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Given their debt levels, could some of these companies may take down financial companies with them though? If these (and other unicorn companies) secured what
by motohagiography 4y ago
Given their debt levels, could some of these companies may take down financial companies with them though?
If these (and other unicorn companies) secured what could be some several billions of dollars in low interest debt with their stock as collateral, that means those loans have been securitized, resold, and leveraged again into the market using other derivatives. It also means that the interest rates hikes coming from the Fed may cause those companies to sell more stock to make their interest payments - which will drive their stock down, knocking the collateral out from under the loan, with a bazillion or so in derivatives hinging on it.
Totally hypothetical though. I am sure they have it under control.
It does sound like unicornageddon if interest rates jump though. The 2008-billion dollar question would be, who is holding the derivatives on those loans? It's probably different this time, it's not like 2008 could happen again, and we learned from history so much so that Margot Robbie in a bathtub explained it to us. The US could probably afford another bailout if it came to it, and it's not like the conseqeunt inflation would trigger rapid de-dollarization of the global economy as big national holders dumped their reserves and created huge bubbles in anything that facilitated capital flight out of USD - like oil, fertilizer, and other necessary things to keep whole continents of people from starving. Co-operation would need to persist instead of nations turning inward to solve their own problems and fend off internal strife, instead of co-ordinating a response. This is fine.