Russia does not give a single fuck about their assets getting burned. It happens all the time. It’s part of their playbook to make their assets more and more bold.
This sounds really interesting but I lack the necessary economics background to understand it. Instead of having to research for potentially hours, do you mind please dumbing it down a little for me? The parts I don’t understand are “borrow against an ownership”, “holding non-institutional debt”. You don’t have to of course
The same way your mortgage is backed up by your house. If you default on your mortgage, the bank can take your house in foreclosure.
Rather than sell shares to raise the money, Musk has backed his borrowing with Tesla shares. Basically, if he doesn’t pay back the loan, the banks get the shares. Unlike houses, shares can change value quite quickly. If the value of the loan exceeds the value of the shares, then the banks start to get VERY nervous. They will call in the loans to get what they can, before things get worse. This could crash the share price further, since they will want to offload the shares as soon as possible.
Musk is extremely rich. However, like most extremely rick people, his money is tied up in shares. If Tesla falls fast enough, he could end up owing more than he has in assets. As soon as his creditors pull the plug, he becomes bankrupt.
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I want to believe…
Russia does not give a single fuck about their assets getting burned. It happens all the time. It’s part of their playbook to make their assets more and more bold.
I really doubt that somebody will margin call one of the most powerful men in the world who is in control of the president of the United States.
That hinges entirely on whomever holds the loan.
If it was one person, then no way. But it’s not just 1 person, it’s more than 100.
https://www.msn.com/en-us/money/companies/these-are-the-investors-who-helped-elon-musk-acquire-twitter-in-2022/ar-AA1pguJS
There are investment groups in that list, and ties to the Saudis and Russians.
The investment groups might be legally required to margin call if the stock price falls too far, but none of them will hold the full loan.
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This sounds really interesting but I lack the necessary economics background to understand it. Instead of having to research for potentially hours, do you mind please dumbing it down a little for me? The parts I don’t understand are “borrow against an ownership”, “holding non-institutional debt”. You don’t have to of course
The same way your mortgage is backed up by your house. If you default on your mortgage, the bank can take your house in foreclosure.
Rather than sell shares to raise the money, Musk has backed his borrowing with Tesla shares. Basically, if he doesn’t pay back the loan, the banks get the shares. Unlike houses, shares can change value quite quickly. If the value of the loan exceeds the value of the shares, then the banks start to get VERY nervous. They will call in the loans to get what they can, before things get worse. This could crash the share price further, since they will want to offload the shares as soon as possible.
Musk is extremely rich. However, like most extremely rick people, his money is tied up in shares. If Tesla falls fast enough, he could end up owing more than he has in assets. As soon as his creditors pull the plug, he becomes bankrupt.