I guess it’s really from 4chan but I found it on r*ddit
There are currently around 70 million $GME shares in existence, at 250% shorted, that puts us at 175 million shorts. To be conservative, and for simplicities sake, lets round that up to 200 million.
Bank of America has total assets equalling 2.34 trillion.
Even if Bank of America had assumed all of the risk (which it hasn’t) for GME shorts to bankrupt just them $GME would need to reach a value of $10,000 per share.
Unless we start seeing $GME values pushing well into the tens thousands I don’t think there’s any chance this short squeeze can cause a financial collapse as described in that post.
That being said, Bank of America only has “operating revenue” (cash on hand) in the tens of billions, so $GME pushing past $1,000 would force banks to liquidate their other assets which could very well have a run on effect on the economy.
I’ve seen a lot of hopeful analyses like this on r/WSB and elsewhere that this will magically lead to a complete collapse in the system like this person describes. I really don’t see that. There might be some interesting consequences to what is going with GME, but I don’t think it will be like 2008. If the markets can survive the COVID-19 reckoning, they will survive a meme stock/pump-and-dump scheme.
r/wsb Qanon is here. Melvin Capital is small potatoes compared to the real big players on Wall Street.
The sum of Melvin’s assets under management is valued at 12.5 billion USD. Blackrock Inc’s AUM is worth 8.7 trillion. And Blackrock certainly doesn’t follow Melvin’s leads on investment.
2008 happened because mortgages, the most widely held assets by every financial institution (because they were perceived as incredibly safe), collapsed on a global scale. There’s no fucking way banks stand to lose more from shenanigans involving a company ranked 464th on the fortune 500.
Anyways, if the system as it is ensured that COVID barely hurt Wall Street in the long term, I can’t see a meme stock destroying it.
the one thing i can’t make sense of in this analysis is how the banks are the prime brokers of hedge funds. they aren’t. Citadel was the primary backer for Melvin.
there’s co-party collapse from Citadel onward, for sure. but I’m not sure how that gets to the banks.
