I was up late doing yesterday’s GameStop post, so today’s LinkSwarm may be a bit briefer than you’re used to. Nope! Still huge!
At one point, it was estimated that the losses accumulated by GameStop short-sellers approached $5 billion. Melvin Capital, the now-notorious hedge fund with the huge GameStop short position, eventually required an infusion of $2.75 billion in cash from an even larger hedge fund to cover its possession and remain solvent.
And that’s when the Wall Street empire struck back. Suddenly, the federal Securities and Exchange Commission, or SEC, which purports to be a Wall Street regulator but instead operates as little more than a Wall and Broad soothsayer to a public skeptical of Wall Street’s power, weighed in and intimated that it might investigate or even shut down the trading of GameStop stock to prevent the price from getting even higher.
Then the Wall Street-backed trading apps and the Wall Street brokerages joined in, announcing they would no longer allow their users and retail investors to buy GameStop stock. The result? When you can no longer buy a stock, its price can only go in one direction: down.
The whole saga has spawned a mini-industry of commentary on trading, markets, Wall Street, hedge funds, regulation, efficient markets theory, and who knows what else. Hedge funds are bad! No, hedge funds are good! Markets are efficient vehicles for asset price discovery! No, we need strict regulation to prevent mob-incited runs on banks!
They all miss the point. What’s happening right now has nothing to do with hedge funds or free markets or pricing theory or any of that. What’s happening right now is another front in the major war taking place in institutions and countries across the world: It’s the elite versus the populists.
Wall Street has a long, storied history of viciously crushing short-sellers. It’s something of a local pastime. Just ask David Einhorn, who wrote an entire book on the industry’s efforts to destroy him for the crime of shorting the stock of a bank that was covering up the fact that a huge chunk of its loans were garbage and would never be paid back. The GameStop saga isn’t about the benefits, or evils, of short-sellers.
The real story is how “retail investors” — the industry term for regular people who day trade now and then or have a small brokerage account for retirement or to buy stocks every now and again for fun — figured out how to take down a financial leviathan. It’s not that Wall Street dislikes retail investors, it’s that Wall Street views them as little more than commission factories for the big brokerage houses.
Those rubes don’t know anything. They’re not sophisticated. They don’t have the credentials or pedigrees of the geniuses who simultaneously destroyed the housing market and economy in 2008. And they certainly don’t have the power to move markets.
It’s Wall Street’s job to move markets. It’s Wall Street’s job to tell people which stocks and bonds to buy, which conveniently just happen to be the same assets that the mega-banks are desperate to get off their balance sheets.
A bunch of trash, mortgage-backed securities based on mortgages that will clearly never get paid back? Just put them all in the same garbage bag, claim they couldn’t all possibly start to rot at once, and then demand that the ratings agencies whose salaries you pay stamp them not as trash, but as pure gold. Then, when magically all those bags of garbage start to stink to high heaven, why, then it’s time to demand that the federal government — funded by those retail investor rubes who will probably lose their jobs and homes and savings because of those bags of Wall Street’s garbage — bail every last one of them out.
See, retail investors don’t move markets. Until they do. Which, in the case of the Redditors bidding up GameStop stock, they did. And that cannot be tolerated. The whole GameStop saga isn’t about finance or politics. It’s David vs. Goliath, the have-nots vs. the haves, the underdog vs. the heavy favorite with the best talent and training and equipment money can buy. It is a perfect microcosm of the war between the populists and the elites, the individuals vs. the institutions, the people vs. the powerful.
A bunch of internet randos found a way to take financial advantage of a company that had backed itself into a corner. They banded together, executed the strategy, and made bank. They used the exact same rules and systems that Wall Street has used for decades to screw individual investors out of their money.
That was the Redditors’ real crime. Because that’s not allowed. You are not allowed to use the same set of rules for your own advantage.
The rules here are simple: Heads Wall Street wins, tails you lose. The institutions set the rules, not you. The elite, not the populace, will determine what is allowed and what isn’t.
The great theme of the Trump years, the one historians will note a century from now, was the failure of America’s expert class. The people who were supposed to know what they were talking about, didn’t.
The failure began with the country’s top consultants and pollsters. Candidate Trump did almost everything lavishly paid political consultants would have told him, and did tell him, not to do — and he won. The most respected pollsters, meanwhile, predicted a landslide for Hillary Clinton. America’s best and brightest political adepts turned out to know very little about the elections they claim to understand.
Also during the 2016 campaign, an assemblage of top-tier academics, intellectuals and journalists warned that Mr. Trump’s candidacy signified a fascist threat. Timothy Snyder, a historian of Nazism at Yale, was among the most strident of these prophets. “Be calm when the unthinkable arrives,” he warned in a Facebook post shortly after the election. “When the terrorist attack comes, remember that all authorities at all times either await or plan such events in order to consolidate power. Think of the Reichstag fire.” Many experts stuck with the fascism theme after Mr. Trump’s election and throughout his presidency. That these cultured authorities couldn’t tell the difference between a populist protest against elite contempt and a coup carried out by powerful ideologues will go down as one of the great fiascoes of American intellectual history.
The fascism charge was only the most acute form of the claim that Mr. Trump was carrying out an “assault on democracy.” Some semantic clarification is in order here. When intellectuals and journalists of the left use the word “democracy,” they typically are not referring to elections and decision-making by popularly elected officials. For the left, “democracy” is another word for progressive policy aims, especially the widening of special political rights and welfare-state provisions to new constituencies. By that definition any Republican president is carrying out an “assault on democracy.”
Mr. Trump assaulted democracy in the ordinary sense of the word, but he did so only after the 2020 election. That effort was discreditable and disruptive, but it was also delusional and ineffective. It was not the assault the president’s expert-class critics had foreseen.
Perhaps those critics failed to understand Mr. Trump’s assault on democracy because they had carried out a similar sort of assault in 2016-18, with the support of the federal bureaucracy and the nation’s political and cultural elite. I’m referring to the Russia scare: the belief that Mr. Trump won only because his campaign “colluded” with agents of Moscow, and that his election in 2016 was therefore illegitimate. The theory made sense only if you couldn’t grasp the obvious reasons for Mr. Trump’s victory, namely that Hillary Clinton was a terrible candidate and that Obama-era progressivism had become sufficiently unpopular in the Midwest to throw the election to the nationalist candidate. Somehow it was easier for smart and accomplished people to believe that a TV celebrity and political neophyte with attention-deficit issues had entered into a diabolically ingenious pact with a foreign dictator in which the dictator helped him pick up just enough votes in the states he needed to win.
It took a 22-month investigation by a special counsel to establish an absence of evidence that Mr. Trump’s campaign had conspired with the Russians. America’s best minds and most influential leaders had spent more than two years obsessing over an idiotic conspiracy theory.
This spectacular failure of the expert class would have been impossible without the willing support of a credulous news media. That Mr. Trump won the presidency largely by denouncing the media should have suggested to leading journalists and media executives that something in their industry had gone badly wrong. Instead most of them took his rise as license to indulge their worst instincts.
Reporters treated every turn of events as evidence of Mr. Trump’s unique evil. They regarded every preposterous accusation put forward by his political foes as reasonable and likely true. The repeal of “net neutrality,” an Obama-era regulation on internet service providers, heralded the end of the open internet (it didn’t). The administration built “cages” in which to cram children of illegal border crossers (it didn’t). The president praised neo-Nazis as “very fine people” (he didn’t). His postmaster general was removing mailboxes to steal the election (an obvious lie). In retrospect, it was hardly surprising that so many Americans believed Mr. Trump’s fictitious claims about the election. Reports of his defeat, accurate though they were, meant little coming from news organizations that cared so much about discrediting him and so little about factual truth.
America’s foreign-policy elite didn’t perform appreciably better. For decades, they had insisted that peace between Israel and the Arab world was impossible without a long-term solution to the Israel-Palestinian problem. It was an axiom, no longer up for debate. Mr. Trump followed through on a promise long made but not kept by the U.S. government to recognize Jerusalem as the capital of Israel. Foreign-policy experts the world over predicted hellish payback from the Arab world, but the recognition went forward, the U.S. Embassy moved, and the payback consisted of a day’s worth of inconsequential protests.
Meanwhile the administration pressed ahead with a diplomatic push to strike commercial and diplomatic deals between Israel and Arab states. The United Arab Emirates, Bahrain, Sudan and Morocco announced they would establish formal relations with Israel, and Saudi Arabia may do the same. The foreign-policy clerisy, having been wrong about the central question of global diplomacy for the past four decades, predictably ignored these achievements.
In the few short days following the collapse of President Donald Trump’s attempts to bring evidence of electoral fraud to the attention of the state legislatures and the courts—not to mention the calamitous events of Jan. 6—the ascendant left has moved swiftly to capitalize on what has proved a stunning propaganda victory for them and neutralize their enemies on the right.
Forget the looting, burning, and general civil unrest at the hands of BLM and Antifa in cities across America last summer—for which next to no one has yet been punished, and which was widely cheered by both the mainstream media and Democrat politicians up to and including Vice President-elect Kamala Harris. That’s all ancient history now, replaced by the “insurrection,” the “armed riot” at the Capitol, the “worst attack on Washington” since the War of 1812, when the British burned the capital and the White House.
Of course, it was not. Unrecalled by the born-yesterday media, for example, is the 1954 attack by four Puerto Rican separatists on the House of Representatives, during which some 30 shots were fired and five congressmen were wounded; the terrorists were later pardoned by Jimmy Carter in 1979. Also forgotten: the bombings of the Capitol building and the Pentagon in the 1970s by the radical leftists of the Weather Underground, led by Barack Obama’s buddy William Ayers.
George, where you make a mistake is that people coming from the liberal side like you, you immediately say everything’s a lie instead of saying there are two sides to everything. Historically what would happen is if said that I thought that there was fraud, you would interview someone else who said there wasn’t. But now you insert yourself in the middle and say that the absolute… fact is that everything that I’m saying is a lie…. Let’s talk about the specifics of it. In Wisconsin, tens of thousands of absentee votes had only the name on them and no address. Historically those were thrown out, this time they weren’t. They made special accommodations because they said, oh, it’s a pandemic and people forgot what their address was. So they changed the law after the fact. That is wrong, that’s unconstitutional. And I plan on spending the next two years going around state to state and fixing these problems and I won’t be cowed by liberals in the media who say, there’s no evidence here and you’re a liar if you talk about election fraud. No, let’s have an open debate. It’s a free country.
The order, which is the first the governor has signed since October and the first non-coronavirus related order since the pandemic began last year, directs agencies “to use all lawful powers and tools to challenge any federal action that threatens the continued strength, vitality, and independence of the energy industry.”
“Each state agency should work to identify potential litigation, notice-and-comment opportunities, and any other means of preventing federal overreach within the law,” it states.
“And when they do that,” added Abbott during the press conference, “that will arm Texas to be prepared to fight back.”
The governor called the order “a homework assignment for every state agency in Texas.”
It will be swell to see democrats squander tens of millions of dollars on a race they can’t win yet again…
The Lamb and Flag, once frequented by the likes of Lord of the Rings author J.R.R. Tolkien and his friend C.S. Lewis, who wrote The Chronicles of Narnia, has suffered a disastrous loss of revenues since the start of the pandemic.
It first opened in 1566 and moved to its present location on St Giles, a broad thoroughfare in the city centre, in 1613. It is owned by St John’s College, one of 45 colleges and private halls that make up the University of Oxford.
SUPERCUT!
Jen Psaki (@jrpsaki) is going to “circle back” pic.twitter.com/uf5yAWmcYy
— Tom Elliott (@tomselliott) January 26, 2021
On one side of the fight are the hedge fund managers. These guys are good-hearted regular folks living out the American dream by manipulating markets so that companies will fail and they can buy another desperately needed yacht.
On the other side are a bunch of Cheeto-stained Redditors who are dangerously manipulating markets to try to make money. These guys obviously weren’t informed that the stock market was only for rich people to make money. They’re probably Nazis and alt-righters too.
good evening people of gotham, you have 24 hours to turn in The Batman pic.twitter.com/yVFpVSd8Bv
— evan (@evcon) January 28, 2021
Let me show you how it's done
"I have always put my own money into #tailsofjoy. For years, every time a dog walked by, my husband would say, 'There goes our beach house'."-@ElayneBooslerhttps://t.co/TxkYe1EHBb is 100% volunteer so 100% goes to rescue!
IG funny.animals.clips pic.twitter.com/P2Y92vnfgC— Elayne Boosler's Rescue Dog, Ralph (@BooslerS) January 29, 2021
(@_wintergirl93) 