GameStop- Reoccupy Wall Street, economic populist movement and Crowdshorters
The retail investor storm on the stock of video game seller Gamestop is making waves. While the papers soared by a staggering 1700 percent within a few weeks, institutional investors who had bet on falling prices are piling up losses in the billions. The hedge fund Melvin Capital alone is said to have lost around half of its assets under management in January, reports the Wall Street Journal. Of eight billion dollars, only 4.5 billion were left at the end of the month. Melvin makes his living speculating on falling prices. The hedge fund is thus one of the biggest losers in the market turbulence of the past few weeks. Do the hedge funds have to sell stocks? Because other hedge funds are likely to be affected by the steep price increase in Gamestop shares, the fear of a general stock exchange crash was claimed to exist.
According to socalled insiders, the hedge funds could lose $ 20 billion, according to the Wall Street Journal. If the funds could be forced to sell stocks and other long positions to cover their losses at Gamestop, the prices of uninvolved companies threatened to collapse – which could spark a wildfire, so the warnings of so called experts. „Since everything is closely intertwined in the modern financial markets, too many cogs jumping out can lead to the overall system no longer working properly,“ fears Jochen Stanzl from the trading company CMC Markets. As long as the uncertainty persists, many investors will no longer dare to venture out onto the floor. Reassure
However, the experts at the British Barclays Bank, on the other hand, are optimistic that the turbulence around Gamestop will remain localized. Overall, the volume of short sellers or short sellers operating on Wall Street is around $ 800 billion. In the case of Gamestop and other stocks targeted by retail investors and hedge funds, the volume is just $ 40 billion. Therefore, a global equity crash, as feared by some market players, is rather unlikely. From the point of view of chart technology, a form of financial analysis, there is currently no cause for dramatization.
But what exactly happened on Wall Street? How can it be that the shares of a troubled video game company skyrocket from just under $ 20 to $ 325 (closing price on Friday) within a month? It cannot be due to the attractive business model of the Gamestop, as the sales development of this chain has only known one direction for years: downwards. According to experts, it is a new kind of protest against the financial world, a „Re-Occupy Wall Street“ movement, which is now directed against the „big boys“ of the stock market with the help of apps, social networks and discount brokers to demonstrate the street. „The young traders are not only concerned with making money on the fly, but also with ideology,“ says Boris Strucken from the banking service provider Fidelity Information Services (FIS), the „Frankfurter Allgemeine Sonntagszeitung“: „You want to show the establishment who has the power. “ Small investors versus short sellers The small investors are facing short sellers such as Citron Research and Melvin Capital, who had bet massively on falling prices of Gamestop. The funds are not without controversy. They borrow stocks for a fee and sell them in the hopes of being able to buy them back at a cheaper rate on an agreed return date. The difference between the sell and buy price is their profit.
A share buyback – a company buys its own shares to reduce the number of openly available shares, thereby driving up the price – is a form of market manipulation that was illegal in the US until Ronald Reagan abolished that a ban as it would restrict the freedom of the market. The result is that instead of building factories, many corporations are now putting money into their own stocks. This has helped raise the stock market to record levels and bring shareholders a huge windfall. But few others have benefited from it. The pharmaceutical company Merck insists that it has to charge exorbitant sums for its drugs to fund new research. In 2018, the company spent $ 10 billion on research and development – and $ 14 billion on share buybacks and dividends. According to a report, if Walmart had diverted half of the money it spent on share buybacks into wages, it could have raised 50% wages to one million of its worst paid employees, many of whom live below the poverty line.
Since speculation – instead of productive investment – has become the fuel of the stock market, big investors have spent more and more time playing games like short selling. However, last week after being caught off guard by a bunch of nerds, the titans of Wall Street did what all privileged people do. They wailed. How dare you manipulate the market! Only people with penthouses in Manhattan attending dinner parties with presidents and central bankers should be able to do this – not people with online avatars like DeepFuckingValue. Or as Severus Snape says in Harry Potter and the Half-Blood Prince: “You dare to use my own spells against me, Potter? It was me who invented it. „
However, it is stupid to distinguish in such an orthodox fashion between productive capital and speculative capital. Industry or Services or whatever, the real industry and real material base always were connected with financial capital and banks which gave them loans and credits for reinvestment and on the basis of hoped-for future profits and also speculated with it. However, until the Reagan era, there was a limit for speculation and derivates, but with the Reaganomics and Thatcherism the Glass-Stegal Act was removed and another multilayer of speculation was permitted which became for a short- or midterm independent from the already existing former profit bets and material base but could generate and create money, which was perceived as real by short sales, derivates and other financial products in its own circulation for a limited time. This created a sphere of a semi-independent financial pulp, money by money, which originates money for some short term- and mid-term best, but also was still dependent on the material base and their normal capitalist economic crisis which then had effects on the other multilayers of alleged independent, autonomous capital and their financial superstructure. Traditional speculative capitalism was speculation on a bet for a hoped for profit or return of a concrete investment, with the Reaganomics and neoliberalism it was not just this bet, but a bet on the bet and on the bet and on the bet.
Traditional Marxists only know capitalism before Reaganomics and neoliberalism and criticize the fact that people are criticizing neoliberal capitalism instead of traditional capitalism. Some leftists even claim that this sort of critic was structural antisemitic and would be like the Nazis and Hitler who were distinguishing between German productive capital and speculative Jewish capital. And as many US representatives like Allan Greenspan, Jellen or Goldman Sachs or Warburg were Jewish they just see an antisemitic offensive if you criticize the policy of the Fed or US banks. Of course, fascists and rightists often use these antisemitic codes. Or Rothschild as an example. Of course Rothschild as a Jew was the main topic of the Nazis and all European antisemites, there was also a Nazi movie „Rothschild- the profit of Waterloo“ and so on , Also in Arab movies you see the scene when Anselm Rothschild is lying on his death bed and distributes the world among his sons . However, if you even mention that Macron was at a Rothschild bank and German chancellor beyond his Gazprom contacts was a representative of the Rothschild bank for Eurasia and wanted an Euranization of the G7 with Russian and China as new members and so on, this is seen as being antisemitic. However: It would be antisemitic if you say: The Rothschild as Jews control the world as a racial or financial entity and there are no others. Or as conspiracists say: The Fed is a private and not a central bank, controlled and owned by the Rothschilds and as they control the world money they would control the world. And as Allen Greenspan, Bernanke and Yellen are also Jews in the Fed the theory for some people seems to make sense. However, they are not interested in the numerous not-Jewish bankers and elite members. But just to see that Macron and Schröder were representatives and lobbyists for Rothschild and that they had a Eurasian vision, has nothing to do with antisemitism. Just the opposite: If you ignore and want to silence these connections and not put them in a framework, you will promote each sort of conspiracy theories. Same with the Bilderbergers and other elite clubs. To mention them and discuss the organization beyond primitive populism should be permitted.
Therefore it is interesting that a new movement of economic populists emerges which wants to challenge the monopoly of Wallstreet. Until now, we never heard of such a story in US history or it was forgotten or it is really a new phenomenon due to social media and the internet. What existed before were more spontanic organizations of .small shareholders or when some leftists discovered it: Critical shareholders which polluted the profit-orientated shareholder meeting with such crazy ideas of sustainability, ecology, human rights and so on. Now most companies have this in their official profile, but just don´t act like this and there is also the tendency of greenwashing. But the Gamestop movement is different. It is not about ecological, human rights standards or whatever, but that a small investor group due to market manipulation by the big Wall Street is denied his „honest buck“. .
For many private investors or should we say petty hobby speculators and unsocial predators , it was a matter of wiping out these hated big investors. Numerous posts in the „WallStreetBets“ forum, where small investors organize themselves, testify to widespread anger against banks, hedge funds and all of Wall Street. There it is only a matter of sucking out the people so that a few, the so-called „Big Boys“, can stuff their pockets with money. The small investors get support from the left-liberal Senator Bernie Sanders. He accuses the hedge funds of „outrageous behavior“ and calls for the practices of these investors to be examined „very carefully“. Sanders told ABC broadcaster that he had long been convinced that Wall Street’s business model was „defective.“
The Senator Elizabeth Warren sees the Securities and Exchange Commission in the duty and requested an investigation into the CNN broadcaster. She criticized that the development around Gamestop only illustrates what has been happening on Wall Street for years. There is „a group of players“ who manipulate the market. Therefore, there must be better regulation to protect against market manipulation. The SEC must now „do its job“. The US Securities and Exchange Commission said on Friday that it was monitoring the „extreme price volatility“. This could mean „rapid and serious losses“ for investors and „undermine“ confidence in the markets.
After the left-winged Occupy Wallstreet movement 2011, right winged New Republicans organized now a “Reoccupy Walltstreet”movement and demobnstration in New York next to Wall Street which should have no political affiliation. “There’s some blatant corruption going on in the buildings around us and in Greenwich, wherever hell they are,” Gavin Wax, the group’s president, told about 50 protesters.
“There’s two standards,” Wax said. “There’s rules for thee, not for me. You got these big hedge-fund guys who are trying to short companies into the ground, and then they got called on their bluff by a bunch of anonymous day traders on Reddit.“And then they have the balls to call those guys unsophisticated,” he said. “God bless the little guy for making an honest buck and showing them how the market really works.”
Wax predicted that the deep-pocketed hedge-funders “are now going to cry and have their crocodile tears on CNBC and tell us, ‘Oh, you know, you’re manipulating the market.’
While the left Democrats like Bernie Sanders, Octavio-Cortez, Elizabeth Warren declare support for the movement. “These guys have been manipulating the market to their advantage for years. For years,” he said of the wealthy stock investors.
Sunday’s protest — fashioned after the left-leaning Occupy Wall Street democnstrations that began in the park in 2011 — stemmed from a move by some Wall Street hedge funds to bet on GameStop’s stock going down, prompting a Reddit push to buy it on trading apps such as Robinhood to keep it high.
The furious money-losing hedge funds then lobbied Robinhood to halt trading on the stock to stem their losses. Robinhood temporarily stopped the trading.The gaming store, once a staple at US shopping malls, was in serious decline before the populist run on its shares. Robinhood was slapped with a class acition lawsuit in Manhattan last week for pulling the store’s stock from its trading options. According to the Young Republicans wasn’t about political affiliations — they dubbed it a non-partisan event.“We need to take a stand today, tomorrow and every day that comes forward,” the Young Republicans’ vice president, Vish Burra, said at the rally. “[Wall Street is] corporatizing the American dream and making a mockery of American freedom.”Among those speaking at the rally was mayoral hopeful and Guardian Angels founder Curtis Sliwa, who called it hypocritical that Wall Street bankers took billions of dollars in tax-funded bailouts in 2008, only to now cry foul. “They screwed the little people once,” Sliwa said. “Lets get these hedge-fund monsters before they get us.”
While left Democrats as Bernie Sanders, Elizabeth Warren, Alexandra Ocasio- Cortez support the demands of the movement and call for stricter regulations, also by the SEC, Congress is now also debating the issue and Secretary of Treasury Janet Yellen wants to have a meeting of the SEC and other regulation authorities to debate the consequences of this case.
However, Trump supporters also see their big chance to start a broad movement that could create an economic populism after Trump and Brexit. Breitbart News aired an video with Nigel Farage “The People vs. Wall Street”:
“GameStop Rebellion Is Populist Successor to Trump and Brexit, Says Farage
Nigel Farage has hailed the GameStop rebellion as the natural successor to the populist movement which carried Brexit and Donald Trump to victory in 2016.
The Reform UK party leader said he is “with the ordinary traders” in the so-called Reddit Revolution, in which millions of small-time investors have collectively taken on giant hedge funds through buying heavily shorted stocks such as Gamestop and AMC — causing massive losses on Wall Street.
Mr Farage said that it was “about time Wall Street got a bloody nose” after the damage the financial sector inflicted upon ordinary people during the 2008 economic collapse, when banks were bailed out at the expense of the public.
The driving force behind the Brexit movement said a “new kind” of economic populism has emerged with WallStreetBets — the Reddit group behind the movement — but that it is ultimately based on the longstanding feeling amongst the masses that “we’re run and governed by people, whether they work in the civil service, giant businesses, big banks, politics, much of the media, they’re all the same people.”
“They don’t understand the conversations that we have every day and of course when it comes to money they’re all in it for themselves,” Farage added.
“That’s why we voted Brexit and it’s why in 2016 Trump got elected and got another 75 million votes in November, and now this populist action has moved from voting to what people do on the markets,” he continued.
Mr Farage said that the actions were taken by financial services firm Robinhood, which blocked traders from buying stocks in GameStop, AMC and others, demonstrated that the market was being “openly rigged” in “favour of the big guys, in favour of the
establishment and against the little people”.
Brokers like Robinhood now refusing buy orders on stocks that Wall Street are short of is outrageous.
It shows that big money, big politics and the regulators are all in bed together and against the little guy.
Farage went on to say that the financial service sector and the government are “all in bed together”, pointing to U.S. Treasury Secretary Janet Yellen, who previously served as the head of the Federal Reserve.
Ms Yellen has been revealed to have received over $800,000 in speaking fees from Citadel, a hedge fund that bailed out Melvin Capital, one of the hedge funds that has incurred heavy losses after taking out large short positions against GameStop.
On Friday, Breitbart News reported that the Treasury Secretary has not recused herself from advising President Joe Biden on the populist economic revolt, despite what some see as an apparent conflict of interest.
“We don’t know what advice she gave, we don’t know what made the brokers stop taking buy orders,” Farage noted.
White House press secretary Jen Psaki defended Yellen not recusing herself, highlighting the fact that she is a woman in office as an achievement in itself and adding that “It shouldn’t be a surprise to anyone she was paid to give her perspective and advice before she came into office.”
Mr Farage concluded by saying that “maybe the establishment this time bit off more than they can chew”, noting the bipartisan calls for investigations into Robinhood from the likes of Republican Senator Ted Cruz and Democrat Congresswoman Alexandria Ocasio-Cortez.
He said that the establishment is in trouble because “they haven’t just got the Trumpites screaming, they’ve got the Trumpites now linked up with those on the left, both with common cause about the way that big money, big banks, big politics work together in their favour and against ordinary folk.””
And according to Breitbart Donald Trump jr. is now also supporting the Reoccupy Movement:
“Donald Trump Jr. Blasts ‘Rigged’ System After Robinhood Blocks GameStop Trades
Donald Trump Jr. defended the populist investing movement rallying to buy stock in GameStop on Thursday accusing the system of being “rigged.”
“It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street,” he wrote on Twitter. “This is what a rigged system looks like, folks!” Trump Jr. shared a post on Twitter from Barstool CEO Dave Portnoy who challenged the popular stock market trading app for blocking trading of GameStop stock as well as AMC, Blackberry, and Nokia.
“Somebody is going to have to explain to me in what world RobinhoodApp and others literally trying to force a crash by closing the open market is fair?” Portnoy asked. “They should all be in jail.”Trump Jr. also marveled at the WallStreetBets Reddit group for acting like a major hedge fund.“[T[hey just aggregated enough small retail investors in an open forum to move markets just like the big guys,” he wrote. “It’s actually amazing to watch!!!” As more populist rage continued building against the Robinhood trading app, Trump Jr. criticized the SEC. He also joked that pigs must be flying after Rep. Alexandria Ocasio-Cortez and Rep. Rashida Tlaib appeared to agree with his criticism of Robinhood
Reoccupy Walltsreet at the moment is a movement mainly of small petty hobby speculators against professional system-relevant big speculators and investors, petty bourgeoisie against monopoly capital which could become a broader right-winged populist movement and join the Trumpites, Qanonian, conspiracy theorists, militias, fanatic believers in America First, the freedom of the capital,libertarianism and neoliberalism and the American dream who then see in the existing plutocratic capitalist democracy some sort of overregulated, exploitive socialism and communism. After globalization was criticized first by the Left in the 199ßs and 2000s, right-winged populists and nationalists prevailed in their critic of globalism. The same happens now: After the leaft leaning Occupy Walltsreet movement in 2011, the right leaning Reoccuppy Wall Street takes over.
However, some left politicians as former Greece finance minister Yanis Varoufakis and chief of the failed DIEM25 movement see this as a potential form for left protests, as cyber hippies before spoke of the democratizing effects of the internet and swarm intelligence. He even sees a prototype of a new movement that could be comparable to the labor movement of the 19. Century:
“Not a revolution – but a hint
When I found out in 2008 that Lehman Brothers was broke and thousands of employees had been laid off, I ventured into an imagination. I imagined one of the sacked men – for some reason I called her Esmeralda – would become a dissident. Esmeralda annoyed how the same bosses who had led her to a lucrative career in manufacturing financial weapons of mass destruction were sorting her out. So she and others founded the “Crowdshorters” to prevent the central banks from bailing out investment banks and hedge funds. To do this, they would “short” the structured derivatives that wreaked havoc on the world in 2008, that is, bet on their decline in value.
In my imagination, the Crowdshorters proceeded as follows: With all their expert knowledge, they identified derivatives that were central to the survival of large banks and hedge funds and that threatened to lose value if there were defaults – for example for water bills or insurance premiums. So they reached out to those who had to make these payments and convinced them to take their time. The crowdshorters would compensate for default interest with money that they had collected through crowdfunding from millions of ordinary people who wanted to see bankers and hedge funds punished. In 2008, when the spirit of Occupy Wall Street spread, I was convinced that millions of people wanted to be part of such a well-orchestrated mass attack on finance capital. The key to the success of the fictional movement was the principle that everyone made a tiny sacrifice, which, multiplied by millions of fellow campaigners, was enough to overthrow capitalism, or at least to prevent rulers from leaving a few bankers at the expense of the many To help.
Some time ago I decided to revisit my fantasy in my political science fiction novel Another Now. That closes this chapter, I thought. A few days ago a reader from the USA wrote to me: “Are you following the Gamestop saga? Your crowdshorters have stepped into action! ”That’s an exaggeration, but parts of my imagination are recognizable. It found that over a few days, 4.4 million people had used a Reddit site to coordinate their modest individual purchases of Gamestop stock. The goal was to drive two Wall Street hedge funds that had „shorted“ these very stocks into bankruptcy. The plan worked, at least both hedge funds were in dire financial straits. This is where the resemblance to my Crowdshorters and Esmeralda stops. The Reddit crowd was not targeting capitalism in general, and most of those involved were interested in profit. At the same time, however, many were motivated by the intention to really show the hedge funds. The bottom line is that the Gamestop incident was not a revolutionary moment. But it shows what new forms of collective action can look like in the 21st century. One day we may look back and see an analogy to the trade union movement of the 19th century.”
However, most of these petty speculators and petty predators and petty organized anti-Wall Street gambler want just to become rich without work, like capitalism, even libertarianism , share the American dream of the dishwasher who becomes a billionaire, but without dishwashing, but by bit coining and become a billionaire, have no connection with the interests of the working class, unions or the left. are just as „greedy“ or even more greedy as they claim Wall Street was. Maybe Yanis Varoufakis thinks that a left could organize such a subversive investment movement and that this would be a new alternative to strikes, class struggles and traditional social movements. To what purpose: To ruin some hedge funds and cause a financial crisis that destabilizes the capitalist society and pave the way for a left revolution? Some sort of monetary general strike? It shows that the new left has lost any connection with the working class, but focuses only on identity policy and desperate swarm intelligence of some anarchistic cyberpunks without knowledge about their intentions, ambitions and class background. And such anarchistic swarm intelligence which has libertarian ideas of a world without a state and regulations have already other ideologists who fit very well to a Barlow, O Leary and other cyberpunks, but as a right-winged movement.
Ayn Rand, the mastermind of US libertarianism in her book „The Strike“ already had a similar idea. But that was the call for a strike of the upper class and the elite against the working and middle-class to get rid of all state regulations and even the state as she perceived the existing US capitalist system as a new form of socialism and communism from which she had fled from the Soviet Union and made her an extremist apologetic of individualism and the social Darwinist survival of the fittest in contrast to totalitarian collectivism. However, Ayn Rand as libertarian ideas is very influential with the Trumpites and the Tea Party: Against Big government. This always has also been a topic of the mainstream Wall Street Republicans, but they never brought it to the extreme as they part of the establishment and lobbyists of Wall Street and the big boys. . After the radicalization since Newt Gingrich in the 90s we experience this fundamental anti-establishment and anti-big government and now anti-Wall Street mood which should not be underestimated.
However, US movies like Oliver Stone´s Wall Street during the Reaganomics already were the first critical movies about the topic. However, it was a more moralistic than an analytical movie. The bad evil, greedy speculator Greko hires the son of a union leader who is proud that his son was studying economics, but then Greko wants to buy his airline, but just to let it get bankrupt and sell it for a windfall profit. The good union leader and the evil greedy Greko come into a confrontation and the son has to choose sides and teams up with the union, makes some insider trading to save the company and Greko gets imprisoned as the son. In Wall Street Part 2 Greko is returning from prison, engages again in speculation, but this time he is a good speculator which at the beginning nobody recognizes, but in the end, all actors discover that he used his evil knowledge for a good and happy end against the real evil and greedy speculator. Similar to „The Wolve of Wall Street“ with De Caprio. Everything is explained by the greedy and cocaine sniffling character of the person. Financial and economic crisis are systemic in capitalism like scarcity of consumer goods and underproduction in communist societies, their extent can be somehow regulated by Keynesian or social democrat welfare measures. Neoliberalism and globalization was just the catalyzation of these processes and of the extent of the crisis, but not the systemic cause.
Today´s nationalists see liberal speculator George Soros and his Open Society as some form of a new Greko. But they themselves might hope that by a crowdfunding movement which could be organized or lead or catalyzed by a right-winged Soros figure or maybe Trump or maybe even a Silicon Valley rebel and icon as Elon Musk ( whose recommendation for a company on his Twitter account normally boosts the stock prices for any company to oblivion), Ayn Rand´s strike could somehow materialize. But this might overestimate the role of a person and the financial power and the destabilizing effect of such an investment movement and can only be the trigger and happen if a certain constellation on the financial markets and a critical mass is emerging. Haymann Capital chief Kyle Bass is already teaming up with other speculators, Chinese exile oligarch Guo Wengui and the Committee for the Present Danger: China to speculate against the Hongkong dollar and the Chinese financial system- until now without success. He hopes to repeat Soros´speculation success against the British pound in the case of China.
A member of the US Democrats thinks that this is just a media hype, nothing serious, that Reoccupy Wall Street will vanish as Occupy Wall Street did, that this sort of spontaneously organized swarm intelligence which might also be supported by some marginal leftists in connection with some anarchistic gamblers and petty predators, won´t have any chance as the New Young Republicans of Reoccupy Wall Street did their best as not to expand to a real mass demonstration, but declared that they were not leftist students and intellectuals who had enough time and collective consciousness to make demonstrations. And they also have this sense of a higher form of capitalism, where without market manipulation by the big boys of Wall Street you could earn an „honest buck“, get a fair trade like Trump wants in free trade or some worker unions a fair salary or just wage. And Trump wouldn´t support it as he beyond all establishment rhetoric would need the funding for his movement from Wall Street and some right-winged big business oligarchs.
However, many parts of Wall Street retreated from Trump funding after the storm on Capitol Hill and the mainstream Republicans as the main stream Democrats are for Wall Street and the establishment. Therefore Trump and his supporters as his son or Nigel Farage could think about using this prototype of a movement to pressure Wall Street and the mainstream establishment. It is also interesting that the mainstream media don´t research who these New Young Republicans in New York are if it they are mainstream Republicans who just make a pseudo movement they will cancel soon or a new organization of Trumpites within the Republicans , what is their and this alleged crowd investors background if they are not establishing a network for an economic populist movement and maybe with the support of Kyle Bass, former New York major Guilinani and other right-winged capitalists. The Wall Street Republicans as the Wall Street democrats ignored all the economic needs of the middle class, working-class and other social strata to get a Trump. And if so-called swarm intelligence which such Silicon Valley rebels and 68 Hippies as Barlow or Timothy O Leary or Elon Musk and now Varouflakis believe in as a new movement, teams up with right-winged swamp intelligence like Donald Trump jr. or Breitbart or Nigel Farage, there could, of course, be a new movement nobody thought before.Hopefully it is a desperate move by the Trumpites to overcome their roll back.
However, such an investment or speculation crowd movement could become a boost if other nation-states try to use it to destabilize the US economy and society. Putin-Russia or China could try to support such a movement as Putin did with Trump. In this case, such a crowd shorter movement could also become a weapon in an economic war. But it had to be limited to a certain extent as a global financial crisis was also not in the interest of China or Russia.