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Interbank loans, which will be far larger than the government or shareholder or bondholder liabilities, will almost certainly be respected as well. > if you lo
by blitzar 4y ago
Interbank loans, which will be far larger than the government or shareholder or bondholder liabilities, will almost certainly be respected as well.
> if you loan me 10B on thursday, Bob lends me 10B on Friday, then Monday the Bob says the business will be sold to UBS who will honor his loans but not yours
In your example, Bob is getting back 2bn of his 10bn and I am getting back 0. The term of neither agreement are being respected, people are just being told you get what you get and if you dont like it you can have less. Everyone has been served up a shit sandwich for dinner.
- s1artibartfast 4y agoMy reading is that Bob also happens to be the bankruptcy judge aka the state. Bob says that he is still owed $10 billion dollars but everyone else takes their lumps. In plain terms, money lent from the government is not discharged in bankruptcy. It all has to get paid back with interest. Private lenders of emergency liquidity and get zeroed out.