Bailout 6: Getting an equity infusion

[flyingbeagles]

Goldman brothers and Lehman Sachs!

[olipop84]

yeah, dude, you're the man!

[personova]

For TARP, the majority of equity infusion was in the form of preferred stock and warrants.

[o0stonedagain0o]

The federal reserve in no more federal than federal express. It is a foreign private central bank whose board members are held secret. So when you say our national debt is owed to ourselves that is flat out lie. You need to bone up on some history before you call yourself an economist. Do you know what money is or how it is created? In a true free market system there is no need for any regulatory body to adjust the 'supply' of money or interest rates. Stop reading Keynes and start reading Mises

[Andersxman]

So is an "Equity infusion" what Goldman Sachs did recently to raise $6bn? I haven't been following that closely, but it doesn't seem to me that the shareholders in Goldman got hit by this latest move? If Goldman didn't do an Equity Infusion, then what was it they did?

[hotdroper]

Why would the SWF pay more then market value? That doesn't make sense in this example.

[mark7996]

exactly, and this is whats happening in real life right now...doesn't make sense. they are technically buying way above market value...because co's can't sell it privately.

[delegate21]

Because the SWF would then own 80% of the bank, and it's in their best interest for it to stay afloat, and that requires them paying over the market value for them, instead of just buying more. If they simply bought more shares, they would dilute the share value further, thus losing money etc... (its better off for the bank to have less shares)

[JLZesbaugh]

Well if the SWF fund it self was concerned about going bankrupt, say due to a entitlements issue. It would need to make long term investments. The model here shows a functional bank, with toxic assets. Or "the fundamentals are of our economy are strong". This is just a momentary blip, to allow the SWF long term investments to pay entitlements. Is my guess...

[ladicius]

@delegate21 were you responding to a question similar to 'how did swf purchase 2b shares when there were only 500m?'...that was my question...

[rsheicai2002]

@ladicius well it is possible for the company to have say an authorized capital of 5 billion shares at a face value of 1$,now as the total issued capital was only 500 million they still can issue more shares by way of an fpo etc so they could issue shares to the SWF but that would essentially dilute their equity in the company

[kleineajw]

You rock! I am a teacher & I really enjoy your delivery style. Keep up the great work!!

[o0stonedagain0o]

THE FED!!

This video has the FIRST mention of the

FEDERAL RESERVE in the series.

THE 'FED' is the real 'crucks' of the PROBLEM!

END the FED NOV 22nd

endthefed(dot)us

[leetcr]

Wow. That last part was very interesting. So a foreign investor could buy the majority stock of a failing company. And instantly see an increase in stock price despite the fact that tons of new stock have been created.

I think I can see now why all of these businesses have been gobbling each other up the last couple years.

It still seems counter-intuitive though

[mrjaywilliams]

We're "Goldman Brothers" or "Lehman Sachs" lol!

[expchrist]

Khan great job! This is far more rewarding than watching TV. Do you have a playlist explaining how you gained your experience and your insight? Why you started doing you tube videos? Are you hiring? Can I submit my resume to you for a job so that I might learn some more first hand?

[wmacorlando]

it's a shame that 10,000 people have seen Bailout 1 and only 853 people have seen bailout 6 so far. This just tells me people aren't as interested in or able to understand this subject as they say they are.

[brco2003]

Sal, why did the company need to pay of Loans A and B (in the previous video)? Could they not have not paid them off and accrued a bit more interest while still holding on to those solid bonds?

[wmacorlando]

the loan was due because corporations often take out loans for a short term like 3 months.

[brco2003]

He doesn't teach at MIT, but he should.

[dallenchao]

I DID go to MIT, and don't think it was explained as well there. Great work!

[pongman]

Thanks professor. If I had you as a teacher I'd have gone to MIT lol.