SpaceX bond worth 10% less than issue price – heading for junk bond status

You could make a decent argument that capitalism will very likely end-game devolve into crony-capitalism as it's typical failure mode, but I don't think it's written in stone.

It's funny to me. Everyone rails about Atlas Shrugged being some libertarian fantasy story. I always read it as an allegory warning about crony capitalism and how it ruins society along with a story about trains and magical perpetual motion machines.

And beyond that there is a lot of capital in active funds that use an index as their benchmark. So they don’t have to buy anything, but they are trying to beat their benchmark so not buying is an active decision with risk.

You feel a stock is overvalued and you short it. You feel a stock is undervalued and you buy it. What's the difference?

Plus there's option traders who naturally need to go short sometimes.

It’s all betting.

If someone wants to dress it up in jargon or talk about beneficial second order effects, they can. But if putting money on an outcome you can’t control isn’t gambling, I don’t know what is.

(under the assumption your broker is managing their risk if your losses from a short position potentially exceeds capital available for liquidation if the trade moves against you)

https://www.spglobal.com/spdji/en/indices/equity/sp-500-ex-i...

Does the same rule work in crypto?

Q: Why is this stock so valuable? A: Duh, because Musk is worth a kajillion dollars and everything he touches is gold!

Q: Why is Musk worth a kajillion dollars? A: Because he holds so many shares of extremely valuable companies, silly!

The theoretical arguments against socialism (or, more specifically, centrally planned state production) given by Hayek is that pricing is information and markets are computers on that information, ergo changing the information gives you a bad result. This certainly applied to the kinds of production the Soviet Union loved to engage in, but there's no particular reason why it can't apply to capitalist enterprise as well. I mean, Facebook's headcount or market cap alone is larger than some actual nation-states' population or GDP.

Just like how the USSR was nominally socialist but practically engaged in exactly the same state-controlled mode of production as feudalism, today's corporate entities are nominally capitalist but practically feudalist. The medieval historians in the room would probably balk at me using the word "feudalist" to describe either, so to be clear, what I mean is "an economic system in which the majority of profit goes to landowners / platform owners / the state / etc". In this economic mode, companies can warp markets to their whims in exactly the same way Congress can.

Except, Congress is democratically controlled. Joint-stock corporations are inherently oligarchial in structure: control of the company is assigned based on how many shares you can afford to buy, so the company answers to the amount of money that has capitalized it, and not any other concern[0]. The "innovation" in Facebook's IPO was to go from internal oligarchy to internal autocracy - to install Mark Zuckerberg as God-Emperor of Facebook and largely depose the shareholder class that normally runs publicly-traded entities.

You'd think markets would have priced in this risk, but Facebook IPO'd at the peak of its hype and was able to get away with this. The funny thing about Hayek's distributed market computer is that it does not actually reach perfectly efficient price computation. If it did, you could crack RSA keys by placing a sufficient number of suitably complex options trades. Markets can put a bounty on fixing incorrect pricing information, but they can also just refuse to accept corrected pricing. Everyone rushing into Facebook stock counteracted the few people concerned about the ridiculously autocratic governance structure. And now that it's obvious that such a thing was a problem, it's too late to challenge it, because now Facebook has platform holder money. Zuckerberg can bribe the shareholders to not care about their lack of control.

The history of state intervention is very fraught, but there's one subset of interventions that has a better track record than most: those intended to stymie autocrats of trade. The state cannot correctly set prices better than a market can, but it absolutely can prevent other state-like entities from doing the same thing. Likewise, it would behoove the world's competition law and securities regulators to investigate and regulate the use of dual-class shares to retain control over companies you do not own.

Unfortunately, the current administration is unlikely to do anything about this.

Actually, to make matters worse, Texas is deliberately trying to pour gasoline on the problem by disenfranchising minority shareholders. I believe this was done specifically to give Elon Musk even more control over SpaceX, because Delaware made the mistake of actually entertaining a shareholder lawsuit over Musk's pay packet. If Facebook was an autocracy that bribed its shareholders into compliance, then SpaceX is an autocracy that says, "Fuck you, pay me". If there's one thing that gives me hope, it's that the markets are rightfully rejecting this obvious attempt at offloading Musk's toxic junk onto retail. But this is mainly because Elon failed to generate suitable hype to get the market to buy into his trash, not because markets are actually good at pricing in this specific kind of risk.

[0] In fact, this is part of why you see companies go to great lengths to fight unions, even when negotiating with a union would be cheaper. The shareholder class considers democratic control (one worker, one vote) to be an existential threat.

2. If his claims are incorrect and poorly sourced, feel free to call them out. But his research appears to have been rather exhaustive on this topic.

3. If there are other sources that contradict these claims and are well researched, links are welcome

Why? Have US-backed NGOs never saved a single life with their spending?

You can argue it's not worth the spending, perhaps, but you really can't argue that it's not happening somewhere.

> This is a reason why the US is trillions in debt.

This is a tiny, tiny, nearly invisible fraction of that reason.

Trump's OBBBA will be another reason, expected to add several trillion in the next few years. So yeah, real cuts are probably needed, but the DOGE people aren't achieving that in net.

2. Made the modern EV relatively commonplace; no other manufacturer was taking it seriously until Tesla succeeded, and took many years to catch up, although they have

3. Re-usable rockets / higher launch cadence leading to significantly cheaper costs to put things in space. No major competition yet.

Profitably reusable rockets were a major accomplishment. People like to argue against this. Every argument I've seen is either saying it doesn't actually save money or it wasn't new, neither of which is correct. It's very hard to argue with the numbers here; SpaceX is now launching more into orbit than every other launch provider combined.

I think the main reason people downplay these things is precisely because his own claims are so exaggerated. Doing 165 orbital launches in a year just doesn't sound impressive when he promised we'd be sending people to Mars years ago.

The company has plenty of revenue, and if needed can just turn off the r&d tap and become a boring company. Terrible for the shareholders obviously, but the bond holders will be fine.