Relatively little can apparently be $10B:

“ In 2014, for example, Oracle cofounder Larry Ellison disclosed he had used 250 million of his Oracle shares as collateral to secure a $9.7 billion personal line of credit.”

Source: https://www.businessinsider.com/american-billionaires-tax-av...

I would not call that 'cash in hand'. I get why you see it that way but to compare it to the little guy:

A credit card with a $5000 limit is not $5000 cash in hand. It's a 'line of credit' for $5000 and whether I actually have the cash to pay that back is a different story. I might actually have $0 cash in hand to pay that back and many people don't until their next paycheck arrives.

Any guesses how far the Oracle share price (of ~$100) has to drop before the bank will actually use that collateral to get their cash?

It is true that it’s not cash in the wallet but it’s there available if you want it. It is in no way comparable to paycheck to paycheck living.

This practice also comes with all sorts of tax benefits as well.

If they really need to pay some of it back then the company might decide to buy back some shares.

And realistically, like the old adage says: If you owe the bank $1M it owns you, if you owe the bank $1B you own the bank.

That's where collateral comes in. I guess the credit card analogy only works in the likening it to cash aspect. For the other aspects a mortgage might be a better analogy.

The little guy had cash in hand for maybe 24 hours (and even then probably just a certified check). Maybe a little later, say 10 years in they get a home equity line of credit and the bank takes back the previously paid off part of the house as collateral again.

I don't doubt repossession of the little guy's house is easier and happens more often than a Bezos loosing his collateral :) and for every Bezos there are probably quite a few small and medium business owners that put their businesses as collateral to get that line of credit and that did get repossessed.

Billionaires have massive personal loans (compared to human needs, not compatrd do their owned equity) collateralized by their business equity.

Yes, they are “massive” by normal people’s standard, but they are usually minuscule relative to their equity holdings.

Which is kind of to the point, they have more money on hand than a small country’s budget and even if they lose it all it almost doesn’t make a dent in their net worth.

In this situation it is almost reasonable to want a small crisis to shake out your upcoming competitors and buy some more land or other things of real value at a discount.

> Which is kind of to the point, they have more money on hand than a small country’s budget

They don’t, though, that’s the entire point.

> and even if they lose it all it almost doesn’t make a dent in their net worth. > In this situation it is almost reasonable to want a small crisis to shake out your upcoming competitors and buy some more land or other things of real value at a discount.

A small crisis will in fact not cause them to lose significant amount of cash, but will cause them to lose significant amount of their net worth. Nobody wants that.

Unless the billionaire in question is extremely vain, they should absolutely want some of their paper wealth to vanish temporarily since it is an opportunity to accrue more real value stuff at a discount for those that have large amounts of either cash or cash equivalents on hand. All of their paper wealth will appear again in the next upswing.