Will be interesting to see if Musk has found a way around the poison pill. There are several theoretical techniques to avoid triggering them but as far as I know none have been tried in practice. There is also the issue of whether a company would actually follow thru and implement a poison pill as there would be lots of fallout.
Yeah, OP was asking for legal options and this spells them out. Additionally, Levine has been wrong about which option Elon will pick, but he's also generally been spot on about listing all potential options and also saying "this guy is unpredictable, so who knows."
You're not making a case for this being fraud. Why would this be fraud rather than a sharp-elbow business tactic? "Fraud" has a concrete meaning; for this to be a fraud, one would need to be able to identify precisely of what Musk has been defrauded.
The poison pill is fighting off a hostile takeover, by someone who has offered a first-and-final-offer. It would be screwing the other investors to have zero negotiations for a better deal.
Which other people would get those shares? Would that be considered taxable income for the recipients? If I were a regular shareholder and my shares were diluted without compensation, I'd be pissed...
As far as I know it has never been done in practice but is sure seems like it would have a huge amount of fallout for existing shareholders. Would the board actually pull the trigger knowing this? On the other hand poison pills are widely used and have generally been considered a credible defense.
They don't have to pull the trigger; it's already set up. These triggers never get pulled because it's irrational for a hostile acquirer to play chicken with them; it's like playing chicken with a brick wall.
Every other shareholder gets access to the shares. So the effect is: you can buy $420 worth of twitter stock for $210 unless you're elon musk or working in concert with elon musk.
Some poison pills just give the shareholder extra shares -- it's basically a stock split except for the targeted shareholders.
As described above, it would be like a stock dividend or split (except for the 15%) - no income, no capital gains, no dilution.
In reality, this poison pill is more complicated - from Matt Levine: "The main mechanism of the pill is that if Musk or anyone else acquires more than 15% of Twitter's stock, then every other Twitter shareholder will have the right to pay $210 to acquire $420 worth of Twitter stock (at then-current market prices)."
He also points out that this is moot except in the highly unlikely event that it is triggered - in which case, someone screwed up really badly.
So the discount for existing shareholders is only 50%? That still requires pretty significant investment from their side, what if they can't come up with enough money? Poison pill becomes uneffective, right?
The poison pill is blatantly unethical. The fact that it exists as a tactic where a company can target a specific shareholder and dilute them exclusively, while also diluting other shareholders who don't have the money to participate in the poison pill, is yet more proof that the SEC is a garbage organization.
It's been settled corporate law for decades, and it serves a clear purpose: without poison pills, hostile buyers can also do blatantly unethical things, like coercive lowball bids that punish shareholders that don't tag along.
The other shareholders don't need to have the money:
"Another, perhaps more practical provision of the pill says that the board can just exchange each right for one share of stock, for free, meaning in essence that the board can double everyone else’s number of shares of Twitter while holding Musk’s constant, without asking anyone to put in more money."
(From a recent Money Stuff.)
It also gives reasons why poison pills were allowed by the Delaware Supreme Court (and not the SEC).
That seems even worse then; it's effectively the board voting to steal shares from a major shareholder in order to increase their own relative stake in the company. How is that not illegal?
What used to happen before there were poison pills, was a corporate raider would say "I want to buy this company, and I offer 100$ per share. If not everybody agrees to sell to me, but I get more the 50% of shares I will replace the board and then offer a merger in which 30$ per share are offered. The board (which I just instituted) will agree to my offer." That means after a raider has the majority of shares he can stiff the remaining minority shareholders. Of course people knew this on the initial offer and were therefore pressured to accept it or risk losing a lot of money later. I assume you agree that making this possible is not in the interest of sharedholders (or companies), although it made some people very wealthy back in the days. The Delaware Supreme Court considered, that such an extreme threat to shareholders justified extreme countermeasures such as the poison pill.
(All of the above just tries to paraphrase Matt Levine, which I can really recommend if one wants to understand such things.)
Why would the newly installed board be allowed to allow a merger with such a low number?
This seems to be the root problem, and it can happen in other scenarios when a coalition controls 51% of the shares. The law needs to protect the minority shareholders.
If one was ever triggered the diluted shareholder would sue for the direct economic damage they suffered as a result. But they still wouldn't end up controlling the company, they'd just get paid out the cash value that was literally stolen from them-- instead everyone would just lose a lot of money to lawyers... which is why, AFAIK, none has ever been triggered.
That explanation sounds like they are just giving away shares, which they aren't. Other parties get the _right_ to buy additional new shares at a reduced rate.
I think that oversimplifies the dynamics drastically.
First off, even if buying the shares at the reduced rate is highly profitable, you do need the cash to buy them. With the 50% that are floating around here that's a significant amount of cash.
Furthermore, with the dilution that's happening the stock price would also drop so while you gain on the reduced shares, you loose on money on your old shares unless Elon keeps buying.
I just don't see that it's the same as giving away shares for free (which is just adding dilution without additional capital costs for the existing shareholder). Feels to me like an all parties lose situation if it's triggered.
The other shareholders don't need to have the money:
"Another, perhaps more practical provision of the pill says that the board can just exchange each right for one share of stock, for free, meaning in essence that the board can double everyone else’s number of shares of Twitter while holding Musk’s constant, without asking anyone to put in more money."
(From a recent Money Stuff.)
I hesitate to speculate on what Musk will do specifically, but often in a poison pill situation a tender offer will be contingent on the removal of the poison pill. The point of the tender offer is not to buy the shares immediately, but to incentivize shareholders to put pressure on the board to remove the poison pill, then complete the tender offer it's removed.
"Musk can launch a tender offer to buy all of Twitter's stock for $54.20 in cash. (Or, of course, some higher number.) The tender offer is a public, binding document filed with the SEC, open to all shareholders, and it will be full of disclosures about his plans and, in particular, his financing. Shareholders will be able to read it and see if he has the money. If it looks like he does, then they will be able to decide if $54.20 is a good enough price. If they think it is, they will be able to tender into his offer, submitting their shares for purchase. He won’t be able to buy them, though, because of the poison pill; the tender offer will be contingent on getting rid of the pill. But if like 90% of shareholders tender into his offer, then that is an important public-relations victory; he can go to the board and say “your shareholders want this deal, let them take it.” And then the board might agree and get rid of the pill, and then the tender offer can close and he can buy the shares."
Ask, I guess. The people doing the communicating are perhaps committing fraud and endangering their own wealth and freedom if they lie. I'm willing to bet the SEC has regulations that apply to this situation already.
If three large shareholders came in with a similar agenda but did not disclose group status, the SEC would investigate. First, the SEC would request that they turn over communications records. 99.9% of the time, they would. If they didn’t, the SEC would seek a warrant.
The financing is in 3 pools. If each could buy 14% and Musk increases his stake to 14% without triggering the poison pill, that’s 56% in total. If they had 56%, could they immediately gain control? This is getting interesting.
Again, first lines of the shareholder rights agreement. This is something the lawyers thought of approximately 3 minutes after poison pills were invented.
https://www.law.cornell.edu/cfr/text/17/240.13d-5 seems to indicate they have to be explicitly coordinating to be legally defined as a "group" for this purpose (and Twitter's filing highlights this definition), which seems hard to prove. Twitter can't issue a search warrant, the participants would presumably not write any such deal down on paper, and the action is readily explicable by "I think the acquisition is gonna go through and he's offering a premium, so I'd profit".
I was wondering about this - what's to stop him from creating 3 permanently sealed South Dakota trusts, acquiring 14% in each, and combined with his personal share calling a vote and immediately rejecting the poison pill and firing the board?
IIRC Twitter already has rules about shareholder votes, and it couldn't happen until next year at the earliest. There's no provision for shareholders to call for a vote at any random time.
Has the board formally rejected his offer yet? The poison pill only applies to a hostile takeover - i.e. if Elon just starts buying up all the shares in the market. If the board accepts his offer to buy the company, the poison pill does not take effect.
I doubt the board is going to agree. Musk might want to buy, but they will actively thwart his efforts, even if that's not in the interest of shareholders.
Courts have traditionally given the board wide leeway to decide what is best. There was the one case (Dodge v. Ford Motor Co) that held otherwise but it's been walked back in recent years.
As I understand it, it's not. The whole thing about fiduciary duty is a bit of a meme. The board can argue that they believe that Musk will run Twitter into the ground and in the long term not selling is a better financial move, and due to the Business Judgement Rule, the court is likely to side with them (whether or not they're actually right).
Not working in the interests of the shareholders is a breach of the board's fiduciary duties (which is simply what I commented based on the parent comment I was replying to).
The issue is indeed always to determine whether a course of action is knowingly not in the interests of the shareholders.
> The whole thing about fiduciary duty is a bit of a meme.
Fiduciary duty is very much a thing. The Twitter board with such a tiny amount of equity may incur risk from "honest services fraud," if they block shareholders from recieving the material and obvious value of the offer.
Can someone who understands finance ELI5 the section about the financing:
> "To finance the Proposed Transaction or a Potential Offer, entities related to the Reporting Person have received commitment letters committing to provide an aggregate of approximately $46.5 billion as follows:"
What follows seems like Elon is "paying" for Twitter with... imaginary money.
"A debt commitment letter"
"A separate debt commitment letter"
"An equity commitment letter"
Am I understanding it correctly that effectively $0 is coming out-of-pocket for purchasing Twitter?
Why can't anyone do this? I'll promise you a bunch of debt and equity, too.
Because the people who wrote those letters don't trust you to pay up if stonks go down by 100x your net worth. They trust Elon, though, because he has more net worth.
I'm taking a broad definition of "trust" that includes "we can sue you and recover the money."
It's not reputation based. Musk as requested secured enough loans to pay with cash. His ownership in SpaceX/Tesla is the collateral (as well as his Twitter shares if he buys them).
He has no "infinity" of anything. It's called leverage and it probably maxes out around 60-70% of everything he owns.
seems crazy to take that much leverage when you are worth $200B.
the shorts must be salivating at a chance to force a margin call on him, just for fun. Would have been better to just do a tesla twitter merger for free.
When he requests debt from the banks he needs to show that his current owned assets are worth more than his current debt _and_ the new requested debt. They wouldn't loan the hypothetical billionaire infinity dollars, unless the billionaire has infinity dollars in assets that aren't offset by previous debt.
The "make the money back" part is what prevents it.
Musk has 100 billion of TSLA say.
He mortgages it to buy TWTR. Now he has 100 billion of TSLA, -40 billion loan against it, and 40 billion of TWTR. He could mortgage TWTR and buy something else, but it would have to be smaller, because the banks won't loan 100% of the value of the thing.
Or he'd have to make another $40 billion and pay off the first loan to mortgage it again.
Think of it as trying to use mortgage properties in monopoly to continue buying other properties.
80s Junk Bond King (and convicted felon*) Michael Milkin tells this story.
He was once talking to an ambitions entrepreneur about funding a buyout with junk, and the entrepreneur asked, "This is a lot of money. How do you know I'll replay it?"
Milkin says he replied, "Because if you miss even a single payment, I'll call your debt and take not just the company, but every single asset you own."
———
* That would be presidentially pardoned convicted felon Michael Milkin. The rules for "righting injustice through pardons" are very different for the rich than the comfortably well off, much less those living paycheque to paycheque.
>We should name and shame each one until this stops.
Why should it stop? Do you not believe in redemption? Milken has done (and continues to do) a lot of great charity work with his fortune.
Besides, if you look at what Milken was actually convicted of, it's pretty tame, especially by today's standards. And he spent two years in prison for it. What more do you want?
I actually like what you're saying, but there is a problem here that is larger than whether it is just that Mr. Milken deserves a pardon. The problem is that justice unequally applied is injustice.
So if we are saying, "Everyone convicted of a felony who serves their time and who then rehabilitates themselves should be pardoned," I'm all for it. And in my jurisdiction (Canada), people can apply for Federal pardons, and many receive them. There is a standard way to do it, a standard procedure to follow, and in theory, everyone is treated equally by the system.
The injustice comes in if there is a special fast-track for a pardon one gets by hob-nobbing with your fellow wealthy oligarchs, one of whom is elected President and gives you a personal pardon. That's a bad look that suggests that all felons are equal, but some felons are more equal than others.
Likewise, I am extremely leery of talking about "doing great charity work." Reputation laundering is my preferred term, and again this is not something available to all citizens. Nobody gives a crap if some felon donates $1,000 to a soup kitchen, but donate $1,000,000 and you get called a "philanthropist."
I'm all for charity and doing good works, but I'm not for giving philanthropists anything special in terms of justice that people who can't afford to be philanthropists get.
IMO, the answer is not to burn Milken's pardon, it's to pardon more convicted felons who do their time and then turn their backs on whatever criminal acts they used to commit.
Yeah we need more pardons not less, and we need blanket laws that forbid making hiring, etc decisions based on convictions (AND forbid lawsuits around hiring) more than X years ago.
People are afraid to expose themselves to liability for hiring a felon, even if said felony is ages ago, because if something goes wrong everyone will say "well you shouldn't have hired a felon."
I believe in redemption, and I think US jail sentences are extremely excessive. That is an issue for voters.
I do not believe in random justice where connected people can be pardoned even if they deserve so when there are literally millions in jail who could be as deserving.
Sadly important today, pardons can be corrupt. Trump several times promised pardons for people willing to go to jail for him. And he delivered on those pardons.
So yes I believe in redemption, but not by executive decree. That belongs in a time when we had kings with real power.
Finally, the prison time is often from a plea bargain (I do not like those either but different story). So the time sentenced to does not always have a meaning.
That's so unreasonable you should go more into it or just leave it. It's literally the richest man of Earth, banks are falling over themselves to stuff him their money.
Yes, but the hoi-polloi don't get to write off their mortgage interest as a tax deduction.
"The rich have all of the money and pay none of the taxes. The middle class pay all of the taxes and have none of the money. The poor are there just to scare the shit out of the middle class so they keep going to those jobs."
—George Carlin, 1937-2008
UPDATE:
As some replies have pointed out mortgage interest on a primary residence is permitted in some form in six countries: The Netherlands, Switzerland, the United States, Belgium, Denmark, and Ireland. If you live in one of these six countries, my comment does not apply to you. If you live in any of the nearly 200 other countries in the world, it does.
YMMV: "Your Mortgage-interest-deductiblity May Vary."
> Yes, but the hoi-polloi don't get to write off their mortgage interest as a tax deduction.
What a strange example to pick. That's, like, THE major write-off that most people have. It just gets obfuscated by the fact that most people don't go over the standard deduction.
I think this varies between jurisdictions. I believe it is deductible in the USA, but not here in the People's Republic of Kanuckistan, although there are ways around the limitation, depending on your appetite for the risk of a drawn-out battle with the Canada Revenue Agency.
Up here, home mortgage interest is only deductible if the home is used to generate income, so it does not apply to people who use a home as their primary residence. But what if you have a home office? What if you use it as an AirBnB some of the time?
If you ask a tax accountant whether Canadian home mortage interest is deductible, they will answer "a definite maybe." But it's actually "no" for most people who don't structure their home ownership around qualifying for a deduction.
That second part is huge and people don't account for it correctly. It really hasn't mattered much in the era of super-low loan rates, but the amount that your mortgage is deductible is only the difference between the standard deduction and the itemized deduction.
My mortgage interest became "worthless" for that when the standard deduction was raised. I'm still better off than before, but that particular part of the benefit is gone.
The standard deduction for California did not change, unlike the temporary change on the federal side enacted for 8 years beginning with 2018. Also CA did not change the limits on the amount and type of loan interest that is deductible.
Since California by many measures is large enough to equate to a "country", It would be fair to add it to the list of places where primary residence (and a second home too) mortgage interest is largely deductible.
Elon Musk lives in one of them though, si that's not very relevant. You should take it up to your own government if you want to make it happen wherever you live, not be against Musk doing the same
> The rich have all of the money and pay none of the taxes.
This is demonstrably false. But then again, you don't expect factual accuracy from a comedian.
> As some replies have pointed out mortgage interest on a primary residence is permitted in some form in six countries: The Netherlands, Switzerland, the United States, Belgium, Denmark, and Ireland.
This Wikipedia sourced list is obviously not exhaustive. And interest deduction is allowed in the US which is the relevant case here.
The debt is banks agreeing to loan Musk $3 billion because they know he's good for it. The second letter is banks agreeing to margin $12.5 billion against an unspecified amount of Musk's stock, and the last is Musk pledging the rest (or something like this).
You can promise all you want, but you have to get the bank to be willing to pony up the money - but what you're describing can and does happen - leveraged buyouts were common in the past. https://en.wikipedia.org/wiki/Leveraged_buyout
You find a company with no debt (say, TLSA) and you believe it is undervalued, so you convince banks to loan you enough money to buy TSLA and pledge TLSA itself as the collateral. If the purchase goes through, you now own TLSA and a TLSA sized debt. If it doesn't, nothing much happens.
Frank McCourt's tenure as owner of the Los Angeles Dodgers is a good illustration of this dynamic. He purchased the team with effectively no cash, he and his family proceeded to treat it as a collateral asset to take out lines of credit to buy themselves personal luxury goods, bankrupted the team, then when the league forced him out, he sold for a profit and made a few billion dollars anyway thanks to the value of MLB television contracts and that's just the way being rich works, I guess.
That is the way that betting correctly on the future value of an asset works. There are many people who have lost money the same way because the value of the asset went down and so they walk away with nothing.
Yes, all the downside falls on the lenders because that's how investing money works. If you can get someone to loan you hundreds of millions, you should (in a purely economic sense) take it because all you can lose is everything you have.
He used effectively no cash but pledged his Boston parking lots as collateral for the debt. So if he had defaulted on the debt his lenders would have gained ownership of the Dodgers AND of the Boston parking lots.
Excellent explanation. To add to that - this is a typical example of an asymmetrical transaction for the lender(s). If Musk+Twitter are successful, lenders’ upside is limited by the debt interest and if Musk+Twitter fail - they are left with a huge underperforming asset on the books. This is nothing new for the banks - essentially it is a potential foreclosure on a defaulted mortgage, just on a different scale, so the risk will be priced into the loan conditions.
I don't have a million dollars, but I can buy a million dollar house. A bank promises to lend me a million dollars contingent on buying the house and then the loan will be collateralized by the house, which I don't own yet.
They do. That's why they have a policy that you're not allowed to borrow more more than 25% the value of the stock
> Tesla has a policy in place of letting directors and officers only borrow up to 25% of the value of their stock. And Elon Musk has already pledged about 88 million shares against indebtedness, according to Tesla's 2021 proxy filing. That leaves him with only another 85 million shares to raise debt with.
Great find! Is this normal policy at other companies? On the surface, it seems like a good idea. If you pledge 100%, and the company share price takes a dive, you might be inclined to do crazy things with the company to try to recove the share price!
Something akin to it is common, and the SEC may even require "large shareholders" to file when they've encumbered their shares, but I don't know the details.
This is a good analogy, but for it to apply to this situation, the house would have to be on property that has oil or lithium deposits. Once you have the property, it pays for itself, like the profits from Twitter would in this case.
If it ends up not being profitable, the bank takes back the house (or Twitter, or more likely the TSLA stock Elon put up as collateral)
I don't know if its that meaningful of a distinction. The property does generate profits in that you could rent it out. But yeah, you can finance traditional businesses like that. Buying with debt is generally a good idea because you juice your returns with someone else's money. Of course you give up some fixed amount and take first loss but in general debt is absolutely necessary to make the economics work.
If you can buy a valuable asset for $1 and have a bank cover $9 and it yields 10% return, you're making $1 from $1 invested (minus interest) compared to someone that bought it outright (making $1 on $10 or 10% return). The bank has no upside. If you invest in something bad though or the rate is too high the math changes and you lose 100% if the asset ends up being worth <= $9. That's leverage
Yeah, fair enough. Musk could either "rent" Twitter and pay the money back with profits or "live in" Twitter and direct it toward some other purpose and use his other activities to pay back the debt. So my mineral rights addendum was unnecessary.
On a related note, I always find the loans where the borrower takes on personal liability are in a completely separate category of risk. Anytime you put yourself in a situation where you could possibly ruin your future prospects or mortgage your future labor to a financial institution is much different than your net worth (and your investors' principal) simply going to zero.
The biggest danger of leverage is the "margin call" or calling the loan - the most common form of leverage people are exposed to prohibit this calling - if you buy a house today on a normal 30 year fixed mortgage in the USA, the bank cannot call the loan if you continue to make payments, even if the house value drops way below the original amount collateralized.
In some states, such as California, a purchase loan is non-recourse, so you could walk away (and many did in the last housing downturn) and the bank can't do anything beyond take the house.
This means if you can weather the downturn you don't get wiped out, you borrowed 80% of the house to buy, put 20% down, it went down 30%, you were underwater, but continued to make payments, and now it's up 20% above where you started.
Margin loans against stocks, etc do not have this, so if you borrowed against $1k worth of stocks you had, and they dropped in value below what the bank wants you to keep as collateral, they can force you to sell at the lower price (or produce more cash/collateral). This means that with leverage you could be right in the long term but wiped out in the short term.
Yea this seems like a significant amount of unnecessary risk for an asset that is unlikely to get better. I wonder how much of a recession/downturn would trigger a margin call for that amount.
You still have to pay off your debt to the lender according to the plan set out in the loan agreement, where will these come from?
You haven't crossed the finish line by securing the loan, you cross it by transferring the title to your name and repaying the loan (principal + interests) fully.
A margin loan is just a loan where securities are the collateral asset.
The major feature of a margin loan versus other types of loans collateralized by assets is that the value of the underlying security (collateral) is tracked and depending on the terms of the margin loan, the lender has the right to issue a "margin call" demanding additional collateral or cash if the underlying securities have declined in value. These rules, called "house requirements," vary from lender to lender.
As the other poster said, it's a special type of collateralized loan where since everything is known, it can be done automatically.
You can get approved for a margin account at TD Ameritrade right now, and then later decide to margin some shares for whatever reason. The bank doesn't need to check your collateral because it knows how much it is worth at any given moment when the market is open.
Mortgage loans are not nearly as formalized, and the bank will send out an appraiser to verify that the property is worth an amount that they're willing to loan against.
And once you get past that, it becomes very hand-wavy; banks making loans to governments, non-profits, private companies, etc will all have their internal departments that make decisions about how much the risk is and what premium they'd need to charge.
Margin loans use commonly traded commodities, normally stocks. Because they are easy to value (compared to a house) and liquid they are easier to get. However, because they are easy to value, they get compared to the loan value constantly. You'll be allowed to borrow X% of the values of your shares. If they go up, you can borrow more money. If they go down, you have to immediately pay off part of that loan. Since X < 100%, you can do so by selling shares (but of course, that decreases the amount of the collateral you have again), but you could also just deposit cash or pay it another way. They normally are more than happy for you to not have to sell shares if you deposit money.
Ok that makes sense, but I thought his other loan from MS was also using his stock as collateral?
If you're MS, why would you want to treat stock as "normal" collateral instead of using a margin loan? Is that Elon only feels comfortable using so much of his stock for a margin loan, and wants to use the rest as "normal" collateral (but is then getting less favorable terms for it)?
I have no idea why MS would choose to mix-and-match. Maybe the margin department has a global limit and that's hit by giving most of it to Musk? Maybe the margin department only covers the amount of Musk's stock they think they can sell in a margin call without causing the stock to tank? Maybe the other loan was using SpaceX stock (margin would only apply to public stock)?
It's also possible that Elon is getting a lower rate for the non-margin loan, but at a much worse multiple (putting up far more shares as collateral).
> (including, with respect to the Margin Loan Facility a condition which requires that the borrower thereunder satisfy a maximum loan to value ratio of 20%, which is expected be satisfied by the contributions of a portion of Mr. Musk’s unencumbered shares in Tesla, Inc. to such borrower)
Musk is putting up some of his Tesla stock as collateral on the loans. The effect of this is pretty similar to if Musk had sold his Tesla stock and used the money to buy Twitter, but avoids some of the tax and regulatory consequences of doing that.
The big difference is the lending terms will surely require the borrower to do something such as sell assets or deposit more money if the value of the collateral (and/or the asset being purchased) falls below a certain amount.
Borrowing against your shares is like taking out a mortgage on your home. You still get to live in it (dividend + voting rights), and you are still exposed to swings in value. And you can end up underwater.
Most of the ultra-wealthy live on debt. Here's the basic scheme:
- Let's say I own $10B in startup.com stock, but haven't sold it. My income tax burden is $0.
- If I sell the stock, and taxes are 40% in my country, I get $6B, and the government gets $4B.
- If I keep the stock, and borrow against it, I pay no taxes, but I do pay finance fees (e.g. interest). The finance fees work out to less than taxes.
The trick is to never realize gains or income. Debt lets you do that.
One more trick is that a lot of purchases are "investments." If I buy a mansion, yacht, and Picasso on debt I can use them. When I'm bored of them, I sell them, and pay off that debt. I've probably made money on the mansion and Picasso, and lost money on the yacht.
I've paid a little bit of interest and a little bit of tax, but much less than I would have otherwise.
One big difference is that you are constantly paying property taxes on the house, levied as a proportion of its total value, making the mere ownership of it a financial burden. Stock ownership comes with no such burden.
Another is that, should the need arise, stock can be sold at the drop of a hat. It is liquid and fungible so a stock-collateralized loan is seen by banks to be a very safe investment. Houses are not.
You left out the portion where you get the money to pay the principal and interest. Either you actually sell some of that stock, or you work a job to get that money. Either way you that income will be taxed.
I'm no expert but in other parts of the thread people are saying that interest is tax deductible. So you sell just enough stock to cover the interest and the capital gains are not taxed because they are offset by the interest deduction.
You still have to pay down principal at some point.
In this case explicitly I suspect it has more to do with the uncertainty of the deal going through AND not wanting to incur the tax penalty ALONG with the share penalty (liquidating $30 billion in TSLA would affect its price for sure). If you sold the shares to raise the cash, paid the tax, and then the deal didn't go through and bought the shares back, you'd be out the tax (with a stepped-up cost basis to be sure).
Or continually roll the debt over, borrowing more money and more money. Then, when you die, your estate can sell the assets to cover the debt, but that avoids taxes.
> - If I keep the stock, and borrow against it, I pay no taxes, but I do pay finance fees (e.g. interest). The finance fees work out to less than taxes.
I'm not following the whole lifecycle. You borrow against your stock, spend that money, and then repay the loan using stock? Without having technically sold the stock?
You don't repay the loan using stock. You repay it with cash from other sources (possibly thrown off by the new investment) or you keep the loan open and continue to pay interest on it.
You repay the loan with the next loan because you have $10b in stock but only took out a $10m loan. In the meantime the stock appreciates some more or you have more vested stock.
I guess the risk here would be that the stock goes to 0, you get margin called AND you are now on the hook to pay taxes.
You don't have to repay the loan (for a very loooong time).
Let's say you have 10 million in stock.
A typical margin account allows you to borrow up to, say, 40% of that. That's 4 million dollars.
Let's say you borrow $1 million and spend it. Currently interest rate on a margin loan is under %2. So every year the amount you need to repay grows by $20k (2% of $1 million, for simplicity I don't count compounding).
So in 10 years that would be $1.2 million to repay. But you're authorized for $4 million.
If in those 10 years the value of stock doubles to $20 million, then you're authorized to borrow $8 million - the amount you can borrow grows faster than the amount you need to repay.
To be clear: eventually you have to repay it but in the corner case it could be done when you die.
There are of course caveats. If interest rate increases dramatically, then the amount to repay will grow much faster etc. but you can see how e.g. if you have $10 million then you could borrow and spend $100k to live a good life and never have to sell your stock to fund your life (especially if stocks keep going up faster than interest rate, inflation and your spending habits)
In a certain central european country they had 5% yield govermnent bonds, combined with 1-2% lombard loans for private banking clients they invented a financial perpetuum mobile.
Unlike a home a publicly traded stock is supposed to be immediately liquid. I really don’t think the banks should be giving rich people loans against publicly traded stock to facilitate a tax avoidance scheme, these billions of dollars would have been better of being loaned to home buyers.
You know how you only work for companies who pay you salary instead of companies who don't?
Aligned self interest is the engine of capitalism.
You don't care if society would be better of if you donate your time and skill to company X for free. You care that company Y will pay your for your time and skill and that's why you work company Y.
The good of society doesn't enter your calculus. Only the good of throwawaycities
Similarly the banks don't care what is optimal way to allocate capital for the good of society (apparently as decided by you).
They care about their self interest. Their business is providing loans so they provide loans to people most likely to repay those loans.
From the perspective of the bank, margin loans are the safest loans they can give because the collateral is fully liquid and under the control of the bank i.e. the moment the borrower crosses margin loan threshold, he gets margin call and the bank sells his stock to ensure the loan gets repaid.
Study the wildly successful economies of communist countries to see what happens when people think they know better that free market what should or should not be allowed in the economy.
So far good intentions have vastly inferior economical results than lightly regulated free market where, for example, participants decide what kind of loans they want to make.
Banks are chartered by the government, thus should be prohibited from giving loans against publicly traded stocks, at least at rates less than the applicable capital gains tax, otherwise these loans are nothing more than government sanctioned tax loopholes for the rich.
This sounds like an interesting point but I don't understand it. Why is it worse to give a loan against a building for less than the capital gains rate then it is to do so for a public stock. Can you explain or link to an explanation?
Although they are both subject to capital gains taxes there are many differences between real estate and publicly traded stock.
As a preliminary matter, as investment vehicles publicly traded stock is a liquid asset, whereas real estate is an illiquid asset. Generally one invests in liquid investments so that they can be readily converted into cash when needed.
From the tax perspective a building/building owner would at all times be subject to continue paying property taxes. If there were some equivalent wealth tax for stock holders then at least society wouldn’t lose out entirely on this kind of tax avoidance scheme designed for the rich, but I’d still probably prefer these billions in bank loans go to qualified home buyers before lending it to the world’s richest man to circumvent a taxable event.
It doesn't cost him anything, because the interest rate on the loan is virtually guaranteed to be less than the appreciation rate of the underlying asset.
Don't confuse consumer and central interest rates for discretionary loan interest rates. The ultra-rich have been taking out ultra-low interest stock-backed loans to cover their living costs and obligations for over a century, and no billionaire has ever been "wiped out" by interest loan.
Do you provably own quarter of trillion USD of equities? This is exactly what the very stupid people never seem to understand about wealth - net worth is not cash under the mattress (nor on a "Savings" account). Musk (as well as Bezos, Dorsey, etc for that matter) probably has less than a hundredth of a promile of his wealth in cash.
One of the main reasons is that today's cash is in essence a rave-club bracelet - you need it for every day transacitons but as a store of value it is useless to harmful. The whole idea of today's currencies is for the financially illiterate people to get robbed of their savings. You don't become that wealthy by being that stupid.
Edit: I used billion instead of trillion, apologies
> The whole idea of today's currencies is for the financially illiterate people to get robbed of their savings.
No it isn’t, the financially illiterate don’t tend to have much savings anyway. The point of controlled inflation is to prevent the financially literate from hoarding cash as an appreciating asset and provide tooling to alleviate economic crisis. Considering your quote I’d question just how financially literate you yourself is.
Yes. I know very well that this is the justification (and a justification can be invented for anything). Now it is your turn to explain to me how does this fact contradict my statement that the drawback of such paradigm is that it makes it useless as a store of value?
Hint: It doesn't - you just stated a completely separate fact as if it is logically incompatible with the original argument.
> Now it is your turn to explain to me how does this fact contradict my statement that the drawback of such paradigm is that it makes it useless as a store of value?
Well, nobody contradicted that statement, as that is generally accepted. The contradicted statement is "The whole idea of today's currencies is for the financially illiterate people to get robbed of their savings.", which as (i parse it) is a statement about purpose of such properties of today currencies, so it is contradicted by a different statement about purpose of these properties: "The point of controlled inflation is to prevent the financially literate from hoarding cash as ..."
That's not a drawback, it's basically the whole point. Cash is designed to be a bad store of value in the long run because the government wants you to spend it or invest it. Cash is a good store of value in the short and medium run so that people accept it in return for goods and services but a bad one in the long run so that it doesn't make sense to hoard it.
Cash is not a store of value, it's a mechanism of exchange. It never has been a store of value.
It's supposed to be safe but if it has zero risk, then it has zero return.
Inflation is a bit like maintaining the pressure in the pipe of the flow of money.
Inflation also has the effect of discounting debt, which means it is good for borrowers, not lenders. Most people are borrowers, in terms of things like house mortgages and other debts. That's a good thing, but you also don't want wages to have to grow too fast with prices.
Also inflation isn’t linear. It is very possible for controlled inflation to be high one year and then low for the next two to make up for it. This idea that once we’ve inflated the dollar by a percent there’s no going back is false.
I rebutted against the idea that our economic policy is designed to rob the poor or financially illiterate. The exact opposite is true, inflation forces the rich to put their capital to work. Financially illiterate people don’t tend to have enough savings to lose out to inflation, so that point seems moot. The working class, however, overwhelmingly stores it’s capital in retirement accounts (56% of US workers own stocks or bonds[1]) so they aren’t losing their savings to inflation.
Your rhetoric is using lies to pull at peoples emotions, it’s the same thing all right-leaning libertarians spout. It has and will continue to be bullshit.
Watch how fast his numbers fall if he tried to sell a fraction of it.
Watch how fast it falls when people realize how absurd it is for Tesla to be the sixth largest company in the world by market cap, with a trillion dollar valuation. The meme voting era of stocks is coming to a close. The weighing portion of the cycle is coming and it will not be kind.
> What follows seems like Elon is "paying" for Twitter with... imaginary money.
The vast majority of money is "imaginary" in the sense that it's just liabilities on some bank's balance sheet, AKA bank deposits.
> Why can't anyone do this? I'll promise you a bunch of debt and equity, too.
Anyone can do this. Nothing is stopping you from writing me a note for $1,000,000 and me writing you a note for $1,000,000. This leaves us both a million richer in assets and a million poorer in liabilities. At that point even hinkier stuff can happen like me using your note as collateral on a loan to further expand my balance sheet. The tricky part is getting third parties to accept our IOUs. US Banks have no such trouble thanks to their membership in the Federal Reserve system. This is one major reason why a banking license is such a huge deal.
Elon has a lot of equity in ownership of tsla, spacex, etc, no doubt plenty of other things. Instead of selling for cash and buying Twitter with cash, he’s taking out loans based on assets he owns.
On top of that there will probably be “imaginary money” where a bank will give him money to buy Twitter with Twitter as collateral, but not the whole thing, just part. I.e. loans against his personal capital will provide a kind of down payment for loans against the value of Twitter.
In this scale it’s called leverage, banks loaning you a multiple of assets you’re willing to risk.
It is quite common for people with extreme net worth to take loans out against assets instead of selling them.
Doubly so when the interest on these loans is tax deductible. This is why he and most other wealthy people pay 0 taxes - he never has a taxable event, like selling stock. He just uses his stock as collateral to take out loans and writes off the interest.
This is where the weird negativity around billionaires taking loans is odd, even as someone who doesn't particularly like Musk. Sure, if their stock holdings keeps increasing in value, they can handle the loans easily and come out ahead on the deal. But that isn't a given, so what is the issue?
Reed Hastings would currently being losing a lot under this scheme.
Personally, my issue is that taking loans against equity is the reason billionaires don't pay any income tax. Sure, they should be able to take loans in order to keep their voting share, but not as a tax loophole.
For a long time this always felt awkward to me but I was never able to pin-point exactly what was wrong. Then I found georgism, with its claims of not needing any income and capital gains taxes, and it was even harder to quantify.
But I think now I've been able to work it out. There's actually two different types of loans but we treat them equally. The first is the nice type, the 'I built a factory, used that factory to pay back the loan with interest', that loan is a positive sum loan, the company wins, the bank wins, and the community wins. The second are loans for land, loans for stock, and other similar loans - these are zero-sum loans. The company can win, the bank can win, but someone is losing, and as is the community.
And so the real problem with this if you track how the money flows - a possible scenario is that a company might take out a bond, use the money for that bond to buy its own stock. The people who sold that stock and got that money might then go out and buy a house, the people who sold that house - you betcha, put that stock into an index fund, which includes a larger and larger share of the companies buying their own shares. Now that their share price is raised, they have more equity, and can once again take out another bond to do it again. It's a positive feedback loop. Each cycle is inflating the bubble. Valuations end up not being based on actual productivity, but on assumptions as to how money will flow through the markets.
We're at a stage now that the stock market flows of funds is only positive because of the stock buybacks. Companies that aren't buying back their stocks are going out of business. The Russel 5000 is getting punished despite the s&p recovering. We're at a stage now where north of 40% of all money is being held behind passive flows. We're now seeing the consequences of that with things like Netflix - when the stock does drop, it drops quickly and massively. Average volatility might be down considerably, but peak volatility is up massively.
The issue is that loans are ways of realizing gains on investments that aren’t taxed.
A proposal to correct this is to require that when you use an asset as collateral for a loan you have to reassess its value and pay capital gains taxes on the increased basis between when you acquired it and took out the loan.
Basically there needs to be friction and taxation with equity transactions like these loans.
Margin loan against your stock is more like a line of credit.
Once you upgrade your brokerage account to include margin loans you're allowed to borrow up to, say, 40% of the value of your stock (I simplify, the exact rate is dynamic).
Say you have $1 million in stock.
You're allowed to borrow up to $400k. You have a line of credit of $400k.
Say you borrow $100k. And in this context "borrowing" is simply transferring money from your brokerage account to your bank account. There's no additional paperwork as in most loans.
Let's say over 5 years you accumulate $10k interest (interest rates are really low, can be below 2% right now).
You don't have to "repay" that $10k or the principal. You now owe $110k which is well below $400k limit.
It's a line of credit, you can still borrow additional $290k.
In the limit that line of credit would only have to be settled when you die.
We know that no companies pay tax (ignore the billions paid in tax), and no rich people pay tax (ignore the billions paid in tax), so therefor all taxes must be paid by me personally.
Way more people than Musk can do this. You just need a bank that trusts your ability to pay and who thinks the size of the transaction is worth their time.
4 is true but doesn’t show how insane of a diff it is. The interest is going to be tiny. It isn’t going to be 3% like what Robinhood charges for any one with at least $2K in Robinhood and $5/mo membership. If Elon is getting sub 1% interest rate. AND he gets to tax deduct that interest. It’s near nothing.
With 4, the more significant factor is not tax avoidance, but the fact that selling 21B$ of shares in a short period would really tank the stock price. the negative effect of that would be more significant than capital gains tax
Everyone can do this. Just call your bank and get commitment from them to issue you a $40B loan! Those "commitment letters" are contracts. It's a known bank with known assets saying it's promised to issue a loan in the stated amount for the stated purpose.
It's the same thing that happens when you make an offer on a house. You don't generally come to them with the money "out of pocket", you show them documentation from your bank that details your mortgage contract. But the mortgage doesn't actually exist yet because you don't own the home. It will execute at the same time as the purchase, generally through some kind of escrow process.
Things aren't any different, fundamentally, even five orders of magnitudes higher.
You can. If you have a stock portfolio and your broker allows you to do margin loans you could just withdraw say $12k from your account as a loan without selling any shares and go buy a jet ski.
But if you don’t have sufficient collateral your broker will just tell you to get fucked.
Why contact you? Because you are insightful unlike most and there is agreement on some of the insights you wrote. Do you have an email address or a contact method?
Old thread could not be replied to, probably because too many days past.
This is what I find funny about all those people shouting "No, Elon can't pay for taxes, it's all tied up in stocks!!1!"
If you are stock-rich and you can buy stuff on the collateral for that: normal people can't really do that. Ordinary people have a much harder time buying more stuff than they have the cash for. Or at least on worse terms when they do take out a loan.
Being rich is cheaper than being poor. Is it really so awful to change that?
I imagine there’s a reason people feel more comfortable lending to Elon than to people with a smaller amount of assets, and that it’s not “lol fuck poor people”.
Tax the proceeds at loan origination (1099-whatever filed by whomever is providing the cash based on pledged assets). How you pay the loan back if the collateral declines in value is your problem (or the bank’s problem, depending on the amount in question).
High level, it closes a financial engineering loophole (buy, borrow, die [1]). The taxable event is when you get liquid, and a loan is liquidity. The tax code requires a patch, that’s all.
Would taxing the loan reset the cost basis, then? Or are you suggesting taxing the same gains twice (or more than twice if someone repeatedly takes out and pays back a loan against the same assets)?
I agree buy, borrow, die is a problem but the “weird” feature of tax law that makes that possible is the step up in basis. (Getting rid of that has its own challenges I’m sure.)
Given how fast heirs squander their wealth, it may not be worth the government fighting it too much, especially as the side-effects cause all sorts of howling (grandpa dies, dad inherits farm, has to sell it to pay the tax bill).
Shooting from the hip, sure, the broker could record this as a cost basis adjustment and report that attribute along with the rest of the form reported to the IRS.
Guess that is implied but not really what I meant. Poor people don't have much assets so it wouldn't do much.
My issue with the whole "Elon has to pay taxes" thing is that there are loads of people (fans?) fighting over why he shouldn't have to. It's the richest dude in the world, he really doesn't need defending for everyday people.
I also like the cool stuff he does, don't like the non-cool stuff he does, as I do with a lot of people really
The problem of the rich not paying taxes because they're stock-rich and use the stock as collateral to take out loans to buy a new yacht could be solved by taxing unrealized gains.
Of course, this tax increase could be offset by also allowing unrealized losses to act as a tax deduction.
The thing about an unrealised gain is … that is hasn't yet been realised. It doesn't exist yet. It could (and often does) vanish like smoke later on, and become a loss. When people propose to tax unrealised gains, do they also propose to reimburse those taxes when the gains become losses? Do they intend to continue taxing realised gains?
They usually propose some sort of mark-to-market and tax the value, but outside of markets like the stock market, and somewhat the housing market, it can be really really hard to determine the value of something.
Should the 1st tweet NFT be taxed at its last sale price? The recent failed bid price?
As with anything, complaining is the easy part indeed. I don't have the answers either.
The funny thing is that hoards of people will come to defend a rich dude who really doesn't need it while poor people constantly get fucked over and could use a little bit of defending.
One improvement could be to just have a higher tax bracket (like the US had decades ago) and build more stuff for the common good. What doesn't help is that from my side of the big pond, the US sounds like a third world country if you are below middle-class. Can't judge if that is true for myself, but hey.
> hoards of people will come to defend a rich dude who really doesn't need it
I don’t know if that’s a fair characterization generally, but it’s not the case with me and it’s actually a frustration/lament I have when discussing this topic.
I’m not particularly a fan of Musk or any of the current crop of billionaires or their companies. But I care about the principles and the practicalities.
There’s this tendency to say “There are terrible problems in the world. We need to fix them with money. Where can we get money from? Billionaires!”
But when you do the maths, i.e., total up all the wealth that billionaires have and divide it by all the people/causes in the world who “need more money”, you end up with basically nothing.
And that’s before you consider what the billionaires’ companies are doing - which in many cases involves things like making phones/goods/software/knowledge cheaper/free, which benefits everyone including poor people, making electric cars affordable and ubiquitous, which will benefit all humanity and the environment long into the future if it leads to climate change abatement, and creating millions of jobs including many for low-skilled people, and also that these companies do generate vast amounts of tax in the form of sales taxes, income/payroll taxes, and capital gains taxes when shareholders liquidate their shares, and you find that it’s not necessarily true that taking money away from these companies/owners would be net beneficial for society anyway; it could easily make the problems worse.
And now for the obligatory disclaimer - yes I know there are plenty of valid concerns about the merits and ethics of what companies do, and worker pay/conditions and externalities and other issues; but these are matters for regulators and consumers to consider and are separate from the principle of how billionaires should be taxed or how beneficial it would be for billionaires to be taxed more.
I’m also not in the U.S., and I see plenty of dysfunction in that country as well as many others - though we also see many people, including some of the world’s poorest people desperate to move there for a better life.
For what it’s worth I devote a large number of my brain cycles to contemplating how life could be better for the worst-off; I’ve spent much of my adult life dealing with health challenges that caused great difficulty in achieving steady employment and financial security, which I’ve now largely overcome, and do I think a lot about how the principles that helped me could be applied more broadly, including for people far worse off that I ever was. At this stage I find myself thinking there are certain things that could work, but a lot of it is just really really hard.
No one is saying Musk literally can't afford to pay taxes. He can borrow against his ownership. But if you have a company that goes from 0 -> 100, and you get taxed 35% on that, and then the company goes from 100 -> 50, you kind of got screwed. That $100 is a made-up number.
Suppose there is a company with 200 shares, half of which you own. The last trade price was $1 per share, meaning you have $100. But you can't necessarily dump your shares for $100 because the $1 was based off the last trade. So on the margin you can sell a share for $1, but you won't necessarily be able to sell all 100 shares for $100.
Imagine you own a home that went from being worth $1 million to $2 million. Did you MAKE $1 million? Should you pay taxes on that delta as soon as the home's value became $2 million? It makes more sense to wait until you sell it and pay taxes on the net you made. Otherwise it's more complicated and you could end up paying taxes on $1 million when you end up selling it for a lot less. You could have a tax credit I guess but you're unlikely to have the IRS cut you a check for the money you paid that turned out to never be actualized.
California famously insulates people from additional property tax burden on highly-appreciated real estate - and it's clearly still a popular policy among the people benefiting, but it gets a lot less defense from people who don't own those houses than the status quo here gets from people who aren't stock-based-billionaires.
Wealth is closely correlated enough to power that it's worth encouraging people to turn those on-paper gains into liquid forms - even if only to avoid "losing" if the stock then slides back from 100 -> 50. Especially since he can leverage it to spend in other ways!
Yes, taxing unrealized gains as if they were income would be silly.
Most proposals to tax giant piles of wealth in the market look nothing like what you've described. A wealth tax is more like: pay 1% per year on the current market value of your portfolio, if that amount is over $100 million.
Money attracts money. Wealth taxes are an attempt for reverse that effect and force some of that money to trickle down.
That said, any attempt to implement a wealth tax will probably be struck down as unconstitutional because moneyed interests want it to be declared so.
> Most proposals to tax giant piles of wealth in the market look nothing like what you've described
Wealth tax is different and I think it makes more sense compared to unrealized capital gains. But its not true no one is proposing an unrealized capital gains tax
> Biden’s fiscal 2023 budget request released Monday would impose a 20% minimum tax on the unrealized capital gains for households worth at least $100 million.
Doesn’t this already happen to some extent with property taxes? You pay tax on the appraised value of the property. If it later goes down, you just pay less from that point onward. It doesn’t seem like a problem.
To me, taxing wealth and only wealth seems like the most straightforward route to a truly progressive tax system. That’s not to say it’s simple or straightforward in an absolute sense, but neither is taxing income, is it?
At a high level, taxing wealth instead of income or transactions ensures that rich people are paying their share, while maximizing upward mobility so that people can become rich more easily. Think about how much easier it would be to become wealthy without income taxes, sales taxes, property taxes, taxes on corporate profits, etc. etc.
This is what we should optimize for imho: making it as easy as possible to become wealthy. Sure, there details to figure out, as with any approach, and maybe some rich people will face some difficult choices or be forced to sell assets; I’m ok with that and it seems well worth the tradeoff.
Wealth taxes and land value taxes seem like the most sane way to fund social programs. Extract a bit of value from the people who have runaway wealth (but not so much that their wealth can't continue to grow), and use it to help the economically downtrodden become more upwardly mobile (education, healthcare, basic social safety nets.)
Pair it with a hefty pigeuvian carbon tax and you could probably do away with income taxes entirely.
(A nondistortionary VAT to replace sales taxes and corporate income taxes would be nice as well.)
> If you are stock-rich and you can buy stuff on the collateral for that: normal people can't really do that. Ordinary people have a much harder time buying more stuff than they have the cash for. Or at least on worse terms when they do take out a loan. Being rich is cheaper than being poor. Is it really so awful to change that?
What you are talking about is reputation and it will always be a part of the dynamic. It happens at the poverty level too. In any poor community there are people you trust and people you don't.
about a dozen answers have been posted here, each one missing the point
people are conflating Musk's personal balance sheet with Twitter's. it's not clear to me whether any debt would be recourse to Musk—but in all likelihood, it wouldn't be. "recourse" is a term used to describe what collateralizes the loan. if the loan is recourse to Musk, he'll have to cover the cost if Twitter isn't spitting off enough cash flow to service the debt. if it's non-recourse, then the only collateral available to the creditors is Twitter and its assets (potentially subject to certain carve-outs). most rich people don't do recourse transactions as a risk mitigation measure. however, non-recourse debt is costlier because the universe of collateral available to the lender is slimmer
why can't anyone do this? because Musk has been deemed a better sponsor / steward of capital than your average joe
It means between himself, and a group of others, he has collected enough money to buy Twitter, as evidenced by the letters of intent.
Those are legit. Banks don't sign notes without some intent. They can back out, but they are not meaningless.
It's important so that the current shareholders and the board know that Musk's bid is legitimate, and not something he's just making up.
In order for the banks and others to back him in this bid, he will have had to provide with with a lot of info.
This could be a big PR move, but Musk will have had to hire very expensive bankers to actually go through this as if it were a real thing.
"Why can't you do this?"
Because Goldman and other Private Equity firms won't back you (well, assuming they won't). And they won't give you a letter to the board of Twitter saying they will.
Yeah, the costs to do this are running in the millions, even if nothing ever happens. It was basically a foregone conclusion that Musk can do this, but each bank has to do a bunch of work inside to make sure they're not exposing themselves in ways they don't want to.
It's very similar to buying a house - you don't get the mortgage first, you get a letter of pre-approval that says the bank is ready to give you a mortgage when you actually buy the thing.
It's even technically more amusing (a pre-approval letter is just the bank saying eh probably we can do this; it's not even required) - the seller will say "We will sell if you have the money", the bank will say "we will give the money if the house is worth X and you have Y downpayment, you will say "I have Y down payment if the bank will give me the money" and the appraiser will say "I think the house is worth X+1-5% (it is always just above the amount needed)".
Then you get a form of a financial standoff where each party checks that they're getting what they want, and you escrow/sign everything.
If you had a signed letter that GS was willing to loan you $43 billion, you'd get taken seriously too. If you want to bid on a house, you'll need a signed letter promising a loan of (house price) on it from a bank to be taken seriously (or cash reserves)
Not to be that guy, but anyone actually can do this with DeFi exchanges using a flash loan. You can borrow infinite capital with no collateral, as long as you can pay it back (plus fees) before the end of the current transaction.
Does Twitter even made money? The Wikipedia article claims they went from losing several hundred million in 2017 to making a billion in 2018, but I'm not seeing what change led to that huge turnaround.
at least historically they had a DI/DS scheme (like many mega corps) so theres probably 10s of millions that are "expensed" to a foreign subsidiary to avoid tax.
whenever something like this happens you have to ask yourself why now and what’s in it for Musk (let’s be real: nobody spends this much without an agenda). My fear is that Musk’s endgame is to reinstate a specific account that was banned after some specific events around a specific election. If this is what’s happening he can frack off.
He should reinstate all accounts that were banned for political or ideological reasons. Or just straight up do a jubilee of all accounts unless they posted illegal content.
It is absolutely trivial to get banned on Twitter. My favorite example is someone I know getting banned for posting pitbull fatality statistics. They were banned for “racism”. Against dogs.
Not going to dox myself via sharing their @. It's banned now so you can't see it anyways. They were attacked by some pitbull advocacy club and likely mass-reported.
The replies were full of people saying things like "this is exactly like how white people post statistics to say black people commit more crime! Report this person for racism!"
It was charts of dog fatalities per year broken down by breed.
I still don’t believe that’s the whole story. Maybe it was automatic due to the large number of reportings. But I’m certain nobody at twitter said “yep, let’s ban him for racism against pit bulls”.
Wouldn't that be a violation of his fiduciary duty, at least in the same way that other people in this conversation have defined fiduciary duty when criticizing the board for adopting the poison pill?
Bringing back the accounts that spew stuff which pushes advertisers away will not make Twitter more financially successful than they are today.
That's true, if his intent is to take it private, he could run it into the ground on purpose.
Hell, maybe that's his intent. What if it turns out that rather than being a free speech absolutist, he thinks social media is destroying the world and the best way to solve that is to crush it out of existence, starting with Twitter.
That wouldn't work, of course, but it would be entertaining.
Afaik, he views Twitter as the closest thing we have to a genuine public square on the web, and he thinks it’s poorly managed and ideologically captured. Musk also uses Twitter a lot, so it’s believable that he wants it to be something better than what it currently is.
> Afaik, he views Twitter as the closest thing we have to a genuine public square on the web, and he thinks it’s poorly managed and ideologically captured.
For me, this is the thing that bothers me the most: if he thinks it is the closest we have to a public square, why does he think that the richest private individual in the world should decide how it is run?
It seems he's saying "the oligarchy is not running this well so we should make it a dictatorship, not a democracy," which is in his right to say or believe, I just wonder how much we have lost faith in democracy if we agree.
Who is running it now? A Saudi prince and a bunch of other tech oligarchs? Why would Elon be worse than that? How is twitter a democracy now? Did you cry this much when Bezos (the then richest person) bought the Washington Post?
Isn't the fact that twitter is NOT part of our democracy the crying call of the left? "It's not censorship because it's a private company and they can do what they want (as long as they only censor anything I don't agree with)!"
Oh NO, Elon might make twitter a free speech platform where differing views can be expressed!
I was talking about the structure of its governance, which I think is currently more like an oligarchy and if Musk buys it, might be more like a monarchy or dictatorship, not like a democracy.
I don't claim that the current oligarchy is doing it well, I don't claim that a Musk monarchy would not do it better, and I don't claim that even a democratic structure would do it well.
I was merely trying to point out the different governance structures and question our collective faith in democratic structures.
To be honest, I think you are exactly on the right track. We _do_ have reduced faith in democratic structures.
Allow me to steelman this position a bit for you though. I think the root, gut feel that many Americans have is that they are sick of being pushed around and mismanaged by ineffective, small-minded, out-of-touch bureaucrats. This affliction seems to affect every aspect of our lives. If you have a problem with Comcast, you have to go through a robo call center that makes it physically impossible to actually talk to the people that are authoring your pain. You can't get mad at the person on the phone, because they can rightly say that it's not their fault your bill doubled. And yet, what's left unsaid is that things are specifically arranged this way on purpose.
The social architecture of our society is so "democratic" that there is no responsibility, no human spirit, no .. humanity in the way we deal with things. You can bet that Twitters internals follow this rule, and I'm sure when they talk about the failings they've had as a company, the blame is blandly smeared around. As a democracy fades into a bureaucracy, politics and corporate culture just descends into tee-totalling, cover-your-ass box checking that you're doing everything "by the book". It is the soulless HR department in place of actual values and kinship.
So you might see this newfound lack of faith in democratic structures less as a vote against democracy and more like a vote _for_ humanity. If you put Musk in charge, one thing you know is that there is a dude - a fully human dude, foibles and negative qualities included - who is running things. Looked at from this perspective, you can almost even get your head around what it would be like voting for trump. Okay, maybe not, but maybe you can get a few steps closer.
I appreciate you taking it further and I think I can relate. The frustration with things being too ineffective and the drive to have a human responsible for something. I believe monarchies can be highly efficient, as many other top-down hierarchies. I think the challenge lies in that while one can efficiently help, one can also efficiently harm.
So, yeah, a part of me loves that a human could come in and make it more structured, more "the buck stops here" (ironically from the US President, the leader of a democratic republic), and I also worry about what happens when that person goes in a direction we don't like or a direction that harms or kills us. May seem like an exaggeration for a social media company, however, many genocides have been fueled by language through mass media.
> The social architecture of our society is so "democratic" that there is no responsibility, no human spirit, no .. humanity in the way we deal with things.
This is why I actually believe more in the idea of representative democracy than direct democracy. Yes, not as much responsibility as a single owner, but allocated responsibility to a few while being owned by many.
> Isn't the fact that twitter is NOT part of our democracy the crying call of the left? "It's not censorship because it's a private company and they can do what they want (as long as they only censor anything I don't agree with)!"
Lol, if you think the left is genuinely defending the rights of private corporations, I don't think you know much about the left...
Probably the defining ideological organizing principle of the left is social equality, which is the exact opposite organizing principle of corporations, that being profit over all. Corporations are organized as dictatorships; leftists prefer them to be organized as democracies of, by, and for workers. Corporations censor the free speech of their workers, restricting what they say and how they can organize themselves; leftists want to take away the power corporations have to do this.
Insofar you are hearing anyone you perceive to be on the left supporting the rights of corporations like twitter to do what they want, perhaps consider they are throwing the argument in the face of corporate friendly Democrats and Republicans who have created this situation themselves by granting corporations such power over our lives, and are now only complaining when it hurts them politically.
I'm waiting for the day when that's tackled honestly by those groups, because right now it seems to me that politicians want to force specific companies like Twitter to stop hurting them politically while still maintaining corporate power and the inflow of corporate cash into their reelection campaigns. Thy want to call Twitter a "town square" and a "public good", and carve out exceptions that would specifically limit its power while still maintaining the power of the corporations they prefer to wield it. Meanwhile they will argue vociferously that healthcare, education, housing, even roads and broadband aren't public goods and must be kept privatized or turned into private ventures.
Under our current system (not created by leftists), corporations are people too and have more rights and power than natural humans. Leftists will stop pointing out that corporations have this power as soon everyone else stops arguing that corporations should have this power.
I have some good memories of using Twitter in the pre-IPO days. Of course we can’t say that the former private ownership was necessary to create an open platform, but I don’t think it was a hindrance in that regard, either. (Would it be different for a megabillionaire to buy the company today? Definitely. Still, there shouldn’t be an unchecked assumption that it’s indispensable for Twitter to be publicly traded.)
I'm not saying the current publicly traded, previous/future private ownership, publicly regulated utility, non-profit, or any other form of ownership and governance would necessarily yield a better result than others. There can be benevolent dictatorships and oligarchies and malevolent democracies and republics. I'm more interested in why we (US specifically) celebrate democracy in public governance but seem to prefer oligarchy or autocracy in corporate governance.
why don’t these “unfairly” censored people build their own platform? oh! it’s hard. much harder than spouting their bs and complaining about “free speech”
exactly! the gist of it is that they need people from the “other camp” and they need to get into shouting matches to feel like they matter and their crackpot ideas are valuable.
The unfairly banned people have made several platforms, they just never blow up and you don't hear about them. It's like an employee gets fired from target, a well known and established company, so they make their own pseudo target and you're shocked that you've never heard of their small one
Edit: corrected autocorrect miswording
why don’t the platforms blow up? you’d think if these people are banned based on ideological issues only they would accumulate and thrive on these new platforms
the reason twitter works and is successful is that you have people from all backgrounds and walks of life. people that get banned don't follow the rules that Twitter has (if the rules are fair, etc, is another discussion, but everyone has to follow the rules)
> why don’t these “unfairly” censored people build their own platform?
Don't you recognize that this is exactly what happens?
They do end up going to their own corners of the web, and idealogical-activists refuse to leave them alone and try and shut them down wherever they go. Look at how many times Gab, Parler, and other more free speech sites have been shut down.
I wonder if the world can support a conservative Twitter. I think the problem is that if you're going to spout offensive nonsense it's not as much fun if there is no one around to be offended by it. And while those who are offended will fight it when it's a percentage of their platform, there will be a wave as people abandon what they see as a toxic platform. I mean sure there are platforms like 4chan and The Donald but 4chan's traffic is a fraction of what reddit's is.
Given Elon's predilection for trolling it's odd he doesn't realize those people who are banned don't want to build anything, they just want to watch the world burn.
Sure. But if Elon Musk buys twitter, a private corporation, then he can decide who he platforms. Yet you see tons of people complaining exactly about that possibility here. So your comment is pretty ironic in the context of an entire thread filled with complaints about Musk getting his own platform.
it's in the direction of "I don't want Musk to mess with Twitter". I personally cannot do anything about it but watch and voice concern, but if enough people see the concern I am voicing maybe this will lead to a better outcome. who knows?
I totally agree with that! The thing is, that's exactly what people have been doing only to be constantly dismissed because hey it's a private corporation and they shouldn't complain. The comment I replied to was literally doing just that, mocking people and calling them annoying because they kept voicing their concern for free speech, because they apparently shouldn't even complain since it's not their platform.
I don't buy this line. Twitter used to be "the free speech wing of the free speech party." So your theory is that this happened:
1. Twitter is totally open free speech
2. This scares people away and user counts drop
3. Twitter censors and users come back
But this didn't happen. Twitter and other, at the time, free speech platforms like Reddit were experiencing rapid user growth throughout their free speech phases. The "this will scare away users" justification for censorship is used entirely as an ex post facto justification.
No, this is the route that literally every popular social media platform goes through if they want to make money. Having an 'absolutist' stance on free speech is only tenable at smaller scales. As your platform scales up and more people join, so does the amount of people posting things that are borderline illegal, chase off advertisers/other users and so forth.
There's a reason why none of the other purported full free speech platforms ever taking off and it's because they end up so odious that advertisers never go near them and the userbase stalls out. Personally I think most of the people that believe full freedom of speech is possible have never been a moderator of even a small social media platform. If you have two users and one of them is harassing, stalking etc another user you eventually have to make a decision which of the two you want to keep around, and it inevitably involves you censoring one of them.
This is not the argument I was responding to. That was the argument that the platform will lose users, which objectively didn't happen. You are talking about losing advertisers, which is a reasonable theory, but also incorrect. Twitter and Reddit to this day are full of content, e.g. porn, that is absolutely toxic to advertisers, but it doesn't drive advertisers away from the platform as a whole because they have segregated their platforms and allow advertisers to pick and choose where they advertise. An example of this is Google search and Youtube demonetization of controversial videos. Advertisers are certainly an explanation of those policies, but it doesn't explain outright banning content from the platform.
If his agenda is polar opposite of the current agenda, I can't wait to see it. I would love to see him turn Twitter into a free-for-all where all LEGAL under US law material is allowed. Where YOU as an individual can mute/block things you do not want to see. It's incredible this idea today is considered "dangerous".
It's EASY to counter Holocaust deniers because there is so much evidence that it happened. It's like debating flat earthers. No problem. Why be threatened by things that are easily debunked in day light?
It's not hard to defeat bad ideas with good ideas. Or you can just ignore it by turning off the channel. That's always an option.
huh. this naive approach is cute. but here is the thing: the amount of effort required to refute bullshit is at least an order of magnitude higher than the effort required to produce it.
we don’t have unlimited time an unlimited attention spans. we also deal with uneducated, easily manipulated people that will just discard anything that does not match their world view and just amplify the bs.
Correct. No one can deal with all that shit. But it's distributed. You can ignore most of it, or all of it if you want. There are plenty of us autists to overwhelm it.
Sending Flat Earthers off to their own dark corner is how they become entrenched. Leave them in the public square, in broad daylight, so they are exposed to evidence to the contrary. That's how you defeat bad ideas over time.
Empirically, that doesn’t work. Bringing misinformation into the public square simply allows it to spread. It’s almost immune to “evidence to the contrary”, at least for those who are apt to believe misinformation and conspiracy theories.
Empirically, the church is still here, and yet we mostly now hold heliocentric beliefs.
We didn't need to censor anyone to get here.
On longer timescales, the truth wins, because it is real, and everything else is not. False beliefs are persistent but simply can't compete with reality.
this approach of letting people air bs and having them be shamed by the level-headed individuals may work if the people airing the bs are just misinformed but
are open to a discussion and changing their mind.
a lot of people, on the internet, are not open to this and will chose the bs over any fact, argument, reason.
The problem is that those ideas spread because it’s not in most peoples best interest to challenge them intellectually. It’s in their self interest to promote that material because it feels good emotionally.
That's some sick shit but I can't see why Twitter cannot allow you to block that garbage from YOUR perspective. I want personal controls for my content.
have you ever defended your ideas? against someone that does not do this in good faith? and makes shit up on the fly? and lies when caught? and uses mental gymnastics when shown their are plain wrong?
how many times would you try to debate that person before deciding it’s a waste if time?
There are already Twitter alternatives that operate as a free-for-all. So we don't even need to speculate on how that plays out. It is interesting to ponder how Elon thinks that would make him any richer. Or maybe he values the free-for-all concept so highly that he's willing to burn billions of his own money on it when Twitter loses most of its advertisers.
Of course, he may just do the opposite, and start banning people on the left. That would align more closely with how he runs the companies he is currently in control of.
Unfortunately your first sentence isn't true. There is no uncensored microblogging platform or protocol that is even a tiny fraction of Twitter's scale.
Twitter isn't just a US platform. It's a global one. As part of a global platform that means it has to adhere to laws in countries other than the US. Thing's like EU's anti-terrorism laws or data privacy laws. You could argue that they should strictly adhere only to US laws, but you're effectively arguing for Twitter to outright remove a large portion of its international audience and censor them as well.
I'd be fine with bringing back most of these banned accounts if the algorithm also died.
Without an engagement-maximizing algorithm that promotes the most divisive content, those accounts would just be preaching to their own choirs. Meanwhile other people could pop in and see just how unhinged and ridiculous they are.
Maximizing engagement means maximizing dishonest trolling, hate, fear, controversy for the sake of controversy, and catchy tabloid bullshit. The most engaging content is basically an adversarial attack on higher human cognition. It typically works by bypassing the rational mind and shooting for the amygdala.
Make it a simple timeline again. Nix recommendations in favor of search. Make it just a forum, not an inherently biased Skinner box that sucks out peoples' brains.
I'd support that regardless of who he lets back on the platform, because algorithmic social media is the real problem. Algorithmic social media is what got Donald Trump into the presidency, among many other things.
isn’t it convenient to blame everything on the algorithm?
why spend time actually educating people and giving them the tool of critical thinking when you can create a cesspool that enables and amplifies xenophobia, racism, sexism, you name it.
why call out certain behaviors that are horrendous when you can normalize them and pretend this is part of the normal public forum?
Person A walks past you and smiles. Person B walks past and punches you in the face. Which maximizes engagement?
Person A tells you about a new discovery at NASA. Person B tells you the Earth is flat and bombards you with "irrefutable" proof. Which maximizes engagement?
I really do think engagement maximizing algorithms explain much (but not all) of our collective descent into insanity since about 2010-2012 when they became popular.
the algo amplifies nasty things. that’s for sure. i guess my point is that those nasty things exist independently and have backing (and we should not normalize them).
Elon canceled someones order because of what they said which I consider strong evidence he doesn't fully support others having free speech like he claims
So many others here are saying negative things. I hate that people are even allowed to be billionaires or that they don't pay their fair share in taxes. But I do believe that Elon has a master plan and him buying Twitter is a key element in that plan. Starlink + Dogecoin + Twitter. It all makes sense and I'm in full support.
Hard to really know the facts, but things may not be as they appear. In this case however, he has filed the SEC docs to verify that funding is secured.
The people Musk said he had funding secured from for taking Tesla private immediately denied it. To the point of saying they’d only had a single conversation with him, and never discussed price
Can you tell us more about the detailed internal discussions that happened between Musk and N other parties concerning possible funding for taking Tesla private? You seem to be an authority on the subject.
“It turned out that he had had a single casual conversation with representatives of a Saudi sovereign wealth fund in which they did not discuss the price of the deal or how much money the Saudis were willing to invest; ultimately Musk settled fraud charges with the Securities and Exchange Commission over this tweet.”
They adopted a poison oil that they can use to discourage a hostile takeover while they consider the offer. The poison pill doesn't necessarily mean the offer will be rejected as it can also put them in a better bargaining position to try and negotiate a higher price.
I feel bad for Twitter employees or potential employees right now.
You KNOW Musk has no intention on converting unvested RSUs to cash. He'll either get rid of them completely while giving everyone a 10% raise (common Twitter TC is 50% cash 50% RSU) or keep everyones cash the same, and tell them their RSUs are now amazing options that will be worth soooo much when Twitter gets relisted in the future
Likely also will make deep staff cuts, especially to areas related to content moderation, display algorithms, etc. If this succeeds, I would not be surprised to see a 50% headcount reduction as one of the earliest actions.
If employee compensation is 50% RSUs (which have a public value and can be sold immediately once vested, basically making them as good as salary) then what you're saying is Elon might give everyone a 50% pay-cut.
I guess I can only speak for myself at Google which has a similar high percentage of pay as RSUs, but if they suddenly took away everyone's stock grants, nearly everyone would quit.
levels.fyi lets private company employees list their stock option worth as what ever they like, its self reporting
More often these stock options for non-publicly traded companies are not liquid until they IPO. Which a startup engineer at SpaceX completely expects
But the Twitter employees didn't join a startup, and have compared their TC to other liquid comps offered to them. Their leases and mortgages would be based on their liquid comp, which could be cut in half overnight until the next IPO
He's definitely going to burn a ton of existing employees (basically kick them out), and then incentivize new ones with aggressive packages.
It sucks and I wouldn't wish it on my worse enemy. It does make sense though since the mission and culture will be night and day different and would never mesh.
To be fair to Musk he made a lot of people at TSLA very wealthy when everyone in the valley was complaining how poor the TSLA comp packages were vs how hard the worked. I mean I don't think Elon saw TSLA take this much of a rocket ride but employees did pretty damn well on their stock.
Entirely separate from the politics around why Musk would want to buy Twitter: I don't understand the world in which this would be a confidence-inspiring maneuver amongst Tesla's shareholders. If my reading is correct, a significant portion of Musk's net worth (in the form of Tesla equity) will now be held up in a perpetual money-bleeding venture.
The TLSA shareholders will be more concerned with TWTR bleeding Musk's attention vs bleeding his shares; he's not giving up the shares or control of TSLA.
It's also very likely that if Musk takes TWTR private he then privately sells portions of it to people who would like to be in on it with him. SpaceX is private, for example.
The key is that TSLA is not buying TWTR (which stranger things have happened), it's Musk.
> he's not giving up the shares or control of TSLA.
Again, correct me if I'm wrong, but it sounds like he's financing this prospective purchase of Twitter with loans that are backed in no small part by his stored equity in Tesla. He might not be "giving up" shares, but he's effectively introduced an interested party with the ability to seize those shares to recover any losses.
That's the part that would concern me as a Tesla shareholder.
I’m joking, but I’m kind of not… We will see who is actually behind the package, but MUFG and friends have a habit of financing foreigners’ adventures while keeping Japanese companies under-capitalized and starving. (For those not aware, MUFG owns a large part of Morgan Stanley, hence the photo above.)
I've never had a twitter account and didn't plan on getting one.
But if Musk is successful taking over twitter, my intent is to get a twitter account and start posting the most grotesque and offensive things to see if Musk really is a free speech absolutist. My suspicion is that he is mostly interested in his free speech, not mine.
So you haven't cared about free speech at all until you want to lash out to spam others? Cool story, bro... I bet you and your legion of followers will love all your content. Then you'll bitch when people disallow you from commenting on their posts.. But I can't push my speech on others!!! This isn't my definition of free!!!
Please tell me how you determined that I don't care about free speech at all from what I've said. All I said is I have never had a twitter account.
I find the medium to not lead to productive dialog. The only interesting posts I've read are ones where someone essentially ignores the format and writes a long form comment over ten serial tweets. Limiting people to 140 characters (or 2x that now) leads to people spitting out punchy comments that lack any nuance. Rather than a dialog you get either echo chamber if the participants are in agreement, or if the participants are in opposition, a series of tweets attempting to land a body blow on the other.
I think that is a worthwhile test and agree banning things like spam or extremely grotesque content means you aren't a "free speech absolutist." However, banning some speech (such as those mentioned above) wouldn't necessarily put him in the camp of only being interested in his own free speech.
This gets at a core issue for me: how do our national governments govern online spaces that transcend national boundaries?
From what I understand, a large reason the US switched from the Articles of Confederation to the US Constitution was to help resolve inter-state conflict. I wonder if we can resolve inter-national conflict with our current confederation of nations.
> The Articles of Confederation and Perpetual Union was an agreement among the 13 original states of the United States of America that served as its first frame of government. It was approved after much debate (between July 1776 and November 1777) by the Second Continental Congress on November 15, 1777, and sent to the states for ratification. The Articles of Confederation came into force on March 1, 1781, after ratification by all the states.
I understand how you could have this confusion, but if you're going to offer a correction you should double-check yourself first. You can look it up on wikipedia to check yourself and to copy the URL to post in your comment at the same time, two birds with one stone, and you avoid the embarrassment of being wrong.
he has fired a lot of his own employees for what they said or posted online, no need to test him more.
Some people think it's fair game to retaliate gainst your own employees because there is no free speech at a company, I would counter that it's a very narrow margin for someone who declared themselve "free speech absolutist" and didn't implement it in their own kingdom.
> he has fired a lot of his own employees for what they said or posted online, no need to test him more.
Twitter is not Tesla or SpaceX neither are they considered the same (at all). To expect him to treat everything the same across the board is a disingenuou unrealistic expectation.
"Starlink has been told by some governments (not Ukraine) to block Russian news sources. We will not do so unless at gunpoint.
Sorry to be a free speech absolutist."
That's pretty hilarious, but I think saying offensive things (and offending people at their expense) to own Elon really is some derangement. I am assuming this is a joke.
I don't get why people are so worked up about this. If you see Twitter, as Elon and millions of other people do, as the "public digital town hall", it is not unreasonable to verify people's identities and let them comment whatever they want so long it is legal.
It does not mean that you or anyone have to subscribe or listen to their crap.
If you don't see it that way, do people really not understand how others see that as gatekeeping, controlling, or dangerous? What is the purpose of Twitter than to you - basically television? To tune in and tune out?
Then, open source the algorithms. Do the same people really not want to know why Twitter chose to show you X information? Wild.
It's not derangement, it's a logical method of protesting if you think that it's valid to ban tweets on subjects like qanon, flat out (dangerous) lies, and stirring up violence on Congress on private platforms
I disagree on multiple grounds. Forcing someone to have an abortion is a terrible thing to do and should never be allowed. Having an abortion is not shameful, and so my slander was aimed at Must, not his putative lovers. Second, I didn't say all of them had an abortion, so any individual lover isn't being accused of anything.
I understand you disagree with me. Call me deranged is over the top. Calling me immature and thoughtless and not even remotely creative is also a broadside that you can't possibly know. How about we talk about ideas rather than you psychoanalyzing me?
You have taken great offense that I hypothetically might say something untrue on twitter. Have you spent this much energy combating the actual harmful BS that is actually on twitter? Have you written more about my comment or about Elon Musk calling that scuba diver who helped rescue those kids a pedophile?
It's a test of the word and motivation of not just a billionaire, but one of the world's wealthiest individuals - one who has publicly insulted and offended many people already.
I think it's more deranged to see such a test as abnormal.
(Also grotesque does not necessarily mean offensive, and you can limit the scope of the content's exposure)
Yes, even offensive things. If you are a free speech absolutist, there are no boundaries.
So far you are railing on imagining the worst possible implementation of my idea. I won't speculate why you are that way.
I also think (a) nobody would notice my twitter account, (b) they'd probably block me, which would make my point, and (c) the people who did read my stream while it was active would clearly understand the context of my statements.
Think of it like The Satanic Temple. It exists not to glorify Satan but to test whether laws really are favoring some religions over others, in contradiction to the constitution.
Dude, the GP said they'd post "the most grotesque and offensive things." Please note the "AND offensive". And yet, you keep trying to deny that the GP's intent is to post offensive things?
> Right, it's not limited to being offensive, and even if it were, you can limit exposure.
What do you mean by limit exposure? How would the GP limit exposure of their grotesque and offensive tweets? And even if they did, wouldn't that defeat the purpose of their test? They are trying to increase exposure and see if Musk will limit exposure.
The GP is stating they will purposely offend people to test their suspicions of someone. They are willing to hurt (with words) innocent people to do this. You're calling this normal behavior. So if Musk takes over, it's okay to start calling black people the n word on Twitter to test Musk? I think that qualifies as "most offensive." And to call this testing behavior abnormal is deranged itself according to your words?
And some of your justifications are it's okay to do because Musk is the world's wealthiest individual and he's already offended others?
> It's a test of the word and motivation of not just a billionaire, but one of the world's wealthiest individuals - one who has publicly insulted and offended many people already.
isn't using social media anonymously a valid use case? (i.e. would you tell me your full name?)
as for open sourcing the algorithms, I consider myself extremely pro-open source (though ofc you're free to draw your own conclusions), but isn't it clear that that might simply allow spammers to game them as efficiently as possible (and to that end, isn't spam also free speech)? one idea that seems reasonable that I've heard proposed is an open marketplace of algorithms that one can choose from (open source and otherwise)
You need to have a significant following for this to have any relevance. If you have a significant following, you have a strong incentive not to post the most grotesque things.
You post things outrageous enough, believe me, a significant following will raise up around it.
I think we're all about to witness the tragedy of the commons in real time if Musk buys twitter. Because there are literally thousands of people in college towns alone all across the US who will descend on Twitter and do this. Probably millions outside of college towns who will do the same. it's too bad.
My bet is we'll end up filing this under "This is why we can't have nice things".
I think that the characterization of "free speech absolutist" is misleading and facile, and this is reinforced by the idea of testing it with "the most grotesque and offensive things". Very few people are absolutists who would favor a platform that allows everything - kiddy porn and snuff films included.
I think what Musk wants to see is the Overton Window opened up more than it is now, and that's not a bad thing.
Kiddy porn and snuff films are illegal. Musk is a self-described "free speech absolutist" in his own words so it's fair to hold him to that description, and while I do agree it's misleading, Musk is often misleading when it comes to his businesses, so I think the criticism is well earned.
No need to bother, there are plenty of people who will be doing this for you. Your contributions will be mere drops in the grotesque and offensive ocean.
Seems it would be better for Musk's stated goals to use this money to expand clean energy, SpaceX, and such things instead of buying a social media application.
Why do you think Besos bought the Washington Post for what, $200 million... right after AWS got that $600 million CIA web services contract? Notably there are no more "Top Secret America" investigations looking into how the US government feeds money to defense contractors at the WaPo.
Is Musk following in Besos steps, or will he really open source the ranking algoritm and increase the character count of posts to paragraph-scale (512-1024 characters)? Time will tell I suppose.
This is also something strange, Musk talks about opening the algorithm but hasn't, as far as I can tell, talked about opening the datasets, models, etc that the algorithm depends on which makes it a bit less useful then it could be. He knows this from his work with Tesla so the lack of clarity is strange to me.
If you can point to a single investigative journalism story / series similar in scope and detail to Top Secret America published in the WaPo since Besos acquired it, then I will recant my opinion.
At the least he is not partnering with any fringe elements, but he is very serious about it. This also means if the board says we will sell it to you for $90 bucks he may back off, as coming up with another 40 billion might be very tough even if it’s leveraged.
>what basically amounts to a logo, he could very well just make his own website
Trumps fall in mainstream impact has proved this to not be the case. It used to be we would hear something crazy from him on a daily basis. If the ex president can't make his own website and maintain relevancy, I doubt musk can either
> Musk will give users the ability to choose, modify, and control their own algorithms.
Like he does his existing customers or employees?
I can never understand how some people still have such unbridled optimism about what Elon Musk will do next, given how ample the evidence is that he won't. He has quite a track record to base predictions on.
So its $25.5 billion of debt backed by his Tesla shares and $21 billion from himself, presumably from selling Tesla shares?
I wonder how many will accept the offer - about 30% of ownership have said they're not interested at that price, if he let a few large holders stay on it could be successful - but this would be a kick in the teeth for smaller investors and his retail fans.
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[ 3.1 ms ] story [ 378 ms ] threadAnyone have a sense of what might happen?
Edit: And as best I can tell Levine has been wrong on this situation at every step…
Perhaps when it comes to the sincerity of Elon's actions, but I'm not aware of when he's been wrong when it comes to Elon's legal options.
Trust is a big part of stock value, if you don't trust the board is time to sell...
Some poison pills just give the shareholder extra shares -- it's basically a stock split except for the targeted shareholders.
In reality, this poison pill is more complicated - from Matt Levine: "The main mechanism of the pill is that if Musk or anyone else acquires more than 15% of Twitter's stock, then every other Twitter shareholder will have the right to pay $210 to acquire $420 worth of Twitter stock (at then-current market prices)."
He also points out that this is moot except in the highly unlikely event that it is triggered - in which case, someone screwed up really badly.
The offer is extended to existing shareholders.
So if you own 10 stocks you will be allowed to purchase 10 more stocks at a vastly reduced cost.
Something like that.
This way you can screw over the corporate raider without screwing over existing stock holders.
"Another, perhaps more practical provision of the pill says that the board can just exchange each right for one share of stock, for free, meaning in essence that the board can double everyone else’s number of shares of Twitter while holding Musk’s constant, without asking anyone to put in more money." (From a recent Money Stuff.)
It also gives reasons why poison pills were allowed by the Delaware Supreme Court (and not the SEC).
This seems to be the root problem, and it can happen in other scenarios when a coalition controls 51% of the shares. The law needs to protect the minority shareholders.
This poison pill “solution” is just theft.
This is effectively the same as giving away shares.
First off, even if buying the shares at the reduced rate is highly profitable, you do need the cash to buy them. With the 50% that are floating around here that's a significant amount of cash.
Furthermore, with the dilution that's happening the stock price would also drop so while you gain on the reduced shares, you loose on money on your old shares unless Elon keeps buying.
I just don't see that it's the same as giving away shares for free (which is just adding dilution without additional capital costs for the existing shareholder). Feels to me like an all parties lose situation if it's triggered.
"Another, perhaps more practical provision of the pill says that the board can just exchange each right for one share of stock, for free, meaning in essence that the board can double everyone else’s number of shares of Twitter while holding Musk’s constant, without asking anyone to put in more money." (From a recent Money Stuff.)
"Musk can launch a tender offer to buy all of Twitter's stock for $54.20 in cash. (Or, of course, some higher number.) The tender offer is a public, binding document filed with the SEC, open to all shareholders, and it will be full of disclosures about his plans and, in particular, his financing. Shareholders will be able to read it and see if he has the money. If it looks like he does, then they will be able to decide if $54.20 is a good enough price. If they think it is, they will be able to tender into his offer, submitting their shares for purchase. He won’t be able to buy them, though, because of the poison pill; the tender offer will be contingent on getting rid of the pill. But if like 90% of shareholders tender into his offer, then that is an important public-relations victory; he can go to the board and say “your shareholders want this deal, let them take it.” And then the board might agree and get rid of the pill, and then the tender offer can close and he can buy the shares."
Clearly, the cabal is not interested in losing control of the public narrative.
The issue is indeed always to determine whether a course of action is knowingly not in the interests of the shareholders.
Fiduciary duty is very much a thing. The Twitter board with such a tiny amount of equity may incur risk from "honest services fraud," if they block shareholders from recieving the material and obvious value of the offer.
https://en.wikipedia.org/wiki/Honest_services_fraud
They can’t argue that because it would be completely irrelevant to current shareholders.
They can argue that the long term value is higher than Musk's offer.
Board goes against Musk, shareholders may sleep.
Board goes against Musk and the founder, shareholders may awake.
"A debt commitment letter"
"A separate debt commitment letter"
"An equity commitment letter"
Am I understanding it correctly that effectively $0 is coming out-of-pocket for purchasing Twitter?
Why can't anyone do this? I'll promise you a bunch of debt and equity, too.
I'm taking a broad definition of "trust" that includes "we can sue you and recover the money."
By that logic though -- if you're a billionaire, could you try to buy every profitable company on borrowed money?
Eventually you'd make the money back and since you don't have to pay anything out of pocket, you effectively have $INFINITY dollars to bargain with.
He has no "infinity" of anything. It's called leverage and it probably maxes out around 60-70% of everything he owns.
Musk has 100 billion of TSLA say.
He mortgages it to buy TWTR. Now he has 100 billion of TSLA, -40 billion loan against it, and 40 billion of TWTR. He could mortgage TWTR and buy something else, but it would have to be smaller, because the banks won't loan 100% of the value of the thing.
Or he'd have to make another $40 billion and pay off the first loan to mortgage it again.
Think of it as trying to use mortgage properties in monopoly to continue buying other properties.
Unless you're on robinhood: https://www.bnnbloomberg.ca/robinhood-traders-discover-glitc...
Maybe we'll see a wallstreetbets post "Musk couldn't take TWTR private but I did via robin hood bug"
He was once talking to an ambitions entrepreneur about funding a buyout with junk, and the entrepreneur asked, "This is a lot of money. How do you know I'll replay it?"
Milkin says he replied, "Because if you miss even a single payment, I'll call your debt and take not just the company, but every single asset you own."
———
* That would be presidentially pardoned convicted felon Michael Milkin. The rules for "righting injustice through pardons" are very different for the rich than the comfortably well off, much less those living paycheque to paycheque.
Why should it stop? Do you not believe in redemption? Milken has done (and continues to do) a lot of great charity work with his fortune.
Besides, if you look at what Milken was actually convicted of, it's pretty tame, especially by today's standards. And he spent two years in prison for it. What more do you want?
So if we are saying, "Everyone convicted of a felony who serves their time and who then rehabilitates themselves should be pardoned," I'm all for it. And in my jurisdiction (Canada), people can apply for Federal pardons, and many receive them. There is a standard way to do it, a standard procedure to follow, and in theory, everyone is treated equally by the system.
The injustice comes in if there is a special fast-track for a pardon one gets by hob-nobbing with your fellow wealthy oligarchs, one of whom is elected President and gives you a personal pardon. That's a bad look that suggests that all felons are equal, but some felons are more equal than others.
Likewise, I am extremely leery of talking about "doing great charity work." Reputation laundering is my preferred term, and again this is not something available to all citizens. Nobody gives a crap if some felon donates $1,000 to a soup kitchen, but donate $1,000,000 and you get called a "philanthropist."
I'm all for charity and doing good works, but I'm not for giving philanthropists anything special in terms of justice that people who can't afford to be philanthropists get.
IMO, the answer is not to burn Milken's pardon, it's to pardon more convicted felons who do their time and then turn their backs on whatever criminal acts they used to commit.
People are afraid to expose themselves to liability for hiring a felon, even if said felony is ages ago, because if something goes wrong everyone will say "well you shouldn't have hired a felon."
I do not believe in random justice where connected people can be pardoned even if they deserve so when there are literally millions in jail who could be as deserving.
Sadly important today, pardons can be corrupt. Trump several times promised pardons for people willing to go to jail for him. And he delivered on those pardons.
So yes I believe in redemption, but not by executive decree. That belongs in a time when we had kings with real power.
Finally, the prison time is often from a plea bargain (I do not like those either but different story). So the time sentenced to does not always have a meaning.
however, I'm not confident "anyone" could secure the funding, so they can't "do this"
https://www.bloomberg.com/opinion/articles/2022-04-20/elon-c...
The long and short of it is that the people who would lend him money may not trust him due to his previous (and erratic) statements.
he has a net worth over 200B, why couldnt he raise 40B?
I feel Elon Musk could literally mint NFT of his face and sell them to raise the cash
"The rich have all of the money and pay none of the taxes. The middle class pay all of the taxes and have none of the money. The poor are there just to scare the shit out of the middle class so they keep going to those jobs."
—George Carlin, 1937-2008
UPDATE:
As some replies have pointed out mortgage interest on a primary residence is permitted in some form in six countries: The Netherlands, Switzerland, the United States, Belgium, Denmark, and Ireland. If you live in one of these six countries, my comment does not apply to you. If you live in any of the nearly 200 other countries in the world, it does.
YMMV: "Your Mortgage-interest-deductiblity May Vary."
What a strange example to pick. That's, like, THE major write-off that most people have. It just gets obfuscated by the fact that most people don't go over the standard deduction.
Up here, home mortgage interest is only deductible if the home is used to generate income, so it does not apply to people who use a home as their primary residence. But what if you have a home office? What if you use it as an AirBnB some of the time?
If you ask a tax accountant whether Canadian home mortage interest is deductible, they will answer "a definite maybe." But it's actually "no" for most people who don't structure their home ownership around qualifying for a deduction.
My mortgage interest became "worthless" for that when the standard deduction was raised. I'm still better off than before, but that particular part of the benefit is gone.
Since California by many measures is large enough to equate to a "country", It would be fair to add it to the list of places where primary residence (and a second home too) mortgage interest is largely deductible.
> The Netherlands, Switzerland, the United States, Belgium, Denmark, and Ireland allow some form of the deduction.
That's six out of roughly 195 countries in the world. Perhaps you live in one of them, but billions don't.
This is demonstrably false. But then again, you don't expect factual accuracy from a comedian.
> As some replies have pointed out mortgage interest on a primary residence is permitted in some form in six countries: The Netherlands, Switzerland, the United States, Belgium, Denmark, and Ireland.
This Wikipedia sourced list is obviously not exhaustive. And interest deduction is allowed in the US which is the relevant case here.
And China[1]. And India[2]. (Although I don't know either country's housing market and therefore don't know how to interpret upper limits).
Between the US, China and India, it seems like most people and the biggest economies do that.
[1] https://www.chinadaily.com.cn/a/201812/23/WS5c1e2dc0a3107d4c... [2] https://www.bankbazaar.com/tax/mortgage-tax.html
You can promise all you want, but you have to get the bank to be willing to pony up the money - but what you're describing can and does happen - leveraged buyouts were common in the past. https://en.wikipedia.org/wiki/Leveraged_buyout
You find a company with no debt (say, TLSA) and you believe it is undervalued, so you convince banks to loan you enough money to buy TSLA and pledge TLSA itself as the collateral. If the purchase goes through, you now own TLSA and a TLSA sized debt. If it doesn't, nothing much happens.
A cursory Wikipedia search shows the baseball team owner referenced above put up significant real estate as collateral.
I don't have a million dollars, but I can buy a million dollar house. A bank promises to lend me a million dollars contingent on buying the house and then the loan will be collateralized by the house, which I don't own yet.
I wonder what Tesla shareholders think about all this ;-)
> Tesla has a policy in place of letting directors and officers only borrow up to 25% of the value of their stock. And Elon Musk has already pledged about 88 million shares against indebtedness, according to Tesla's 2021 proxy filing. That leaves him with only another 85 million shares to raise debt with.
https://www.barrons.com/articles/tesla-ceo-elon-musk-twitter...
Any sort of hedging strategies we can expect a lot of money to flow into?
If it ends up not being profitable, the bank takes back the house (or Twitter, or more likely the TSLA stock Elon put up as collateral)
If you can buy a valuable asset for $1 and have a bank cover $9 and it yields 10% return, you're making $1 from $1 invested (minus interest) compared to someone that bought it outright (making $1 on $10 or 10% return). The bank has no upside. If you invest in something bad though or the rate is too high the math changes and you lose 100% if the asset ends up being worth <= $9. That's leverage
On a related note, I always find the loans where the borrower takes on personal liability are in a completely separate category of risk. Anytime you put yourself in a situation where you could possibly ruin your future prospects or mortgage your future labor to a financial institution is much different than your net worth (and your investors' principal) simply going to zero.
In some states, such as California, a purchase loan is non-recourse, so you could walk away (and many did in the last housing downturn) and the bank can't do anything beyond take the house.
This means if you can weather the downturn you don't get wiped out, you borrowed 80% of the house to buy, put 20% down, it went down 30%, you were underwater, but continued to make payments, and now it's up 20% above where you started.
Margin loans against stocks, etc do not have this, so if you borrowed against $1k worth of stocks you had, and they dropped in value below what the bank wants you to keep as collateral, they can force you to sell at the lower price (or produce more cash/collateral). This means that with leverage you could be right in the long term but wiped out in the short term.
You still have to pay off your debt to the lender according to the plan set out in the loan agreement, where will these come from?
You haven't crossed the finish line by securing the loan, you cross it by transferring the title to your name and repaying the loan (principal + interests) fully.
a) $21 billion of Elon's ("Reporting Person"; see item #1) own money
b) $12.5 billion in margin loans arranged by Morgan Stanley
c) $13 billion in debt from Morgan Stanley
The major feature of a margin loan versus other types of loans collateralized by assets is that the value of the underlying security (collateral) is tracked and depending on the terms of the margin loan, the lender has the right to issue a "margin call" demanding additional collateral or cash if the underlying securities have declined in value. These rules, called "house requirements," vary from lender to lender.
You can get approved for a margin account at TD Ameritrade right now, and then later decide to margin some shares for whatever reason. The bank doesn't need to check your collateral because it knows how much it is worth at any given moment when the market is open.
Mortgage loans are not nearly as formalized, and the bank will send out an appraiser to verify that the property is worth an amount that they're willing to loan against.
And once you get past that, it becomes very hand-wavy; banks making loans to governments, non-profits, private companies, etc will all have their internal departments that make decisions about how much the risk is and what premium they'd need to charge.
If you're MS, why would you want to treat stock as "normal" collateral instead of using a margin loan? Is that Elon only feels comfortable using so much of his stock for a margin loan, and wants to use the rest as "normal" collateral (but is then getting less favorable terms for it)?
It's also possible that Elon is getting a lower rate for the non-margin loan, but at a much worse multiple (putting up far more shares as collateral).
But that's all making stuff up.
Musk is putting up some of his Tesla stock as collateral on the loans. The effect of this is pretty similar to if Musk had sold his Tesla stock and used the money to buy Twitter, but avoids some of the tax and regulatory consequences of doing that.
Most of the ultra-wealthy live on debt. Here's the basic scheme:
- Let's say I own $10B in startup.com stock, but haven't sold it. My income tax burden is $0.
- If I sell the stock, and taxes are 40% in my country, I get $6B, and the government gets $4B.
- If I keep the stock, and borrow against it, I pay no taxes, but I do pay finance fees (e.g. interest). The finance fees work out to less than taxes.
The trick is to never realize gains or income. Debt lets you do that.
One more trick is that a lot of purchases are "investments." If I buy a mansion, yacht, and Picasso on debt I can use them. When I'm bored of them, I sell them, and pay off that debt. I've probably made money on the mansion and Picasso, and lost money on the yacht.
I've paid a little bit of interest and a little bit of tax, but much less than I would have otherwise.
Another is that, should the need arise, stock can be sold at the drop of a hat. It is liquid and fungible so a stock-collateralized loan is seen by banks to be a very safe investment. Houses are not.
In this case explicitly I suspect it has more to do with the uncertainty of the deal going through AND not wanting to incur the tax penalty ALONG with the share penalty (liquidating $30 billion in TSLA would affect its price for sure). If you sold the shares to raise the cash, paid the tax, and then the deal didn't go through and bought the shares back, you'd be out the tax (with a stepped-up cost basis to be sure).
I'm not following the whole lifecycle. You borrow against your stock, spend that money, and then repay the loan using stock? Without having technically sold the stock?
I guess the risk here would be that the stock goes to 0, you get margin called AND you are now on the hook to pay taxes.
Let's say you have 10 million in stock.
A typical margin account allows you to borrow up to, say, 40% of that. That's 4 million dollars.
Let's say you borrow $1 million and spend it. Currently interest rate on a margin loan is under %2. So every year the amount you need to repay grows by $20k (2% of $1 million, for simplicity I don't count compounding).
So in 10 years that would be $1.2 million to repay. But you're authorized for $4 million.
If in those 10 years the value of stock doubles to $20 million, then you're authorized to borrow $8 million - the amount you can borrow grows faster than the amount you need to repay.
To be clear: eventually you have to repay it but in the corner case it could be done when you die.
There are of course caveats. If interest rate increases dramatically, then the amount to repay will grow much faster etc. but you can see how e.g. if you have $10 million then you could borrow and spend $100k to live a good life and never have to sell your stock to fund your life (especially if stocks keep going up faster than interest rate, inflation and your spending habits)
I know Ken Lay did that exact chain of events a lot to cash money out of Enron before it's bankruptcy.
Aligned self interest is the engine of capitalism.
You don't care if society would be better of if you donate your time and skill to company X for free. You care that company Y will pay your for your time and skill and that's why you work company Y.
The good of society doesn't enter your calculus. Only the good of throwawaycities
Similarly the banks don't care what is optimal way to allocate capital for the good of society (apparently as decided by you).
They care about their self interest. Their business is providing loans so they provide loans to people most likely to repay those loans.
From the perspective of the bank, margin loans are the safest loans they can give because the collateral is fully liquid and under the control of the bank i.e. the moment the borrower crosses margin loan threshold, he gets margin call and the bank sells his stock to ensure the loan gets repaid.
Study the wildly successful economies of communist countries to see what happens when people think they know better that free market what should or should not be allowed in the economy.
So far good intentions have vastly inferior economical results than lightly regulated free market where, for example, participants decide what kind of loans they want to make.
Thank you.
As a preliminary matter, as investment vehicles publicly traded stock is a liquid asset, whereas real estate is an illiquid asset. Generally one invests in liquid investments so that they can be readily converted into cash when needed.
From the tax perspective a building/building owner would at all times be subject to continue paying property taxes. If there were some equivalent wealth tax for stock holders then at least society wouldn’t lose out entirely on this kind of tax avoidance scheme designed for the rich, but I’d still probably prefer these billions in bank loans go to qualified home buyers before lending it to the world’s richest man to circumvent a taxable event.
It could change rapidly and people can get wiped out quite quickly when it does.
On the flip side, selling the assets would have no strings attached to the cash.
Further, it is definitely not guaranteed as you assert.
So if you don't sell the stock and thus have no applicable capital gains tax, then you can be loaned NaN dollars?
One of the main reasons is that today's cash is in essence a rave-club bracelet - you need it for every day transacitons but as a store of value it is useless to harmful. The whole idea of today's currencies is for the financially illiterate people to get robbed of their savings. You don't become that wealthy by being that stupid.
Edit: I used billion instead of trillion, apologies
No it isn’t, the financially illiterate don’t tend to have much savings anyway. The point of controlled inflation is to prevent the financially literate from hoarding cash as an appreciating asset and provide tooling to alleviate economic crisis. Considering your quote I’d question just how financially literate you yourself is.
Hint: It doesn't - you just stated a completely separate fact as if it is logically incompatible with the original argument.
Well, nobody contradicted that statement, as that is generally accepted. The contradicted statement is "The whole idea of today's currencies is for the financially illiterate people to get robbed of their savings.", which as (i parse it) is a statement about purpose of such properties of today currencies, so it is contradicted by a different statement about purpose of these properties: "The point of controlled inflation is to prevent the financially literate from hoarding cash as ..."
It's supposed to be safe but if it has zero risk, then it has zero return.
Inflation is a bit like maintaining the pressure in the pipe of the flow of money.
Inflation also has the effect of discounting debt, which means it is good for borrowers, not lenders. Most people are borrowers, in terms of things like house mortgages and other debts. That's a good thing, but you also don't want wages to have to grow too fast with prices.
Your rhetoric is using lies to pull at peoples emotions, it’s the same thing all right-leaning libertarians spout. It has and will continue to be bullshit.
1. https://news.gallup.com/poll/266807/percentage-americans-own...
Watch how fast it falls when people realize how absurd it is for Tesla to be the sixth largest company in the world by market cap, with a trillion dollar valuation. The meme voting era of stocks is coming to a close. The weighing portion of the cycle is coming and it will not be kind.
The vast majority of money is "imaginary" in the sense that it's just liabilities on some bank's balance sheet, AKA bank deposits.
> Why can't anyone do this? I'll promise you a bunch of debt and equity, too.
Anyone can do this. Nothing is stopping you from writing me a note for $1,000,000 and me writing you a note for $1,000,000. This leaves us both a million richer in assets and a million poorer in liabilities. At that point even hinkier stuff can happen like me using your note as collateral on a loan to further expand my balance sheet. The tricky part is getting third parties to accept our IOUs. US Banks have no such trouble thanks to their membership in the Federal Reserve system. This is one major reason why a banking license is such a huge deal.
On top of that there will probably be “imaginary money” where a bank will give him money to buy Twitter with Twitter as collateral, but not the whole thing, just part. I.e. loans against his personal capital will provide a kind of down payment for loans against the value of Twitter.
In this scale it’s called leverage, banks loaning you a multiple of assets you’re willing to risk.
It is quite common for people with extreme net worth to take loans out against assets instead of selling them.
Especially when selling those assets would require paying capital gains taxes.
Reed Hastings would currently being losing a lot under this scheme.
But I think now I've been able to work it out. There's actually two different types of loans but we treat them equally. The first is the nice type, the 'I built a factory, used that factory to pay back the loan with interest', that loan is a positive sum loan, the company wins, the bank wins, and the community wins. The second are loans for land, loans for stock, and other similar loans - these are zero-sum loans. The company can win, the bank can win, but someone is losing, and as is the community.
And so the real problem with this if you track how the money flows - a possible scenario is that a company might take out a bond, use the money for that bond to buy its own stock. The people who sold that stock and got that money might then go out and buy a house, the people who sold that house - you betcha, put that stock into an index fund, which includes a larger and larger share of the companies buying their own shares. Now that their share price is raised, they have more equity, and can once again take out another bond to do it again. It's a positive feedback loop. Each cycle is inflating the bubble. Valuations end up not being based on actual productivity, but on assumptions as to how money will flow through the markets.
We're at a stage now that the stock market flows of funds is only positive because of the stock buybacks. Companies that aren't buying back their stocks are going out of business. The Russel 5000 is getting punished despite the s&p recovering. We're at a stage now where north of 40% of all money is being held behind passive flows. We're now seeing the consequences of that with things like Netflix - when the stock does drop, it drops quickly and massively. Average volatility might be down considerably, but peak volatility is up massively.
Why is that?
A proposal to correct this is to require that when you use an asset as collateral for a loan you have to reassess its value and pay capital gains taxes on the increased basis between when you acquired it and took out the loan.
Basically there needs to be friction and taxation with equity transactions like these loans.
If the interest paid is tax deductible, then the selling of the stock won't result in a tax needing to be paid.
Once you upgrade your brokerage account to include margin loans you're allowed to borrow up to, say, 40% of the value of your stock (I simplify, the exact rate is dynamic).
Say you have $1 million in stock.
You're allowed to borrow up to $400k. You have a line of credit of $400k.
Say you borrow $100k. And in this context "borrowing" is simply transferring money from your brokerage account to your bank account. There's no additional paperwork as in most loans.
Let's say over 5 years you accumulate $10k interest (interest rates are really low, can be below 2% right now).
You don't have to "repay" that $10k or the principal. You now owe $110k which is well below $400k limit.
It's a line of credit, you can still borrow additional $290k.
In the limit that line of credit would only have to be settled when you die.
We know that no companies pay tax (ignore the billions paid in tax), and no rich people pay tax (ignore the billions paid in tax), so therefor all taxes must be paid by me personally.
Or so the arguments go.
2. elon uses this money to buy twitter
4. Interest is cheaper than tax Elon would pay if he sold those shares instead of borrowing against them.
By the time he has to pay it he'll also have to pay tax on the accumulated interest.
He'll pay the interest AND the tax on the principal AND the interest.
Everyone can do this. Just call your bank and get commitment from them to issue you a $40B loan! Those "commitment letters" are contracts. It's a known bank with known assets saying it's promised to issue a loan in the stated amount for the stated purpose.
It's the same thing that happens when you make an offer on a house. You don't generally come to them with the money "out of pocket", you show them documentation from your bank that details your mortgage contract. But the mortgage doesn't actually exist yet because you don't own the home. It will execute at the same time as the purchase, generally through some kind of escrow process.
Things aren't any different, fundamentally, even five orders of magnitudes higher.
But if you don’t have sufficient collateral your broker will just tell you to get fucked.
Old thread could not be replied to, probably because too many days past.
If you are stock-rich and you can buy stuff on the collateral for that: normal people can't really do that. Ordinary people have a much harder time buying more stuff than they have the cash for. Or at least on worse terms when they do take out a loan.
Being rich is cheaper than being poor. Is it really so awful to change that?
I imagine there’s a reason people feel more comfortable lending to Elon than to people with a smaller amount of assets, and that it’s not “lol fuck poor people”.
High level, it closes a financial engineering loophole (buy, borrow, die [1]). The taxable event is when you get liquid, and a loan is liquidity. The tax code requires a patch, that’s all.
[1] https://youtu.be/8pBPZMUcsh0
I agree buy, borrow, die is a problem but the “weird” feature of tax law that makes that possible is the step up in basis. (Getting rid of that has its own challenges I’m sure.)
My issue with the whole "Elon has to pay taxes" thing is that there are loads of people (fans?) fighting over why he shouldn't have to. It's the richest dude in the world, he really doesn't need defending for everyday people.
I also like the cool stuff he does, don't like the non-cool stuff he does, as I do with a lot of people really
When those bits of stock bits are then transferred to ordinary people, they would be entitled to a bit of the dividends of eventually all companies.
Not thought this all the way through and I'm very much not an economist, so there are lots of impracticalities.
In a way, it's the opposite of 'cease the means of production': distribute the 'means' of capitalism.
They do it with homes all of the time, what are you talking about?
https://en.wikipedia.org/wiki/Iron_law_of_oligarchy
Of course, this tax increase could be offset by also allowing unrealized losses to act as a tax deduction.
Should the 1st tweet NFT be taxed at its last sale price? The recent failed bid price?
Did you only read the first line of my comment? I specifically said that unrealized losses should also be a tax deduction.
Nobody disputes that it’s a nice idea to make life easier for the poor. The mechanics of how you actually do it are the hard part.
The funny thing is that hoards of people will come to defend a rich dude who really doesn't need it while poor people constantly get fucked over and could use a little bit of defending.
One improvement could be to just have a higher tax bracket (like the US had decades ago) and build more stuff for the common good. What doesn't help is that from my side of the big pond, the US sounds like a third world country if you are below middle-class. Can't judge if that is true for myself, but hey.
I don’t know if that’s a fair characterization generally, but it’s not the case with me and it’s actually a frustration/lament I have when discussing this topic.
I’m not particularly a fan of Musk or any of the current crop of billionaires or their companies. But I care about the principles and the practicalities.
There’s this tendency to say “There are terrible problems in the world. We need to fix them with money. Where can we get money from? Billionaires!”
But when you do the maths, i.e., total up all the wealth that billionaires have and divide it by all the people/causes in the world who “need more money”, you end up with basically nothing.
And that’s before you consider what the billionaires’ companies are doing - which in many cases involves things like making phones/goods/software/knowledge cheaper/free, which benefits everyone including poor people, making electric cars affordable and ubiquitous, which will benefit all humanity and the environment long into the future if it leads to climate change abatement, and creating millions of jobs including many for low-skilled people, and also that these companies do generate vast amounts of tax in the form of sales taxes, income/payroll taxes, and capital gains taxes when shareholders liquidate their shares, and you find that it’s not necessarily true that taking money away from these companies/owners would be net beneficial for society anyway; it could easily make the problems worse.
And now for the obligatory disclaimer - yes I know there are plenty of valid concerns about the merits and ethics of what companies do, and worker pay/conditions and externalities and other issues; but these are matters for regulators and consumers to consider and are separate from the principle of how billionaires should be taxed or how beneficial it would be for billionaires to be taxed more.
I’m also not in the U.S., and I see plenty of dysfunction in that country as well as many others - though we also see many people, including some of the world’s poorest people desperate to move there for a better life.
For what it’s worth I devote a large number of my brain cycles to contemplating how life could be better for the worst-off; I’ve spent much of my adult life dealing with health challenges that caused great difficulty in achieving steady employment and financial security, which I’ve now largely overcome, and do I think a lot about how the principles that helped me could be applied more broadly, including for people far worse off that I ever was. At this stage I find myself thinking there are certain things that could work, but a lot of it is just really really hard.
Suppose there is a company with 200 shares, half of which you own. The last trade price was $1 per share, meaning you have $100. But you can't necessarily dump your shares for $100 because the $1 was based off the last trade. So on the margin you can sell a share for $1, but you won't necessarily be able to sell all 100 shares for $100.
Imagine you own a home that went from being worth $1 million to $2 million. Did you MAKE $1 million? Should you pay taxes on that delta as soon as the home's value became $2 million? It makes more sense to wait until you sell it and pay taxes on the net you made. Otherwise it's more complicated and you could end up paying taxes on $1 million when you end up selling it for a lot less. You could have a tax credit I guess but you're unlikely to have the IRS cut you a check for the money you paid that turned out to never be actualized.
Wealth is closely correlated enough to power that it's worth encouraging people to turn those on-paper gains into liquid forms - even if only to avoid "losing" if the stock then slides back from 100 -> 50. Especially since he can leverage it to spend in other ways!
Most proposals to tax giant piles of wealth in the market look nothing like what you've described. A wealth tax is more like: pay 1% per year on the current market value of your portfolio, if that amount is over $100 million.
Money attracts money. Wealth taxes are an attempt for reverse that effect and force some of that money to trickle down.
That said, any attempt to implement a wealth tax will probably be struck down as unconstitutional because moneyed interests want it to be declared so.
Wealth tax is different and I think it makes more sense compared to unrealized capital gains. But its not true no one is proposing an unrealized capital gains tax
> Biden’s fiscal 2023 budget request released Monday would impose a 20% minimum tax on the unrealized capital gains for households worth at least $100 million.
https://www.bloomberg.com/news/articles/2022-03-28/manchin-p...
To me, taxing wealth and only wealth seems like the most straightforward route to a truly progressive tax system. That’s not to say it’s simple or straightforward in an absolute sense, but neither is taxing income, is it?
At a high level, taxing wealth instead of income or transactions ensures that rich people are paying their share, while maximizing upward mobility so that people can become rich more easily. Think about how much easier it would be to become wealthy without income taxes, sales taxes, property taxes, taxes on corporate profits, etc. etc.
This is what we should optimize for imho: making it as easy as possible to become wealthy. Sure, there details to figure out, as with any approach, and maybe some rich people will face some difficult choices or be forced to sell assets; I’m ok with that and it seems well worth the tradeoff.
Pair it with a hefty pigeuvian carbon tax and you could probably do away with income taxes entirely.
(A nondistortionary VAT to replace sales taxes and corporate income taxes would be nice as well.)
https://en.wikipedia.org/wiki/Georgism
What you are talking about is reputation and it will always be a part of the dynamic. It happens at the poverty level too. In any poor community there are people you trust and people you don't.
people are conflating Musk's personal balance sheet with Twitter's. it's not clear to me whether any debt would be recourse to Musk—but in all likelihood, it wouldn't be. "recourse" is a term used to describe what collateralizes the loan. if the loan is recourse to Musk, he'll have to cover the cost if Twitter isn't spitting off enough cash flow to service the debt. if it's non-recourse, then the only collateral available to the creditors is Twitter and its assets (potentially subject to certain carve-outs). most rich people don't do recourse transactions as a risk mitigation measure. however, non-recourse debt is costlier because the universe of collateral available to the lender is slimmer
why can't anyone do this? because Musk has been deemed a better sponsor / steward of capital than your average joe
1- Saudi company borrows $7B from Turkish banks to buy 55% of Turkey's largest internet and telephone provider.
2- Drive the provider into $4B debt (it was debt free when bought)
3- Pay the new holding company $9B in dividends
4- Don't pay the initial money borrowed to purchase the company.
5- Somehow borrow another $4B from Turkish banks to pay the new debt, and pocket that money as well.
6- Government creates a consortium of banks to bail the provider because its too big to fail.
Outcome: Provider is in debt, banks lost all the money, banks needs to spend unknown amount to get the provider back into a functioning state.
Those are legit. Banks don't sign notes without some intent. They can back out, but they are not meaningless.
It's important so that the current shareholders and the board know that Musk's bid is legitimate, and not something he's just making up.
In order for the banks and others to back him in this bid, he will have had to provide with with a lot of info.
This could be a big PR move, but Musk will have had to hire very expensive bankers to actually go through this as if it were a real thing.
"Why can't you do this?"
Because Goldman and other Private Equity firms won't back you (well, assuming they won't). And they won't give you a letter to the board of Twitter saying they will.
If it was Buffet then it would be 'almost a foregone conclusion'.
Not with musk.
Musk has gained $10-30M in free publicity thus far. He's made the front pages of the news everywhere in the world.
He can hardly lose here.
And I'm not a Musk fanboy or anything.
In this case Musk is buying using TSLA (and SpaceX?) shares as collateral, not having TSLA buy.
Then you get a form of a financial standoff where each party checks that they're getting what they want, and you escrow/sign everything.
The dude does own 200B + worth of publicly traded equities.
> Most years they lose money
Absolutely grotesque.
https://www.alphaquery.com/stock/TWTR/earnings-history
whenever something like this happens you have to ask yourself why now and what’s in it for Musk (let’s be real: nobody spends this much without an agenda). My fear is that Musk’s endgame is to reinstate a specific account that was banned after some specific events around a specific election. If this is what’s happening he can frack off.
ask yourself: why were those accounts banned?
what’s the ideology that’s being “suppressed”?
+5 for mental gymnastics
Money. If your advertisers flee, meeting payroll gets exponentially more difficult.
Twitter is/was a ban happy shithole.
It is absolutely trivial to get banned on Twitter. My favorite example is someone I know getting banned for posting pitbull fatality statistics. They were banned for “racism”. Against dogs.
Twitter needs a top to bottom purge.
The replies were full of people saying things like "this is exactly like how white people post statistics to say black people commit more crime! Report this person for racism!"
It was charts of dog fatalities per year broken down by breed.
Bringing back the accounts that spew stuff which pushes advertisers away will not make Twitter more financially successful than they are today.
Hell, maybe that's his intent. What if it turns out that rather than being a free speech absolutist, he thinks social media is destroying the world and the best way to solve that is to crush it out of existence, starting with Twitter.
That wouldn't work, of course, but it would be entertaining.
what experience does musk have to make twitter better and why is this expensive unique so that twitter itself cannot make the changes?
twitter back in the day was awesome until they turned hostile to the 3rd party developers.
Elon musk - smart and crazy
This is all you or Morgan Stanley need to know, besides Elon claiming he doesn't care if the venture makes money.
For me, this is the thing that bothers me the most: if he thinks it is the closest we have to a public square, why does he think that the richest private individual in the world should decide how it is run?
It seems he's saying "the oligarchy is not running this well so we should make it a dictatorship, not a democracy," which is in his right to say or believe, I just wonder how much we have lost faith in democracy if we agree.
Isn't the fact that twitter is NOT part of our democracy the crying call of the left? "It's not censorship because it's a private company and they can do what they want (as long as they only censor anything I don't agree with)!"
Oh NO, Elon might make twitter a free speech platform where differing views can be expressed!
I don't claim that the current oligarchy is doing it well, I don't claim that a Musk monarchy would not do it better, and I don't claim that even a democratic structure would do it well.
I was merely trying to point out the different governance structures and question our collective faith in democratic structures.
Allow me to steelman this position a bit for you though. I think the root, gut feel that many Americans have is that they are sick of being pushed around and mismanaged by ineffective, small-minded, out-of-touch bureaucrats. This affliction seems to affect every aspect of our lives. If you have a problem with Comcast, you have to go through a robo call center that makes it physically impossible to actually talk to the people that are authoring your pain. You can't get mad at the person on the phone, because they can rightly say that it's not their fault your bill doubled. And yet, what's left unsaid is that things are specifically arranged this way on purpose.
The social architecture of our society is so "democratic" that there is no responsibility, no human spirit, no .. humanity in the way we deal with things. You can bet that Twitters internals follow this rule, and I'm sure when they talk about the failings they've had as a company, the blame is blandly smeared around. As a democracy fades into a bureaucracy, politics and corporate culture just descends into tee-totalling, cover-your-ass box checking that you're doing everything "by the book". It is the soulless HR department in place of actual values and kinship.
So you might see this newfound lack of faith in democratic structures less as a vote against democracy and more like a vote _for_ humanity. If you put Musk in charge, one thing you know is that there is a dude - a fully human dude, foibles and negative qualities included - who is running things. Looked at from this perspective, you can almost even get your head around what it would be like voting for trump. Okay, maybe not, but maybe you can get a few steps closer.
I appreciate you taking it further and I think I can relate. The frustration with things being too ineffective and the drive to have a human responsible for something. I believe monarchies can be highly efficient, as many other top-down hierarchies. I think the challenge lies in that while one can efficiently help, one can also efficiently harm.
So, yeah, a part of me loves that a human could come in and make it more structured, more "the buck stops here" (ironically from the US President, the leader of a democratic republic), and I also worry about what happens when that person goes in a direction we don't like or a direction that harms or kills us. May seem like an exaggeration for a social media company, however, many genocides have been fueled by language through mass media.
> The social architecture of our society is so "democratic" that there is no responsibility, no human spirit, no .. humanity in the way we deal with things.
This is why I actually believe more in the idea of representative democracy than direct democracy. Yes, not as much responsibility as a single owner, but allocated responsibility to a few while being owned by many.
Lol, if you think the left is genuinely defending the rights of private corporations, I don't think you know much about the left...
Probably the defining ideological organizing principle of the left is social equality, which is the exact opposite organizing principle of corporations, that being profit over all. Corporations are organized as dictatorships; leftists prefer them to be organized as democracies of, by, and for workers. Corporations censor the free speech of their workers, restricting what they say and how they can organize themselves; leftists want to take away the power corporations have to do this.
Insofar you are hearing anyone you perceive to be on the left supporting the rights of corporations like twitter to do what they want, perhaps consider they are throwing the argument in the face of corporate friendly Democrats and Republicans who have created this situation themselves by granting corporations such power over our lives, and are now only complaining when it hurts them politically.
I'm waiting for the day when that's tackled honestly by those groups, because right now it seems to me that politicians want to force specific companies like Twitter to stop hurting them politically while still maintaining corporate power and the inflow of corporate cash into their reelection campaigns. Thy want to call Twitter a "town square" and a "public good", and carve out exceptions that would specifically limit its power while still maintaining the power of the corporations they prefer to wield it. Meanwhile they will argue vociferously that healthcare, education, housing, even roads and broadband aren't public goods and must be kept privatized or turned into private ventures.
Under our current system (not created by leftists), corporations are people too and have more rights and power than natural humans. Leftists will stop pointing out that corporations have this power as soon everyone else stops arguing that corporations should have this power.
This will elevate the level of discussion to be more like the highly praised philosophy forum known as 4chan.
I'm sure all the users will appreciate it and not leave immediately.
But it's not good enough, we must be forced to listen to hear how the COVID vaccine is a mind control weapon and why we must fight (((globalists))).
Good. Time to break it up and enforce fair rules.
the reason twitter works and is successful is that you have people from all backgrounds and walks of life. people that get banned don't follow the rules that Twitter has (if the rules are fair, etc, is another discussion, but everyone has to follow the rules)
Don't you recognize that this is exactly what happens?
They do end up going to their own corners of the web, and idealogical-activists refuse to leave them alone and try and shut them down wherever they go. Look at how many times Gab, Parler, and other more free speech sites have been shut down.
Given Elon's predilection for trolling it's odd he doesn't realize those people who are banned don't want to build anything, they just want to watch the world burn.
it's in the direction of "I don't want Musk to mess with Twitter". I personally cannot do anything about it but watch and voice concern, but if enough people see the concern I am voicing maybe this will lead to a better outcome. who knows?
1. Twitter is totally open free speech 2. This scares people away and user counts drop 3. Twitter censors and users come back
But this didn't happen. Twitter and other, at the time, free speech platforms like Reddit were experiencing rapid user growth throughout their free speech phases. The "this will scare away users" justification for censorship is used entirely as an ex post facto justification.
There's a reason why none of the other purported full free speech platforms ever taking off and it's because they end up so odious that advertisers never go near them and the userbase stalls out. Personally I think most of the people that believe full freedom of speech is possible have never been a moderator of even a small social media platform. If you have two users and one of them is harassing, stalking etc another user you eventually have to make a decision which of the two you want to keep around, and it inevitably involves you censoring one of them.
It's not hard to defeat bad ideas with good ideas. Or you can just ignore it by turning off the channel. That's always an option.
That's a load of crap. You cannot debate with conspiracy theorists. Debates only work when both sides are acting in good faith.
we don’t have unlimited time an unlimited attention spans. we also deal with uneducated, easily manipulated people that will just discard anything that does not match their world view and just amplify the bs.
Sending Flat Earthers off to their own dark corner is how they become entrenched. Leave them in the public square, in broad daylight, so they are exposed to evidence to the contrary. That's how you defeat bad ideas over time.
We didn't need to censor anyone to get here.
On longer timescales, the truth wins, because it is real, and everything else is not. False beliefs are persistent but simply can't compete with reality.
a lot of people, on the internet, are not open to this and will chose the bs over any fact, argument, reason.
I'll pass. And I'm sure many others will too.
how many times would you try to debate that person before deciding it’s a waste if time?
Free speech is measured by the tolerance for speech that you hate.
Of course, he may just do the opposite, and start banning people on the left. That would align more closely with how he runs the companies he is currently in control of.
Without an engagement-maximizing algorithm that promotes the most divisive content, those accounts would just be preaching to their own choirs. Meanwhile other people could pop in and see just how unhinged and ridiculous they are.
Maximizing engagement means maximizing dishonest trolling, hate, fear, controversy for the sake of controversy, and catchy tabloid bullshit. The most engaging content is basically an adversarial attack on higher human cognition. It typically works by bypassing the rational mind and shooting for the amygdala.
Make it a simple timeline again. Nix recommendations in favor of search. Make it just a forum, not an inherently biased Skinner box that sucks out peoples' brains.
I'd support that regardless of who he lets back on the platform, because algorithmic social media is the real problem. Algorithmic social media is what got Donald Trump into the presidency, among many other things.
why spend time actually educating people and giving them the tool of critical thinking when you can create a cesspool that enables and amplifies xenophobia, racism, sexism, you name it.
why call out certain behaviors that are horrendous when you can normalize them and pretend this is part of the normal public forum?
Person A tells you about a new discovery at NASA. Person B tells you the Earth is flat and bombards you with "irrefutable" proof. Which maximizes engagement?
I really do think engagement maximizing algorithms explain much (but not all) of our collective descent into insanity since about 2010-2012 when they became popular.
Why would he pay 50 billion for that? What does he gain from it? Goodwill? Leverage on Trump in case the latter becomes President again?
the gov already pumped billions of dollars in tesla and space x through different programs. if that pumping increases that would be great, right?
https://www.youtube.com/watch?v=vzY_jIJaZwk
Hard to really know the facts, but things may not be as they appear. In this case however, he has filed the SEC docs to verify that funding is secured.
https://www.bloomberg.com/opinion/articles/2022-04-20/elon-c...
You KNOW Musk has no intention on converting unvested RSUs to cash. He'll either get rid of them completely while giving everyone a 10% raise (common Twitter TC is 50% cash 50% RSU) or keep everyones cash the same, and tell them their RSUs are now amazing options that will be worth soooo much when Twitter gets relisted in the future
Is that possible? I guess it is but wow, I would be beyond livid if my compensation changed due to this.
But the scenario that you KNOW is going to happen doesn't seem likely.
I guess I can only speak for myself at Google which has a similar high percentage of pay as RSUs, but if they suddenly took away everyone's stock grants, nearly everyone would quit.
More often these stock options for non-publicly traded companies are not liquid until they IPO. Which a startup engineer at SpaceX completely expects
But the Twitter employees didn't join a startup, and have compared their TC to other liquid comps offered to them. Their leases and mortgages would be based on their liquid comp, which could be cut in half overnight until the next IPO
It sucks and I wouldn't wish it on my worse enemy. It does make sense though since the mission and culture will be night and day different and would never mesh.
It's also very likely that if Musk takes TWTR private he then privately sells portions of it to people who would like to be in on it with him. SpaceX is private, for example.
The key is that TSLA is not buying TWTR (which stranger things have happened), it's Musk.
Again, correct me if I'm wrong, but it sounds like he's financing this prospective purchase of Twitter with loans that are backed in no small part by his stored equity in Tesla. He might not be "giving up" shares, but he's effectively introduced an interested party with the ability to seize those shares to recover any losses.
That's the part that would concern me as a Tesla shareholder.
https://twitter.com/pacday/status/985314558775410688/photo/1
I’m joking, but I’m kind of not… We will see who is actually behind the package, but MUFG and friends have a habit of financing foreigners’ adventures while keeping Japanese companies under-capitalized and starving. (For those not aware, MUFG owns a large part of Morgan Stanley, hence the photo above.)
I know inflation is high but...
But if Musk is successful taking over twitter, my intent is to get a twitter account and start posting the most grotesque and offensive things to see if Musk really is a free speech absolutist. My suspicion is that he is mostly interested in his free speech, not mine.
"Elon Musk says Tesla hopes to produce a robotaxi with no steering wheel or pedals in 2024"
https://www.businessinsider.com/elon-musk-tesla-build-robota...
I find the medium to not lead to productive dialog. The only interesting posts I've read are ones where someone essentially ignores the format and writes a long form comment over ten serial tweets. Limiting people to 140 characters (or 2x that now) leads to people spitting out punchy comments that lack any nuance. Rather than a dialog you get either echo chamber if the participants are in agreement, or if the participants are in opposition, a series of tweets attempting to land a body blow on the other.
From what I understand, a large reason the US switched from the Articles of Confederation to the US Constitution was to help resolve inter-state conflict. I wonder if we can resolve inter-national conflict with our current confederation of nations.
AKA “The South” in the US civil war.
Edit: Yup, as pointed out by replies, I got my documents backwards. Sorry!
> The Articles of Confederation and Perpetual Union was an agreement among the 13 original states of the United States of America that served as its first frame of government. It was approved after much debate (between July 1776 and November 1777) by the Second Continental Congress on November 15, 1777, and sent to the states for ratification. The Articles of Confederation came into force on March 1, 1781, after ratification by all the states.
https://en.m.wikipedia.org/wiki/Articles_of_Confederation
Edit: I think you're thinking of the Constitution of the Confederate States: https://en.m.wikipedia.org/wiki/Constitution_of_the_Confeder...
Some people think it's fair game to retaliate gainst your own employees because there is no free speech at a company, I would counter that it's a very narrow margin for someone who declared themselve "free speech absolutist" and didn't implement it in their own kingdom.
Twitter is not Tesla or SpaceX neither are they considered the same (at all). To expect him to treat everything the same across the board is a disingenuou unrealistic expectation.
https://twitter.com/search?lang=en&q=absolutist%20(from%3Ael...
I know I can read minds.
I don't get why people are so worked up about this. If you see Twitter, as Elon and millions of other people do, as the "public digital town hall", it is not unreasonable to verify people's identities and let them comment whatever they want so long it is legal.
It does not mean that you or anyone have to subscribe or listen to their crap.
If you don't see it that way, do people really not understand how others see that as gatekeeping, controlling, or dangerous? What is the purpose of Twitter than to you - basically television? To tune in and tune out?
Then, open source the algorithms. Do the same people really not want to know why Twitter chose to show you X information? Wild.
Protesting a cause at an innocent persons expense is immature.
It also can escalate into real violence.
Here are some sample tweets I might want to post.
"I'm not saying Elon has killed anyone, but he owns a lot of property where bodies could be buried. Why aren't the authorities looking into this?"
"Fact: Tesla cars are killing more people than any other cause." Yes, it it is patently false, and that is the point.
"People are saying that Elon is forcing his numerous lovers to get abortions. Does anyone know if this is true?" Hey, I'm just asking questions.
I believe twitter accounts allow posting a very short description. I'd probably put something like "Testing the limits of twitter's free speech."
> People are saying that Elon is forcing his numerous lovers to get abortions.
Yes, this is harmful to Elon’s “lovers” and at their expense (not yours, not his).
Yes, this is deranged.
Yes, people can support your right to say this while thinking you are really immature, thoughtless, and not even remotely creative.
I understand you disagree with me. Call me deranged is over the top. Calling me immature and thoughtless and not even remotely creative is also a broadside that you can't possibly know. How about we talk about ideas rather than you psychoanalyzing me?
You have taken great offense that I hypothetically might say something untrue on twitter. Have you spent this much energy combating the actual harmful BS that is actually on twitter? Have you written more about my comment or about Elon Musk calling that scuba diver who helped rescue those kids a pedophile?
Although groups like qanon tend to sway naive users to extremism, it would be unfair to silence different thoughts just because it "may" lead to that.
Fight bad ideas with better ones.
I think it's more deranged to see such a test as abnormal.
(Also grotesque does not necessarily mean offensive, and you can limit the scope of the content's exposure)
> (Also grotesque does not necessarily mean offensive, and you can limit the scope of the content's exposure)
OP comment:
> start posting the most grotesque and offensive things
Also, testing if a billionaire (who has offended many people on Twitter) is lying is not deranged behavior, which is the point you keep avoiding.
So far you are railing on imagining the worst possible implementation of my idea. I won't speculate why you are that way.
I also think (a) nobody would notice my twitter account, (b) they'd probably block me, which would make my point, and (c) the people who did read my stream while it was active would clearly understand the context of my statements.
Think of it like The Satanic Temple. It exists not to glorify Satan but to test whether laws really are favoring some religions over others, in contradiction to the constitution.
> Right, it's not limited to being offensive, and even if it were, you can limit exposure.
What do you mean by limit exposure? How would the GP limit exposure of their grotesque and offensive tweets? And even if they did, wouldn't that defeat the purpose of their test? They are trying to increase exposure and see if Musk will limit exposure.
The GP is stating they will purposely offend people to test their suspicions of someone. They are willing to hurt (with words) innocent people to do this. You're calling this normal behavior. So if Musk takes over, it's okay to start calling black people the n word on Twitter to test Musk? I think that qualifies as "most offensive." And to call this testing behavior abnormal is deranged itself according to your words?
And some of your justifications are it's okay to do because Musk is the world's wealthiest individual and he's already offended others?
> It's a test of the word and motivation of not just a billionaire, but one of the world's wealthiest individuals - one who has publicly insulted and offended many people already.
as for open sourcing the algorithms, I consider myself extremely pro-open source (though ofc you're free to draw your own conclusions), but isn't it clear that that might simply allow spammers to game them as efficiently as possible (and to that end, isn't spam also free speech)? one idea that seems reasonable that I've heard proposed is an open marketplace of algorithms that one can choose from (open source and otherwise)
I think we're all about to witness the tragedy of the commons in real time if Musk buys twitter. Because there are literally thousands of people in college towns alone all across the US who will descend on Twitter and do this. Probably millions outside of college towns who will do the same. it's too bad.
My bet is we'll end up filing this under "This is why we can't have nice things".
>mine
You enjoy grotesque and offensive things?
I think what Musk wants to see is the Overton Window opened up more than it is now, and that's not a bad thing.
There will be moderation.
Musk talked about the need to improve Twitter's handling of spam, bots and scammers.
So clearly if he owns Twitter he will direct the team to eliminate spam, bots and scammers as much as possible.
If you get classified as those, you'll be booted off the island.
And given that your stated purpose is malicious, I say that you should be.
https://en.wikipedia.org/wiki/Top_Secret_America
Is Musk following in Besos steps, or will he really open source the ranking algoritm and increase the character count of posts to paragraph-scale (512-1024 characters)? Time will tell I suppose.
Because it was cheap and he wants to support journalism. Seems a lot more likely than your conspiracy theory.
Sure, WaPa does fantastic journalism- it's obvious that they must be supported for their lengthy history of great pieces.
Trumps fall in mainstream impact has proved this to not be the case. It used to be we would hear something crazy from him on a daily basis. If the ex president can't make his own website and maintain relevancy, I doubt musk can either
Like he does his existing customers or employees?
I can never understand how some people still have such unbridled optimism about what Elon Musk will do next, given how ample the evidence is that he won't. He has quite a track record to base predictions on.
I wonder how many will accept the offer - about 30% of ownership have said they're not interested at that price, if he let a few large holders stay on it could be successful - but this would be a kick in the teeth for smaller investors and his retail fans.
Why would Musk need more than 51% of voting shares for control of the board?