I mean, I also think leveraged buyouts are dumb and should at the least be a lot more regulated than they are if not made illegal, but your example here is bad because that’s exactly how car loans work.
Normal car loans have the title of the car go to the bank because the car itself is being used as collateral for the loan, just like a house is with a mortgage.
Which is why you need insurance if you buy That Car on a loan. So there’s somebody else who will pay back the loan if you fuck up That Car.
If That Car is worth a hundred billion dollars, suddenly that very important aspect just seems to vanish and you can just buy That Car with itself without any further securities.
How is that even possible?
https://en.wikipedia.org/wiki/Leveraged_buyout
This is so dumb.
“I want to buy That Car, can you give me money? I have… nothing.”
“But if you have nothing, how can we expect you to ever pay back That Car?”
“Well, after buying That Car, I will have a net worth of That Car, so paying you back obviously will be trivial using ownership of That Car.”
“Sounds like we have a deal!”
I mean, I also think leveraged buyouts are dumb and should at the least be a lot more regulated than they are if not made illegal, but your example here is bad because that’s exactly how car loans work.
Normal car loans have the title of the car go to the bank because the car itself is being used as collateral for the loan, just like a house is with a mortgage.
Which is why you need insurance if you buy That Car on a loan. So there’s somebody else who will pay back the loan if you fuck up That Car.
If That Car is worth a hundred billion dollars, suddenly that very important aspect just seems to vanish and you can just buy That Car with itself without any further securities.
Very true