One of the most interesting and potentially significant conflicts to happen in some time — not just financially but culturally and politically — deserves serious scrutiny.
Funny how the hedge funds cry to the SEC and the administration and then all of a sudden we see this BS.
ANYONE who tries to spin the actions of Robinhood, Discord, the other trading platforms as ANYTHING OTHER than a clear attempt to protect the hedge funds from their stupid bets is just a pathetic Wall Street apologist and shill.
I have been trying to figure out what influential constituency actually leans conservative anymore. The liberals have a lock on Hollywood, Wall Street, big tech, Universities and k-12, the mainstream media and trial lawyers and as of now the legislative and Executive branches. What else? What's left for Conservatives? SCOTUS, My Pillow and energy companies? Strange times....
Is covering their margins a concern for Robinhood?
I am reminded of a 20 something year old who committed suicide. It was discovered he was deeply in debt to Robinhood on margin trading. His family complained that he was not credit worthy and they were angry Robinhood extended so much credit.
actually I think it was worse than that. He really wasn't in debt that much but the way it was displayed in his account made it look like he was in the hole for 100s of thousands.
I agree with your fake red and blue dichotomy. What I find interesting is that most pols who claim to be "conservative" are actually liberal extremists, libertarian, small government types, not conservative, as in authoritarian. Republicans do have conservatives, the religious types, but we must be careful in considering the GOP to be a "conservative" party, which it is not in it's small government, anti-regulation world view.
What makes the fundamental difference the parties, IMO, is that the Democrats are a bit more progressive than the GOP as in it is willing to use government to help and protect, whereas the GOP isn't, except in providing subsidies to certain donors, which act as a tax break under another name and thus means of wealth redistribution up to the top.
January 27th and 28th, 2021 saw the Washington Post at last totally divorce itself from what used to be called “the news”. I have the Post delivered to my door every day. On the morning of January 27, I eagerly opened my copy to see what the Post had reported on one of the biggest if not the biggest news stories of the week, the revolt of the small retail investor against the hedge fund giants. To wit the meteoric rise of shares in GameStop which cost several hedge funds who had shorted the stock billions of dollars. A rare, rare victory of the small guy against the titans of the financial world. I couldn’t find a single mention of the story in the paper! Not on the front page and even not in the “business” section. I assumed I had missed the story and went back through the paper page by page. Nope, it wasn’t there. Not one word! In the real world of journalism this would have led to the firing of the editor. But we work under different rules now.
I can imagine the editors not knowing how to play this news. Yes, they could have simply stated the plain facts; the stock moved how much, and hedge funds lost so much, but they didn’t. News is about so much more than facts these days. The dilemma was this; clearly it was at least a symbolic victory for the small guy and a demonstration of a fearsome new power in the financial world and the Post staff and management saw themselves as champions of the little guy. On the other hand, it was a near mortal blow to some of the captains of the industry who have now become (at least for public consumption) friends of the Democratic party and fierce enemies of the guy who used to be president. (Don’t blame me for bringing him into the story, the Post did that on their own) And besides the Post is a business that has had its ups and downs in recent years, and it doesn’t pay to make enemies of these guys, not to mention the owner of the Post, Jeff Bezos is one of the world’s richest men and has much more in common, if not outright friendship with said titans. So the Post decided to punt and skip the story altogether. Perhaps it took them a day to consult with Mr. Bezos and others in the industry and in the world of politics to see how to spin the story. Oh, how I would like to be a fly on the wall of the editor’s office! I am sure there was some real debate going on! I am sure the Post’s woke staff had plenty to say about this story.
Move to Thursday the 28th. The story framing is complete, and it comes down on the side of the elites. Now it’s a front-page story. In a very long two-page article the Post plays the role of the hedge fund toady and defender. The small investor is now “a flash mob with money”. And we know what sinister connotations the word “mob” has taken on in the past few weeks. As crazy as it seems the article doesn’t mention the role of short sellers (who smell bad) until the twentieth paragraph on an inside page and doesn’t mention the specific hedge fund until the twenty-ninth paragraph when this information was all over the news. Unbelievable! The Post preferred to call the hedge funds “big Wall Street firms, “wealthy institutions”, and “big institutions”.
By late Thursday the political/financial industry dealt the small investor a savage blow in a naked show of force. Halting the purchase of GameStop shares but not their sale meant the market could go only one way, down, saving hedge funds from losing billions more if not saving some from total destruction. If this isn’t the definition of market manipulation, the word has no meaning. It will be interesting to see how the liberal mainstream media plays this story in coming days. They can’t support both sides. At least we know where the Post stands. The story is not over.
So the real issue now is not so much the little guys versus the hedgies but it's the fact that the system (Discord, Robinhood, TD, etc) are now forcing the price lower by basically stopping people from buying the stock.
How quaint . . . that the SEC should be investigating wrongdoing by Wall Street/Silicon Valley hedge funds and tech firms. I only wish I had that kind of faith in our government.
Glenn, one of the stories that got "memory-holed" by Obama's Praetorian Guard media was his role in persuading members of the Congressional Black Caucus to switch their votes on the 2008 bailout without receiving the protections for distressed homeowners that they had been holding out for. It should be better known as one of the original moments establishing the basic framework of the kind of woke neoliberalism that we're now so familiar with: the exploitation of identity politics as a means of providing cover for corrupt corporate powers.
Eric Weinstein has said it best (paraphrasing): It is far cheaper to invoke “racial/social justice” on behalf identity groups than confront the economic inequalities associated with social class and Wall Street hegemony.
Yes, but I would characterize it more the other way. Wall Street (and Silicon Valley, military-industrial complex, "Deep State", etc.) hegemons have found the perfect shield behind which they are able to hide their dastardly dealings: Social Justice (conceived only in terms of woke identity politics).
I hope this Gamestop/Reddit episode inspires new and original thinking about all the ways ordinary Americans -- politically left or right -- can legally undermine and dethrone our repugnant ruling classes.
That, gwb, is the critical center of current unrest: elites vs ordinaries. Elites have mastered the art of turning the ordinaries against each other with identity politics. Most of Congress, POTUS, MSM, Academia, etc... have purchased what the elites are selling without any questioning. Populism has a dangerous edge, and elitism is tyranny. We live in extraordinarily interesting times.
I've always found the concept of hedge funds - in which people buy stocks not to invest in companies, but to speculate - to be immoral. You're basically gambling that certain companies will lose value, and make money when this happens. Hedge funds generate no actual wealth for society, they create nothing of value. They are parasites. And if you read the Reddit subs of the folks who are driving up the price of the hedge funds' target stocks to preclude the hedge funds from making money off of other people's losses, you'll find that my view is a common one. It's a way of screwing over the folks who have been screwing over our economic system for decades now. Hedge funds have siphoned trillions of dollars out of the stock market - trillions of dollars that could have, should have, been invested in R&D, marketing, new startups, etc., and instead did nothing but line the pockets of a very small number of people who are very good at anticipating when some companies would lose value. Anything that hurts the hedge funds is good for the American economy, and good for the American people.
Efficient markets have value. In an ideal world hedge funds help with price discovery, etc. If idiots are overpaying for a company living on hype, it's good if smart people tear into the stock and burst the bubble early.
The world is full of hype and we are bombarded by it constantly through ads, sponsored news, exaggerated science, and predictions that are basically divination. I'm glad somebody is being paid to cut into it.
I don't think that the hedge fund made "a terrible bet" - they made a very smart bet.... but they went to an extreme risk to make that bet and the Reddit folks simply capitalized on the system which gloriously made that risk a reality. The issue is not the betting process, it is the definition of 'risk.' The rigged game that the wealthy play by serves to negate that risk at the expense of others - and I am thrilled to see them suffer the consequences of [or, rather, that they *should* suffer the consequences of].
The public disclosure of the bet is what doomed them. They openly noted that a culturally important company (in the experience of the extremely online millennial generation) was worth failing in order for them to profit. They made themselves the target. There's a reason why Walt Disney, when buying up swampland in Central Florida used shell companies with odd names (Aye-Four, etc.) it prevented the locals from holding out for a better price, not understanding the deep pockets of the buyers.
When this started on Jan 7 or so, GME had 65 million shares on the board and Wallstreet short sellers had calls on 72.5 million shares. Meaning, the Wallstreet fund big wigs had somehow used leverage to buy more shares than actually existed.
This was so obvious (and blatantly illegal by the way) that even your average uninformed day-traders noticed. This meant that when the shorts inevitably came due, there weren't enough shares to buy to cover the calls, and if small investors held onto their shares instead of selling, the price would skyrocket, which would make the losses even bigger for the shorts as time went by.
It was the arrogance, greed and willful illegality(something they knew they could get away with, since they always had done so before) of the Citadel investment group and friends, which practically invited this act of populist uprising.
It was a chance to stick it to the yellow-tie fat-cats, and make some dough at the same time.
Robinhood is not run by idiots. They know who they have to fear, and it is not light-weight idiots like AOC or untouchable outsiders like Ted Cruz.
Face facts. The big dogs won this round. They stopped their bleeding by changing the rules mid-game. They won.
If one didn't sell on the 27th before the a-holes rigged the game, then the plebes still holding shares on the shorted stocks (GameStop, BlackBerry, etc.) are screwed.
Cruz had zero traction within the GOP in 2016 until the golden boys Jeb and Rubio got squeezed out. A MINORITY of GOP insiders were willing to lend aid to Cruz as a last gasp to try and stop the orange peril from taking over the party. Since then, Cruz is once again an outcast from the GOP party establishment and is definitely NOT a strong favorite for the nomination in 2024. But then again, the orange man was not a favorite of the establishment in 2016. So, maybe Cruz has an small chance of gaining the nomination, but I wouldn't bet actual money on it. Right now that seems like a sucker's bet.
As to my personal politics, I am a liberal. I voted for both Clinton and Obama twice, and did not vote for President in 2016. I had that luxury since I live in Washington State which Hillary was going to win by 15+ points even without my vote. I refused to vote for Hillary as a protest because of what she and the hacks at the DNC did to Sanders.
The thing is that during the Trump years the Dems appear to have gone completely bat-shit crazy. I don't recognize the Democratic party any more. The policy positions of the Dems have changed so much in the last 5 years that it just makes me dizzy to contemplate.
I used to be a liberal Democrat. Now, I am a liberal something else.
Every time Glenn said "Wall Street", I heard "Washington"..........because the problem isn't Wall Street......it's that Government has too much power.......and creates a market for "favors" from which they "sell" that power. If government had the Constitutionally limited role they're supposed to have........Wall Street wouldn't waste their time with their lobbying efforts......because Government has nothing to SELL!
"because the problem isn't Wall Street......it's that Government has too much power"
Wall Street wants to control government because it's the ONLY thing that can control them, so they want to be the masters, not the controlled; if you destroy government's power, you also lose the ability to constrain the rapacious behaviors of the ultra-rich and we end up in permanent oligarchy.
I'm not arguing, I'm pointing out short-sighted reasoning and the danger it poses.
Besides, you have "fuckall" chances of changing who has power without toppling the ultra-rich first, which is why I say "right and left" - EVERYONE who isn't rich - should STOP bickering with your other non-rich fellow victims and START joining with them to take down the control of the ultra-rich, starting by non-status-quo politics. And, I dare say Bernies' vision (better Tulsi's) of which way to go is decidedly better than the right-wing versions we hear, such as that of Trump.
"The only choices are government stranglehold from DC or feudalism."
PERHAPS you meant, "the only choice is feudalism run by the ultra-rich out of DC via their puppets in government."
Indeed, that's what the oligarchs want. Its up to us to overthrow them via unified political power. Again, government is the ONLY thing that can constrain the ultra-rich which is why We, The People need to be in control of it instead of its present set of masters.
"The only choices are government stranglehold from DC or feudalism."
PERHAPS you meant, "the only choice is feudalism run by the ultra-rich out of DC via their puppets in government."
Indeed, that's what the oligarchs want. Its up to us to overthrow them via unified political power. Again, government is the ONLY thing that can constrain the ultra-rich which is why We, The People need to be in control of it instead of its present set of masters.
Without the ability to print, much of Wall Street is nuetered. Once you go off hard money, it's inevitable the government and bankers will collude to steal your wealth via currency devaluation.
That comment shows ignorance about our monetary system, however, you might agree with me that we need to nationalize the Federal Reserve, as I have already proposed here in these comments today.
Bipartisan Consensus, or what I like to call, Well Funded Organized Crime.
In 1999 and 2000, President Clinton signs the Gramm–Leach–Bliley Act and Commodity Futures Modernization Act. These acts made it legal for our banks to operate as casinos (CDOs, CDSs, MBSs…).
In 2005, Barney Frank: “Obviously, speculation is never a good thing…but you’re not going to see the collapse that you see when people talk about a [housing] bubble. And so, those of us on our committee, in particular, will continue to push for homeownership.”
2008-2009, "The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution," Sanders said.
A battle of epic proportion has seen it's first skirmish. The GME short play aimed at Wall Street hedge funds who had shorted 170% of the float, penetrated their sacred gilded coffers and ransacked their treasure.
They were beaten back today by effectively moving the goal post whilst the winning kick was in the air. I think battle lines will continue to develop and the plutocrats will not go gently into battle.
I have nothing against short sellers. They typically provide a valuable service, and much fraud has been uncovered by short sellers who bet against a company they believe is perpetrating a fraud. They have an economic incentive to do this, so they shouldn't be viewed as heroes. But, it benefits the market when fraud is uncovered or deterred (e.g., don't engage in fraud for fear that you might attract scrutiny of short sellers looking to profit).
The issue here is the exactly the same as the issue that arose when Parler was banned: Corporations are abusing their platforms to rid themselves of those engaging in disfavored speech.
In Parler's case, it was conservatives. Don't kid yourselves for a moment that they were banned because Parler is where capital protests were organized. If that were true, Facebook and Twitter would also be banned. But, Parler is smaller and generally has speech that is disfavored. While more capital protests were organized on Facebook and Twitter, those platforms already are deplatforming those whose speech they don't like. So, Apple, Google and Amazon don't lift a finger or even mention them when deplatforming Parler.
It's the same thing with the WSB crowd. It's the speech that's disfavored. The monied interests don't like that they can band together, share ideas and impact the entrenched interests of billionaires. So, they deplatformed this collection of disfavored speakers: take away their platforms on Reddit; take away the Discord server; eliminate their ability to express themselves (in the form of stock trades) on Robinhood; etc.
It's just another episode of crony capitalism and collusion. Most people don't care about Parler. Most don't care about the WSB crowd. The problem is: Most won't care until they come for you. Big tech can pick you off, one by one because individually you don't matter. This playbook has been in effect for at least 10 years now. It's accelerating, but it didn't start with Parler. It's been going on for quite some time (e.g., Cloudflare and 8Chan, but many incidents predate that as well.)
Yep, my European friends easily see what a HUGE swath of Americans do not - and what you just stated. I deeply wish the vast majority of us (including a very sizable percentage of those who comment here) would wake up to the fact you just stated, and, in particular The Democrats are NOT "left." ... It leads them to wrong conclusions... And, it helps the oligarchs win because that kind of deep misunderstanding keeps us from coming together to defeat the ultra-rich.
Americans don’t see the reality of the Democratic Party for the reason suggested by Eric Weinstein: the Democrats use identity groups as virtue signalling cover, while putting people like Janet Yellen in Treasury.
Exactly. Main Street democrats don't yet realize that they are actually the party of Wall Street, Big Tech, "lockdown" corporations (Amazon/Walmart, etc), endless war, and the literal formation of the Ministry of Truth.
Glenn your enthusiasm is palpable! The giddy look as you explain this situation is priceless! Thank you! And p.s I have a friend who made over a million dollars!!! He plans to fund his future children’s education with the proceeds.
This all rings true to me. Got out of the market years ago because "market fundamentals"--the actual economic health of traded companies--no longer drive what the market does and how it acts. Put another way, the "Invisible Hand" of the market is so corrupt that individual investors have little chance and little security. Hats off to those who found a way to strike back, and thanks for the jolt of schadenfreude.
There will of course be a reaction from the Masters. Here's one possible outcome--the gamestop rebellion will be couched as a mild form of economic terrorism, and provisions will be included in the upcoming Domestic Terrorism Bill. The relevant provisions naturally will be written by Wall Street lawyers and lobbyists, just as healthcare lawyers and lobbyists wrote much of the ACA.
A positive outcome from this crowd-sourced technique might be in it's application to other sectors, such as oil/gas. Oil/gas is hugely dependent on wall street funding. How could the gamestop tactic be used to hasten the demise of oil/gas industry? Which would benefit the entire planet.
This is the problem with decoupling currency from hard money. The bankers and government will ALWAYS print away your wealth. Sooner or later, the fake economy of being close to the money printers overtakes the real economy of voluntary transactions.
Hedge Funds = Big Democratic Donors
Big Tech = Big Democratic Donors
Administration = Democrat
Funny how the hedge funds cry to the SEC and the administration and then all of a sudden we see this BS.
ANYONE who tries to spin the actions of Robinhood, Discord, the other trading platforms as ANYTHING OTHER than a clear attempt to protect the hedge funds from their stupid bets is just a pathetic Wall Street apologist and shill.
I have been trying to figure out what influential constituency actually leans conservative anymore. The liberals have a lock on Hollywood, Wall Street, big tech, Universities and k-12, the mainstream media and trial lawyers and as of now the legislative and Executive branches. What else? What's left for Conservatives? SCOTUS, My Pillow and energy companies? Strange times....
Farmers?
Actually in Minnesota Xcel Energy is in lock goose step with our tyrannical Democrat Governor
Agreed, I am in MN too. I was thinking more of the producers (oil/coal/gas).
Don't forget canned beans and sofrito!
Is covering their margins a concern for Robinhood?
I am reminded of a 20 something year old who committed suicide. It was discovered he was deeply in debt to Robinhood on margin trading. His family complained that he was not credit worthy and they were angry Robinhood extended so much credit.
actually I think it was worse than that. He really wasn't in debt that much but the way it was displayed in his account made it look like he was in the hole for 100s of thousands.
Sorry, but the hedge fund donors are predominantly Democrats. Look it up.
I agree with your fake red and blue dichotomy. What I find interesting is that most pols who claim to be "conservative" are actually liberal extremists, libertarian, small government types, not conservative, as in authoritarian. Republicans do have conservatives, the religious types, but we must be careful in considering the GOP to be a "conservative" party, which it is not in it's small government, anti-regulation world view.
What makes the fundamental difference the parties, IMO, is that the Democrats are a bit more progressive than the GOP as in it is willing to use government to help and protect, whereas the GOP isn't, except in providing subsidies to certain donors, which act as a tax break under another name and thus means of wealth redistribution up to the top.
January 27th and 28th, 2021 saw the Washington Post at last totally divorce itself from what used to be called “the news”. I have the Post delivered to my door every day. On the morning of January 27, I eagerly opened my copy to see what the Post had reported on one of the biggest if not the biggest news stories of the week, the revolt of the small retail investor against the hedge fund giants. To wit the meteoric rise of shares in GameStop which cost several hedge funds who had shorted the stock billions of dollars. A rare, rare victory of the small guy against the titans of the financial world. I couldn’t find a single mention of the story in the paper! Not on the front page and even not in the “business” section. I assumed I had missed the story and went back through the paper page by page. Nope, it wasn’t there. Not one word! In the real world of journalism this would have led to the firing of the editor. But we work under different rules now.
I can imagine the editors not knowing how to play this news. Yes, they could have simply stated the plain facts; the stock moved how much, and hedge funds lost so much, but they didn’t. News is about so much more than facts these days. The dilemma was this; clearly it was at least a symbolic victory for the small guy and a demonstration of a fearsome new power in the financial world and the Post staff and management saw themselves as champions of the little guy. On the other hand, it was a near mortal blow to some of the captains of the industry who have now become (at least for public consumption) friends of the Democratic party and fierce enemies of the guy who used to be president. (Don’t blame me for bringing him into the story, the Post did that on their own) And besides the Post is a business that has had its ups and downs in recent years, and it doesn’t pay to make enemies of these guys, not to mention the owner of the Post, Jeff Bezos is one of the world’s richest men and has much more in common, if not outright friendship with said titans. So the Post decided to punt and skip the story altogether. Perhaps it took them a day to consult with Mr. Bezos and others in the industry and in the world of politics to see how to spin the story. Oh, how I would like to be a fly on the wall of the editor’s office! I am sure there was some real debate going on! I am sure the Post’s woke staff had plenty to say about this story.
Move to Thursday the 28th. The story framing is complete, and it comes down on the side of the elites. Now it’s a front-page story. In a very long two-page article the Post plays the role of the hedge fund toady and defender. The small investor is now “a flash mob with money”. And we know what sinister connotations the word “mob” has taken on in the past few weeks. As crazy as it seems the article doesn’t mention the role of short sellers (who smell bad) until the twentieth paragraph on an inside page and doesn’t mention the specific hedge fund until the twenty-ninth paragraph when this information was all over the news. Unbelievable! The Post preferred to call the hedge funds “big Wall Street firms, “wealthy institutions”, and “big institutions”.
By late Thursday the political/financial industry dealt the small investor a savage blow in a naked show of force. Halting the purchase of GameStop shares but not their sale meant the market could go only one way, down, saving hedge funds from losing billions more if not saving some from total destruction. If this isn’t the definition of market manipulation, the word has no meaning. It will be interesting to see how the liberal mainstream media plays this story in coming days. They can’t support both sides. At least we know where the Post stands. The story is not over.
So the real issue now is not so much the little guys versus the hedgies but it's the fact that the system (Discord, Robinhood, TD, etc) are now forcing the price lower by basically stopping people from buying the stock.
And that's what the SEC should be investigating.
The SEC are the foot soldiers of the hedgies. They, or FINRA are the likely intervening party.
I agree. There us zero chance of the SEC investigating TD or any of the other trading platforms even though they should
How quaint . . . that the SEC should be investigating wrongdoing by Wall Street/Silicon Valley hedge funds and tech firms. I only wish I had that kind of faith in our government.
Should /= will
Glenn, one of the stories that got "memory-holed" by Obama's Praetorian Guard media was his role in persuading members of the Congressional Black Caucus to switch their votes on the 2008 bailout without receiving the protections for distressed homeowners that they had been holding out for. It should be better known as one of the original moments establishing the basic framework of the kind of woke neoliberalism that we're now so familiar with: the exploitation of identity politics as a means of providing cover for corrupt corporate powers.
Eric Weinstein has said it best (paraphrasing): It is far cheaper to invoke “racial/social justice” on behalf identity groups than confront the economic inequalities associated with social class and Wall Street hegemony.
Yes, but I would characterize it more the other way. Wall Street (and Silicon Valley, military-industrial complex, "Deep State", etc.) hegemons have found the perfect shield behind which they are able to hide their dastardly dealings: Social Justice (conceived only in terms of woke identity politics).
I hope this Gamestop/Reddit episode inspires new and original thinking about all the ways ordinary Americans -- politically left or right -- can legally undermine and dethrone our repugnant ruling classes.
That, gwb, is the critical center of current unrest: elites vs ordinaries. Elites have mastered the art of turning the ordinaries against each other with identity politics. Most of Congress, POTUS, MSM, Academia, etc... have purchased what the elites are selling without any questioning. Populism has a dangerous edge, and elitism is tyranny. We live in extraordinarily interesting times.
As someone else has said, democracy is "sacred" only until it becomes unmanageable.
I've always found the concept of hedge funds - in which people buy stocks not to invest in companies, but to speculate - to be immoral. You're basically gambling that certain companies will lose value, and make money when this happens. Hedge funds generate no actual wealth for society, they create nothing of value. They are parasites. And if you read the Reddit subs of the folks who are driving up the price of the hedge funds' target stocks to preclude the hedge funds from making money off of other people's losses, you'll find that my view is a common one. It's a way of screwing over the folks who have been screwing over our economic system for decades now. Hedge funds have siphoned trillions of dollars out of the stock market - trillions of dollars that could have, should have, been invested in R&D, marketing, new startups, etc., and instead did nothing but line the pockets of a very small number of people who are very good at anticipating when some companies would lose value. Anything that hurts the hedge funds is good for the American economy, and good for the American people.
Efficient markets have value. In an ideal world hedge funds help with price discovery, etc. If idiots are overpaying for a company living on hype, it's good if smart people tear into the stock and burst the bubble early.
Efficiency isn't the only value worth supporting.
The world is full of hype and we are bombarded by it constantly through ads, sponsored news, exaggerated science, and predictions that are basically divination. I'm glad somebody is being paid to cut into it.
I don't think that the hedge fund made "a terrible bet" - they made a very smart bet.... but they went to an extreme risk to make that bet and the Reddit folks simply capitalized on the system which gloriously made that risk a reality. The issue is not the betting process, it is the definition of 'risk.' The rigged game that the wealthy play by serves to negate that risk at the expense of others - and I am thrilled to see them suffer the consequences of [or, rather, that they *should* suffer the consequences of].
The public disclosure of the bet is what doomed them. They openly noted that a culturally important company (in the experience of the extremely online millennial generation) was worth failing in order for them to profit. They made themselves the target. There's a reason why Walt Disney, when buying up swampland in Central Florida used shell companies with odd names (Aye-Four, etc.) it prevented the locals from holding out for a better price, not understanding the deep pockets of the buyers.
When this started on Jan 7 or so, GME had 65 million shares on the board and Wallstreet short sellers had calls on 72.5 million shares. Meaning, the Wallstreet fund big wigs had somehow used leverage to buy more shares than actually existed.
This was so obvious (and blatantly illegal by the way) that even your average uninformed day-traders noticed. This meant that when the shorts inevitably came due, there weren't enough shares to buy to cover the calls, and if small investors held onto their shares instead of selling, the price would skyrocket, which would make the losses even bigger for the shorts as time went by.
It was the arrogance, greed and willful illegality(something they knew they could get away with, since they always had done so before) of the Citadel investment group and friends, which practically invited this act of populist uprising.
It was a chance to stick it to the yellow-tie fat-cats, and make some dough at the same time.
Robinhood is not run by idiots. They know who they have to fear, and it is not light-weight idiots like AOC or untouchable outsiders like Ted Cruz.
Face facts. The big dogs won this round. They stopped their bleeding by changing the rules mid-game. They won.
If one didn't sell on the 27th before the a-holes rigged the game, then the plebes still holding shares on the shorted stocks (GameStop, BlackBerry, etc.) are screwed.
Well, it was fun while it lasted.
Cruz had zero traction within the GOP in 2016 until the golden boys Jeb and Rubio got squeezed out. A MINORITY of GOP insiders were willing to lend aid to Cruz as a last gasp to try and stop the orange peril from taking over the party. Since then, Cruz is once again an outcast from the GOP party establishment and is definitely NOT a strong favorite for the nomination in 2024. But then again, the orange man was not a favorite of the establishment in 2016. So, maybe Cruz has an small chance of gaining the nomination, but I wouldn't bet actual money on it. Right now that seems like a sucker's bet.
As to my personal politics, I am a liberal. I voted for both Clinton and Obama twice, and did not vote for President in 2016. I had that luxury since I live in Washington State which Hillary was going to win by 15+ points even without my vote. I refused to vote for Hillary as a protest because of what she and the hacks at the DNC did to Sanders.
The thing is that during the Trump years the Dems appear to have gone completely bat-shit crazy. I don't recognize the Democratic party any more. The policy positions of the Dems have changed so much in the last 5 years that it just makes me dizzy to contemplate.
I used to be a liberal Democrat. Now, I am a liberal something else.
Every time Glenn said "Wall Street", I heard "Washington"..........because the problem isn't Wall Street......it's that Government has too much power.......and creates a market for "favors" from which they "sell" that power. If government had the Constitutionally limited role they're supposed to have........Wall Street wouldn't waste their time with their lobbying efforts......because Government has nothing to SELL!
This illustrates a lack of strategic thinking:
"because the problem isn't Wall Street......it's that Government has too much power"
Wall Street wants to control government because it's the ONLY thing that can control them, so they want to be the masters, not the controlled; if you destroy government's power, you also lose the ability to constrain the rapacious behaviors of the ultra-rich and we end up in permanent oligarchy.
Nonsense. The rich can't force you to do anything without the government to back them up.
Again, that's just non-strategic thinking.
Again, that's not an argument.
I'm not arguing, I'm pointing out short-sighted reasoning and the danger it poses.
Besides, you have "fuckall" chances of changing who has power without toppling the ultra-rich first, which is why I say "right and left" - EVERYONE who isn't rich - should STOP bickering with your other non-rich fellow victims and START joining with them to take down the control of the ultra-rich, starting by non-status-quo politics. And, I dare say Bernies' vision (better Tulsi's) of which way to go is decidedly better than the right-wing versions we hear, such as that of Trump.
Feudal England? Sure. The only choices are government stranglehold from DC or feudalism.
Does that pass for a good argument in your world?
This gave me a chuckle:
"The only choices are government stranglehold from DC or feudalism."
PERHAPS you meant, "the only choice is feudalism run by the ultra-rich out of DC via their puppets in government."
Indeed, that's what the oligarchs want. Its up to us to overthrow them via unified political power. Again, government is the ONLY thing that can constrain the ultra-rich which is why We, The People need to be in control of it instead of its present set of masters.
Yeah I’ll pass on giving up my freedom to prevent your parade of horrible.
Enjoy the evening
This gave me a chuckle:
"The only choices are government stranglehold from DC or feudalism."
PERHAPS you meant, "the only choice is feudalism run by the ultra-rich out of DC via their puppets in government."
Indeed, that's what the oligarchs want. Its up to us to overthrow them via unified political power. Again, government is the ONLY thing that can constrain the ultra-rich which is why We, The People need to be in control of it instead of its present set of masters.
Perhaps after you look up the false dilemma fallacy.
Have a great day
Without the ability to print, much of Wall Street is nuetered. Once you go off hard money, it's inevitable the government and bankers will collude to steal your wealth via currency devaluation.
It's not "collusion"; one controls the other - and we need to end that.
Without the ability to print, the bankers couldn't steal your money.
That comment shows ignorance about our monetary system, however, you might agree with me that we need to nationalize the Federal Reserve, as I have already proposed here in these comments today.
Legalizing the theft won't stop it.
Bipartisan Consensus, or what I like to call, Well Funded Organized Crime.
In 1999 and 2000, President Clinton signs the Gramm–Leach–Bliley Act and Commodity Futures Modernization Act. These acts made it legal for our banks to operate as casinos (CDOs, CDSs, MBSs…).
“I got bad advice on derivatives: Clinton”
https://economictimes.indiatimes.com/news/international/i-got-bad-advice-on-derivatives-clinton/articleshow/5829941.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
In 2002, President Bush issued America's Homeownership Challenge to increase commitment to the minority market.
https://www.youtube.com/watch?v=QYvtvcBKgIQ
In 2005, Barney Frank: “Obviously, speculation is never a good thing…but you’re not going to see the collapse that you see when people talk about a [housing] bubble. And so, those of us on our committee, in particular, will continue to push for homeownership.”
https://www.youtube.com/watch?v=iW5qKYfqALE
2008-2009, "The $700 billion Wall Street bailout turned out to be pocket change compared to trillions and trillions of dollars in near zero interest loans and other financial arrangements that the Federal Reserve doled out to every major financial institution," Sanders said.
https://money.cnn.com/2010/12/01/news/economy/fed_reserve_data_release/index.htm
And the cover up. “Eric Holder, Wall Street Double Agent, Comes in From the Cold”
https://www.rollingstone.com/politics/politics-news/eric-holder-wall-street-double-agent-comes-in-from-the-cold-49262/
A battle of epic proportion has seen it's first skirmish. The GME short play aimed at Wall Street hedge funds who had shorted 170% of the float, penetrated their sacred gilded coffers and ransacked their treasure.
They were beaten back today by effectively moving the goal post whilst the winning kick was in the air. I think battle lines will continue to develop and the plutocrats will not go gently into battle.
The hardscrabble bettors may find ways around the lines. At least one hopes.
I have nothing against hedge funds, except possibly the carried interest tax loophole they all exploit. https://www.investopedia.com/articles/investing/101415/2-ways-hedge-funds-avoid-paying-taxes.asp But, that's not their fault. It's Congress's fault and one more way they protect rich, entrenched interests.
I have nothing against short sellers. They typically provide a valuable service, and much fraud has been uncovered by short sellers who bet against a company they believe is perpetrating a fraud. They have an economic incentive to do this, so they shouldn't be viewed as heroes. But, it benefits the market when fraud is uncovered or deterred (e.g., don't engage in fraud for fear that you might attract scrutiny of short sellers looking to profit).
The issue here is the exactly the same as the issue that arose when Parler was banned: Corporations are abusing their platforms to rid themselves of those engaging in disfavored speech.
In Parler's case, it was conservatives. Don't kid yourselves for a moment that they were banned because Parler is where capital protests were organized. If that were true, Facebook and Twitter would also be banned. But, Parler is smaller and generally has speech that is disfavored. While more capital protests were organized on Facebook and Twitter, those platforms already are deplatforming those whose speech they don't like. So, Apple, Google and Amazon don't lift a finger or even mention them when deplatforming Parler.
It's the same thing with the WSB crowd. It's the speech that's disfavored. The monied interests don't like that they can band together, share ideas and impact the entrenched interests of billionaires. So, they deplatformed this collection of disfavored speakers: take away their platforms on Reddit; take away the Discord server; eliminate their ability to express themselves (in the form of stock trades) on Robinhood; etc.
It's just another episode of crony capitalism and collusion. Most people don't care about Parler. Most don't care about the WSB crowd. The problem is: Most won't care until they come for you. Big tech can pick you off, one by one because individually you don't matter. This playbook has been in effect for at least 10 years now. It's accelerating, but it didn't start with Parler. It's been going on for quite some time (e.g., Cloudflare and 8Chan, but many incidents predate that as well.)
I have a Frankfurt investment banker friend who puts it most simply: “America has two conservative parties.”
Yep, my European friends easily see what a HUGE swath of Americans do not - and what you just stated. I deeply wish the vast majority of us (including a very sizable percentage of those who comment here) would wake up to the fact you just stated, and, in particular The Democrats are NOT "left." ... It leads them to wrong conclusions... And, it helps the oligarchs win because that kind of deep misunderstanding keeps us from coming together to defeat the ultra-rich.
Americans don’t see the reality of the Democratic Party for the reason suggested by Eric Weinstein: the Democrats use identity groups as virtue signalling cover, while putting people like Janet Yellen in Treasury.
Exactly. Main Street democrats don't yet realize that they are actually the party of Wall Street, Big Tech, "lockdown" corporations (Amazon/Walmart, etc), endless war, and the literal formation of the Ministry of Truth.
But they are going to find out.
Bingo. And THAT is why they have white guilt.
That's too simple. There are social conservatives and economic consevatives. Democrats are not social conservatives.
Glenn your enthusiasm is palpable! The giddy look as you explain this situation is priceless! Thank you! And p.s I have a friend who made over a million dollars!!! He plans to fund his future children’s education with the proceeds.
Make sure he holds aside the funds for taxes first ; )
This all rings true to me. Got out of the market years ago because "market fundamentals"--the actual economic health of traded companies--no longer drive what the market does and how it acts. Put another way, the "Invisible Hand" of the market is so corrupt that individual investors have little chance and little security. Hats off to those who found a way to strike back, and thanks for the jolt of schadenfreude.
There will of course be a reaction from the Masters. Here's one possible outcome--the gamestop rebellion will be couched as a mild form of economic terrorism, and provisions will be included in the upcoming Domestic Terrorism Bill. The relevant provisions naturally will be written by Wall Street lawyers and lobbyists, just as healthcare lawyers and lobbyists wrote much of the ACA.
A positive outcome from this crowd-sourced technique might be in it's application to other sectors, such as oil/gas. Oil/gas is hugely dependent on wall street funding. How could the gamestop tactic be used to hasten the demise of oil/gas industry? Which would benefit the entire planet.
This is the problem with decoupling currency from hard money. The bankers and government will ALWAYS print away your wealth. Sooner or later, the fake economy of being close to the money printers overtakes the real economy of voluntary transactions.
When that becomes apparent, buckle up.
I'm all for the currency being decoupled--if you're referring to metal standard. MMT forever baby.
I think redditors should get together and create a Mutual Fund.
Really good Glenn, really good work