1) Accounting basics: assets are written down to closer to liquidation value when impaired. Collateral for a loan to an A-credit company can be casually assumed to be available for repossession, but the chaos at $tsla should make any lender unwilling to continue.
2) When the possibility of repossession and liquidation looms, the lender must imagine what it actually costs to repossess and liquidate, and what net value would remain. Broken used cars with no backing company, spare parts, or warranty won’t sell for much.
3) An auto plant in one of the highest-cost locations imaginable, filled with $billions in equipment not easily sold to others. Solar panels installed on roofs in hundreds of thousands of homes, with clients ready to stop paying leases. After legal costs, salvage values zero.
4) Looming liabilities for broken promises made to receive gov’t loans and subsidies, the tidal wave of lawsuits and regulatory penalties, the zeroing out of goodwill and brand value built up by years of blue-sky talk, the run on refunds for deposits....
5) Desperate moves to forestall collapse. The Schroedinger’s Cat inside the box of non disclosure (being charitable) $tsla built to sell more equity and bonds. Metastable: so long as belief was strong, more money could be borrowed and spent to maintain the illusion. /end
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