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It's about him defaulting on the loan which is not possible considering his shares in Tesla etc. not about him borrowing for investment purposes
by jack_pp 5y ago
It's about him defaulting on the loan which is not possible considering his shares in Tesla etc. not about him borrowing for investment purposes
- kurupt213 5y agoYou can default on a loan regardless of your net worth; you can even default on a secured loan. The default is what triggers the civil proceedings for a judgement and forced liquidation of assets
- colinmhayes 5y agoThere's a not totally unreasonable chance that tesla is 10x lower next year. That would mean his net worth is basically equivalent to the loan he would need. Seems pretty risky.
- mehrdada 5y agoWe don’t know the interest rate of that margin loan but you can be goddamn certain whoever underwrote the loan calculated that risk more precisely than HN crowd such that the rate justifies the default risk.
- accountofme 5y agoI have to disagree. It is about the risk of his counterparties. If their risk is deemed too high, they will start liquidating assets to get minimise their risk. Just look at what recently happened in the nickel markets on the London Metals Exchange when a Chinese Nickel Producer had a margin call against a $2bn short position. Tldr: the brokers liquidated their position due to the unnecessary risk of having a margin call over a weekend.