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My understanding is that if an entity going down results in a widespread wealth destruction in the entire domain then it's deemed to be too-big-to-fail. It woul
by vishnugupta 4y ago
My understanding is that if an entity going down results in a widespread wealth destruction in the entire domain then it's deemed to be too-big-to-fail. It would in turn lead to social unrest threatening the stability of government. Like a huge lender going bust would lead to credit shrinkage leading to millions of small/medium businesses going bust.
- safog 4y agoYup you're right. It's more like Adani's lenders might threaten social stability if Adani becomes insolvent. But I'm pretty sure the govt will give SBI a cash injection and have them loan that amount to Adani in the event that things actually get bad.
- vishnugupta 4y ago> But I'm pretty sure the govt will give SBI a cash injection and have them loan that amount to Adani in the event that things actually get bad. It's exactly (in content) what I wrote to my friends while we were discussing this in WhatsApp. "If push comes to shove RBI could well bail out Adani through some complicated deal....they'll bail out LIC and SBI for sure...through those entities I meant not directly"
- headsoup 4y agoExactly. It's not 'too big to fail,' it's 'too big for the Government to let fail.'