4 ms·

Ah, so it's a reputation/wealth-based thing. That makes sense. By that logic though -- if you're a billionaire, could you try to buy every profitable company o

Ah, so it's a reputation/wealth-based thing. That makes sense. By that logic though -- if you're a billionaire, could you try to buy every profitable company on borrowed money? Eventually you'd make the money back and since you don't have to pay anything out of pocket, you effectively have $INFINITY dollars to bargain with.

shkkmo 5y ago
Each new loan would have increased scrutiny due to the other loans you carry.
leetcodesucks 5y ago
Trump and Gordon Gekko did this
pydry 5y ago
You could try but it'd probably work out for you about as well as when the hunt brothers tried to buy up all the silver on earth.
nabla9 5y ago
It's not reputation based. Musk as requested secured enough loans to pay with cash. His ownership in SpaceX/Tesla is the collateral (as well as his Twitter shares if he buys them). He has no "infinity" of anything. It's called leverage and it probably maxes out around 60-70% of everything he owns.
- naveen99 5y ago
  seems crazy to take that much leverage when you are worth $200B. the shorts must be salivating at a chance to force a margin call on him, just for fun. Would have been better to just do a tesla twitter merger for free.
newaccount2021 5y ago
rsstack 5y ago
When he requests debt from the banks he needs to show that his current owned assets are worth more than his current debt _and_ the new requested debt. They wouldn't loan the hypothetical billionaire infinity dollars, unless the billionaire has infinity dollars in assets that aren't offset by previous debt.
s1artibartfast 5y ago
Banks don't like loaning multiple times with the same collateral
bombcar 5y ago
The "make the money back" part is what prevents it. Musk has 100 billion of TSLA say. He mortgages it to buy TWTR. Now he has 100 billion of TSLA, -40 billion loan against it, and 40 billion of TWTR. He could mortgage TWTR and buy something else, but it would have to be smaller, because the banks won't loan 100% of the value of the thing. Or he'd have to make another $40 billion and pay off the first loan to mortgage it again. Think of it as trying to use mortgage properties in monopoly to continue buying other properties.
- KptMarchewa 5y ago
  >He could mortgage TWTR and buy something else, but it would have to be smaller, because the banks won't loan 100% of the value of the thing. Unless you're on robinhood: https://www.bnnbloomberg.ca/robinhood-traders-discover-glitch-that-gives-them-infinite-leverage-1.1343289 https://www.bnnbloomberg.ca/robinhood-traders-discover-glitc...
  - bombcar 5y ago
    Robinhood is the exception that proves all the rules. Maybe we'll see a wallstreetbets post "Musk couldn't take TWTR private but I did via robin hood bug"

shkkmo 5y ago

Each new loan would have increased scrutiny due to the other loans you carry.

leetcodesucks 5y ago

Trump and Gordon Gekko did this

pydry 5y ago

You could try but it'd probably work out for you about as well as when the hunt brothers tried to buy up all the silver on earth.

nabla9 5y ago

It's not reputation based. Musk as requested secured enough loans to pay with cash. His ownership in SpaceX/Tesla is the collateral (as well as his Twitter shares if he buys them). He has no "infinity" of anything. It's called leverage and it probably maxes out around 60-70% of everything he owns.

naveen99 5y ago
seems crazy to take that much leverage when you are worth $200B. the shorts must be salivating at a chance to force a margin call on him, just for fun. Would have been better to just do a tesla twitter merger for free.

newaccount2021 5y ago

rsstack 5y ago

When he requests debt from the banks he needs to show that his current owned assets are worth more than his current debt _and_ the new requested debt. They wouldn't loan the hypothetical billionaire infinity dollars, unless the billionaire has infinity dollars in assets that aren't offset by previous debt.

s1artibartfast 5y ago

Banks don't like loaning multiple times with the same collateral

bombcar 5y ago

The "make the money back" part is what prevents it. Musk has 100 billion of TSLA say. He mortgages it to buy TWTR. Now he has 100 billion of TSLA, -40 billion loan against it, and 40 billion of TWTR. He could mortgage TWTR and buy something else, but it would have to be smaller, because the banks won't loan 100% of the value of the thing. Or he'd have to make another $40 billion and pay off the first loan to mortgage it again. Think of it as trying to use mortgage properties in monopoly to continue buying other properties.

KptMarchewa 5y ago
>He could mortgage TWTR and buy something else, but it would have to be smaller, because the banks won't loan 100% of the value of the thing. Unless you're on robinhood: https://www.bnnbloomberg.ca/robinhood-traders-discover-glitch-that-gives-them-infinite-leverage-1.1343289 https://www.bnnbloomberg.ca/robinhood-traders-discover-glitc...
- bombcar 5y ago
  Robinhood is the exception that proves all the rules. Maybe we'll see a wallstreetbets post "Musk couldn't take TWTR private but I did via robin hood bug"