"...Toys R Us was a sort of a magic kingdom...
...Alas, some magic is going out of the world.
The venerable retailer, already in bankruptcy, is expected to tell the court as soon as Monday that it can’t figure out a way to reorganize as a going concern and must therefore begin the process of an orderly liquidation.
Which in finance-speak means shutting down stores, selling off everything that can be sold and handing the proceeds over to creditors.
...We like to tell ourselves morality plays about failure.
Someone is either a victim or a villain, and which is which varies by, among other things, ideology.
In fact, if you interviewed those folks, you generally found that they were well aware that they couldn’t really afford their house if the payment reset.
They just expected to be able to refinance it when prices climbed, or they got a raise, or at worst, to sell if they couldn’t afford the payments.
Then prices collapsed, and they ended up in a whole world of trouble.
What they did was undoubtedly risky.
But plenty of people took that exact same risk in 2001 — buying more house than they could afford.
But those people had no trouble refinancing to more affordable mortgages, because the market was soaring and they had loads of equity.
The same risk produced two very different outcomes depending on when people happened to take it.
You’ll see this pattern repeated over and over if you look at failures, from major disasters to corporate collapses: They start with people taking risks that others (or they themselves) had taken before.
Only this time, something goes wrong, and that little risk turns into a big problem..."
Read on!
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