Interesting. Rent default domino effect.https://www.washingtonpost.com/business/2020/06/03/next-big-problem-businesses-cant-or-wont-pay-their-rent-its-setting-off-dangerous-chain-reaction/ …
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Basically consequences of distress and defaults should never be automated because they tend to be complex contingencies requiring human responses. Automating AND distributing them is double jeopardy. Sudden automated repo trigger on 1 missed payment, flash crash etc.
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Some bank is going to make a lot of money re-intermediating borrowers and MBS owners, and negotiating this. And making a huge profit on the principal-agent spread
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Yes and because that quickly grows to a group of people way past your Dunbar's number, you can't hold an emotional connection to them. So they are not "real" to you and nor is their lost investment.
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This highlights the existential issue with financial engineering — optimizing for capital availability, stability, and capital market returns at the cost of entirely abstracting the value chain from the day-to-day operations of the underlying businesses.
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