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Imagine if your bank, by law, had to pay you out the cash value of any increase in your home’s value during the term of your mortgage. Nuts, right? | Imagine if your bank, by law, had to pay you out the cash value of any increase in your home’s value during the term of your mortgage. Nuts, right? | ||
Now had Archegos bought real shares using [[margin loan]]s from its [[prime broker]]s, the brokers would not have ''had'' to pay out the cash value any asset appreciation. To be sure, they may well have ''willingly'' done so – [[margin lending]] is how [[prime broker]]s make their money, after all — but being ''able'' to lend money, and having to lend it money are quite different propositions, especially on the day the whole world is going to hell.<ref>It is fair to note that — with the possible exception of the vampire squid — [[Archegos]]’s brokers did ''not'' believe the world was going to hell, at least not until it was far too late. But the principle remains.</ref> | Now had Archegos bought real shares using [[margin loan]]s from its [[prime broker]]s, the brokers would not have ''had'' to pay out the cash value any asset appreciation. To be sure, they may well have ''willingly'' done so – [[margin lending]] is how [[prime broker]]s make their money, after all — but being ''able'' to lend a customer money, and ''having'' to lend it money, are quite different propositions, ''especially on the day the whole world is going to hell''.<ref>It is fair to note that — with the possible exception of the vampire squid — [[Archegos]]’s brokers did ''not'' believe the world was going to hell, at least not until it was far too late. But the principle remains.</ref> | ||
=== A dissonance === | === A dissonance === |