I don't actually know, but I think shorts are covered by borrowing stock, which is a rule that exists to fix this problem... though the fact that it's possible to short more stock than exist suggests borrowing stock doesn't mean what it sounds like.
More generally though, the talk was about clearing problems all stock trades, not just these. I can understand how a meltdown related directly to the stocks in question could happen. I don't understand why this threatens the solvency of the whole clearing house. Even if all 140% are due at once (they're not) @ $0, someone owes someone else $25bn - $30bn.
More generally though, the talk was about clearing problems all stock trades, not just these. I can understand how a meltdown related directly to the stocks in question could happen. I don't understand why this threatens the solvency of the whole clearing house. Even if all 140% are due at once (they're not) @ $0, someone owes someone else $25bn - $30bn.