Reply to Robin Hood just ended trading on GameStop and AMC

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]
I agree that overleveraging is bad and should be prevented, but that's not the issue.  You manipulate the market, you create risk.  These people manipulated the market and made money.  They also identified a type of risk that was ignored before and should be closed in the future.  Good for them!  But they don't get a medal, they don't get to dictate a price, and[b] the stupid shorts did not break any laws[/b].  Sorry, it just doesn't work the way you think it does.[/quote]
Did the Reddit longs break any laws either?

Yes, the whole system if f-ed. AFAICT, the Redditors goal is to prove that. I do think that the collateral impacts are concerning...but I'm not 100% how to fix this. I think if it gets fixed in a way that more than a few pounds of flesh aren't extracted from WS (which I doubt will happen), then in the long run it's worse than any short-term instability the Redditors caused. The system is rigged so that WS always wins. That will continue to drive destabilizing behavior. We at least need to start by admitting that and taking the risk seriously. I don't think we really did in 2008 (i.e. didn't take the moral hazard concerns seriously), and I don't think we've learned enough since.

A big problem, IMHO, is that no one has seriously challenged the notion that more liquidity is always good. [/quote]
I mostly agree with that.  I think the real problem is that we have so many complicated financial instruments that can create wealth at the top but have no economic value.  Need to really reign in all in.  [/quote]

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