The free money feels (and may be) gone

Cash is clearly drying up. The SPAC (special purpose acquisition company) craze is over, San Fran real estate has hit “fire sale” headline levels. Where the free money was, the free money is dry.

More than 100 (namely 101) SPAC companies have less than a year left of cash with 50 of those having less than half a year and 27 having less than 2 months. The cash is dried up and drying up throwing the number of bankruptcy mentions for these companies through the roof.

One of those companies is Bird Global - a once $2 billion company. What Bird Global does is it rents out electric scooters to anyone on the street.

When I was in Austin, Texas end of last summer I had the pleasure to ride one of these 30 mph scooters through and around downtown Austin. For only $30 I could buy myself a 5 day pass offering 3 rides per day up to I think 30-60 minutes (something like that). As long as you stayed within city limits you could take that little scooter where ever you’d like. At the end of each day several pickup trucks would drive around picking up scattered scooters to take them back to their charging station - where ever that was. The economics aren’t adding up, fuel alone to pick these scooters up had to be insane not mention repairs when some drunk idiot ruined one, or when someone destroyed it flat out because again they go 30 mph and you drive them on the main roads, with other vehicles.

That was a $2 billion company that is now running out of stupid cash and will probably cease to exist at some point.

In San Francisco, and other metros, office real estate is taking it in the chin. What just made news was that 350 California Street is open to offers. At one point that tower was worth $300 million and it may sell for 80% less because no one wants to live in SF, nor do offices have the leverage to force employees to come back to work. The other problem specific to SF is crime. I heard the downtown whole foods store closed its doors, not because of shoplifting, but because it felt that it could not keep its employees safe.

Some of the real estate issues have everything to do with work from home, but another huge factor is that companies that were once rich with cash are leasing these office towers no longer because they are cash drained and are laying employees off anyways. Will work at the office come back, of course, will work at the office come back with as many employees, maybe not.

Cash comes with stipulations, the easier it is to get the easier it is to spend. When cash becomes hard to get, it becomes hard to spend. In that case, you start spending less on essential non essentials, like office space, employees, food, and housing.

The free easy money is gone, and will likely stay gone for some time. The days of harder to earn money is back.

Anyways that’s my rant on current cash, here’s everything I read, wrote and, spoke this week.

Scale your financial life with Fjell Capital - get a dedicated team, 3 meetings a year, unlimited phone calls, texts, and emails, an annual progress report, meetings designed around our 29 foundations, and professional asset management.

Join the 900+ subscribers reading Running the Tape every week!

Thank you! Your submission has been received!

Oops! Something went wrong while submitting the form.

Connect with me on social media!