Clown car, clown country, clown world.
If America is a clown country, the ruling class on Wall Street, along with their ruling class friends in Washington, are driving the clown car.
You might have noticed that the suits are very upset this week. That’s because anonymous Redditors, while presumably brushing the Cheeto dust off their laptop keyboards, decided to do a little bit of stock speculation.
They had no fancy tools, no quantitative analysis, no Bloomberg terminals, and they’re certainly not members of the elite class who are entitled to engage in such sophisticated business.
What they did have was unbridled rage and disdain for the drivers of the clown car, and when they found a way to exploit them, they hijacked the clown car for themselves and took it for an epic joyride.
But if there’s anything the ruling class hates, it’s losing money—especially to a bunch of unwashed punks who were laughing in their faces while they sent Melvin Capital hurtling towards bankruptcy. In an instant, the rightful owners of the clown car demanded it back.
You see, only fancy hedge fund managers—members of the Wall Street ruling class—are allowed to decide the value of a stock. Those hedge fund managers decided the value of GameStop, a brick and mortar retailer, was very little. Hence the massive short position. They were allowed to short the stock as they pleased, which of course, in turn, continued to drive down the value of the stock, helping their positions. They knew what they were doing. Their friends at other hedge funds knew it, too, and took full advantage, pummeling GameStop into the ground.
But when Reddit decided the value of GameStop, a cutting-edge video game distribution company, was worth $350 per share (or at least worth enough to watch hedge fund managers cry, which is a hilarious source of entertainment) they were banned from purchasing the stock on almost every platform.
In our clown country, only the ruling class is allowed to win. If the ruling class is not winning, it will simply change the rules of the game.
Matt Taibbi takes the piss:
The only thing “dangerous” about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter. That bit about investigating this as a “pump and dump scheme” to push prices away from their “fundamental value” is particularly hilarious. What does the Washington Post think the entire stock market is, in the bailout age?
America’s banks just had maybe their best year ever, raking in $125 billion in underwriting fees at a time when the rest of the country is dealing with record unemployment, thanks entirely to massive Federal Reserve intervention that turned a crash into a boom. Who thinks the “fundamental value” of most stocks would be this high, absent the Fed’s Atlas-like support in the last year?
In other words, it was all well and good for investment banks and executives of phoney-baloney companies to gorge themselves on funhouse profits on a funhouse economy, but when amateurs decided to funnel just a bit of this clown show into their own pockets, finance pros wailed like the grave of Adam Smith had been danced upon.
GameStop has prompted more pearl-clutching than any news story in recent memory. Expert after grave-faced expert has marched on TV to tell Reddit traders that markets are complicated, this isn’t a game, and they wouldn’t be doing this, if they really understood how things work.
“I’m not sure everybody fully understands what’s happening here,” was the melancholy comment on CNBC of Wall Street’s famed fluffer-in-chief, Andrew Ross Sorkin. The author of Too Big to Fail added in pedagogic tones that while this “stick it to the man moment” might feel good, betting up the value of GameStop above Delta Airlines just isn’t right, because “there are no fundamentals here.”
Fundamentals? How much does Sorkin think his exalted Delta Airlines would be worth now, if the Fed hadn’t stopped its death plunge last March? How much would any of the airlines be worth in the Covid age, with their fleets of mothballed jets? What a joke!
Furthermore, everybody “understands” what happened with GameStop. Unlike some other Wall Street stories, this one isn’t complicated. The entire tale, in a nutshell, goes like this. One group of gamblers announced, “Fuck you!” Another group announced back: “No, fuck YOU!”
That’s it. Or, as one market analyst put it to me this morning, “A bunch of guys made a bet, got killed, then doubled and tripled down and got killed even more.”
He digs into the real nitty-gritty of the thing, and it’s worth a read if you’re interested. But for me, “No, fuck YOU!” is all I need to know, and t’will suffice. Anything that reduces The Power to bitching and boo-hoo’ing this way, hey, I’m good with it.