TIL updated my post to reflect that
TIL updated my post to reflect that
“Dear America: You are waking up, as Germany once did, to the awareness that 1/3 of your people would kill another 1/3 while 1/3 watches.”—Incorrectly attributed to Werner Herzog but just some random person on the internet it seems.
Still the quote makes sense even without the appeal to authority
Thanks, TheReturnOfPEB for correcting me
Rush Week might be a good match
“Perfect” as the steak knives jut at random angles.
This take up so much more space than a butcher block and I’m sure those holes are going to smell great after a few months of crumbs mix with wet knife drippings in the dark zone beneath the counter. Luckily it’s completely inaccessible to any kind of cleaning.
Eventually they do need to pay back the loan, the low interest rates just make it so that they can choose to sell their stocks in the most favorable way.
This is why it makes sense for the financial institute to give out the loan in the first place.
So here’s the scenario. Let’s say you wake up tomorrow and somehow find yourself with $200M worth of stock. You are now “worth” $200M so you’d like to start living like it! You want to go buy a mansion and a nice new car and a private chef. Problem is, none of those people take stock, they all want money.
Goldman Sachs goes, “hey, I’ll loan you the money really cheap, you have to pay me back with interest, but since you have $200M in stock you can sell some of that later and pay me back”
This is great for you because you get to enjoy the mansion and new car and private chef right now. If you sold the stock right now you’d get taxed as if it were income at 38% but if you hold the stock for a few years when you sell it it will be considered capital gains and only taxed at 10% (or 15%, whichever the rate is). In addition, you don’t have to go to the stock market and sell for whatever they want right now, you can wait until the value of your stock is really high and selling is very advantageous for you.
So you do have to pay back the money, but this is still a really sweet deal because you can enjoy all the nice things right now and you get to avoid that extra ~30% you would pay in taxes if you sold it right now.
As long as the amount you saved in taxes outweighs the amount you pay in interest, this is a great deal for you. And for the financial institute it’s low risk (they extended you $10M backed by $200M in assets) and when you repay they make back enough in interest to make it worthwhile.
You get more money in your pocket, the bank gets more money in its pocket, from their point of view this was a win win. The losers are the market suffering a higher price for the stock because the supply was artificially constrained by you having access to this credit (otherwise you’d have sold shares to buy a mansion and nice car and private chef) and the taxpayer who was to shoulder a heavy tax burden because you converted your income into capital gains.
The one thing that definitely isn’t happening is Bezos or Musk or any of these other “they are only rich on paper” people clipping coupons to make ends meet. They live like rich people because the have access to plenty of money secured by their less liquid assets
For anyone that’s fallen for the “{wealthy person} doesn’t actually have ${huge number} because it’s stock” thing, here’s how it works.
You might be wondering, why do they get this cheap credit? Because it’s a very safe bet for the financial institute, they are acting as a sort of time arbitrage mechanism for the person they are extending credit to. Since they perform this function they can be relatively assured that this will allow their client to sell their stocks, not because they have to cover expenses, but because capital gains protections and the market is favorable. It also aids in fostering a positive relationship with someone with a lot of wealth which is something financial institutes have an interest in doing.
All the actors are doing what’s in their rational self-interest. The end result is that Spez can access a large part of that $200M as liquid cash right now through credit with one hand and with the other wave you off and say “those are stocks I actually only got paid $400k”
I’ve always thought it so odd how people can look at something like greed and we pretty much all agree, that thing is bad.
Go out to dinner with some friends and just start taking everyone’s food and drink and you aren’t getting invited out again.
Then for our society we were like “what if we let greed be the driving force of this thing and the greediest people who take up the absolute most for themselves we will turn into celebrities!”
In my life I’ve known lots of people and most have been pretty regular fine people. It’s like our entire society is being held back by a small group of people going “no you can’t have nice things because if you had a nice thing a person like me would come in and fuck it all up to make a profit” and then we put those people in charge.
In case you are wanting the history. IBM actually coined the term PC with their IBM Personal Computers
At the time most computing platforms were incompatible. Software written for a commodore computer wouldn’t work with an apple computer wouldn’t work with an IBM PC.
The IBM PC was popular enough though that people started building “pc compatible” machines. A very popular configuration for this was intel chips with Microsoft DOS. While these machines started out as “pc compatible” after a while the IBM PC wasn’t a big deal anymore so saying “we are compatible with a machine released in 1981” just slowly morphed into “it’s a PC” as shorthand for “intel chipset with Microsoft OS”
Now why didn’t apple get the pc moniker? At the time when the IBM PC launched apple was actively building and selling their own computers and weren’t interested in making them IBM PC clones so they never went out and marketed themselves as “pc compatible” because for the most part they were not.
Thanks for attending my Ted talk