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Not sure - it's sort of what we have done with banks.
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