It was not always like that. There was a time when companies were not using so many finance tricks and had better resilience and balance sheets. Unfortunately, since the 80's there has been a trend of increased financialization of the economy, most probably caused by the secular decrease in interest rates.

I would argue this is actually fortunate. While financialization absolutely causes fragility of individual companies, it makes the aggregate more stable, as it's also easier to prop up (or pick apart) Hertz with minimal interruption of actual rental car service.

At the end of the day, for most companies, too much debt relative to cash flows is just a sign of overextension. And aggressive "real" business practices is hardly something that companies were immune to prior to financialization.

Why Hertz in particular then? They aren't the only rental car company.

Not all of it. The smart companies are debt free, and are in a much better financial position right now. I'm not saying they're not hurting. I'm just saying they have a better chance of being around still when this pandemic is over.

Side note: You can run your personal finances 'debt free' and be in a better position when shit hits the fan too. :-)

"The smart companies are debt free" - every company has debt. All of them. Apple pays for Iphone parts 30, 60, 90 days after receiving them. That's debt. The only companies that don't take on debt are the ones that nobody will extend credit.

Hertz went bankrupt because of the type of debt they took, their lack of cash-on-hand, and the aggressiveness of their business model. But the expected value of their decisions may well have been positive - a single failure is a bad way to evaluate a decision-making methodology.

When you say every X is Y, then you've obviously defined Y in a non-useful way. Every concept, to communicate information, has to distinguish between some things which it includes and other things it doesn't. If nothing else, there has to at least be a conceivable counterfactual world where Y doesn't hold for everything.

Every dodo is a bird - the concept of a bird is useful to explain what a dodo is (in part, at least).

In this case, I happened to use manufacturing inputs for a specific reason: cars are the inputs to the end product of car rental companies. In the same way it makes sense to pay for product inputs after you've sold an iphone, it makes sense to pay for the cost of a car after you've made the money renting it. If you have to bootstrap, you can't leverage economies of scale nearly as effectively.

>> You can run your personal finances

I’m not convinced that people who apply prudent personal finance strategies ever come up with anything worthwhile in corporate or government financial scenarios.

The difference between a persons finances and that of a legal vehicle with limited liability or an entity which can print its own currency, these aren’t differences of degree, these (and other differences) change the entire game.

And this summarizes the core problem with "moral hazards". Private companies which actually "prepare" for uncertain market conditions are not being rewarded right now.

To make this more concrete, let me give you a recent example for advertising. I was watching a YouTube clip from user Jomboy Media about a baseball strike-out. I noticed in the background the stadium seats had Delta decals for marketing purposes. The fact Delta is permitted, effectively by government authority, to continue to advertise in the "market" because of their bail-out, distorts supply and demand. Namely, Tyson Foods, which was able to be assiduous with their profits over the years and provided wages to their employees during the pandemic, suffer from this blatant "synthetic" market competition.