Submitted to Dinar Chronicles by Sherry T
THIS SOFTBANK DISASTER LOOMING COULD TRIGGER A MASSIVE STOCK MARKET CRASH!!! Especially banks’ with massive uncleared derivatives.
All stock markets are RIGGED. They can lend your shares to short sellers!!! You do not OWN your own shares!!! A private entity does called the DTCC.
— Sherry T
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JustDario
@DarioCpx
PAY ATTENTION
MR. MARKET IS SAYING THAT THE VALUE OF #SOFTBANK NET ITS (OVERINFLATED) $ARM SHARES IS NOW 5.5bn $USD **NEGATIVE** SoftBank mkt cap 66bn$ $ARM mkt cap 79.4bn$ 90% of $ARM shares Softbank owns 71.5bn$
Things are worsening here.
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JustDario
@DarioCpx
In my opinion this is what happened and might trigger an incredible #stockmarketcrash
1 – $WE bust becomes clear in August and lenders are on #Softbank neck
2 – They list $ARM in the hope #Softbank repays the 9bn$ loan vs $ARM collateral, but they don’t
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3 – Lenders panic and start force liquidating #Softbank for the whole month of October -> #Stocks crash
4 – The #BOJ comes to #Softbank rescue printing a gazillion of $JPY to reinflate the value of #Softbank assets
5 – #Softbank finds 1.5bn$ to pay $WE debt guarantees to the lender the last days of October, then 1st week of November $WE files for Chapter 11 6 – Lenders get off #softbank neck and they use all the #BOJ liquidity to do what they do best, gamma squeeze everything they own left and right, including $ARM and their own stock that dump h-----n results published the 8th and 9th of November but then start going up relentlessly since then
7 – $BABA report results and the stock crashes, Lenders take steep losses and jump back on Softbank neck cutting their margin lending lines
8 – Softbank goes into liquidity crisis, they call the #BOJ that this time hung up the phone on them because after deep negative GDP and raising inflation at the same time they are seriously threatening the stability of the whole country.
9 – Lenders are now liquidating Softbank carry trade positions and trying to get them selling the most valuable private assets
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DERIVATIVES ARE FINANCIAL WEAPONS OF MASS DESTRUCTION
Derivatives were invented as an instrument to transfer risk between two counterparts. In theory, when someone gains on a derivative trade, someone else loses. Nowadays, the volume of derivatives outstanding far exceeds the underlying assets they are supposed to be priced upon. This means that derivatives are no longer an instrument to transfer risk in the market used for pure hedging, but they became an instrument to bet on an outcome. However, differently from traditional bets, where the bet amount cannot influence the game, derivatives can. Let’s take horse racing as an example. If everyone starts to bet on the worst horse, the bookies must lower the payout to the point there will be almost no payout for the bets. Why? Because they still price the remote, but not zero possibility, that the worst horse can win (imagine every other horse falls to the ground before the finishing line). The quantity of bets, though, will not make the worst horse neither faster nor stronger. In financial markets, the (gambling) logic above doesn’t apply, why? Let’s imagine an extreme case where a broker writes a put option on an unlisted company named DarioXYZ. The broker will not just sit on the risk since he cannot short DarioXYZ #stocks, but will hedge the risk “synthetically” shorting an asset. Let’s imagine the broker picks $AAPL stocks. The broker then is supposed to borrow $AAPL stocks in a ratio they deem appropriate to hedge the delta for DarioXYZ private stock and sell them short in the market. This inherently will create selling pressure on $AAPL that is totally unrelated to DarioXYZ. At this point, you can intuitively understand that the hedging is far from perfect. Consequently, the broker will still carry a certain amount of risk in its books that cannot be hedged even. Unfortunately, I cannot quantify how much of that “hidden” risk is present nowadays in brokers’ books, but by intuition, I can say that it is enormous. Now let’s go back to the horse racing example. Instead of pricing the (very remote) risk that the worst horse can still win, a bookie accepts a huge amount of bets more than the capital he holds to pay all them out in case the horse wins. The bookie thinks everyone is an i---t and he already pictures the next yacht he is going to buy, but then the worst horse crosses the finish line first. What do you think happens next? The bookie is in default. Here is the trick though, the bookie can start collecting bets for the next race, and if the new bets come in faster than the previous winners coming at him to cash out, he can go away with declaring bankruptcy. If the bookie is very lucky and can repeat this perverse (and i-----l) loop long enough with no more huge payouts, he can even get himself out of bankruptcy. Obviously, the key is no one knows how much capital he holds and how many bets he took. Otherwise, the winners will rush to collect their bets, the slow ones will remain empty-handed, and the bookie will go bust (and in jail). Does what I describe sound familiar? It is exactly what happened to Credit Suisse when Archegos went bust! No one knows how many losses are sitting in bank brokerages’ books right now, but everyone knows they are huge already due to US Treasuries, CRE, Real Estate delinquency, and so on. Still, these brokers keep taking bets in the market, trying to pull themselves out of insolvency (like the bookie). Cash is bleeding out of the system into money market funds and safe assets like T-Bills, but #stocks keep going up because everyone else is leveraged long and “extracting alpha” shorting ITM put options and going long calls forcing brokers to hedge in a way that “archegooses” those very same #stocks. With what just happened to the $JPY, a ton of liquidity just got pulled out from the system leaving many brokers hanging on a thread, and the prophecy of Warren Buffet might be very close to materialize.
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@SamBlak65731531
Replying to @DarioCpx and @DawgMx
Markets Are Rigged
I actually called Etrade and Schwab at some points and asked for my share not to be lent for shorting. They said they can’t do as I request. So, they simply said No. Either they are not legally obligated to do this, or that they won’t do it, and don’t care.
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