Oh dear me, seriously peoples

The implosion of Bill Hwang’s trading empire could trigger $10bn (£7.3bn) of losses across the financial system, analysts warned, as watchdogs around the world launched an investigation into how banks handled the controversial fund.

There is no net loss here at all.

This is speculation. Speculation is a zero sum game. $10 billion of losses in one place means $10 billion of profits in another.

Sure, certain parts of the system could be looking at great gaping holes. But by definition others will be climbing new mountains of cash.

This was all going on with swaps and the like – it’s zero sum speculation.

1 thought on “Oh dear me, seriously peoples”

  1. Well yes and no. The same could have been said about the GFC and we know how that turned out. If its just a case of ‘I’ve got a big pile of cash and I lose a bet and it ends up with my counterparty’ then yes it all just nets off. If on the other hand it involves assets not being worth what people thought they were, and were using as collateral, and thus loads of people who thought they had assets to cover their liabilities suddenly don’t, then its a different ball game.

Leave a Reply

Your email address will not be published. Required fields are marked *