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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (74812)2/16/2008 1:03:03 PM
From: Cactus Jack  Read Replies (1) of 116555
 
Mish,

I read your blog entry, and have a question. Is Wilson's leather handing over the keys to its mall stores and refusing to make further lease payments, or instead deciding that (a) continuing to do business at those locations is no longer financially worthwhile and (b) working out some payment provision to honor its lease obligations?

If it refuses to make lease payments and does not declare bankruptcy, the landlords will sue for unpaid rent and prevail, forcing Wilson's to pay. That isn't the same situation as the homeowner who walks away from a home with a non-recourse loan and leaves the bank high and dry. In that respect, while I understand your argument, the Wilson's decision to "just walk away" isn't the moral equivalent of a homeowner doing the same without recourse by the bank. Wilson's is still stuck with the payment obligation; the homeowner transfers his/her burden to the bank.

Am I missing something here?

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