[bhawks]

You lost me at 3 - how can having hidden structural problems be a desirable position to be in? Hedge funds entered a crowded trade that has unlimited downside without an exit strategy. They are not naive and although they're obviously upset I doubt they're shocked about what happened. They went in with confidence thinking they knew the 'market' (aka other hedge funds) and discounted the possibility of a short squeeze.

This type of risk taking behavior must have the associated consequences, otherwise there is no reason to stop behaving this way at larger and larger scales. Moral hazard - again a finance / trading 101 concept - just like shorting can result in infinite loss.

[Threeve303]

Investors have been known to want increased volatility because playing it right increases profit. If you can target that volatility to specific industries or companies, all the better.

If a foreign adversary was using bots or social media manipulation to drive up this behavior, perhaps they could target the right companies in the market to reveal structural weakness. Similar to how the 2016 election interference happened. Though that is getting much more on the conspiratorial side.