> From Citadel's perspective, why on earth would they assume the short positions? They're in the red. That is Melvin's investors' problem. The second-order prob

> From Citadel's perspective, why on earth would they assume the short positions? They're in the red. That is Melvin's investors' problem. The second-order problem, that of avoiding a fire sale of remaining assets, is what the bailout prevented. Because: > With respect to Melvin, I'm blown away that these trades were executed as unhedged shorts. Because that ^ will take down a prime, and if it's your prime because you're buddies with your mentee... no sir. And to cap it off, dominos fall everywhere because of the Index Fund phenomenon if there's no longer 'liquidity' from these guys. Side note: You're smart as hell, I can tell from the few times we've interacted on this forum, and I appreciate the thoughtful responses. We need to figure out a way to trade info and get a beer. Edit: this could become a run on the banks, but instead it would be a run on equities... which is equity cost of capital worse than just withdrawing your dollars.