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I wonder if there is a systemic risk behind this. Kind of like, if one domino falls, then the rest will tumble.
by blackrock 6y ago
I wonder if there is a systemic risk behind this.
Kind of like, if one domino falls, then the rest will tumble.
- PartiallyTyped 6y agoThis is partially what happened in 2008. Hedgefunds overshorted the housing market and then everything went down.
- intotheabyss 6y agoDidn't hedgefunds "overlong" the housing market? They were borrowing on margin using housing debt as collateral, but the collateral turned out to be junk, so they got margin called when that collateral tanked (the CDOs), and banks with insufficient liquidity to cover the losses either collapsed or got bailed out. Essentially the housing market bubble was people going long using worthless collateral.
- PartiallyTyped 6y agoMy understanding is that while the market crashed, certain people capitalised on the bubble breaking and kept shorting until it was ran to the ground.
- pas 6y agohttps://www.youtube.com/watch?v=lMUtU0tOmNE https://www.youtube.com/watch?v=lMUtU0tOmNE (The Pyramid Scheme that Collapsed a Nation)