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Thread: GameStop, shorts and Reddit. Storming the Capital...

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    Default GameStop, shorts and Reddit. Storming the Capital...

    I'm not a stock market guy, but this Gamestop / Reddit drama is interesting.

    Background:

    GameStop is a stock that is usually subject to shorting. That's when an investor borrows shares, sells them, buys them back at a lower price and profits. Ex: One share of X is borrowed, sold at $10/share, bought back at $8/share and returns the stock to the lender. The short results in a $2 gross profit.

    Because the investor has to buy back the shares in order to return them to the lender, the volume of buying back can result in a short squeeze - where the value of the stock rises. Sometimes it rises to more than the sell price, resulting in a loss to the speculator.
    Ex: One share of Y is borrowed, sold at $8/share, a short squeeze causes the price to rise to $10/share and the investor loses $2 to buy back the stock he has to return to the lender.

    The reason people short stocks is that it's a way to profit when the market isn't gaining (stock values aren't rising).

    Reddit Drama:

    Andrew Left of Citron posted on Twitter that GameStop was a good short. A Reddit subforum r/wallstreetbets organized to beat the short-sellers. A bunch of malcontent millennials, $600 stimulus checks in hand (as the narrative goes), bought enormous amounts of GameStop shares. The stock price has gone from ~$20/share to currently ~$390/share. Professional investors specializing in short-selling are on the hook to lose billions, as they must buy back the shares they have borrowed and sold. The Reddit subforum was temporarily closed, trading on GameStop stock has been frozen, and some retail investment sites do not allow transactions on GameStop.

    Thoughts:

    I'm still processing what I think about all this. On a superficial level, the Schadenfreude of the investor class losing billions is delicious. Similarly, an army of retail investors organizing on Reddit to out-maneuver the professionals is brilliant and impressive. Someone used the phrase "Storming the Capital".

    The other side is that these short-selling hedge fund managers are losing their investors' money. Those investors aren't just wall-street types. They're average Americans' retirement investments - so Redditors are screwing over moms and pops (or grandma and grandpa). There is even mumbling of some of these investment funds needing "bailed out" due to the losses.

    The last piece I'm contemplating is how the market has reacted. If you or I were poised to lose a lot of money, the investor class certainly isn't going to freeze trading to prevent it (especially if they're going to profit from it). We know the professional (and political) classes benefit regularly from sharing information and capitalizing on it. The shoe is on the other foot now. With this demonstrated ability of the internet to organize investors to manipulate the system, is that too much volatility? I suppose that if you don't gamble on projected losses (short-selling), then it's not that big of deal.

    There are plenty of articles, and This CNN piece isn't bad for it's comprehensiveness.
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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    I see no reason for the government to intervene, or bail anyone out. What would the government do, go after the people on reddit for manipulating the market? And what place does the government have bailing out hedge funds? How can it plausibly say that we're for what is ostensibly a "free market" only until it hurts the hedge fund? What was the lesson in the financial crisis 13 years ago, that we have the school of hard knocks for most people, but corporate welfare for the same banks and investment funds that helped cause the problem in the first place? I fully recognize that many "regular" people have money sunk in hedge funds. It's part of the risk of being in the market at all. It's a dangerous place and we take its risks in hand. But intervention sets a precedent and rotten precedents make bad law and bad policy; no need to add another. If this is how the market went, reddit and all, so be it.
    Last edited by Ray-VIgo; January 28th, 2021 at 07:58 AM.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    I agree with everything you've written. The "bail-out" notion simply allows bankers and investors to act irresponsibly, profit enormously from it, and then walk-away as the taxpayer eats the losses.

    Some of that is the result of government intervention. The mortgage crash started when the federal government "mandated" banks to be less restrictive in their home loans. ARMs were the answer, the housing market inflated, mortgages were bundled and the whole thing came crashing down. Student loans ironically went the other direction. As the government saw itself increasingly on the hook for guaranteed student loans, the amounts of which they were responsible for inflating; they changed the law where you cannot include student loans in bankruptcy.

    The only real government involvement in this will be whatever the SEC decides to do or not do. Somehow I suspect it won't be favorable to Reddit investors...
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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Quote Originally Posted by dneal View Post
    I agree with everything you've written. The "bail-out" notion simply allows bankers and investors to act irresponsibly, profit enormously from it, and then walk-away as the taxpayer eats the losses.
    and then the bankers just do it again and take even more risks.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Those investors put themselves in an untenable position from what I was reading. They shorted nearly 140% of the stock. There weren't enough shares to cover the short. And, from what I was seeing, they borrowed those shares at an exorbitant interest rate, 20-25%. They created a system that was easily exploitable by those watching the trends, and because of the amount of shorting, someone was gonna take the hit. They're just crying because it was them.

    The fact that the government seems to be going after the redditors doesn't really sit well with me. And as you all have pointed out, they never would have stopped the trading were it we, at the bottom of the food chain, taking that bath in the markets. These investors played the game and got stung, the fact that they're talking about bailing them out with taxpayer funds is ludicrous, particularly considering that this isn't the first time that shorting GameStop has gone horribly wrong:
    https://nypost.com/2021/01/25/this-s...llion-bailout/

    Shorting is a risk that they took. It's backfired before, so they knew, or should have known the risks involved. And this cannot be stated emphatically enough, the taxpayers had no hand in making the decision to short the stock.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Thanks. I had to do some homework to figure out how you could short more than 100% of the shares, and I have seen a few different answers. The thing I really don't get is how the interest is calculated. Is that interest paid on the "loan" of the stock? Everything I've read talks about short interest being used to determine how "shorted" the stock is.

    The societal implications fascinate me, and the different positions being taken.

    Senator Elizabeth Warren said she intends to make sure regulators “wake up and do their jobs.”
    I'm not sure what she means, but Liz Warren has never seen anything that didn't need a little more regulation...

    “It really just goes to show the classic saying that markets can stay irrational longer than you can stay solvent,” said Greg Taylor, chief investment officer at Purpose Investments. “So you can try to fight this as long as you want but at some point you just have to give in and just step to the sidelines. That feels like the phase of the market we’re in right now, where things are going a little crazy and definitely divorced from fundamentals.”
    I love the first line in this quote. I don't know if things are divorced from fundamentals though. I suppose it is if you don't expect retail traders to organize and outsmart traditional investors.

    Lastly (and sorry for all the quotes), I really enjoy Fox Business' Charles Payne on this:

    "First of all, all of the nonsense, all of this noise, all of this whining by Wall Street – it's making me sick," Payne said during an appearance on FOX Business' "Cavuto Coast to Coast"

    "I didn't hear one person on TV complaining about Wall Street trying to crush GameStop," he said. "I told my subscribers: Buy this stock. And they made a fortune."

    "You can't allow Wall Street to short 75% of a stock – and nobody says anything – crush these companies into the dirt, and then when the individual investor makes money, everyone's up in arms," Payne said.

    "I am thrilled," Payne said. "If you're going to try to destroy a company by shorting 140% of its stock, you have to accept the fact that individual investors are playing the same game, and now you're losing."

    I have a problem with Robinhood, Ameritrade, etc... locking people out, while the professionals can still trade. A few of the sites claimed their servers were overwhelmed (and I suppose that's entirely reasonable), but I'm a little suspicious. It's also interesting to see AOC and Ted Cruz (among others) line up in support of the "little guys". 2021 might be crazier than 2020!

    Some of the professional traders have also capitalized on short traders (now) $5B loss, but I question the ethics of using the "little guys" to make this happen. When the bubble bursts, a lot of people are going to lose money they couldn't afford to lose because of a reddit thread. They're eagle-eying other short stocks (AMC, Bed, Bath and Beyond, etc...) and this definitely changes the game for past short traders.
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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    I don't think the market is entirely irrational in the manner that they seem to mean. Yes, the market for the stock itself is extremely inflated. Many people are set to make money, and there will be losers when the market eventually corrects.
    I'm reading about people who've bought a few of the stocks with the understanding that they will be out the money in the end, but are just holding the stocks on principle. It's a chance to get a little payback for 2008. So, in that regard they've weighed the risk and understand the impact of the financial decision and are just holding the stocks to ensure that the suits take a bath. Even though it means that they squandered that cash, it still is a reasoned, calculated decision. Not irrational in the sense that he meant.

    Users flooded the app store with negative reviews, dropping the rating for the Robinhood app from near five to a 1.1 rating. Google dutifully deleted all 100,000 negative reviews. Big tech is even helping to clean up. How nice of them. The collusion going on here is astounding.

    In the end if those apps and companies who actually interfered with trading get so much as a token fine, I'd be surprised. And Congress will dutifully give their true constituents a bail out, if for nothing else than to send us peons a message, we can have the occasional crumb but it's futile to play to win. The game has always been rigged, they don't even pretend to hide it anymore.
    Last edited by Skwerlmasta; January 28th, 2021 at 09:17 PM.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    I'll throw out a provocative question or three - was the greater creation of hazard on the part of the reddit contributors who drove the stock value, or was it on the part of the platforms that seemed to circle the wagons in favor of the investment funds? Would one be able to link a stake in those funds to the companies running the websites, platforms, and software that then was used to try to hinder the reddit investment mob? Or was their action akin to stopping the proverbial shouting of "fire in a crowded theater" - the first-level response to a public risk?

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Regarding "hazard", I suppose it's a matter of hazard to who? The redditors certainly created a hazard to the short investors. The online platforms created a hazard for the redditors. The first seems legitimate to me, with the redditors playing within the rules, and the second illegitimate as they changed the rules.

    I saw an article asserting that Robinhood, acting as a broker, incurs some financial liability that could bankrupt them when the bubble bursts. I don't really understand that. The argument seemed to indicate that the online brokerage was a sort of guarantor... Maybe someone smarter on the topic could chime in.

    I know that trading is halted when the entire market takes a steep downturn - as a first-level response, but this doesn't seem to be the same. One apparently could still trade GameStop shares through traditional brokerages, but not through "retail" online methods. The professionals thus ended up with an unfair advantage over the retail folks. The result seemed to be that the stock leveled out at around $200 per share. Pure conjecture on my part, but perhaps that was the happy-medium the institutional traders accepted to get out without losing everything. Last I saw there was about $15B in projected losses.
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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    The hazzards are just different sides of the same coin and were all created by the hedge fund shorting the stock.
    You borrow the stock(with interest) and sell it with the expectation that you can buy it back later cheaper and return the borrowed stocks. Of course, you're out of luck that if that stock goes up. It's one of the only plays in the market that has no cap on the financial liability of the player.
    The hedge funds shorted the stock to around 140%, this was in order to sell and drop the price. I'm gonna guess that they were gonna have analysts on TV talking about the bleak outlook of the gamestop franchise, purely speculation. Either way, they shorted the stock to that extent in order to drive the price into the ground where they could then purchase the shares dirt cheap in order to settle the short, leaving the stock owners holding the bag and laughing their way to the bank.
    The problem with such a move is shorting the stock to that extent makes it highly susceptible to a squeeze. Instead of selling the stock, people can purchase that stock and drive the price upwards. The short has to be settled so the ones shorting the stock will have to buy the stock at whatever price the market is selling. The redditors recognized what was happening. They didn't create the situation, they exploited it and capitalized on it.
    From some of the reports it looks like Robinhood stopped allowing buys on its platforms for a while and actually may have force sold some of their customers shares, dropping the price of the stock and allowing the hedge funds to cover some of the shorts. If this is true, they are guilty of market manipulation. While robinhood is marketed as the little guy platform, it looks like they make a tidy profit from selling the sales data to Citadel capital which just happens to have a financial stake in Melvin, the hedge fund that was taking a beating:
    https://www.wsj.com/articles/citadel...nt-11611604340
    This is all speculation, of course. I have no way of confirming this, but it sure looks like they manipulated the situation.
    Users of the app flooded the google app stores with negative reviews, 100,000 of them, dropping the rating from above 4 stars to 1.1. Google deleted them all.
    I'm gonna guess that after the lawsuits robinhood will be gone. I'm sure that they won't have the capital to cover the suit and will declare bankrupty. In the end, the people who got screwed by the robinhood dealing will probably not see much in the way of financial remuneration. The feds should round up everyone in that building and determine if Citadel pressured them to make that move. That might expose Citadel to lawsuit. But that's wishful thinking.
    There were also a couple bigger companies that got in on the act, those customers may be able to recuperate some of their losses.
    But it looks like the feds might even ignore all of the wall street collusion and actually attempt to punish the redditors. Gotta show the peasants that they can't win, even if it means showing the world that the game is rigged. Really, what can we do about it?

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    One thing I'm curious about is why more people didn't try to short once the price increased dramatically. Sure, if you're in at $20/share and intend to rebuy at $5... it ain't good. But if you can borrow stock and sell it at $350 a share, when you know eventually it'll drop back to $20 or so; it seems like that would continue to fuel the shorting.
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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    I'm not all that familiar with the particulars, but my understanding is that the interest on the stocks rises with the short position. The interest may be prohibitive at this point. It was at nearly 25% when the redditors hit. Not only that, but shorting the stock even more would further fuel the frenzy. By the time you were able to cover for that $5, you might be sleeping on the street.
    Melvin took a bath because they got way out in front of their skis, better not to follow along on that ride.
    Last edited by Skwerlmasta; January 29th, 2021 at 10:31 AM.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    (1) The risk, here, is that many, many ordinary people were drawn into a Ponzi scheme to drive up the price of GameStop. That's a company that seems to have a genuine stock price of about $5 because it has been losing money for a year or two, and missed out on selling games on-line. There is no reason that a proper evaluation should put GameStop at $400 or almost $500. Whoever bought-in on the way up will get killed on the way down. If the price is about 100 times too high, then the only people who can make much are people who bought at $5. Anyone who bought GameStop when the price was about $150 has been hurt. It closed at about $92 today.

    Here is a link to GameStop prices. Take a look at the 5-day prices and the year-to-date.

    https://www.google.com/search?q=game...hrome&ie=UTF-8

    (2) Here is an article about people who have been losing money on GameStop. Note that some hedge funds lost big, but hedge funds have the resources to survive. They also should have been able to sell any GameStop stock they had to buy at high prices.

    https://www.washingtonpost.com/techn...jeabqMgt4SLHzM

    And one from CNET:

    https://www.cnet.com/personal-financ...es-whats-next/

    And from The New Republic, an anonymous essay by devoted member of the Reddit group WallStreetBets, where people encouraged each other to buy GameStop.

    "I Bought Tens of Thousands of Dollars of GameStop Stock. And I Have No Regrets": https://newrepublic.com/article/1611...ock-no-regrets

    (3) A lot of firms got put out of business in 2008, and justly. For "how it all happened", see Michael Lewis, "The End of Wall Street As We Know It", the basis for his book, The Big Short, which was the basis for the movie. Here is Lewis's article:

    https://www.gatsby.ucl.ac.uk/~pel/mi...eets-Boom.html

    The "bank bailout", though, was aimed at saving many commercial banks, the ones that offer checking accounts and savings accounts. Some investment banks, like Bear, Stearns and Lehmann, collapsed. So did a few idiotic commercial banks, such as Wachovia and Washington Mutual. Part of the bailout involved stronger banks buying the remains of Wachovia and WaMu.
    Last edited by welch; February 3rd, 2021 at 04:08 PM.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    dneal says
    I'm not a stock market guy, but this Gamestop / Reddit drama is interesting.
    Of dramas, this fits best with Aristotle's explanation of a tragedy: someone with hubris causing themselves to be destroyed. Now, as best I remember, the man with hubris is supposed to be a great man, a ruler such as Oedipus or Creon, while this looks more like ordinary people being convinced that they can become greatly enriched.

    GameStop stock is down to about $50.

    A lot of pain for anyone who bought GameStop to stick it to the elites of Wall Street, and who were told to stick with the stock or, even, to buy more.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Quote Originally Posted by welch View Post
    dneal says
    I'm not a stock market guy, but this Gamestop / Reddit drama is interesting.
    Of dramas, this fits best with Aristotle's explanation of a tragedy: someone with hubris causing themselves to be destroyed. Now, as best I remember, the man with hubris is supposed to be a great man, a ruler such as Oedipus or Creon, while this looks more like ordinary people being convinced that they can become greatly enriched.

    GameStop stock is down to about $50.

    A lot of pain for anyone who bought GameStop to stick it to the elites of Wall Street, and who were told to stick with the stock or, even, to buy more.
    Another manipulation of many by a few to enrich those same few. I heard a few persons say, "The money I lost was worth it to have been part of the event." That's just what those who made money from the scheme hoped you would think. You got taken, and somehow you got conned into thinking there was some good out of it. Well, there was. It went into the pockets of the most savvy of the manipulators. Same as it ever was.

    Way to go.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Quote Originally Posted by welch View Post
    (1) The risk, here, is that many, many ordinary people were drawn into a Ponzi scheme to drive up the price of GameStop.
    It wasn't a Ponzi scheme, and those folks buying GameStop knew exactly what they were doing. Sure, they could lose money, but to them it was worth it to strike back against what they see as elitist oppressors. They were not only buying the stock, they were holding it so the hedge funds would have difficulty covering their positions.

    The "bank bailout", though, was aimed at saving many commercial banks, the ones that offer checking accounts and savings accounts. Some investment banks, like Bear, Stearns and Lehmann, collapsed. So did a few idiotic commercial banks, such as Wachovia and Washington Mutual.
    The bailout was aimed at saving wealthy and connected people in high places. The government could have simply nationalized the failing banks, booting out their dysfunctional senior management. Instead, Uncle Sam handed money to these institutions, and allowed the problem children to remain onboard.

    WaMu was in trouble long before the Great Recession hit. The place was so freaking disorganized that it was hard to open an account there. While waiting in one of their branches, I saw how they treated their customers, turned around and walked out the door. That place was a joke, and likely would have failed or been sold even without the recession.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Quote Originally Posted by Pendragon View Post
    It wasn't a Ponzi scheme, and those folks buying GameStop knew exactly what they were doing. Sure, they could lose money, but to them it was worth it to strike back against what they see as elitist oppressors. They were not only buying the stock, they were holding it so the hedge funds would have difficulty covering their positions.

    The "bank bailout", though, was aimed at saving many commercial banks, the ones that offer checking accounts and savings accounts. Some investment banks, like Bear, Stearns and Lehmann, collapsed. So did a few idiotic commercial banks, such as Wachovia and Washington Mutual.
    The bailout was aimed at saving wealthy and connected people in high places. The government could have simply nationalized the failing banks, booting out their dysfunctional senior management. Instead, Uncle Sam handed money to these institutions, and allowed the problem children to remain onboard.

    WaMu was in trouble long before the Great Recession hit. The place was so freaking disorganized that it was hard to open an account there. While waiting in one of their branches, I saw how they treated their customers, turned around and walked out the door. That place was a joke, and likely would have failed or been sold even without the recession.
    - Those small investors certain stuck it to the big guys, to those who have the resources to survive a day's losses and the pipes into the exchange that allowed them to sell immediately. GameStop is now at $50 or $60. Unless small investors bought-to-hold at prices less than $50, they have lost money. By all reports, many people emptied savings accounts.

    - TARP? It would be good if the US took over the banks and replaced them with a single national bank, but that is a long, long way from reality. Back in 2008 / 9, if nearly all banks had been allowed to fail, nearly everyone would have found their bank accounts reduced to zero. Those deposits are covered by FDIC, yes, but how would FDIC have replaced everyone's money?

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    An article about Michael Burry, important hedge-fund manager in "the big short of 2008" who took a position in 2019 that GameStop was undervalued. If there was any basis in reality for the WallStreetBets enthusiasm, it was in Burry's analysis. Burry says he is now out of GameStop...has sold whatever he bought. Seems to have thought that a fair price for GameStop would be about $20 a share.

    https://markets.businessinsider.com/...1-2-1030050393

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Quote Originally Posted by welch View Post
    - Those small investors certain stuck it to the big guys, to those who have the resources to survive a day's losses and the pipes into the exchange that allowed them to sell immediately. GameStop is now at $50 or $60. Unless small investors bought-to-hold at prices less than $50, they have lost money. By all reports, many people emptied savings accounts.
    You are still looking at it in terms of money. That is not what it was about, at least for the rebels on Reddit. True, the hedge funds will live to see another day, but they were forced to get some very substantial loans to do so. That was not optional on their part. They lost control of the situation, and THAT is what this was all about. For the wealthy elite, such loss of control, a temporary denial of power, had them freaking out. Making these smug manipulators bounce off the wall must have been singularly gratifying to the little guys.

    - TARP? It would be good if the US took over the banks and replaced them with a single national bank, but that is a long, long way from reality. Back in 2008 / 9, if nearly all banks had been allowed to fail, nearly everyone would have found their bank accounts reduced to zero. Those deposits are covered by FDIC, yes, but how would FDIC have replaced everyone's money?
    Replace all the banks with a single bank? Do you mean a single government-owned bank? I can't imagine anything that would be worse. Socialism didn't work for the Soviet Union and it wouldn't work for the US. What I was suggesting is that the US government should have taken control of the failing banks, put a team of technocrats in charge, and then recapitalize the banks. Once the banks were restored to profitability, the government could sell them and recoup at least some of the cost.

    The 2008 recession was a direct consequence of repealing the Glass-Steagall Act, which was enacted to prevent just such a disaster from reoccurring. Those who forget history are condemned to repeat it, and the Democrats and Republicans teamed up to do exactly that. A two-party oligarchy is better than a one-party dictatorship, but nowhere near as effective as a multiparty democracy. Fat chance of that happening anytime soon in the US, though. The Republicans and Democratic elite may disagree publicly, but for each the other is the devil they know.
    Last edited by Pendragon; February 7th, 2021 at 05:07 PM.

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    Default Re: GameStop, shorts and Reddit. Storming the Capital...

    Quote Originally Posted by Pendragon View Post
    You are still looking at it in terms of money. That is not what it was about, at least for the rebels on Reddit. True, the hedge funds will live to see another day, but they were forced to get some very substantial loans to do so. That was not optional on their part. They lost control of the situation, and THAT is what this was all about. For the wealthy elite, such loss of control, a temporary denial of power, had them freaking out. Making these smug manipulators bounce off the wall must have been singularly gratifying to the little guys.

    - TARP? It would be good if the US took over the banks and replaced them with a single national bank, but that is a long, long way from reality. Back in 2008 / 9, if nearly all banks had been allowed to fail, nearly everyone would have found their bank accounts reduced to zero. Those deposits are covered by FDIC, yes, but how would FDIC have replaced everyone's money?
    Replace all the banks with a single bank? Do you mean a single government-owned bank? I can't imagine anything that would be worse. Socialism didn't work for the Soviet Union and it wouldn't work for the US. What I was suggesting is that the US government should have taken control of the failing banks, put a team of technocrats in charge, and then recapitalize the banks. Once the banks were restored to profitability, the government could sell them and recoup at least some of the cost.

    The 2008 recession was a direct consequence of repealing the Glass-Steagall Act, which was enacted to prevent just such a disaster from reoccurring. Those who forget history are condemned to repeat it, and the Democrats and Republicans teamed up to do exactly that. A two-party oligarchy is better than a one-party dictatorship, but nowhere near as effective as a multiparty democracy. Fat chance of that happening anytime soon in the US, though. The Republicans and Democratic elite may disagree publicly, but for each the other is the devil they know.
    The US government guided the destruction of the least credit-worthy banks in 2008 and '09, finding each of the salvagable banks a surviving bank to take over. Such as Wells Fargo taking over Wachovia. That amounts to taking control of the failing banks, putting a team of technocrats in charge, and recapitalize them. The surviving banks repaid their TARP loans.

    Anyone who gets wiped out by having bet on sticking it to the man will have lost big time. Hedge funds merely had to turn around and sell their newly bought GameStop, and they have the accounts and pipes to trade in a flash. The financial institutions were utterly stupid, overcome by greed and foolishness, when so many of them were crushed in 2008. The banks that made the mortgage loans, those that packaged ("securitized") them, those that rated mortgaged backed securities, those that created "innovative financial instruments", those that insured these Collateralized Debt Obligations got hurt, and deserved to be hurt.

    Yes, Glass-Steagall was meant to stop it from happening (again). Happens I was a "software engineer" writing systems for banks, mostly, and finishing by working for the bank-owned non0profit that provides the messaging system by which banks move money across borders. Saw commercial banks dig tunnels under the Glass-Steagall wall because they saw that the investment banks had a higher rate of profits. The commercial banks wanted some, buying investment banks and selling off lines of business that had reliable profits at lower rates. In the mid-to-late '90s, some banks electrocuted themselves by reaching into derivatives. I thought it was sick and dangerous for them to go so heavily into ever-more-risky businesses. By the time Congress demolished Glass-Steagall, the wall had been gone, in practice, for years.

    The issue, I think, was that Wall Street traded bank stock, and wanted commercial banks to have the same returns as investment banks.

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