During their latest episode of the VALUE: After Hours Podcast, Collins, Daniel, Taylor, and Carlisle discussed Will We See Another ‘Big Short’?. Here’s an excerpt from the episode:
Jake: Is there anything like with the Big Short, where there was a catalyst with a known date to it, where like, “Okay, all this is going to go sideways on this date”? Do you see have anything that you’re seeing that might be a candidate for a reckoning at a particular time period?
Porter: Vinny seems to be smiling. So, I don’t know. What do you think?
Vincent: No. Where’s the issues, right? The issues are in the sovereign. And so, as a result, there’s no timetable. Whenever something bad happens, they cave in and they print. As Porter was saying, they did that in October of last year with the UK. They did it in March with– [crosstalk]
Porter: That’s what the debt ceiling.
Vincent: Right. They did it with the debt ceiling. So, the big issue for us is that, yeah, you could have idiosyncratic pockets of issues, but nothing– so it seems, can be material enough, because if it is material enough– Unlike the last time during the Great Recession, I truly believe that the Fed did not know what a lot of the people who were looking at the underlying banking system knew. They didn’t know how severe it was. Now they know and they’re on it.
Credit Suisse goes under, and they’re flooding the system with dollar swap lines to make sure that nothing associated with Credit Suisse is going to impact the rest of the world. So, to answer your question, yeah, there is something out there, and there probably is a definable date. The debt ceiling was a definable date. But what do you do? You just change the rules, and print more money or keep the thing afloat.
Tobias: What about an Airbnb bus? I follow a few of these accounts who think that there are a lot of people who are extended on these things, because they’re looking at them as a cash flowing asset and they assume X amount of occupancy, wherever rates, wherever they are.
Porter: There is no [crosstalk]. What’s the catalyst though?
Tobias: Well, you just can’t make the payments. There’s not enough occupancy to– you just lose a few, it seems.
Porter: If and when they lose their jobs, then I think that’ll be the cascading effect.
Jake: What about corporations saying, “You got to come back to the office now”?
Vincent: But that’s not material enough to really– [crosstalk]
Tobias: As a trigger for the Airbnb us.
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