The Political Implications of the Gamestop Rebellion.
For a few hours this morning it seemed that all was lost for r/WallStreetBets and their crusade to teach Wall Street billionaires a lesson, when one exchange after another banned buying in the most-shorted stocks, an unprecedented unilateral decision made by brokerages (one of which, Robinhood, is effectively joined at the hip with hedge fund Citadel, which in turn is a part owner of Melvin Capital which was destroyed by the short squeeze that Robinhood banned, so a clear conflict of interest), and one which sent GME stock as low as $112 after trading at $500 just hours earlier.
Citadel also paid Janet Yellen, the new Treasury Secretary and ex-Chair of the Federal Reserve, over $800k in speaking fees. Hmmm.
However the hedge funds short Gamestop, who may have declared victory prematurely, had to put the champagne back on ice because just after the close, amid tremendous pushback from clients, Congress, and the public — not to mention what appears to be a liquidity crisis as millions of accounts bailed — Robinhood announced it would allow buying to resume on Friday, sending the stock up almost double after hours.
The little guys picked Gamestop because the Wall Street shorters had shorted 117% of its stock — more shares than existed in Gamestop. Normally this level of shorting would have driven Gamestop into the ground and possibly out of business, in a self-fulfilling prophecy that made Wall Street richer.
Last night we speculated that if indeed there are more shorts — both synthetically or otherwise — than available shares, then the only place bearish hedge funds will get shares to cover their shorts is from the company itself. Which means that Gamestop can theoretically ask for any price (somewhat reasonable) and hedge funds will have to agree. After all, it’s not GME’s fault that hedge funds were so greedy they overshorted the company, which really is what all this boils down to.
Of course, that is a bit of an idealistic take, one where hedge funds finally are forced to pay for their stupidity. Alas, in a country as corrupt as this one, that’s unlikely to ever happen.
Maybe millions of smaller investors are not in it just for the profits, but for the LOL — a big FU to Wall St and the Establishment, who do so much to rip them off, order them around, and make their lives miserable. It’s like voting for Trump.
TheQuartering, with a clue about why RobinHood reversed course:
Robinhood Took Years To Build & Only Hours To Destroy! Google Has Removed Over 100,000 Negative Reviews, Class Action Lawsuits Are Underway & We’re Not Done Yet!
Put These Assholes Behind Bars
Robert Stacey McCain:
Oh, my! Oh, my! What a storm of hilarious schadenfreude has overtaken the stock market this week!
The hero of this saga is a guy with a Reddit account called “DeepF**kingValue” who, in September 2019, accumulated $53,000 in stock in the retail chain GameStop. …
Liberals are actually claiming that “Trumpism” is what has caused the GameStop bonanza. The hedge funds got screwed over by “white supremacists,” some liberals are arguing on Twitter.
What does this claim imply? It implies that any challenge to the status quo is illegitimate, that it’s “hate speech” or “terrorism” any time you do something or say something that disrupts the ordinary process by which rich people get richer and powerful people exercise power.
Wall Street giants are calling foul after having been beaten at their own game by a bunch of guys on the internet. It’s hard not to cheer.
A user comments: “Robinhood canceled stock orders on #gme #amc #NOK etc…. There should be a class action lawsuit. I thought we had a free market. So Wall Street is OK with me losing hundreds of dollars, so that rich investors can’t be called out on their risks.”
When push comes to shove, the oligarchs display an astonishing solidarity. …
In the words of George Carlin, it’s a big club and you ain’t in it.
I’m seeing a lot of FB friends who I’m sure voted for Biden talking about how rigged and corrupt the system is as their trades on Robinhood and similar platforms are blocked. This is likely to make the “great reset” a lot more difficult. Also, if a lot of retail investors get the idea that the market is rigged against them — because, you know, they see it happening — that’s going to be a long-term drag on the markets, and on the many people who make their money, one way or another, off of retail investors.
The result was that GameStop, which had been trading between $3 and $10 a share, rocketed north of $300. …
This display of spontaneous group power by a bunch of previous unknowns has frightened the Really Smart People™ …
Meanwhile, regulators huffed and puffed, and CNBC was filled with industry bigshots arguing that this sort of thing shouldn’t be allowed — although, as critics noted, the Reddit mob was just doing to the short-sellers what Wall Street insiders do all the time to retail investors. …
Writing for The Post this week, Charles Gasparino explained why the little guys got together to buy GameStop: “Mostly, they’re out to hurt the big guys.”
The Big Guys’ problem is that nobody likes them much. From Silicon Valley to Wall Street, they’re deeply unpopular with ordinary Americans, on both the left and the right, resentment they’ve stoked with selfishness, arrogance and condescension. Their solution to this unpopularity has been to use their control over online platforms, and their influence over the government, to silence their critics.
But they can’t stop the signal. No sooner did the tech giants collude to shut down Twitter alternative Parler than a new revolt sprang up somewhere else entirely among stock traders on Reddit. What will it be next? Truck drivers refusing to deliver food to Silicon Valley? Plumbers boycotting “woke” executives? It’ll probably be something cleverer and less foreseeable than that, but it’ll be something. The more the techno-elite tightens its grip, the more Americans will slip through its fingers.
The realization that the markets are corrupt and unfair, like so much else in society (elections anyone?), has spread considerably due to the Gamestop episode. Including to the young lefty crowd.
Since the GFC in 2008, all the markets have been manipulated. “There are no markets, only interventions” — Chris Powell. Central banks have ruled all the bond, share, and commodity markets, to one degree or another.
The market manipulation is greatest in gold and silver, whose prices have been manipulated downwards by agents of the central banks since the mid-1990s. After all, gold and silver are the old money, the competitor to the modern paper currencies produced by the central banks. Surging prices of precious metals indicates a lack of confidence in their product,.
The little guys coordinating on Reddit are considering getting into silver, as the biggest downward manipulation and potentially greatest short squeeze of all. But then they would be taking on not only a few Wall St hedge funds, but all the world’s central banks simultaneously. The establishment would just change the rules to suit themselves to ensure they won.
But at some point we move beyond mere rules set and reset by the establishment. Physical gold and silver are immune, for instance. And see all those troops in Washington? Both are examples of moving outside the usual rules.
A reader adds:
Ironically and despite its name, Robinhood was set up by the big boys to rip off the little people. Robinhood trades had no brokerage fees because information about the little people’s trades was sent, ultrafast, to Citadel so that Citadel could front-run the peasants’ trades and steal from them.
They locked us up, shut down the economy and gave us $1200–what did Americans do? They decided their favorite new video game is fucking with hedge funds. I’ve never been prouder.
They have rigged everything, silenced dissent with tech censorship and financial deplatforming, rigged the economy with insider trading, rigged democracy with lobbying and mass immigration, and they’ll tell you with a straight face that racist rednecks are the problem.
Remember when senators got coronavirus briefings before the public and sold off millions of dollars in stocks before the crash last year and faced no consequences and no regulation? Then reddit made one stock into a meme and they’re talking about restructuring the whole market.
Glenn Reynold’s friend:
10,000 national guard troops to Wall Street by Monday.