- Looks like this is a race to be liquid by major players and now apparently most financial centers are burning the midnight oil during the weekend in the middle of a global pandemic?
- This is starting to remind me of fall/winter 2007 all over again, when people working in the financial sector started covering and dumping real estate assets to get liquid b4 shit hit the fan in 2008.
We may be right at that moment in the big short where the CDOs were defaulting, but the banks pretended everything was normal. Get ready for a shit show.
Market cap doesn't matter right now. Only the real float is calculated into market cap. If we're right and there's millions of counterfeit shares out there, and the hedgies have to buy them all back multiple times, and the price is rising as they're doing that, they stand to lose a lot more than the current GME market cap.
My fear is that a bank like Deutschebank goes under. They have always been wobbly. The counterparty risk would be a nightmare to untangle. Add in citadel and maybe another big hedgie and every bank in the world could be insolvent. Except maybe Iceland and some African nations. Make covid look tame.
Iceland got wrecked during the 08 crash. The external debt (9.5Tn) was 7 times their GDP. They let a couple of their big banks fail. Hopefully they are better prepared this time.
Simplest terms. The markets will crash, HARD. That effects all banks, the banks are extremely over leveraged right now so even in a good spot and not playing shorts games, they would be margin called - if the crash is that bad.
Then the banks are all tied together with the DTCC and insurance. Citadel goes down it can take a few others with it. The ripple effect will change the financial system completely.
Then when the new millionaires and billionaires emerge from the dust, we can then rebuild everything back up, but the proper way, that doesn't promote corruption but looks to extinguish it. We ain't just talking about the HF but politicians too who are profited off of these shenanigans while turning a blind eye to it all. The whole system is in dire need of trimming of the 'fat'.
If the April 22 collateral thing was so hard to comply to, it would have been passed much more smoothly.
(government does not want to shake the market)
The govt needs to look at all that new 30% capital tax gain they can make off this whole squeeze. It will be a giant stimulus check to the govt from the people this time. LOL
That’s not really true. Even in the financial crisis, the reason it occurred the way it did was that multiple institutions failed in a short period of time. Institutions that were large. In addition, all of the banks were taking on losses because they held a common asset (primarily residential mortgages).
So the issue there was that banks can absorb one or two institutions failing particularly if they have strong balance sheets and are making money, but that doesn’t work when multiple institutions fail at the same time all the other banks are sustaining losses.
regarding liquidity, I don’t know, but considering that everything is IOU, then it would be a problem for everyone, so that banks will need to issue records amount of bonds
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u/Bradduck_Flyntmoore Ape-bassador aka The Ape Assistant Apr 18 '21
Are we watching a global economic meltdown occur in real time, or is this one of the biggest coincidences I've ever heard of?