[swader999]

Until it cascades like Lehman and AIG with USA citizens holding the bag. In two days we are 33,333 days since the crash of 1929.

[josephorjoe]

If that is possible here, there needs to be more regulation on hedge funds so they do not operate in a "heads I win, tails the US govt. bails me out" scenario.

[h_anna_h]

The solution is simple, do not bail them out.

[throwaway838nq]

That's the most hilarious part of it. It's a given that someone is going bankrupt big time and someone is going to want to be made whole. They will threaten the stock market until the USG bails them out.

[adamcstephens]

Cascading already happened last March and the Fed bailed out the market. That backstopping has clearly helped buoy the market to new highs, while the real economy is contracting.

Something like this could trigger a cascade, but that cascade would rest solely on the people who built this bubble.

[danhak]

This is nothing like the size of the bubble (US housing market) that precipitated those crashes.

[swader999]

It is actually. The housing market had real collateral even if it was overly appraised.

[danhak]

No, it's not. Not even close.

The current market cap of GME is $25 billion. Meanwhile, the size of the subprime mortgage market in 2008 was in the neighborhood of $50 trillion.

[swader999]

Shorting losses can be infinite. Then add in the derivatives at play. Who backs these trades? Who backs them? What gets triggered when any of these default on their contracts?

[carlmr]

The bubble may become more visible if a chain reaction is started.

[peterwoerner]

https://twitter.com/PigeonsK/status/1354824493982773249

Argument for cascading.

[heartbreak]

The assumptions in that 4chan screenshot are putting in a lot of work.

[swader999]

Who backs each party isn't that hard to verify. The only assumption is the copy cat trading of Melvin's strategy which seems fairly safe to make.

[heartbreak]

Well, one assumption is that the exposure is actually a meaningful number to an investment bank.