The problem with banking is maturity mismatch. Actually, that’s what we have banking for, to do the maturity transformation that we get from maturity mismatch. Banks borrow short and lend long. That’s why we can’t all turn up and demand the money back and thereby create bank runs.
OK, we solve that, central banks. But maturity mismatch is a problem. One that must be watched and managed:[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]WeWork’s S-1: some quick observations[/perfectpullquote]
That’s Alphaville. And the little detail that struck me:[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]As of June 30, 2019, future undiscounted minimum lease payments under these leases were approximately $236.6 million, which represents 0.5% of the Company’s total lease commitments as of June 30, 2019.[/perfectpullquote]
My calculator tells me that means WeWork is long $46 billion in lease payments. And they’re selling those short. Any customer can drop out – perhaps not exactly and immediately when they like but certainly faster than WeWork can drop the underlying lease. So, again, WeWork is long $46 billion in leases….
Not getting me anywhere near that IPO.