If Wall Street Ran The Airlines

The Baseline Scenario has written a pitch-perfect article that pretends financial industry types are now speaking for the airline industry. It’s filled with appeals to the free market, and lots of threats about how the American Way of Life will collapse if we can’t let passengers sit for more than three hours on tarmacs.

It gets really funny/scary by the end, when these imaginary people start realizing that they can create financial products out of air travel:

One Goldman Sachs derivatives trader, who asked to remain anonymous because he is not authorized to speak about company strategy, said that the firm is planning to create a market for derivatives that airlines can use to hedge against the risk of having to return planes to the terminal or having to pay fines to the FAA. Goldman is thinking of creating “collateralized delay obligations,” or CDOs, which will diversify wait-time risk by including flights from across the entire country.

Update: Q points out the opportunity for a carry trade: “wall street would charge large fees for flying people across the country and then buy them cheap tickets home on greyhound.”

“If Wall Street Ran the Airlines…” (Thanks to bendersgame!)

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