Allow me to preface this article by making the disclaimer that I am in no way a financial analyst nor am I all that knowledgeable (as of yet) about investing and finances. I am, however, as you may have been able to tell, more of a political analyst and commentator than anything else. And it is through the lens of politics that I will look at the following story. Though I won’t be able to explain every financial aspect of these events, I can give you the overall political meaning that comes from it.
Last week, one of the biggest stories out there was the mini financial war between big Wall Street hedge funds and investors versus small retail investors who banded together in rebellion against the crap that these big investors have done for decades: manipulating stocks for financial gain, often maliciously.
It began with hedge fund managers heavily short-selling GameStop’s stock. To “short-sell” is to borrow stock from a lender (you can’t sell things you don’t own, after all), sell those stocks to a buyer under the belief that the stock is going to plunge, and once the price of the stock goes down, buy those stocks back at that lower price, thus turning a profit, and returning those stocks to the lender.
There is nothing inherently illegitimate or wrong about this. Despite what some financial analysts charge the retail investors with doing, they are doing the same thing: basically making a bet that a stock will go one particular way. When you sell a stock short, you are betting that the stock will go down in price.
At any rate, some big hedge fund managers shorted GameStop’s stock, which in itself, again, is not a bad thing. What WAS a bad thing was when one of the hedge fund managers, a man named Andrew Left (fitting last name), “held a livestream presentation arguing the stock would fall by 50%,” according to the Wall Street Journal.
See, it’s one thing to bet that a stock will go down, it’s another thing entirely to do things to CAUSE IT to go down. That’s called market manipulation and big investors have been doing this for ages in both legal and illegal ways.
These big investors were trying to cause GameStop to basically go bust and profit off of its financial carcass. Retail investors at a Reddit group called “WallStreetBets” were aware of the nefarious scheme by big investors and decided to short squeeze them. “Short squeeze” is when a short seller’s bet goes opposite from what they expected, with the stock surging instead of plunging, and is forced to buy back the stock as quickly as possible before the value further increases. This pretty much always results in a loss for the short seller.
And thus began the mini financial war between the 1%, elite investors vs. the 99%, retail investors.
Naturally, because the Redditors successfully short squeezed the hedge funds, leading to the big investors to HAVE to buy the stock, it led to GameStop’s stock price to rise even further. At that point, both small and big investors were buying GameStop stocks, leading to the massive and ridiculous percentage increases of over 100%.
However, some big investors, because they couldn’t bear the thought of the peasant class schooling them in their own game, doubled down on shorting GameStop (they may have closed their positions and shorted again) and led to the stock being shorted 138%. That is not a number that should even virtually be possible, as it isn’t reasonable to sell more stocks of a company than are available shares. But if big investors and hedge funds band together, this is something that can technically happen.
If a relatively small company enters public trading, big investors could technically short its stock 300% or more, which would absolutely kill off the company. No company can survive being shorted that much, which is why the hedge fund managers shorted GameStop as much as 138%: they specifically set out to KILL the company – the financial equivalent of killing everyone who works for the company so that there is no company.
But the Redditors know that as long as they aren’t selling the stocks they are buying, the big investors are in some amount of bind (the problem, however, is doing this kind of thing hurts other stocks, which hurts more than just the billionaires – it hurts everybody including the small investors, not to mention that, again, they may have closed their positions and re-shorted, so they aren’t hurt as much as before, thereby defeating the purpose). Which is why the big investors then turned to the financial platforms (which technically would have had to cover their losses if the investors exceeded their margin, so they had financial reasons to do something) as well as the SEC and even the FBI to do what they could to stop the retail investors.
Trading was either restricted or altogether halted for stocks which saw those massive percentage increases like GameStop, AMC Theater, Nokia, etc.; the fake news media began to, hilariously, try to paint the Redditors as white supremacists, Nazis, and CNN’s Chris Cillizza outright tried to blame Trump for it; and it’s entirely likely that the government will do something so this cannot happen again, at least from the retail investors (it helps the big investors that the current illegitimate Treasury Secretary received nearly a million dollars in “speaking fees” giving speeches to Citadel, which is the owner of one of the hedge funds involved in this which lost billions of dollars).
Furthermore, people siding with Wall Street set out to call this event a “pump and dump”, which is when “fraudsters boost [a] company’s stock price by sharing positive, but fake, information,” according to CNBC.
Basically, they are accusing the investors of doing something similar to what Enron did, but with absolutely zero evidence to back it up. The Redditors didn’t drive the company’s stock price up by lying about how good of a company it was, they drove it up by just BUYING the company’s shares to stick it to the big investors trying to play God with a company. I'm not saying it was totally legitimate, as there was clear collusion here, but this is exactly what the hedge funds do all the time.
And, by the way, it’s utterly hypocritical that these big investors are charging the retail ones of performing a “pump and dump” operation when THE BIG INVESTORS WERE TRYING TO DO THE OPPOSITE.
Again, Andrew Left held a livestream where he was arguing that the stock would plunge by 50%. How is that not market manipulation?
How is it not manipulation when big investors with access to CNBC write about how they think certain companies are “overvalued” or “undervalued” and invest in those stocks at the moment when they would make plenty of profit?
How is it not manipulation when hedge funds short a stock 138% to financially choke the company to death?
I’m not saying that the Redditors aren’t doing the same thing, or that what they are doing isn’t hurting even the smaller investors – they are – but it’s hypocritical nonetheless that the big investors cry “wolf” seeing as this is what they do routinely.
It’s not good when either the big investors or the small investors hurt the little guy. And trust me, it’s not just fat cat millionaires who invest in the stock market. Those with less than $10,000 in their portfolios also invest. Those who make a little money and transfer some of it into their trading accounts invest. Those people stand to get hurt by both parties involved, which is the biggest issue.
But at any rate, I’m not here to talk about the financial aspects of this event. Like I said in the beginning, I want to look at it politically. You may not think politics is involved all that much, buy you’d be surprised at how few things are infested by politics (in large part to the Left).
What we saw here is nothing short of a miniature financial French Revolution. No guillotines or pikes were pulled out. No Bastilles were sieged. No political leaders were made to wear stupid hats. But there was a spirit of populism at present in the Redditors and retail investors, at least in the beginning. The idea that the system is corrupt and that the elites have far too much power to do with companies as they please.
This much was shown when they tried to drown GameStop, doubled down on it, and called for daddy government to step in.
This much was shown when the financial platforms stepped in and halted or restricted trading of ALL stocks of the companies involved (though, again, I can understand to an extent because they also had financial interest in stopping it. It’s not like Twitter and Facebook deplatforming conservatives just because they can or want to, it was actually in their best financial interest to not have the big investors go further than their minimum margin requirement).
The rich were playing judge, jury and executioner with GameStop, the poorer but many retail investors banded together to keep the big investors from abusing their financial power, and a mini populist financial war began.
I’m not inherently siding with the Redditors and certainly I am not siding with the ruling class who routinely abuse the little guys, but it’s good to see some attempt at unscrewing the system to some extent or another (whether or not that was the intent).
The idea that the rich ought to be able to dictate what companies make it and what companies don’t is not a capitalist one. Capitalism means free markets. Markets manipulated by the rich or by the government or by entities are not free.
We often see this with big tech when they censor conservatives at a moment’s notice, but it applies to much of the system as well.
Ironically, for a moment, the Redditors faced the swamp. The swamp is more than just politicians – it’s unelected people with enough power to dictate and maintain the status quo, which exclusively serves to benefit them.
It’s the people that, in many other facets, those same Redditors side with. I do not have evidence, but I am certain that at least some of those very same Redditors who called out financial platforms like TD and Robinhood for their restricting actions also gleefully saw as President Trump was utterly deplatformed from main stream social media sites.
If possible, I would like to be able to teach these people that the establishment rats and Leftists whom they often support are NOT with them. They are elitist snobs who have shown their utter disdain at the idea that people apart from them are capable of playing their same game.
They often do this to other companies and saw nothing out of the ordinary with doing it to GameStop. But when new players showed up, they did all they could to pick up the ball and go home so that no one got to play.
They charge that the retail investors were “pump and dump”-ing and were manipulating the stock of the company, and to an extent, they were, but they themselves have been doing this for decades. It’s not the game that they are against, but the players whom they believe should not be allowed to play.
Only THEY get to dictate whether a company’s stock plummets or rises. Only THEY get to make obscene amounts of money manipulating stocks.
The fact that that’s the reality is what populists are against. There’s nothing wrong with making money, even insane amounts of it. There is, however, something wrong with having enough power to cause stocks to go in one’s favored direction. There is something wrong with having the ability to short more shares of a stock than are available. There is something wrong with having the ability to financially harm tons of people on a mere whim (and that goes for both sides).
While tens of millions of people lost their jobs and were forced, by their governments, to lock down and close up shops deemed “non-essential”, the world’s elites made billions and billions more.
Your local mom and pop shop, which could hardly have more than 50 people inside it under normal circumstances, was forced to close, but the local Walmart, which could see hundreds or thousands within it, was allowed to operate with few restrictions.
The stock market saw record highs as Americans lost their jobs (and 50,000 more as a result of Occupier Biden’s EO regarding the Keystone XL pipeline), and the elite got even richer.
Again, there’s nothing wrong with making money, even as others are not quite as fortunate. But can we at least agree that the lockdown has tremendously benefited the elites and has outlined the way the system operates: benefiting the 1% almost exclusively?
When the system is this obviously lopsided, it’s no surprise when you see some semblance of populism like we saw with the Reddit investors. There aren’t a whole lot of things that conservatives and liberals can agree on, but I would hope that at least one thing we can agree on is that the ruling class is doing whatever it can to impoverish as many of us as possible.
I mentioned in my last article that the slaveowner mentality of Democrats is still around. Perhaps, I should expand that to the entire ruling class, made up of Democrats and Republicans (who, for the most part, are also part of the swamp and make up The Party) and with regards to all of the peasant class, not just minorities.
The way they have driven the country has been in the direction of the Soviet Union. We are not quite there yet, but we are heading in that direction. After all, they already rigged and successfully stole the 2020 election away from the popular populist president (something I bet many of these Redditors cheered). Being able to do that is no insignificant thing and I hate it when people supposedly on OUR side say that Biden won. He did not win, by any stretch of the imagination. You don’t win an election by sitting in your basement for 90% of the campaign trail. You can only “win” such an election by having your buddies rig things in the right places.
The people now in power are the ones who believe they OUGHT to be in power forever, them and their children and grandchildren. I hope that the rest of us can understand just what it is that we are up against. To an extent, that’s what happened with Trump, seeing as he brought even former Democrats to his side.
We the People need to understand that we are faced with tyrants in many places.
“For we do not wrestle against flesh and blood, but against the rulers, against the authorities, against the cosmic powers over this present darkness, against the spiritual forces of evil in the heavenly places.”
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