Careful there, bud, you’re singing the siren song of bank bailouts.
If Tesla’s stock crashes, then the value the banks could get from selling it is much lower.
If Twitter and Tesla go bankrupt, the banks will have loaned out billions to own something worthless.
At least I would assume that’s how it works.
Vanth@reddthat.com 2 months ago
uriel238@lemmy.blahaj.zone 2 months ago
The proletariat is still sore about the ones in 2008. They revealed plan the stratified economic system.
Scipitie@lemmy.dbzer0.com 2 months ago
The bankruptcy scenario is correct but the first part isn’t: you don’t have X shares as collateral that you can liquidate. Instead, you have collateral to cover sum Y.
As long as the collateral contract covers enough stock positions the bank won’t lose.
That said all of this is assuming standard contracts. If y bank wrote “0% interest and instead 50% of the revenue growth of Twitter” then this would be an easy way to lose money.
Haven’t heard of a stupid banker yet, though, so what would the chances be?
femtech@midwest.social 2 months ago
I mean, the 2008 housing market was done by greedy and stupid bankers.
curbstickle@lemmy.dbzer0.com 2 months ago
Who also made massive profits.
TheGrandNagus@lemmy.world 2 months ago
Stupid? It was a masterstroke by them.
They made a fortune, then governments had to throw money at them or risk a complete economic crash.
After the crash, people were poorer, and credit was cheap, so they came to banks for loans and financed everything more and more.
Houses temporarily crashed in price, but the poorest were too risky for banks to lend to, leading to houses being bought up en-mass by people who were already wealthy.
Bankers in 2008 were greedy, yes. But certainly not stupid.
Churbleyimyam@lemm.ee 2 months ago
IMO they should not have been bailed out. For most people the economy has already failed and it should be allowed to crash fully so that it can be rebuilt and restructured in full. That might sound extreme but I don’t see many other alternatives. Something has to be sacrificed for the sake of the vast majority of people and the real economy and I think it should be the financial sector.
femtech@midwest.social 2 months ago
I mean, I feel like the banks that failed still should have done some research on what they were putting their money into. …wikipedia.org/…/List_of_banks_acquired_or_bankru…
CaptainPedantic@lemmy.world 2 months ago
An! Thank you for the explanation