Musk, Others Sell Stock at Historic Levels as Market Soars, Tax Changes Loom
wsj.com
wsj.com
Am I wrong in being completely cynical in thinking that our governments spent two years shoveling money (paid for by us through inflation and taxes) to these people?
It is, without a doubt, the largest transfer of resources from citizens to the upper class in human history, all designed to keep Wall Street afloat.
It'd be hilarious if it wasn't so tragic.
Lehman didn't crash, wiping out investors, because investors took money and didn't repay it. The system crashed because everyday people took out loans and didn't repay them.
Sum up the values and then tell me who made out like bandits.
There was rampant fraud in the mis-representation of assets used to back asset-backed loans. The system didn’t crash because everyday people took out loans. It crashed because of the incredible amount of fraud that went into baking a mortgage backed security.
TL;DR: It wasn’t the regular people applying for loans that caused the whole thing to collapse. It was all the fraud used by bankers to justify lending to people who probably shouldn’t have been given mortgages in the first place.
Really? How exactly do you measure "the majority?"
All the borrowers that took money they were not going to pay back was exactly the root cause. Had they not borrowed, then not paid, there would have been no crisis. They first lack of payment wasn't because a bank forgot to pay. It was because a borrower that signed for a loan did not pay.
And guess what - there are still tons of mortgage backed securities, yet now that more people pay, there is not continual crashes. The ratings agencies still work, the banks still work, but more people are denied loans. So the problem wasn't that MBS automatically fail, or ratings agencies are completely incompetent.
We just stopped letting people access loans like drunken sailors.
The real fraud was not writing these loans to less credit-worthy borrowers. It was the mechanism used by Wall Street banks to combine these sub-prime mortgages into mortgage-backed securities.
Not only did the bankers often mis-represent the composition of their MBS, they also employed massive amounts of leverage based on the fraudulent ratings they knew they were getting from the credit rating agencies, no questions asked.
The leverage involved in MBS is what makes them an attractive financial product to municipalities and governments since this extra leverage is what made the impressive promised returns available on such a “safe” asset class.
However, since the Wall Street Banks lied about the quality of the mortgages, the resulting MBS were massively over-levereged. This is why Ryan Reynolds explained in The Big Short, it only required a small % of mortgages to default to create a cascade of failures.
Tl:dr It wasn’t the fact that banks lent to less credit-worthy borrowers that led to the 2008 Financial Crisis, it was all the fraud that went into the construction of the mortgage-backed-securities (MBS)
Musk's Twitter stunt had the same smell to it. How it will end remains to be seen.
At that time there were constant articles and accusations that billionaires used the 'borrow against stock' trick to avoid taxes. This was addressed to Musk in multiple high profile interviews where he had to justify that. Had it come out at that time that he vested lots of option with additional borrowing, there would have been a huge media outcry against him.
Of course then when he did sell the stock to vest the options. He got shit on because it dropped the stock price and tons of articles were written about how he was manipulating the stock price. And now your story is that its because he knows of the coming crash and wants to get out.
So the moral of the story seems to be, it doesn't matter what you end up doing, you will get shit on an equal amount no matter what you do. Being a a very public billionaire willing to talk about these issues is not gone make you popular.
And Musk cares so much about whatever the media has to say about him..
I’d love for my prediction to be wrong. A capital gains tax could pass muster. But it probably won’t matter.