Possibly. Kinda the complete version of what happened yesterday, when robinhood and other brokers wouldn’t allow buying. Less buyers means lower prices as people try to sell, lowering the price helps the hedge funds stem their losses and possibly cover their positions completely.

If all positions were liquidated, though, it’s like a mass sell off. The price of stocks across the board would fall rapidly, particularly things like gme where so many shares are held by Robin Hood users.

The real problem is the deposits required. Suddenly gamestop stocks being worth 2000% what they were, meant 2000% more deposits required for robinhood.

If there is a a rush of selling and withdrawing of cash, robinhood also needs liquidity to process and move those transactions, as it’s not as simple as moving the numbers on the spreadsheet. Ordinarily this isn’t a problem but the scale makes the liquidity in hand too tight, which can cause failures.

Thank for suggestion, I’m not as active here as I’d like so I didn’t know there was one!

Ok, so my ass with limited knowledge of markets met with my buddy who trades for a living to discuss what’s going on. Here’s a take that might interest us:

What’s going on is multiple liquidity problems caused by over leveraged everything (sound familiar), occurring at an unstable moment economically. There’s huge systemic risks right now, and basically the Meme stonk push could crash the entire market.

So you have one problem, which is Robinhood. Their CEO basically gave it away on tv when he said that they had to restrict buying because of volatility. Brokers have to maintain enough capital to process payouts from potential sales, similar to a bank that lends, they should e to maintain a certain amount of cash in order to process trading. So every time someone buys a stock, that number goes up. Robinhood doesn’t have the cash on hand to handle the influx of retail traders buying stocks, especially as the price of these stocks skyrocket. They are on the hook for billions of dollars if everybody sold.

They received an emergency cash injection of a billion dollars last night by their private investors, but still are restricting stocks.

IF they run out of money and cannot pay out sellers/maintain deposits, they essentially break or fail. In this situation, the SEC takes over, liquidates (sells) every position in everyone’s account and eventually gives that money back. However, that triggers a massive sell off all over the market, and could trigger a panic selling frenzy (and the market is over leveraged meaning there isn’t enough cash anywhere to pay out).

The other problem is the short squeeze. As you probably know, several hedge funds have made naked short sells on stocks like gme (basically they bet using stocks that don’t actually exist). This is illegal, but also common. What is uncommon is that retail investors noticed, and bought like crazy. Now the price is so high, the shorts will cause insane losses. They have to buy shares at the current price, which costs a huge amount of money, losses in the billions. And since there are more shares they have to buy than exist to be sold, it will drive the price higher and higher as they buy every share available.

They can hold off on buying to get out of their shorts, but this costs interest. Which, due to how underwater they are, is high. Billions of dollars high. Eventually they will have to exit, causing the squeeze.

The problem with that? They don’t have enough money to get out. They are insanely over leveraged. They’ll have to sell every other asset to pay this off, causing a broad market crash, and even then, it might not be enough. Then that loss must be covered by their bank, and if they don’t have the liquidity to absorb the loss...it’s 08 all over again.

But here’s why this is a huge problem for capital. Robinhood could fail if the gme price continues to remain this volatile, and it will if the hedge funds don’t exit their position. And if the hedge funds give in and exit, causes the above. So basically, there’s a liquidity trap coming one way or another, and not a lot of options to avoid it.

That’s why the broader markets have been selling this week. Very dangerous situation either way.

And key differences between this and 08: voters don’t have any electoral means to give their opinion for a few years, populist anger in all directions is very very high but banks and billionaires have attracted near universal ire, the fed has far fewer tools for what would be a much bigger bubble, and the pandemic makes any speedy economic recovery nearly hopeless. All adds up to extreme risk, and obviously a lot of suffering on the line.

Sorry for the long post, but I’m curious if anyone here has any thoughts about this or what we can do in this moment.

What has the biggies worried is that retail investors are organizing and attacking the financial markets with their pooled capital. It’s systemic risk that they don’t control, and that’s extremely upsetting to these folks.

The stock will crash and burn eventuallly, but it hurt some rich folks and some hedge funds and that’s NOT supposed to happen anymore, at least not by the hand of little guys.

The response is predictable: regulate small guys out of existence, accuse them of manipulating markets (fucking lol at that), bailout the rich and scare boomers.

But this time, hopefully a lot of people are seeing the backlash and calling bullshit.

Honestly, the fact a subreddit is causing a few billionaires some stress is amazing.

Plus there’s been a lot of anti-system sentiment brewing on WSB, particular y directed at the heart of capitalism, the financial system.

the more this goes on, the more opportunities there are for leftist outreach. Most of these bets start with the assumption that the system is fucked, and you’ll never reach the material conditions you want doing what the system says to do.

And regardless of the outcome from these gme short squeeze, it does help to destabilize and delegitimize the stock market. Especially if they crack down on retail investors for beating hedge funds at their own game.

So yeah, don’t bet your rent today, but don’t ignore this or dismiss the participants either.

CBS analyzing Biden’s speech is like when Charlie Kelly was dying to talk about the mail with Mac.

It’s not the horniness of our boners that show our desire, but our desire for boners that show our horniness.

Why has Q forsaken us

Fucking kill me with these puns

Also helps to have lots of firsts

Now this is Unity

Most of the FAANG companies already would adjust your pay rate if you moved from the Bay Area to a cheaper location in the company, like to their office in Boulder . That they’ve extended that to include working from home but moving is not much of a surprise, but still a dick move.

Long term it will be interesting, if the larger companies start accepting permanent remote jobs in mass numbers, how they handle pay rates.

I remember one time I took a call center gig while I was waiting for a buddy to get me in at his spot, just to get some checks. So boring. Cold calling leads to try to sell water purifier systems. You call their cards, and when you run out of cards you start calling the same cards again. Gross. I’d done a few stints in call centers so none of this was a surprise.

But after calling through my cards twice, I was not about to call a fucking third time, so I just took a smoke break and went on my phone. Did it at my desk too, I had already hit the quota of whatever.

What got me was how some other non-manager lead person came up to me and was like “I saw you were on your phone at your desk. If you want to be a part of our family, you have to be present here”.

Like wtf. Family? What kind of horrific family is this? Bear in mind, it’s dead silent in there except for dialing, you can’t even see the other callers. There’s no break room. I didn’t even know anybody’s name, there’s no introductions.

Just really pierced through how all these jobs are built from people with lies and self-delusions. I felt sorry for her, because she’s suffering under one of those same as me.

Cabinet shortlist from politico is the cold shower of progressive horniness. Doug Jones is a LOL. Meg Whitman?!

Turns out Mitt Romney won this election.

Not a different team but a totally different sport, is honestly a good low denominator way to pitch things to many non-political folks.

I mean, election fuckery is a time honored American tradition, all over the world. And neither party is above doing vote suppression when it serves their interest.

Add in the fact that the way we do elections is riddled with vulnerabilities, outdated and overly complicated processes-certainly not impossible for fraudulent events and mistakes to happen. Even Last week tonight did a piece on that, so it’s not exactly a secret conspiracy.

The level of voter fraud trumpies are alleging is pretty wild though. The problems with how we vote lend themselves to repressed turnout, suppression of ideas and truths and votes, but it’s so complicated that some vast systemic fraud would be difficult to accomplish without being discovered.

I think what is more important is that the process, for so many reasons, feels illegitimate, to voters across the spectrum. Whether their reasons for that are accurate is less impactful long term than the impact permanent loss of trust will have.

___

What’s crazy about our laws is that technically he can.

It’s unbelievable that US law basically lets the president attack anyone anywhere anytime for any reason. War powers is a hell of a drug

It’s raining in San Jose CA for the first time in months. Which I love.

Omg this is just like in the Lion King after Simba took his fathers place. Biden is Simba! Remember who you are, Joe!

Well, votes are coming in for CA and it looks like they are passing prop 22 and no on removing cash bail. Fuck this state.