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I understand how people are viewing this as some kind of David vs Goliath, and in a way it is. However, the freaking Goliath is made of pension funds money and
by AzzieElbab 6y ago
I understand how people are viewing this as some kind of David vs Goliath, and in a way it is. However, the freaking Goliath is made of pension funds money and David is a few hundred traders. It is very unlikely that the guy who runs Melvin will suffer significant personal financial consequences if the firm goes boom. What is going to happen when this thing escalates to citadel and whoever is backing them and whoever else who up the chain. There are no good guys here, just an incredibly screwed up and fragile system.
- totalZero 6y ago> Goliath is made of pension funds money Well let's assume that's true (it's not). The logical implication would be that Plotkin is shorting video game developers and retailers with pensioners' money. The only practical way for market forces to disincentivize that kind of irresponsible and unsuitable risk-taking would be for him to publicly suffer losses. If that happens, the pension funds withdraw their money. If they withdraw their money, Plotkin's take-home pay and social status diminish. So as they say, all roads lead to Rome. No matter where his trading assets came from, he suffers personal financial consequences from the loss and the resulting fallout.
- AzzieElbab 6y agoThey will have to sell their long bets to cover loses on shorts. The financial system is incredibly interconnected, no one knows what happens when 12b fund goes out of business and how that escalates up. Just like during the housing crash- bad mortgage- bad tranche - bad MBS - bad synthetics- bad insurance. I wouldn’t be too worried about one year take home pay and social status.
- juanuys 6y agoAnd the tax payer bails him out?