We don’t know the details yet but……

Morgan Stanley and Goldman Sachs Group Inc., along with other major banks, forced the liquidation of more than $20 billion of holdings for Hwang’s New York-based Archegos Capital Management on Friday, according to people familiar with the transactions.

Looks like someone got their trading book very wrong indeed and got liquidated.

Which does talk to that P³ and Piketty idea that r is greater than g, that the rich just pile on the cash year after year. Because they might indeed gain higher returns but only by taking on more risk. Something that doesn’t always work – risk, d’ye see?

4 thoughts on “We don’t know the details yet but……”

  1. “Which does talk to that P³ and Piketty idea that r is greater than g, that the rich just pile on the cash year after year. Because they might indeed gain higher returns but only by taking on more risk. Something that doesn’t always work – risk, d’ye see?”

    Except that if they do get it very wrong (see 2007/8) the State then bails them out by printing money and throwing it at them. So they can’t loose. They can take increasingly risky bets and keep the proceeds or get bailed out if they f*ck up so badly the entire system is in danger of collapse. The ultra rich as a class are never in danger of losing out, the money may be rearranged between the individuals at times, but it does just keep piling up within their class because the State ensures that happens.

  2. Well, sorta. Although the point of this story is rather that they’ve let that bloke lose his $5 billion quite happily.

  3. It all depends what you mean by risk. Financial writers call volatility “risk”. I call the danger of going broke “risk”. They are not the same.

  4. “Although the point of this story is rather that they’ve let that bloke lose his $5 billion quite happily.”

    Yes but he’ll have lost it to people who already has several billion themselves, or hundreds of millions anyway. So the wealth stays within the billionaire class. It doesn’t get down to the masses in any way, they don’t gain from his losses. And if they all f*ck up such that there is risk of all of them losing it all, then that would bring the whole financial system down so they get bailed out. They are bulletproof as a class, they’ve got the masses by the short and curlies and they know it.

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