Moon of Alabama Brecht quote
January 28, 2021

The System Is Rigged - Episode 4537: Game Stop Corp

Early this week a few amateur stock trading nerds decided to promote a stock that was heavily shorted by certain hedge funds. The idea was to raise the stock price of Game Stop Corp., a vendor for computer games, by having lots of small stock traders to buy into it. The hedge fund that shorted the stock, and thereby bet on a dropping stock price, would then make huge losses while the many small buyers would potentially profit.

These people, who had joined up in the sub-reddit /r/WallStreetBets, were not driven by greed but by rage against the financial machine:

Instead of greed, this latest bout of speculation, and especially the extraordinary excitement at GameStop, has a different emotional driver: anger. The people investing today are driven by righteous anger, about generational injustice, about what they see as the corruption and unfairness of the way banks were bailed out in 2008 without having to pay legal penalties later, and about lacerating poverty and inequality. This makes it unlike any of the speculative rallies and crashes that have preceded it.

The movement was successful. The stock price of Game Stop Corp. rose from some $10 to over $400 within just a few days. The short seller had to take cover under a larger firm:

Hedge fund Melvin Capital closed out its short position in GameStop on Tuesday after taking huge losses as a target of the army of retail investors. Citadel and Point72 have infused close to $3 billion into Gabe Plotkin's hedge fund to shore up its finances.

Then the system hit back.

Discord, the company which hosted the server for the sub-reddit /r/WallStreetBets suddenly found that there was 'hate-speech' in the threads. It unplugged the server. (Discord had previously unplugged the sub-reddit /r/The_Donald.)

Glenn Greenwald @ggreenwald - 0:53 UTC · Jan 28, 2021

What an absolutely extraordinary coincidence of timing that Discord happened to decide the r/Wall Streetbets sub-reddit had too much “hate speech” to tolerate on the same day hedge fund billionaires declared them a huge threat for the crime of winning at their expense!

Next the trading app Robinhood, which many of the amateur traders use, blocked further buys into the stock:

Robinhood, the fee-free investment app that has helped Redditors and other retail investors pump dark horse stocks like GameStop, AMC, BlackBerry, and Nokia, has stopped allowing users to buy those stocks and others YOLO picks.

According to screenshots shared on social media, on Thursday morning a notification appeared on Robinhood telling users that they could close their position on GameStop's stock, but not buy any additional shares. Redditors are currently panicking, looking for ways to transfer their shares of GameStop off of Robinhood to other platforms, and are generally furious at the platform.

In a blog post, Robinhood confirmed that it has placed restrictions on several stocks due to volatility.

"Volatility" = the prols are messing up Wall Street by doing legal stock transactions our overlords do not like. What an irony that a company named Robin Hood is protecting the rich from the poor.

The many people who use Robinhood can now only sell their shares and not buy additional ones:

This is likely to have a massive impact on Robinhood users and ultimately the company. According to a popup on the app's homepage, 56 percent of all Robinhood users own at least some GameStop stock. They are now unable to freely trade it; the app is only allowing users to close out their positions, meaning they can sell it but not buy more. This is potentially devastating for novice investors or those who simply want to follow the general marching orders of the r/WallStreetBets subreddit, which is to hold (and buy more) GameStop stock until further notice.

After Robinhood stopped to allow further buys of Game Stop Corp the stock price crashed from above $450 down to $120.


bigger

That outright manipulation of the stock markets was noticed and may even have consequences. Unlike Joe Biden it united legislators across the aisle.

Alexandria Ocasio-Cortez @AOC - 16:36 UTC · Jan 28, 2021

This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary.

---
Ted Cruz @tedcruz - 16:47 UTC · Jan 28, 2021

Retweeting @AOC
Fully agree.

House Speaker Nancy Pelosi will take care that nothing will comes from it. The system has proven again and again that it is rigged. No change to it will be condoned.

As Glenn Greenwald noted yesterday:

Glenn Greenwald @ggreenwald - 13:49 UTC · Jan 27, 2021

To review:
- Politics is to be manipulated only by K Street.
- The stock market is to be manipulated only by Wall St.
- Dissemination of information is to be manipulated only by corporate media outlets.
Those are the rules.

The lesson they want us to learn: Don't even think of ever breaking those rules.

Posted by b on January 28, 2021 at 18:05 UTC | Permalink

Comments
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@Triden #99
There is no law, that I am aware of, that says a brokerage must allow its customers to do whatever it wants.
In this case where both RH's shareholders and its management are united in their opposition to its customer's behavior - I really don't see how any lawsuit will matter. At best, RH will shut down and that retail mob will have to try and do its thing elsewhere.
Note that a big reason why the RH mob is able to do what it is doing is because of RH's business model: RH literally loses money in every transaction but makes up for it by selling user behavioral data. I strongly suspect that having to pay the fees in any traditional brokerage changes the equation completely - much as a financial transaction tax will crush the HFT model.

Posted by: c1ue | Jan 29 2021 11:52 utc | 101

Re Joseph Dillard @ 98 Starting in the late 1800’s and the persecutions of Eugene Debs, the unions have been neutered and eliminated, with the Democrats jumping on board the effort after the disaster at the ‘68 Chicago convention.
snake says it started in 1787 when the pre revolution crown oligarcks went to Philidelphia and wrote a constitution that deprived Americans of a voice in their own governance. That original constitution lacked the Bill of Rights; the founders d\n believe deplorables were entitled to a voice in their own government. It was difficult for the founders to get even the same people that sent the founders to Philadelphia to ratify the founder written constitution, the founders had to agree to amend their constiution to secure ratification <=that amendment was the bill of rights (1st ten amendments to the constitution). But remember the British was defeated by the first USA, 1776-1788, and that USA operated under the Articles of Confederation (not constitution), and the first President of the USA was John Hanson

The constitution is a framework for Oligarch control. George Washington was the 2nd richest in post Colonial time <= wealth attributed to British Government land grants and slaves to make the joint profitable. (all of virgina and 1/2 of west Virginia more or less).


Re Joseph Dillard @ 98 street protests against power were neutered, and war was declare on both demonstrations and free speech.
the war was on the Bill of rights, the events you mentioned were just that events in the war.. if you look at the legislation since the invasion of Iraq you will see an accelerated race to deny Americans their rights. they are just now testing these new laws to see just who they can shut down.


Re Joseph Dillard @ 98 Could this episode presage massive retail market efforts to neuter the plutocracy? snake replies: I think if could, but there is no way to coordinate it, so it will have to be spontaneous until the neuter forces gain control of the content that hits the media. every thing that happens is directed by the privately owned media.

Re Joseph Dillard @ 98 can the kleptocrats shut down that effort, like it has unions and public demonstrations, without creating an even worse backlash?
yes, they will write many new laws and hide then in very strange places in other laws. each new anti freedom, right-depriving law, manages to allow them to arrest and make convicted criminals of the leaders of the neuter forces.

Re Joseph Dillard @ 98 There are a lot of angry people out there who are not going to buy into “Hope and Change,” “Democracy,” or crap about a free market. snake: maybe, but i don't see near enough that understand they should be angry, so few people understand that their total information environment is controlled by the bottom up (nineth layer of the 9 layer model).. the charming Oligarch (92% owned by 6 entities) media content has the deplorable mesermized..

Snake says to Re Joseph Dillard @ 98 you have some good points, but they are not yet "articulated enough" . try again, please
angry people <=but they are not angry about the same thing or at the same time.
(the most powerful weapon the Oligarch have is the divide and conquer game they play)
9 persons on an island appoint one to be their leader, leader announces a plan to leave the island 4 want to leave, four want to stay, the leader gets his way no matter the anger.

Can you incorporate those fragments into a banner statement the neuter force can TRACK?

Posted by: snake | Jan 29 2021 12:23 utc | 102

James 15 and many others.
Shorting requires by law that a share is sold, this is “loaned” by the broker acting on the trade. GameStop had about 140% of its shares in existence shorted.
This means massive illegality by Hedge Funds was condoned.

The group of retail traders was lead by a competant retail trader. running his own trading analytics, The stock had be held down a long time by negative media promoting a complete collapse of the stock and careful shorting with non existent shares but had reached a point where if it rose the price could technically go up, and the retail group could see that as ideal time.
As shorts found themselves too far underwater they need to buy to close out their position, As the retail buyers grabbed and held their shares there was desperate need for the shorts to buy out to close if they had a loan arrangement, for the naked shorts a very dangerous and illegal position, they were desperate to buy any share offered so as to close out.

Shorting with a sale of a loaned share is legal, it allows a collapsing market to have sellers who need to buy and thus keep the market alive. That is really important for market functioning.
It’s naked selling that is very crook. Just looking at the chart and the shorts versus volume of shares showed this was outrageous and a little help gets a short squeeze and bigger help keeps it going, the retail group told their brokers their shares could not be loaned.

The responses are telling.

Posted by: Janet | Jan 29 2021 12:57 utc | 103

The system is rotten and corrupt to the core. The markets are corrupt, politics is corrupt, the police are corrupt, the media is corrupt, the law is corrupt, medicine is corrupt, elections are rigged, there isn't a single thing that can be corrupted for someone's personal gain that hasn't been. Even the government regulators are owned by those they are supposed to regulate. Think on that as you get your vaccines approved by a corrupt FDA, manufactured by corrupt pharma companies indemnified from deaths and side effects and encouraged by corrupt politicians, could anyone seriously believe they are perfectly safe? The best outcome is that the side effects wont be too serious.

It's no doubt been like this for a long time, although perhaps not to this extent. What is interesting though is that the perpetrators no longer seem to care if everyone knows, the media assures us all is fine, politicians assure us all is good. Seems that they know the end is near so its just an orgy of theft and greed, and no longer even care what the serfs think.

Reading some philosophy it was pointed out that being involved in any politics was a waste of time, as if you pour old wine into new bottles the wine is still the same. The inference being that until we change our mindset as a species nothing will change. The Hindus see us now in the Iron Age, one of many we pass through, it is the age of utter corruption and greed. Of course there are many that are good and decent, but they generally are not attracted to politics, nor have the personality types to be elected.

Posted by: Gravelrash | Jan 29 2021 13:12 utc | 104

Triden @ 85

That list looks like just a bunch of the good old boyz.

Good catch. No way was this just some grassroots thing IMO.

Even Robinhooders aren't so loose with their dough that they will pay $300 for a stock just to hurt a hedge fund.

Posted by: arby | Jan 29 2021 13:26 utc | 105

I think this is from a poster on Reddit---

"my take away from watching the GME drama : if ever you see a hedge fund that shorted 138% of issued stock get rolled and immediately get replaced by other short sellers who short even more of the stock only 48hrs away from options expiry,

then you can be assured without any shadow of a doubt, the fix is in."

Posted by: arby | Jan 29 2021 13:30 utc | 106

Whatever rationale used to justify rich Wall Street motherfuckers' speculation, such as "allocation of capital", no longer applies in the new financial capitalism where productive investment is for suckers. Nobody "buys & holds". Everybody is into HFT and interest rate arbitrage. Tax every trade! These parasites, these hedge fund conspirators do not give a shit about productive investment or free market allocation of capital to build industry, they care only to manipulate prices, which they do so cleverly and so blatantly that you wake up one morning to find some commodity has tripled in price during a recession in the midst of a pandemic with no significant inflation at play! Then you read some hedge fund has gained 130% "investing" in commodities and cocksucker extraordinaire Jim Rogers makes pronouncements like some kind of ex patriot financial guru. You bet it's rigged. And these scumbags not only destroy whatever virtue capitalism once had, they also devalue the dollar & impose a tax on every American chump without representation at the same time they complain about the danger of fiat currency and the inevitability of Weimar inflation! Kiss my ass Schiff! Piss on 'em, every one of this human trash.

Posted by: jadan | Jan 29 2021 14:17 utc | 107

The Editor of Wall Street On Parade, Pam Martens, worked on Wall Street for two decades and has read every page of the transcripts of the Pecora Senate Banking Hearings. That was the most corrupt era in the history of Wall Street at that point – but it looks like a cakewalk compared to what is happening today.

If the genuine egalitarian rebels at Reddit’s WallStreetBets succeed in getting meaningful Senate Banking hearings into an industry that is looting the American people with impunity, they will have, indeed, performed a vital public service for their country.

GameStop Shares: 5-Count Felon JPMorgan Could Have Made Upwards of $174 Million Yesterday

Posted by: suzan | Jan 29 2021 15:34 utc | 108

GameStop recoups $11bn blow as day trader-fuelled rally powers on

Posted by: Bemildred | Jan 29 2021 16:02 utc | 109

Posted by: c1ue | Jan 29 2021 11:52 utc | 101


Note that a big reason why the RH mob is able to do what it is doing is because of RH's business model: RH literally loses money in every transaction but makes up for it by selling user behavioral data.

Therein lies the reason RH will not be allowed to go under:

The Establishment has been awoken with a shock now.
They've just learned what "the mob" is capable of.
That it's not a mere dumb beast but a smart adversary.

They're going to make sure structures like RH proliferate and come under their control to ensure there is an "algorithmic wall" between future markets and the masses ...


Posted by: Arch Bungle | Jan 29 2021 16:16 utc | 110

@time2wakeupnow | Jan 29 2021 3:38 utc | 73

For more info on [short selling and GameStop]: Read Taibbi's Substacks piece today on this entire financial comeuppance: appropriately titled: "Suck It, Wall Street"

Indeed a good article. Here is a direct link.

Posted by: Cyril | Jan 29 2021 17:26 utc | 111

snake @ 102 -- my first read this morning, and I must say, very well presented! I wonder if you have also been reading "The Republic", as Book Two very interestingly can continue only by taking up the argument that Thrasymachus has sulkily refused to continue by means of subterfuge. That is, Glaucon and Adeimantes, who are on Socrates' 'side', take up and present Thrasymachus's argument that to practise injustice is more profitable than to be just, all the while hoping to keep the conversation going and provide avenues for Socrates to pursue. The famous 'parable' of Gyges and his ring is proffered as proof that given the same opportunity of invisibly gaining the upper hand, all men would seek to do precisely that. And to counter this strong argument, Socrates must endeavor to show what justice is in its pure essence, rather than seek out its presence within the ideal man. So, it is now the task to create in words a state or polity which will more clearly present elusive pure justice to us -- the larger being easier to see than the smaller.

An idyllic state is at first very briefly presented, where justice is no problem. This state is actually the true comparitive to the just man. But Glaucon is still in Thrasymachus mode- he points out that all the perks and frills of civilization are sadly lacking in this perfect city. So, Socrates obliges and introduces all the problems of a real city,:need to expand, prey on other cities; war with them even. And so guardians are needed. It is that real city, not the ideal one, which then takes up the bulk of the narrative, as Socrates takes each element and tries to force it into compliance, leading eventually to the cave situation. Which is where we are.

I think we ought not forget the first city! In it, all are moderately content as basic needs have been met,much the condition China is striving for today, and a condition the US doesn't even talk about any longer. How indeed does that city keep its virtue intact while it provides the added enjoyments of multipolarity without descending into non-virtuous activity? Perhaps it does this by seeing clearly the alternative.

The dialogue hinges on the education of Adeimantes and Glaucon by Socrates, as they hold the thread of the argument all the way in and out of the labyrinthian twists and turns. It isn't the perfect city they confront; it is a minotaur, which they defeat using their own saving education and personal virtue.

Snake, if those opposed to the Wall Street oligarchs see what they can accomplish, they will find a way to stay the course. It is a horse race that pits team against team, each individual taking the flaming torch one from the other and passing it on. (In India that is happening as well. I will find the link.)

Posted by: juliania | Jan 29 2021 17:38 utc | 112

Here is that India link:

https://ruralindiaonline.org/en/articles/the-many-splendoured-sewa-network-at-singhu/

Posted by: juliania | Jan 29 2021 17:43 utc | 113

@ time2wakeupnow | Jan 29 2021 3:38 utc | 73... the whole system is rotten! what part of that, don't i understand??? lets not just single out shorting in the market...

Posted by: james | Jan 29 2021 17:56 utc | 114

ps - gamestock back at 331$ up 70% today... you think all the players don't partake of this, or that this isn't the game being played by all of them?? see the list @ 85 trident provided... they all play in this game.. it is a rigged game... blaming shorting is an easy alibi, but it doesn't get at how rigged financial markets are...

Posted by: james | Jan 29 2021 18:00 utc | 115

but it is apparently okay for the federal reserve to throw endless money at the markets and for all the players to inflate the balloon... that is all okay with the public, lol..

why do i have a hard time trying to pin it all on short sellers? gee... i wonder why??

Posted by: james | Jan 29 2021 18:02 utc | 116

i have always been for the underdog.. that is why...

Posted by: james | Jan 29 2021 18:03 utc | 117

suck it wall st--words to live by.

Posted by: pretzelattack | Jan 29 2021 18:08 utc | 118

Posted by: james | Jan 29 2021 18:03 utc | 116

I understand there are foreign traders getting into the game ...

The wise guys that started this don't seem to be back in control yet. Time will tell, but I think it could "get out of hand".

Boy there sure are a lot of balls in the air these days.

Yeah, I like Randy Newman too.

Posted by: Bemildred | Jan 29 2021 18:10 utc | 119

Posted by: james | Jan 29 2021 18:03 utc | 116

It has, incidentally, been a mystery to me for some time why our so called "enemies" don't spend more time on the sort of destabilization activities we are so fond of. It seems we would be quite vulnerable. I suppose they just have better things to do. Undermining the markets would be a place start, now that these small traders have shown the way. Who knew it would be this easy?

Posted by: Bemildred | Jan 29 2021 18:15 utc | 120

There is already an algorithm wall between RH and the masses. Thats the point of RobinHood, its a tool used by big banks to analyze and act on activity by common traders. Its like the Facebook of trading. All your personal info and activity are recorded and fed into a database for AI harvesting to the benefit of the big banks. They already use it to Front Run on trending trades which basically means buying up stock that the masses have chosen to buy but they buy it seconds before them thus making $ off that delay.

Remember. Nothing is free. And this "free trading" platform is not free as well. You are the product.

Posted by: comandante | Jan 29 2021 18:56 utc | 121

@ bemildred 118/119... you make a good case for why enemies of the usa and west ought to explore this... i think they have better things to do! it would be easy to find out who was doing what in the markets here.. this is why they know how this happened... if it could be done where they don't know how it happened - maybe.. as it is, it is all the kind of stuff that goes on regularly in the markets... as warren buffett said - it is the derivative market that are the weapons of mass destruction.. not shorting in itself, although the derivative market is one big play that involves both - going long and going short... it is infinitely more scary and they are playing this game as we speak, trying to maintain that it is all normal, which it isn't..

i think this is a one off with gamestock here... i doubt it is going to happen again by reddit people, but i could be wrong... i see it is back at 285 now..

Posted by: james | Jan 29 2021 19:46 utc | 122

Am I right to recall that the 1983 movie 'Trading Places' with Dan Ackroyd and Eddie Murphy did something quite similar (only in reverse)? My recollection is that they got revenge by shorting OJ futures after releasing a fake orange harvest report. But I distinctly remember the four characters staking all they had on the bet: "Looking good Billy Ray! Feeling good Louis!"

Posted by: Patroklos | Jan 29 2021 21:26 utc | 123

@james

" the whole system is rotten! what part of that, don't i understand??? lets not just single out shorting in the market... "

But..of course it is. That glaring fact was never in dispute - and certainly not by me.

However, This particular Gamestop imbroglio we are all commenting on here is mainly centered around the big fat voracious hedge funds that were hyper-shorting the shit out of GME - including quasi-to-blatantly illegal Naked short selling (with it's $140% float).

And I take it that perhaps you are a fan and/or even a participant in the activity of short selling with your repeated defense of the practice - which is your certainly right - as it is still perfectly a legal transaction.

But...it's one thing to bet against (short) some obviously over valued, over leveraged company: think not just Gamestop, but some of the biggest "overvalued" companies like Tesla, Uber..etc. It's another thing altogether to totally 'pig pile' into shorting a company or commodity just for the sake of totally crashing into the ground and forcing it into bankruptcy - all for the sake of potentially making huge profits in this sort of destruction frenzy - without any concern for the companies themselves, and the actual people that might be seriously harmed (employees) bin the process.

What Melvin Capital, and I believe even Robinhood themselves partook in, was attempting to precipitate in this kind of scorched earth shorting (and Naked shorting)- and were caught in their own greedhead-short-trap by a bunch of Reddit rabble who had the wherewithal to play a similarly destructive game, just effectively in reverse.

And Melvin capital was so arrogant in there open contempt regarding their hyper-shorting of all of the supposedly "sitting ducks" (AMC, NOK, KOSS...) companies - that seemed ripe for the pillaging - that they they didn't even really bother to cover their short/Naked/short position tracks, opening the door for those retail heathens to easily figure out that Melvin Capital and their "wunderkind" managers were no more sophisticated and investor savvy than your average day trading quick-bucker.

Posted by: time2wakeupnow | Jan 29 2021 21:41 utc | 124

@ Posted by: time2wakeupnow | Jan 29 2021 21:41 utc | 123

Shorting is merely reverse buying: instead of money → commodity → money, you go commodity → money → commodity. The "magic" here is that, in a "shorting" operation, money itself is also reversed, i.e. it becomes commodity (so we're not talking about labor relations, which also are commodity → money → commodity). Note that it doesn't matter with we live in a fiat currency system or not: shorting is possible even in a non-fiat standards (albeit it is much harder to do for pure practical reasons).

So, there's no such a thing as "illegal", "borderline illegal", "naked" short selling. Short selling is a capitalist operation as much as any other.

Posted by: vk | Jan 29 2021 22:02 utc | 125

@vk

"So, there's no such a thing as "illegal", "borderline illegal", "naked" short selling. Short selling is a capitalist operation as much as any other."

Really!

So anyone with the means and/or capabilities can just create infinitely more of a companies shares out of thin air than are actually issued and in circulation - and it's completely "legal" because that just the way the "capitalist operation" works? Hmmm....

So..the 2008 big bank insolvency crisis - that ended up crashing most of the general economy, was capitalist just being capitalist... no harm..and certainly no fouls called. But shorting, really.. mostly Naked shorting, was the name of the game then when all the big institutional financiers realized that most of the banks were highly over leveraged with large amounts of subprime MBS crap on their balace sheets - that most of these same financial institutions had been regularly feeding to them.

Alrighty then...

In the last few days, we've all seen another dramatic episode of "
capitalist being capitalist" - only the capitalist who run the show apparently didn't want to play capitalist anymore because a rowdy bunch of "outsiders" figured out how to play the same manipulation game - and beat them at it - so they shut their capitalist game down and became who they really are, rapacious financial olighacs that have little to noreal use for actual "capitalism"*

*See the Fed's massive, and ongoing financial and basically socialistic back-stopping of our "genius" money managers to try and maintian this facade called free markets or.. "capitalism".

Posted by: time2wakeupnow | Jan 29 2021 22:42 utc | 126

Robin Hood not only stopped their retail customers from trading the specific stocks ( more than just GameStop ), they sold their retail customers' shares at a heavy discount from the price of the day, thus loosing customers' profits .Then wrote to them that this action was in the customers best interests. That is illegal.
The short sellers, hedge funds, and anyone else in the market other than RH retail customers, could then pick up the heavily discounted stock and make good on the' new price rise - see today's prices .

Posted by: Fíréan | Jan 29 2021 22:59 utc | 127

@ Posted by: time2wakeupnow | Jan 29 2021 22:42 utc | 125

From the point of view of the capitalist system, there's nothing wrong with the 2009 bailout: the State represented the collective property ("trust fund") of the capitalist class, and saved the system as a whole. Perfectly legitimate.

There is not hope in saving capitalism. It doesn't matter how many epithets you put to the word ("crony capitalism", "financial capitalism", "greedy capitalism", "predatory capitalism"), a pig with lipstick is still a pig. The same is true for short selling: putting the adjective "naked" in front of it and calling it "illegal" won't re-purify the system.

Posted by: vk | Jan 29 2021 23:02 utc | 128

@VK


Very true what you say...

I sometime refer to this classic clip from the movie "Network" for Paddy Chayefsky's brilliant final screed on the subject of "Corporation", Capitalism, Communism..etc. It's when the head of UBS Network (Ned Beatty) ferociously informs News Anchor Howard Beals (Peter Finch) what's actually what regarding how the world (of business) really works:

The World is a Corporation

Posted by: time2wakeupnow | Jan 29 2021 23:32 utc | 129

vk is correct. Nothing wrong with short selling./

If investors thought that GME was worth more than it was trading at they would have purchased it. No matter how many they were willing to sell short.

The hedge fund was shorting it because to them it was not worth near what it was trading at.

They were not selling it short to to drive it down.

Which seems to be what a lot of people think about short sellers.

This thought is used in many cases where the owner of a falling stock can blame the shorts for his poor decisions. Easy on the ego.

Posted by: arby | Jan 29 2021 23:32 utc | 130

@ time2wakeupnow | Jan 29 2021 21:41 utc | 123.. thanks for your take time2... the problem i see if offering up short selling as the scape goat for all the ills that are going on in the financial markets today... it ain't just short selling - it is all of it, and as i was trying to point out - the derivative market is a much bigger concern as i see it... these are smaller players in the bigger scheme of things - melvin capital and etc... in 2008 - it was bigger players doing the same sorts of things... and of course they were bailed by the fed too, at the cost of the person on main st..

so don't misunderstand my support for short selling to imply any of it is much better then all the rest of it! it ain't! if you are going to go for a swim with the sharks, it helps to know what the sharks are! and they aren't just short sellers - this point i am not going to repeat to you again! the whole system as it presently stands is a scortched earth policy - it is called late stage capitalism as it presently stands.. the stock, bond and derivative market are just some of the avenues it is being expressed at present...

and a thing about what is legal or not.. of course those in power write the laws.. never forget this! study history and you can quickly see this... i haven't been following your conversation with vk, but will read your additional comments now... cheers james

Posted by: james | Jan 30 2021 0:05 utc | 131

if - is...

i basically agree with vk fwiw... cheers..

Posted by: james | Jan 30 2021 0:10 utc | 132

Short sellers sell stocks they believe to be overpriced.
Buyers by stocks that they believe are under priced.
No difference as far as I can tell.

There are a couple of differences. It is more dangerous to short a stock.
The owners of the stock can demand delivery at any time.
If short seller cannot deliver the stock then he is "bought in". Forced to pay the price a seller who can deliver demands. Usually it is a price higher than where it is trading.
Short seller cannot sell below the last sale.

Then their is now the danger of the buyers rolling the short.

Stocks were invented to be sold.

Posted by: arby | Jan 30 2021 0:25 utc | 133

more short support.
Short sellers have to buy back their shorts.
Buyers are under no obligation to do anything.

When a stock is falling many times the only buyers are the shorts. Handy for buyers who want out.

Posted by: arby | Jan 30 2021 0:37 utc | 134

Blaming short sellers is the same as blaming Russia or China for any woes.

Short sellers should demand to be treated like people.

Posted by: arby | Jan 30 2021 0:48 utc | 135

This board is loaded with short sellers on the American Empire.

just sayin

Posted by: arby | Jan 30 2021 0:50 utc | 136

@snake | Jan 29 2021 12:23 utc | 102

Could this episode presage massive retail market efforts to neuter the plutocracy? snake replies: I think if could, but there is no way to coordinate it, so it will have to be spontaneous until the neuter forces gain control of the content that hits the media. every thing that happens is directed by the privately owned media.

There is indeed a way to coordinate the revolt. We now have this thing called the Internet, which is far larger than any brokerage app like Robin Hood, or any platform such as Facebook. The Internet is far larger than even the World Wide Web. The Powers could install a Great Firewall against all the above -- extremely difficult, especially against the WWW -- and the rebels would still have zillions of ways to coordinate their actions.

Posted by: Cyril | Jan 30 2021 1:04 utc | 137

Vk, is of course, wrong. Or only half-right, but still mostly wrong.

Shorts would not exist in a properly controlled capitalist marketplace which is governed by a nation which protects its people.

Short selling exists today entirely due to the collusion of finance and big government-internationalists.

The SEC has its work cut-out for it now. But...

Robin Hood is done.

Shorts will be a thing of the past soon under a resurgent-nationalism.

This is the beginning of the end for financial rule in the U.S. The signs are all there. It has nothing to do with capitalism. It has to do with nationals who do not care for their own countrymen. Big fucking difference.

This is not marxism/capitalism.

This is globalism/nationalism through and through.

The people are finally starting to catch up to the elites.

GET YOUR PITCHFORKS SHARPENED, BITCHEZ!

Posted by: NemesisCalling | Jan 30 2021 1:25 utc | 138

Posted by: NemesisCalling | Jan 30 2021 1:25 utc | 137


Shorts would not exist in a properly controlled capitalist marketplace which is ....

Isn't that a contradiction in terms? I thought Capitalism meant "Free markets", where's the Invisible Hand in all this?

In a truly free market, even shorts should be allowed.


... governed by a nation which protects its people.

Ha. ha. ha. Interpreted literally, you'd be referring to an Anarchy, not the current Hierarchy of elites.

Posted by: Arch Bungle | Jan 30 2021 1:40 utc | 139

@ Posted by: NemesisCalling | Jan 30 2021 1:25 utc | 137

Shorts would not exist in a properly controlled capitalist marketplace which is governed by a nation which protects its people.

If it is controlled, then it is not free. According to capitalist ideology (all of its variants with the exception of the Keynesians and their branches), free market is the ideal shape of capitalism.

But I understand your point: feeble capitalism (i.e. capitalism subordinated to the will of the nation) is the best possible system.

The problem is that it wouldn't work: the rates of profit would begin to plummet even quicker, thus leading to a fast collapse of the system. There's a reason finance is accepted in capitalism: it retards - and sometimes even reverses a little - the system's tendency of falling profit rate. Without crescent profit rates, capitalism can't survive by pure mathematics (you'll have to read Marx for that, as the demonstration wouldn't fit here).

Your proposal of national capitalism would be the instantaneous ruin of the USA.

Posted by: vk | Jan 30 2021 1:49 utc | 140

@ 135 arby -LOL.. that is very true..

@ 137 nemesis calling.. you are dreaming.. enjoy the dream!

Posted by: james | Jan 30 2021 1:51 utc | 141

An American fairy tale. A flock of garden variety elves stumbles upon a magic mushroom in the dark forest called Stock Market.
It grows and grows, in their hands, to the alarm of wizards of finance.
Their secret is revealed!
The spell is broken!
Maybe the bubble too?
Double, double, toil and trouble, fire burn and cauldron bubble!
A happy ever after ending is not likely for this twisted tale.

Posted by: LittleWhiteCabbage | Jan 30 2021 1:51 utc | 142

@139 vk

Wrong.

No one is saying you can't make money.

But you have to do it within the realm of production, not financial extraction which relies on the media and government to enshrine its position. Both of those tools are soon to fall under a nationalist spell.

And, yes, I desperately want the dollar to fail. Any nationalist knowing their own currency is the key to the globalist pipe dream would HAVE TO desire its collapse. It is just that simple.

If you are a nationalist, you want the dollar to fail. And this is why China and its paid shills such as yourself, DO NOT WANT THIS!

Posted by: NemesisCalling | Jan 30 2021 1:54 utc | 143

@140 James

You are a dumb Canadian. Please stay up there.

Posted by: NemesisCalling | Jan 30 2021 1:57 utc | 144

Only when the profit motive is cured, then capitalism can be cured.

But by that point it is no longer capitalism, but it would be socialism, where things are made for the people, EVEN for free, AND not to be sold for profit. People > profit, without people, there's no profit.

When people get out of this mental block that things have to be sold/traded for something, you will unlock new possibilities.

Posted by: Smith | Jan 30 2021 2:01 utc | 145

@ NemesisCalling | Jan 30 2021 1:57 utc | 143.. i have no need to call anyone names..i hope your words aren't a reflection of your actions for your sake!

"Financial engineering is replacing industrial engineering." quote from michael hudsons article below... - this has been the reality for some time now in the west... it is worth reading for anyone who wants to understand what is going on better..

The rentier resurgence and takeover: Finance Capitalism vs. Industrial Capitalism

Posted by: james | Jan 30 2021 2:05 utc | 146

Right now, capitalism has the upper hand on the nation in the U.S.

But at many points in its history, courageous legislation has been enacted to restricted the anational extracting class from harnessing the labor of others for their profit.

Glass-Steagall, being one of them.

You are all acting as if there hasn't been a steady erosion of nationalism in the U.S., coincidentally during the rise of deregulation and globalism.

Certainly these are not empty concepts, and yet you Marxists claim that the nation is powerless to subdue the anational, extracting elites, and yet above I cite a clear example of the ongoing erosion that is finally beginning to be turned back.

And yet, surprise, surprise, vk is there to say it is all in vain and there is no going back. Just like Obomb-u said when he mentioned: "Those jobs aren't coming back." Hogwash. Malarkey. Globalist-claptrap. Internationalist-Trotskyite nonsense. You will be soon up against the wall, mark my words. Payback for Tsar Nicholas II.

Face it: us Deplorables (and soon to be the progs who wake themselves the fuck up from globalist-brainwashing) have very little to lose anymore. The hour is drawing near where the anational extracting class and its Chinese business partners will be in for a rude awakening.

Will the Chinese stamp their passports on their way in through the ports of Shanghai. Time will tell.

Posted by: NemesisCalling | Jan 30 2021 2:14 utc | 147

@ NemesisCalling

I know you mean well but you are fighting the wrong enemy.

And yes, a nation is powerless against capitalism if that nation is composed of people who believe in the profit motive. You will have the rich selling jobs, de-industrialize, just to make a quick buck.

And that belief is more dangerous than any foreign enemy, because it rots and divides inside.

Even in China, where there is now no extreme poverty or homeless, there's still unemployment, there's still "part time job", and you know what chinese companies do? They outsource the labor to India or Vietnam instead of making sure of 0% employment rate. And the same for Vietnam, we outsourced jobs to Cambodia and Myanmar.

When the USA is long gone, even China and Vietnam have to change, because that greed of the "quick buck" will destroy everything.

Posted by: Smith | Jan 30 2021 2:23 utc | 148

NemesisCalling #146

Nice try but you have a confused geography and a confused country. The promised land is not occupied by China - rather it is occupied by Israel. And the new world is not China but the north of the Americas.

Deflection so blatant as yours is obvious to anyone, especially a Palestinian. Now, they know about illegal occupiers and money manipulators. The anational extracting class are doing very well with this little game in wall street and have hidden behind a quaint, yet artfully constructed front of so called deplorable common class investors.

As the GameStop share price accelerated and expanded ask yourself just how many millions were flooding into the market and before we all celebrate the wisdom/revenge hypothesis let us calculate what the other smart movers like JPMorgan were up to. Wall Street on Parade estimates JPM made something like $150 million in this scam. So it could be that the Dem's financial bosses are just going after those hedge funds that backed Trump and the repugnants. A settling of debts as it were.

When some solid data gets accumulated there may be revealing moments. I doubt China will be appearing there.

This may simply be a big end shakedown hiding behind the meme of the day that hates deplorables and rabble getting uppity in the halls of power.

Posted by: uncle tungsten | Jan 30 2021 2:42 utc | 149

Yeah, I don't buy it Uncle. $150 million payout for THOSE bad optics?!?!?! You clearly think 150 million is far more than it actually is.

This action will greatly erode trust in the financial markets.

But there are greater things coming shortly. This event will be one thing to remember amongst them.

Posted by: NemesisCalling | Jan 30 2021 3:31 utc | 150

@107 suzan and others

Thanks for that Wall St On Parade link. I like Taibbi's piece best for the context of this event, but Pam's article most clearly suggests the schemes within schemes.

For what it's worth, I don't think the presence of commenters at Reddit who seem vastly over-sophisticated speaks necessarily of hidden loyalties (e.g. working on behalf of Morgan). We have people here of similar caliber in various fields. However, I buy the numbers of her story. I hate the thought of that criminal Dimon making that much money, but I suppose one must live with what is - if it is. I think we'll see this more clearly over time.

Please keep us posted, and again many thanks.

~~

@135 arby This board is loaded with short sellers on the American Empire.

And we are making a killing man. It's an easy bet ;)

Posted by: Grieved | Jan 30 2021 4:38 utc | 151

@133 Arby: "When a stock is falling many times the only buyers are the shorts. Handy for buyers who want out."

Ah, OK, so you appear to be justifying short selling as some kind of a community service. A common good.

Not sure I can agree with that proposition.

Posted by: Yeah, Right | Jan 30 2021 5:31 utc | 152

@147 smith

I am not really fighting any fight. Except if you mean arguing with vk.

We both believe in the dialectical force of history. Vk believes that eventually nations will be no more and laborers will live happily ever after with the final "sublation" of capitalism.

Myself, being a Hegelian, understand God's providence in creating the concept of the nation. This can be understood in Genesis with the story of the Tower of Babel.

China, although vk will never admit it, is a nationalist nation. It has a capitalist system with strict regulation. All the talk here about how China is evidence that Marxism is coming to sublate capitalism is absolute phony baloney nonsense.

And what these "Marxists" want you to believe is that America will not and can not revert back to nationalism?

Why?

Because they desire the current arrangement between globalist American elites with nationalist Chinese elites, to the great detriment of deplorables and prog-dems alike.

Think about it: the Chinese have aligned themselves with the democrats here in the states. Who are the democrats? They are trotskyist-internationalists, who abhor conservative nationalism. They, along with China, will do anything to subdue conservatives in this country because they hold the key to getting the nationalist ball rolling.

Unfortunately, in their idiocy, they believe that they can fight against the natural. The natural being God's plan which we humans are best to seek out and align ourselves with, lest you incur a troubled life. The globalist paradigm we will be exiting is exactly that: a troubled life.

So I am not wrestling with anything, really, other than the ability to articulate the forces of history which are currently at play and are making room for the conservative-led nationalist resurgence.

Progs will see in due time that they would be wise to jump aboard.

Posted by: NemesisCalling | Jan 30 2021 5:47 utc | 153

@ NemesisCalling

I don't think China is doing it, hence you are fighting the wrong enemy. Or rather, their influence is so small that it's mostly your own capitalists who sell out your people out.

The americans will never get out of this mess until they sort out the bad apples am,ong themselves, and these bad apples will always defer to foreign element (like China, Russia) to excuse themselves of any crimes.

I'm just saying even if you sort that problem, switch from hedge fund/financial capitalism presently and go back to industrial capitalism with nationalist characteristics, you will be in this mess after the next 50-100 years unless you solve the profit motive of capitalism and discard it at all.

Posted by: Smith | Jan 30 2021 6:42 utc | 154

@ 150 grieved... i had missed the post @ 107 suzan that suzan had made.. thank you suzan and grieved... the article is a much more insider view and an accurate one too... to quote from it - ..."strongly suggesting that Senator Bernie Sanders is exactly right, the business model of Wall Street is fraud."

for anyone who starts looking at wall st more closely, they are not going to like what they see... so the trick is to keep your head in the sand and claim ignorance.. that is a real recipe for success, lol... we have a few here who are very good practitioners of this approach!

Posted by: james | Jan 30 2021 6:54 utc | 155

I sure wish, what I consider to be intelligent MoA barflies, would start discussing the world economies in their realities as mixed economies.

Mixed economies represent the current model in most nations. Some government provided infrastructure and services and some private business product and services. And the mix has changed over time as is being seen in the US where the supporters of private business have lied the public into believing that private enterprise can do things better and cheaper than the government.

Since there is never any public discussion of the social contract that has global private finance controlling the lifeblood of commerce and investment in the West, there can also never be any discussion about what the public wants the government to provide in the way of infrastructure and services.

But that discussion about what government is suppose to do for real people instead of including the added corporate ones is what is needed. China is showing that finance can be public and both effective and trustworthy in contrast to private finance in the West. Housing, health care, education, job security, communication, transportation, environment are all areas that need to be discussed in relation to what is provided for, in an ever-evolving manner, by government and what goods and services should better come and go in the private motivated world.

The public in the West has been brainwashed to be good consumers but not to be good citizens of their respective countries. That focus needs to change and it looks like it may be doing so, at least enough to potentially force some change. Whether that change includes a shift in the West from private to public finance remains to be seen.

The public is also brainwashed to discuss this subject in the abstract of capitalism/socialism/marxism/religionism instead of the reality described above without any of those "ism"s. I keep hoping the conversation at MoA rises to and maintains that level of clarity but am constantly seeing it fail to do so. It makes me think that purveyors of the ism BS are purposeful in their obfuscation of our world at MoA and question their humanistic morals.

Posted by: psychohistorian | Jan 30 2021 7:30 utc | 156

re "the business of wall street is fraud"--couldn't agree more, james.

Posted by: pretzelattack | Jan 30 2021 7:55 utc | 157

It makes me think that purveyors of the ism BS are purposeful in their obfuscation of our world at MoA and question their humanistic morals.

Posted by: psychohistorian | Jan 30 2021 7:30 utc | 155

Yeah i agree - vk's dishonest, obfuscatory and oftentimes nonsensical antics can be quite annoying at times, can't they?

Posted by: Triden | Jan 30 2021 8:03 utc | 158

psychohistorian | Jan 30 2021 7:30 utc | 155

How baffling that simple principles of fairness and truth, even when distilled to such clarity as "Do not sell what you do not own" is beyond comprehension of highly schooled, upper classes; agreement is precluded.

There are responses such as "well, what about a house with a mortgage?" There is not enough understanding to reason that the mortgage, or any other added claim on the house, is always handled before the sale is legally completed. I.e., the owner is only selling what he owns.

Modern forms of communication seem to have us more brainwashed and groggy that 50 or 100 years ago, which likely means we have overlooked and not addressed vital parts of life.

Our scientists have failed us? Maybe they have been somehow neutered or overwhelmed? Have our real scientists been fooled? Or been deliberately shunned or silenced? Marginalized? Like Edward Snowden? I have not seen any discussion on this queer situationmodern life's contradictions.

Posted by: chu teh | Jan 30 2021 10:00 utc | 159

There's a Jeff Psaki working as portfolio manager at Citadel Capital.

No confirmation on familial relationship, but Psaki is certainly not a common name.

Is Jen Psaki's Brother the Lead Trader at Citadel?

Posted by: Triden | Jan 30 2021 10:29 utc | 160

Shorting is merely reverse buying: instead of money → commodity → money, you go commodity → money → commodity. The "magic" here is that, in a "shorting" operation, money itself is also reversed, i.e. it becomes commodity (so we're not talking about labor relations, which also are commodity → money → commodity).


Posted by: vk | Jan 29 2021 22:02 utc | 124

-----

Just in case some overly-trusting reader of this thread, not well-versed regarding the antics of badly-programmed propaganda-bots, should be bamboozled by this glossolalial-diarrhoea from this site's premier propaganda-bot vk: the quoted text or is litterally gibberish.

The creator of the vk propaganda-bot should change its name to "Chauncey Gardiner/Chance the Gardener"

Posted by: Triden | Jan 30 2021 12:04 utc | 161

Why should only buyers and owners of stock determine what it is worth?

Is GME really worth $400 a share?

A bagged out company that was trading at $5 not long ago and there have been no fundamental changes since it was trading at $5.

Posted by: arby | Jan 30 2021 12:40 utc | 162

Posted by: arby | Jan 30 2021 12:40 utc | 161

This is gambling, a game, they con't care about the "real" price. There is no real price, that is at best a statistical fiction. The real price of anything is what you can get somebody (with the cash) to pay. As people here point out with some frequency, money is all a social fiction anyway.

Posted by: Bemildred | Jan 30 2021 12:45 utc | 163

@ Posted by: psychohistorian | Jan 30 2021 7:30 utc | 155

The problem with your rationale is that you treat the "government" (State) as an absolute and constant, while everything else is fluid and ephemeral.

In reality, the State is not a single and immutable entity, but the amalgam of class struggle. The reason the Chinese State does everything you listed and the American State doesn't is because, in China, the working class made a revolution and won, while in the USA the capitalist class won.

The State will always be fluid and temporary. It is the thermometer of class struggle. There is no absolute State and it is an illusion to think it can change without violence - History's ultimate decisive factor.

Posted by: vk | Jan 30 2021 12:52 utc | 164

In theory the market is discovering something close to "the real price".

All the haters of short sellers should be looking at insider incentive options and company stock buybacks where the company buys the optioned stock off the insider.
That is how these guys get rich.

I'm not even sure why there seems to be so much animosity for short sellers.
Totally misplaced by people who hadrly even know what a short sale is.

Posted by: arby | Jan 30 2021 12:55 utc | 165

Just in case some overly-trusting reader of this thread, not well-versed regarding the antics of badly-programmed propaganda-bots, should be bamboozled by this glossolalial-diarrhoea from this site's premier propaganda-bot vk: the quoted text or is litterally gibberish.

The creator of the vk propaganda-bot should change its name to "Chauncey Gardiner/Chance the Gardener"

Posted by: Triden | Jan 30 2021 12:04 utc | 160

Accusing someone a bot by saying their "post" gibberish by literally using hodpodge of words that doesn't mean anything and not touching the substance matter of VK's post. Amazing.

This is why I only follow vk's posts. I might not agree with everything they say but they can put sound arguments into each post, reply, and rebuttal. Meanwhile their detractor only resorts to name calling and ad hominem, which shows they don't have the same capability to refute vk's argument.

Posted by: Hangar | Jan 30 2021 12:56 utc | 166

Originator of WallStreetBets hedgefund naked short-squeeze named:
GameStop: Will the Real Keith Gill Please Stand Up

    By Pam Martens: January 29, 2021 ~

    The Wall Street Journal has an article up naming Keith Gill as the fellow that started the GameStop mania at WallStreetBets. The article says that Gill “until recently worked in marketing for Massachusetts Mutual Life Insurance Co.”

    According to FINRA’s BrokerCheck, a Keith Patrick Gill, employed at a subsidiary of Massachusetts Mutual, MML Investor Services, has held trading licenses since 2012 and got his Series 7 stock trading license in 2016. On November 1, 2016, FINRA shows that Gill received his Series 24 Principal’s license, making him eligible to supervise other licensed brokers. FINRA also shows that Gill has worked for three trading houses since 2012.

    Could there be two Keith Gills working for MassMutual? Yes there could. But it would certainly behoove the Wall Street Journal reporters to revisit their reporting.

    If the guy who started the GameStop mania has passed a multitude of trading exams showing his knowledge of exactly what constitutes market manipulation, this is a whole new ballgame.

Posted by: Triden | Jan 30 2021 13:11 utc | 167

they don't have the same capability to refute vk's argument.

Posted by: VK-fanboi | Jan 30 2021 12:56 utc | 165

----

Gibberish doesn't require "refutation"

Posted by: Triden | Jan 30 2021 13:14 utc | 168

I certainly don't agree with every statement in this Bloomberg piece, but there are certainly several interesting views expressed therein. Food for thought if nothing else.

Who’s buying GameStop?

    Retail investors were net buyers on Monday but net sellers for the rest of the week (through yesterday), and all in all quite balanced: About 49.8% of retail orders (that Citadel Securities saw) were to buy, and 50.2% were to sell.

    What do you make of that? One reading would be: “Retail investors on Reddit might have started the GameStop rally, but they’re not piling into this stock now, and the price action this week is coming from professionals.” Or as one Twitter user put it, “past the retail ignition, the rocket ship was mostly intra-fast money warfare.” This story doesn’t exactly tell you who the professionals are, whether they’re traditional Wall Street (hedge funds, etc.) or algorithmic high-frequency traders or just semiprofessional crews of day-traders who don’t access the market through traditional retail brokers. Someone other than Robinhood traders, anyway. 2

    You could tell a related story like: “Retail investors on Reddit started the rally to squeeze professional short sellers, and then this week the professional short sellers capitulated and started buying the stock at even higher prices from those redditors, who claimed victory and took profits.” This is probably true, at least in part. It also matches the popular story reasonably well, except that in the popular story the short squeeze is in the future, and the Reddit traders are supposed to be holding firm so that short sellers can’t cover even at recent high prices.

    Another reading would be: “Lots of retail investors are piling into this stock, and the price action is coming from them, but they’re mostly buying stock from other retail investors.” 3 Those other retail investors could be normal people who bought 100 shares of GameStop in 2005, forgot about them, and then remembered and sold them into this rally, or they could be Reddit posters who got in early, pumped the stock on WallStreetBets, and then happily got out as more people piled in to buy.

    I don’t want to make too much of this. There are always as many buyers as sellers, so it’s not really a surprise that about half of the retail investors playing the GameStop game were buying and about half, or a little more, were selling. GameStop has about 69.7 million shares outstanding, but almost 180 million shares traded on both Monday and Tuesday, meaning that on average each GameStop share turned over 2.5 times on each of those days. Of course people were buying and selling and selling and buying; the fact that the retail crowd was not overwhelmingly on one side is pretty much a mathematical requirement.


Posted by: Triden | Jan 30 2021 13:22 utc | 169

In theory the market is discovering something close to "the real price".

yeah but in real life economic theories aren't worth the paper napkins they're written on (see the laffer curve)

Posted by: pretzelattack | Jan 30 2021 13:23 utc | 170

CEO of WeBull (Robinhood competitor) offers an explanation, for RH shutting down trading and forced selling of GME stock, which doesn't rely on nefarious backstage collusion.
Webull CEO explains why trading was restricted amid the GameStop market mania

    “There is an outcry because a lot of the retail, they don't actually understand the dynamics that happen after a trade,” Denier said. “It has nothing to do with the decision or some sort of closed room smoke-filled cigar room of Wall Street firms getting together to the dismay of the retail trader. This has to do with settlement mechanics of the market.”

Robinhood (RH) is a broker. They don't execute stock orders themselves. They rely on Citadel for that, which in turn relies on firms like JPM. (Lets just ignore frontrunning for the moment, as it has no bearing on the issue of GME stock-trading being halted by RH)

RH sign up customers, route their orders to executing brokers, and keep track of who owns what. RH is also its own clearing broker, so they directly settle and custody their clients' securities

RH customers buy and sell stocks. Those trades don't settle (settle = closing, the exchange of cash for security) until maybe two days later. Depending on the net of buys/sells, RH is on the hook to pay or recieve that net cash.

That's treated as a risk.

RH needs to be able to demonstrate that it has the funding available to cover any liabilities existing until all currently outstanding trades are settled.

Due to price volatility and share-trading volumes of stocks like GameStop, the amount of funds RH needed in order to guarantee their ability to cover all outstanding share-trading liabilities, had reached or breached the limit available to RH.

Posted by: Triden | Jan 30 2021 14:29 utc | 171

The Onion has analyzed what happened and lays it out:

How Redditors Drove A GameStop Stock Surge

Posted by: Bemildred | Jan 30 2021 15:01 utc | 172

@NemesisCalling #137
Short selling is not itself in any way illegal or immoral.
What the hedges were doing with Game Stop involved more than just short selling- but let’s be very clear here: there are no good guys on any of the sides in this issue.
The WallStreetBets people arent doing what they are doing for altruism or for GameStop’s sake - they are looking to make money. Forcing shorts to cover is a time tested tactic used by banksters as well.
The real issue is that there used to be enforcement of laws which prohibited media based communications to manipulate stock prices. Obviously this is not enforced in any real way anymore unless you go so way over the line (cough Musk) that the SEC is forced to come slap your wrist.
Ultimately, the RH herds will not be allowed to use that platform to hurt the bankster classes which created and continue to support it.
Nor am I particularly sad about that - there is no difference between a hers of lemmings coordinated by a likely scammer/pump and dumper, if not an actual bankster- and hedge funds employing lemming’s pension funds to do the same.
I would prefer a Tobin tax to greatly discourage all of this - a 0.5% tax or say, $0.50 minimum tax charge on any stock transaction would end most of the abuses overnight.

Posted by: c1ue | Jan 30 2021 15:02 utc | 173

@161 Is GME really worth $400 a share?

Of course not but that isn't the point. The actual value has nothing to do with it. It is worth risking $400 if you think it's going to $1000 (or the moon baby!!) Buyers believe short sellers are going to have to cover at that price.

Posted by: dh | Jan 30 2021 15:11 utc | 174

dh, I understand why it is trading at that price.

Posted by: arby | Jan 30 2021 15:18 utc | 175

@174. So you understand it's worth about $10 a share at the most.

Posted by: dh | Jan 30 2021 15:49 utc | 176

@172 c1ue

I agree with most of your post.

The Tobin Tax appears to negatively-incentivize long-term holding. I like it.

What the GME situation has told us is that, "You ain't in the club."

That George Carlin phrase is coming to embody the stupidity of those who think that with such a naked display of government-finance collusion that they will still be able to revert it back to a "simpler time" of extraction.

I feel that is the main point of this event. The question is what will be the straw that breaks the back? Or have the gears of time finally clicked into motion and it's too late for them? I think the latter.

Posted by: NemesisCalling | Jan 30 2021 16:17 utc | 177

Yes and is a great short candidate IMO as it was at 20 bucks a share.
Eventually it will return to prices in that range if not lower.


Found on Xymphora--

"However, the GameStop shorts look like an awfully inept bunch. Even though at a remove, they appear to be correct about their views of the company’s valuation, if you are a short, you never want to take a position that is so large you can’t get out of it pretty quickly, as in out of proportion to regular trading volumes. "


And I personally do not think that it is worth $400 even if there is a chance that it will go to $1000.

exactly

Posted by: arby | Jan 30 2021 16:19 utc | 178

I certainly think $400 to bringbthe hedge funds down is money well spent.

Posted by: lysias | Jan 30 2021 16:32 utc | 179

psychohistorian @ 156, good post! You've put into common language what Michael Hudson has been focussing on the last links that karlof1 has brought, when he speaks of the difference between financial capitalism and industrial capitalism, and the perils we face in a financially dominated world. One of those perils is what we are seeing happening in this episode- the system is rigged as b has pointed out. And it matters not that there's now just as big a correction happening to stock that should never have ballooned so far above its highest value; it's all being manipulated in such a huge way that we can all see it is totally out of whack.

Prof.Hudson goes so far as to say what you have said all along, psychohistorian,that it is financial capitalism that cannot remain inside the nation that practises it. In order to survive it must go global,and that makes war inevitable. It is crucial that this form of privatization, the most virulent one, be contained or a nation is taken hostage by its own elite, who have become like the worst of drug addicts- they are hooked by the biggest hook of them all, and even their patriotic duty is lost to them.

Money - they have to have more of it. And look where that has taken them, for even the entire world won't be big enough to satisfy the addiction. They have even to deny that they are harming the earth itself.

They need help.

Posted by: juliania | Jan 30 2021 17:03 utc | 180

@178 "And I personally do not think that it is worth $400 even if there is a chance that it will go to $1000."

Neither do I. I'm a 'conservative investor' whatever that means these days.
Incidentally there seems to be some confusion about the closing date for covering shorts.
And a nasty rumor on Reddit suggests that Melvin are still in the game in spite of saying they closed their position.

Posted by: dh | Jan 30 2021 17:04 utc | 181

Well it used to be that a buyer could demand delivery. I have no idea if that is still the case. I have never heard of a closing date or time limit.

Posted by: arby | Jan 30 2021 17:16 utc | 182

I certainly think $400 to bring the hedge funds down is money well spent.

Posted by: lysias |


Do you?

Well here's your opportunity to throw your good money at those evil hedge funds.
I'll bet you do not think it is that worth it after all.

In other words I'll short your call.

Posted by: arby | Jan 30 2021 17:19 utc | 183

@182 That's what I thought too but the RH gang were excited about the end of January for some reason. I must ask my son. He's up on all that stuff, crypto etc. I stick to real estate though I like a little flutter now and again.

Posted by: dh | Jan 30 2021 17:21 utc | 184

dh - arby - triple witching - last friday of the quarter https://www.investopedia.com/terms/t/triplewitchinghour.asp

which means they are working with the derivative market instruments here, not stocks directly... they are shorting thru the use of a derivative..

@156 psychohistorian.. but i think people are trying to have the conversation, at least here in canada... the issue of what is to be in the public domain and what is to be private is a big issue... do we control our resources - public, or give them over to corporations?? i just read linda mcquaigs book - the sport and prey of capitalism... she goes into this in depth from a canuck perspective... the book is addressing what you say no one is addressing... i am sure others are having conversations about this too.. cheers james

Posted by: james | Jan 30 2021 17:53 utc | 185

@180 juliania & #156 psychohistorian & now james @185

juliania, thanks for bringing up Hudson in your comment to psychohistorian, I was going to jump in and do the same when I got to the end of the thread.

psychohistorian, don't give up on commenters and start doubting their integrity or suspecting agendas - the tide is almost turning, hang in there.

Hudson's latest article that karlof1 posted the other day is a great surge of clarity to the discussion of whether we need any "isms" in determining the kind of economy we want in a country - as juliania is saying.

I don't know where karlof1 linked that - it gets hard back here trailing behind threads and trying to keep them straight ;) - but anyway, here's the link again:

The rentier resurgence and takeover: Finance Capitalism vs. Industrial Capitalism

I actually took the hour to read this and found it completely illuminating. Derived from a book chapter, it's fairly well edited and very readable. It portrays the true struggle today, and its historical context, as the dominance in the west of the fiction-based economic system over the production-based economy.

~~

I know very little about the "ism" from friend Marx, but I know enough about economists to rate him as one of the best ever. We are continually told that he expected industrial capitalism to prevail over the rent-seeking component, and thus to lead organically and inevitably into socialism. He is thus said not to have predicted that the rent-seekers would fight back, and prevail over production.

So - I don't mean to disparage Marx, and I don't know enough to make any comment other than this question: While Marx's analysis of economics is obviously useful, is his prediction useful, since it failed?

In other words, taking the fatigue with "isms" as a starting point, can we simply use Hudson's conflict between the real economy and the fictitious one to decide what we'd like?

We can use everyone's analysis if it's accurate, with people like Marx and Hudson right at the top, but we can simply choose which things in our mixed economy we want to operate as a public utility, driven by social considerations, and which things we want to operate privately, driven by a profit motive.

~~

psychohistorian, that was all a long-winded way of saying that I think you're actually on to something here. We could drop the isms and accept that all economies in places with governments are mixed economies, and just start talking about the preferred mix.

We can best change the paradigms that stand in the way of that kind of discussion, simply by enduring and persisting - nil desperandum, so forth...

Posted by: Grieved | Jan 30 2021 17:56 utc | 186

I hope this will be seen as relevant to the topic. I went from here and found a local New Mexico project that is the reverse of predatory financial capitalism so this is rather self-promoting, but a positive way that industrial capitalism ought to be proceeding:

https://www.nakedcapitalism.com/2021/01/
how-new-solar-power-projects-support-the-homeless.html

[I hope my way of presenting the link is not difficult to use- the article is at the top of the page, so easy to access by just going to the first line. My own inability to use the allowed tags (I've tried) forces me to use this process.]

Posted by: juliania | Jan 30 2021 18:04 utc | 187

thanks grieved and juliania... the article grieved links to @ 186 is exactly talking about this too and is highly recommended reading... cheers..

Posted by: james | Jan 30 2021 18:06 utc | 188

@ juliania... says - cant find the page with your extended link... off for a walk..

Posted by: james | Jan 30 2021 18:09 utc | 189

Hedge-fund traders (la creme de la creme)
outwitted by a bunch of dim-wits; the word Schadenfreude comes to most people's minds)

kudos must go to the dimwits.

although technically, as i and a lot of other people understand it,
there is possibly even probably an element of illegality behind it all.

but why should the ordinary Joe have any sympathy for the hedgefund guys
(Mitt Romney, Bill Browder, Philip Green, et al)

who've spent their entire lives raiding other people's pension funds,
and will expect a bailout from the Government whenever their bets go sour.

Posted by: chris m | Jan 30 2021 18:12 utc | 190

Not sure why you couldn't, james @ 189, as I checked and you should see the title I gave, second line down. Maybe just try this:

nakedcapitalism.com

without the end bits. Then see "How New Solar Projects Support The Homeless", second article down. (It goes with Grieved's mixed economy theory also; thanks Grieved for re-lnking the Hudson article.)

Hope you enjoyed your walk!

Posted by: juliania | Jan 30 2021 18:23 utc | 191

@190 Permit me to suggest you spend a little time on Reddit. Those people are far from being 'dimwits'...

https://www.reddit.com/r/wallstreetbets/

Posted by: dh | Jan 30 2021 18:31 utc | 192

@189 the walking dude

How New Solar Power Projects Support the Homeless

Posted by: Grieved | Jan 30 2021 18:32 utc | 193

Super, Grieved, thanks!

Posted by: juliania | Jan 30 2021 18:38 utc | 194

Though the information written at this site is of 29 jan and today , as i post link here, is 30 jan., is still relevant.

Is the Squeeze Squoze ?

http://www.isthesqueezesquoze.com/

Quote :
" They borrowed and sold a record amount - they sold more shares, in fact, than are actually traded, far more than Gamestop's float. This shouldn't have been allowed to happen and probably means they were selling shares they never even bothered to borrow - naked shorts. (Where were you on that one, SEC?) Essentially, they were simultaneously betting on Gamestop going bankrupt and doing their best to drive them into bankruptcy. It's a good tactic when you need to find a way to pay for your old wife's alimony and your new wife's poolboy.

But it presents an opportunity for the savvy degenerate gambler. Because these shares eventually need to be returned - . . . . "

endquote

Posted by: Fíréan | Jan 30 2021 19:04 utc | 195

Posted by: Fíréan | Jan 30 2021 19:04 utc | 195

Thanks, informative.

Posted by: Bemildred | Jan 30 2021 20:00 utc | 196

juliania and greived... thanks! i read the article just now... that is super positive! new mexico has a lot of sun, so it makes sense to take advantage of all of that! here where we live, we get much less sun, but still i have a few friends who have invested about 20 grand in a similar set up on their roofs, with the idea that the saving on energy bills will ultimately mean that the solar panels were worth it... and, they are improving the quality of solar panels too, which is something i discovered.. there was a video on biomass that i watched that went into this... can't remember where it was i saw it... unfortunately bio mass is a label with a lot of hidden meaning in it... but back to the positive article you shared juliania - yes.. that is an example of something positive happening...

and on a much wider note which is related to the issue of homelessness... i have been reading eric richards book 'the highland clearances'... this happened from approx 1700- mid 1800s.... my dads family came to canada in 1796 and were a part of this ongoing dynamic... i had never heard of the enclosure laws of britian which would have been put in place perhaps in the 1600's, but this did much the same thing to many of the common people of the time - who became dispossessed of the common lands which were put into enclosures... now fast forward to today with the increase in homelessness which we see everywhere in the west... while it is not a slam dunk, the article that i and grieved posted from michael hudson on this thread, go directly into this whole issue of 'private property' and the financialization of our world beginning with the removal of land for all the people and into the hands of a few.. it goes back hundreds of years.. previously the land was owned or controlled by the kings and queens of the land... eventually it was spread out to barons and etc. etc... it is these same upper class who continue to hold undue influence over the courts, laws and rules of the society we are presently living in.. the whole concept of 'private property' has been on sale for hundreds of years in a guise which is not serving the masses of people... this much is very clear and i can find no better way to describe so much of it then to encourage others get a deeper understanding by reading michael hudsons article while trying to fill in the blanks... cheers james

Posted by: james | Jan 30 2021 20:10 utc | 197

juliania - i am also reading dostoyevskys 'brothers karazamov' as well! i am into it 86 pages, but it is over 900 pages in length! i am really enjoying it too.. thanks!

i have 3 books on the go! the other one is pema chodrons 'no time to lose'.... my life is rich!

Posted by: james | Jan 30 2021 20:13 utc | 198

Posted by: Fíréan | Jan 30 2021 19:04

The first thing I see is this stuff about the shorts driving the price down so they can buy it back and pocket millions. Buy it back from who? They were/are the sellers. In order to buy back their shorts they need sellers.
Even if the short is naked the float actually increases by whatever amount the short sold.

If the float is 100 million and someone shorts 100 million the float is now 200 million.

Posted by: arby | Jan 30 2021 20:17 utc | 199

Further to my above.
The only difference that 100 million shares of that 200 million float is under the gun to buy them back and cancel the short position.

Posted by: arby | Jan 30 2021 20:22 utc | 200

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