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Nukes seem overrated even in Ukraine. I’d still put used in Ukraine at the under 5% bucket.
Housing price collapse >25% in real terms seems guaranteed. But my guess is it happens over 5 years. So 25% for one year seems close.
Ukraine is expected to get F-16 by the experts. Alperovitch expects Ukraine to get full Nato weapons in time. Maybe not 2023 but there coming when the west has a game plan for post war and are ready to speed up victory.
Joe Biden president at end of 2023 is close to right. I’d go lower. Biggest risks imo is health. He’s old enough that 5% chance of a health issue seems plausible. Plus any risks something gets pinned on him with Hunter.
I’d have to do more analysis but 75% seems high for UK negative growth.
Twitter bankruptcy seems high for next year. Musks can bail them out. And I think they have some cash on balance sheet to get thru the year. Without Musks having cash it might be 50%. Musks might even just buy out the debt at a discount personally. If Twitter was pe owned etc then the finances might be closer to 50-50. But for reputatational risks he’s got enough money to fix them.
UK house prices need a ~50% collapse to get to reasonable values, even comparing to other advanced economies. We basically have a housing cartel where government regulations strictly limit builds and cause untold amounts of misery to the young and the high earners/low wealth people.
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It would be a tactical bankruptcy. Twitter already survived a decade and the stock price was at $45 despite losing money, so imminent bankruptcy seems very unlikely, especially with Musk's cost cutting. Musk would not buy a company for $43 billion at risk of imminent bankruptcy. He would wait for the stock to crash and then buy it.
No clue if you understand bankruptcy. You cant just go bankrupt. Need to wipe out your equity which wouldn’t exists now. You can’t change the balance sheet without completely wiping out the current equity.
Musks loses control of twitter if he declares bankruptcy. The debt currently owned by banks becomes equity and they can sell the debt out to the highest bidder as new equity.
Musk would still be the CEO during bankruptcy and retain ownership if after emerging from bankruptcy, being that he's the debtor-in-possession. If it went chapter 7 then he would lose everything. This occurs when there is no way to rectify the situation, but twitter still earns $600 million/year. Twitter has $18 billon in debt. bankruptcy would allow twitter to renegotiate the terms of this debt on more favorable terms. Asbestos and tobacco companies have filed chap 11 bankruptcy when faced with litigation, to reduce of the burden of this debt. When emerged from bankruptcy, the old holders simply get new stock , they don't lose everything. Musk would not float the idea of bankruptcy if it meant irrevocably losing the $25 billion he put into it.
The debtors wouldn’t take a write down on their debt without taking over the equity. The debtors would be the equity.
He would need to own the debt to maintain control.
right but musk would still own part of twitter too after it emerges . It would make no sense for companies to ever go chapter 11 if it meant the owner losing everything.
No that’s normal. You go bankrupt the equity goes to zero. And the debt takes over.
Litigation might be a bit different with unlimited liability. But debt taking over equity is completely normal and the standard.
You are 100% correct companies don’t go bankrupt because they want to. They go bankrupt because they had a bill to pay and their bank account say 0.
I could see Musk buying some of the debt that seems discounted from face about 40 cents on the dollar. Buy the debt to make sure you retain some control post bankruptcy.
I thought that was why he had recently sold some stock. He could take most of his debt out at 70 cents on the dollar max so could take away most of that risks for $10 billion max. Then he could do some kind of friendly deal with twitter shareholders (mostly him to swap his debt for more equity).
Then he doesn’t have to worry about bankruptcy as twitter should have enough revenue to costs non interest expense.
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Not necessarily. That is what a strategic bankruptcy is. Chapter 7 means twitter is worthless and the assets that remain sold off to pay off creditors, and musk loses everything. Chapter 11 allows twitter to reorg while giving Musk an opportunity to retain some of his wealth and run the company. Creditors would prefer to get paid than not, so reorg is better than defaulting. let's say twitter is worth $30 billion. $18 billion is debt. that $12 billion does not go away. It does not go to the creditors. unless twitter becomes worthless then musk loses everything . If it thrives, Musk's stake could be worth more when it reemerges. https://www.fool.com/investing/general/2009/06/02/3-bankruptcies-that-actually-helped-investors.aspx
Agree the 12 billion doesn’t go away. But if it’s real then that’s a capital markers activity and not a bankruptcy activity. You just issue new equity to pay off short term cash flow needs and/or to directly pay off debt.
Judges have some leeway to change rates on loan but for the most part their going to wipe out the equity.
And plenty of debt holders do debt for equity swaps and can run twitter so theirs no reason to think the debtors needs to give Musks something to keep the company running. If Musks is in violation of his loan covenents and refuses to raise more capital to make good on his covenents then the debt holders are just going to take the company and go give some equity to the ex-ceo to run the company. No reason to give Musks a stake.
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