Originally published, January 28, 2021, 11:50 am.
January 28, 2021, 9:48 pm:
Robinhood, a brokerage that supposedly “democratizes” trading in stocks is restricting trading on stocks that were targeted by short-selling hedge funds and then in a countermove by retail investors to squeeze the hedge funds. I saw plenty of shrieking about hypocrisy on my Twitter feed and it appears my tweeps actually have a point.
January 29, 2021, 3:41 am:
January 29, 2021, 12:12 pm, revised 3:01 pm:
January 29, 2021, 1:15 pm:
January 29, 2021, 3:01 pm:
When paleoconservatives, the tendency of conservatism that includes neo-Nazis and white supremacists, say something like this, it’s “Blacks and browns” who pose the perceived threat:
Asked earlier by a recruit what to prepare for, [Jessica Marie] Watkins allegedly wrote in November that if [Joe] Biden became president, “our way of life as we know it is over. Our Republic would be over. Then it is our duty as Americans to fight, kill and die for our rights.”
“If Biden get the steal, none of us have a chance in my mind. We already have our neck in the noose. They just haven’t kicked the chair yet,” she said, according to the indictment.
In this case, it’s Joe Biden or the government, which in my mind, brings it back to authoritarian populism. But it is a paleoconservative level of paranoia.
Spencer S. Hsu, Rachel Weiner, and Tom Jackman, “Self-styled militia members in three states began planning in November for recruits, weapons ahead of Capitol breach, U.S. alleges,” Washington Post, January 27, 2021, https://www.washingtonpost.com/local/legal-issues/self-styled-militia-members-in-three-states-began-planning-in-novembe-for-recruits-weapons-ahead-of-capitol-breach-us-alleges/2021/01/27/f13b0bfc-60b9-11eb-9061-07abcc1f9229_story.html
The picture I was getting on Twitter is largely consistent with the New York Times account of small “investors” deciding to stick it to hedge funds by buying shares in stocks that the funds had decided to “short,” running the value of those stocks up, “squeezing” the funds.
The underlying sentiment is generally a lot like this:
In short, revenge against billionaires who’ve gotten a lot richer even before the pandemic, but especially during the pandemic, while a lot of people have lost their jobs and face poverty and eviction. Some are parroting back the lines that victim-blamers have aimed at them:
And that’s pretty much how the New York Times has it:
Ben Patte, 16, a high school student in Wisconsin who said he made $750 off GameStop stock, said the campaign felt like vindication for himself and fellow young traders. “It’s a good opportunity to make money and stick it to the hedge funds,” he said. “By buying GameStop, it’s kind of like beating them at their own game.”
No one knows how this ends. Some analysts say the intense activity could eventually prompt a wider sell-off in the market by forcing hedge funds on the losing side of these trades to sell parts of their portfolios to raise cash to cover their losses. . . .
Justin Speak, 27, an evangelical pastor in California, and his wife, who recently left her job to raise their children, have made $1,700 off GameStop in the past week. Mr. Speak said that so far they had mainly put the money toward a new bed. He described a sense of frustration at how well those in the financial sector have done since the financial crisis of 2008.
“There’s a catharsis to actually making money off their pain a little bit,” he said of his modest earnings from GameStop. His wife put it more bluntly: “Eat the rich.”
The risk of that wider sell-off is, of course, there, and that ultimately hurts the folks pushing this. The rich are gambling with money they can afford to lose; these folks aren’t. Which means capitalism wins again, at least in the interim.
It’s probably also worth noting that Elon Musk, who is very much among the winners in this pandemic-associated widening of social inequality, and notorious for despising short-selling, helped publicize this effort.
Matt Phillips and Taylor Lorenz, “‘Dumb Money’ Is on GameStop, and It’s Beating Wall Street at Its Own Game,” New York Times, January 27, 2021, https://www.nytimes.com/2021/01/27/business/gamestop-wall-street-bets.html
Eric Levitz, “Robinhood Banning GameStop Proves the Free Market Is a Lie,” New York, January 28, 2020, https://nymag.com/intelligencer/2021/01/robinhood-ban-gamestop-share-price-explained.html
Sujata Rao, “Losses on short positions in U.S. firms top $70 billion – Ortex data,” Reuters, January 28, 2021, https://www.reuters.com/article/us-retail-trading-shortbets-idUSKBN29X1SW
Kevin Stankiewicz, “Leon Cooperman on GameStop Reddit speculators: ‘I’m not damning them’ but it will ‘end in tears,’” CNBC, January 28, 2021, https://www.cnbc.com/2021/01/28/leon-cooperman-on-gamestop-reddit-speculators-im-not-damning-them-but-it-will-end-in-tears.html
Hamza Shaban, “GameStop stock roars back after Robinhood lifts trading freeze,” Washington Post, January 29, 2021, https://www.washingtonpost.com/business/2021/01/29/gamestop-stocks-robinhood-reddit/