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Wall Street / GameStop Mania
Gamestop mania is pretty much prevalent now.
As it has been plastered all over traditional media lately, there's full blown "war" between social media, namely Reddit, and Wall Street, over a number of stocks. We're looking particularly at GameStop here (GME), but also at AMC, Nokia and even BlackBerry that have been significantly impacted by an army of retail investors that have been organising themselves on Reddit WallStreetBets.
Why did this happen? A hedge fund has shorted (bet on lowering of the price) GameStop, considering it a falling retailer and rather close to bankruptcy. They shorted 140% of the shares (more than available shares), Wallstreet Bets (Reddit) has latched on to it and pushed GameStop up from about 5-6 dollars a share to about 350 dollars yesterday. This led to the hedge fund Melvin Capital losing hundreds of millions of dollars on their positions, which attracted even more attention and pushed the GameStop stock even higher.
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This new legion of day traders, equipped with free trading platforms, spare cash, and boredom, has set its sights on a growing list of US-listed companies over the past several weeks.
GameStop, a games retailer whose shares have been sent flying by gangs of traders co-ordinating moves on Reddit, sits at ground zero of a battle that has shown these have-a-go investors are no longer just a sideshow.
https://www.ft.com/content/56e8b33a-...b-327ef54c4d5a
This is pretty much market manipulation by a group, but not done by Wall Street (what a shocker!).
https://www.youtube.com/watch?v=F8rwmS4Y17c
Thoughts?
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Re: Wall Street / GameStop Mania
Whilst futures and options both can (not always) have a real world use, the practice of shorting stock has no real world value.
Given that banning this would merely mean a new derivative is concocted to do the same thing, this form of punishment is IMHO a GOOD Thing since shorting then slagging off a company until it folds for profit is if not capitalism at its worst then certainly a bad side effect of what markets do.
~:smoking:
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Re: Wall Street / GameStop Mania
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Originally Posted by
rory_20_uk
Whilst futures and options both can (not always) have a real world use, the practice of shorting stock has no real world value.
Maybe, there is debate. The origin of shorting was just financial trickery grandfathered into digital transactions. There is a case that short sellers act as a check on fraud and speculative bubbles by looking into companies that are genuinely over-valued due to fraud or momentum.
Some would argue this function would be best served by financial journalists, but given all we have is CNBC...I'm not sure where these smart individuals with enough knowledge to detect bubbles but willing to be paid journalism wages are going to come from.
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Re: Wall Street / GameStop Mania
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Originally Posted by
rory_20_uk
Whilst futures and options both can (not always) have a real world use, the practice of shorting stock has no real world value.
Shorting provides a counterweight to the interest of those who own an asset to both downplay its negative aspects and exaggerate its positive aspects. It also should provide more liquidity for the asset.
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Re: Wall Street / GameStop Mania
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Originally Posted by
a completely inoffensive name
Maybe, there is debate. The origin of shorting was just financial trickery grandfathered into digital transactions. There is a case that short sellers act as a check on fraud and speculative bubbles by looking into companies that are genuinely over-valued due to fraud or momentum.
IIRC hedge funds were originally "hedged" funds, that tried to outperform index funds by "hedging" their bets. The idea was to have a mix of long and short assets to even out the effects of price instability for the account holder. I suppose neoliberalism killed that ideal of the hedge fund.
Between the economic role of the stock market in abstract and specific (constantly-evolving) financial instruments and practices, I'm not really informed enough to make suggestions on how it 'ought' to be working. What does Nathan Tankus say about it?
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Some would argue this function would be best served by financial journalists, but given all we have is CNBC...I'm not sure where these smart individuals with enough knowledge to detect bubbles but willing to be paid journalism wages are going to come from.
Guess they have to hope the hiring process lands on some extreme-obsessive nerds who already spend their free time analyzing and charting every possible trend on 6 monitors.
So, it's well-known that Elon Musk had ~$150 billion added to his net worth over the past year by bullish Tesla stock valuation, on some days surpassing Bezos for richest in the world. WTF is going on with the different histories in these two graphs though? There's a pretty huge discrepancy, around 2012 for example: Was Musk already one of the richest in the world, or did he not even have a billion?
https://i.imgur.com/RbFviLf.jpg
https://i.imgur.com/51Ns755.png
And who is that Zhong Shanshan fellow, with $90 billion net worth? Disturbingly, I can't find any information about him from before this year, and hardly anything about him period. His Wikipedia entry was only created last September! What, did he make 99% of his net worth in the past few months? Spooky.
Actually, diving a little deeper, one of his earliest Wiki revisions cites a Forbes profile with a net worth pegged at ~$54 billion, no more than 60% of his January figure.
https://www.forbes.com/sites/ywang/2...h=5c243c587eeb
So here's the deal: One of his companies had an IPO in April 2020. Another had an IPO in September 2020. Near-instantly, this made him one of the richest people on Earth. Over the past few months, rising stock prices for his companies have pushed his net worth into the top 10, presumably at times the top 5.
TLDR: He really did make 99% of his net worth in the past few months.
Overall, billionaires have increased their net worth by like trillions during COVID.
ACIN, let's blow up the stock market, Fight-Club style.
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Re: Wall Street / GameStop Mania
While I am certainly supportive of hedge funds who do bad things getting their just desserts, I'm worried that the bubble being created is going to hurt a lot of regular folk when it eventually bursts, with only the savvier investors (who are likely already well-off) coming out of this unscathed. For example, executives at Blackberry have already made a killing by selling off large chunks of their shares from all this. So is all of this really sticking it to Wall Street or is it just something that just feels good in the moment?
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Re: Wall Street / GameStop Mania
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Originally Posted by
Hooahguy
While I am certainly supportive of hedge funds who do bad things getting their just desserts, I'm worried that the bubble being created is going to hurt a lot of regular folk when it eventually bursts, with only the savvier investors (who are likely already well-off) coming out of this unscathed. For example, executives at Blackberry have already made a killing by
selling off large chunks of their shares from all this. So is all of this really sticking it to Wall Street or is it just something that just feels good in the moment?
As opposed to every other day, where hedge funds regularly spread rumors to tank stocks of American companies they've shorted causing permanent job losses for those regular folk? Or opposed to 2008 where they managed to screw themselves over, and us regular folk got to pay their bills? At least here they made a choice to lose all their money, I have as much sympathy as for someone putting their paycheck on red at the casino.
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Re: Wall Street / GameStop Mania
Oh I don't disagree that hedge funds are awful and that Wall Street as a whole is pretty shady. But just because its a choice for people to lose all their money in this bubble doesn't make me feel any better about it (I'm assuming we are referring to the regular folk here).
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Re: Wall Street / GameStop Mania
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Originally Posted by
a completely inoffensive name
As opposed to every other day, where hedge funds regularly spread rumors to tank stocks of American companies they've shorted causing permanent job losses for those regular folk? Or opposed to 2008 where they managed to screw themselves over, and us regular folk got to pay their bills? At least here they made a choice to lose all their money, I have as much sympathy as for someone putting their paycheck on red at the casino.
And thousands of retail investors are going to lose their investment (hopefully less than $500); is there actually a benefit to this as an event beyond short-term emotional satisfaction or advancing the lulz?
Liquidate your stake ASAP bro.
https://www.cnn.com/2021/01/30/busin...rnd/index.html
(I predict this kid will have the sweetest PC rig in high school)
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Re: Wall Street / GameStop Mania
I'm overall very surprised at the reaction by financial media over this thing.
I've known WSB for some time now and while a lot of it is due to the lulz, most of them over there realise the risks. These are not guys who are oblivious to the risks associated with investing money. They know the risk. I don't get it what's so hard for financial media like CNBC and Bloomberg to understand. Portraying them as extremists, conspiracy theorists, and also - this made me laugh - having billionaires who don't understand even the internet talking about rigging the market.
Yes, a lot of them will lose money. Some of them changed their lives for the better. But having this as a "reset" of sorts is actually good.
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Re: Wall Street / GameStop Mania
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Re: Wall Street / GameStop Mania
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Originally Posted by
Montmorency
And thousands of retail investors are going to lose their investment (hopefully less than $500);
Are you under the impression that any of these people with the time and money to buy a few $200 shares are anywhere close to the poverty line themselves?
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Re: Wall Street / GameStop Mania
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Are you under the impression that any of these people with the time and money to buy a few $200 shares are anywhere close to the poverty line themselves?
I think that a lot of these folks were in their teenish years when the last market crash happened in 2008. They saw that the people responsible for that crash get "rewarded" with bailouts and a slap on the wrist while their parents lost their homes and jobs.
Now they have a chance to eff with these same people who are making the same gamble now as they did in the early to mid 2000's. Instead of CDO's, we now have CLO's which are the same thing with a different name. If they have money to burn in an attempt to screw with Wall Street bullies, more pwer to them....:2thumbsup:
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Re: Wall Street / GameStop Mania
Nice, I'm seeing as much as XXX of snow around me. Rare (in the city). And rain will probably wash most of it away tomorrow. The public schools are making today and tomorrow snow days; naturally though, remote learning continues. :disappointed:
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Originally Posted by
a completely inoffensive name
Are you under the impression that any of these people with the time and money to buy a few $200 shares are anywhere close to the poverty line themselves?
Kind of?
Don't get me wrong, this is all funny, but let's be clear that you don't need to be poor to regret the loss of a few hundred or thousand. Among the retail crowd, there are going to be some big winners, like that Diamond Hands fellow, and a much bigger number of losers, even if maybe the majority of the crowd doesn't quite fall into either category (although netting $100 is always better than losing $100, so...).
And yes, there is a sort of ambivalence here, between concern for the losers and skepticism about the demographics most represented among the players.
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Re: Wall Street / GameStop Mania
Of peripheral relevance: Chinese digital currency! If you'd like to discuss.
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Originally Posted by
Montmorency
Overall, billionaires have increased their net worth by like trillions during COVID.
According to Forbes, it's more complicated.
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The richest people on Earth are not immune to the coronavirus. As the pandemic tightened its grip on Europe and America, global equity markets imploded, tanking many fortunes. As of March 18, when we finalized this list, Forbes counted 2,095 billionaires, 58 fewer than a year ago and 226 fewer than just 12 days earlier, when we initially calculated these net worths. Of the billionaires who remain, 51% are poorer than they were last year. In raw terms, the world’s billionaires are worth $8 trillion, down $700 billion from 2019.
Also Forbes, December 2020:
"The World’s Billionaires Have Gotten $1.9 Trillion Richer In 2020"
EDIT: Ah, I just realized I have a problem with missing dates. March 18 2020 was the depth of the stock market crash - they made their money back and more over the year, which was the prevailing story.
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Re: Wall Street / GameStop Mania
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they made their money back and more over the year, which was the prevailing story
I posted this a couple of months ago:
https://americansfortaxfairness.org/...andemic-began/
From the article, this bears repeating:
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Their pandemic profits are so immense that America’s billionaires could pay for a major COVID relief bill and still not lose a dime of their pre-virus riches. Their wealth growth is so great that they alone could provide a $3,000 stimulus payment to every man, woman and child in the country, and still be richer than they were 9 months ago.
And this:
That's 651 billionaires having DOUBLE the wealth of 165 million Americans...:inquisitive:
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Re: Wall Street / GameStop Mania
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Originally Posted by
Montmorency
Kind of?
Don't get me wrong, this is all funny, but let's be clear that you don't need to be poor to regret the loss of a few hundred or thousand. Among the retail crowd, there are going to be some big winners, like that Diamond Hands fellow, and a much bigger number of losers, even if maybe the majority of the crowd doesn't quite fall into either category (although netting $100 is always better than losing $100, so...).
And yes, there is a sort of ambivalence here, between concern for the losers and skepticism about the demographics most represented among the players.
The concern that we feel comes from the notion that somehow, someway, these people are going to lose their money when they expected good returns. But when redditors are openly bragging about buying in at $475 peak just to HODL I mean...like I said it is not even about the money at this point so I can't even be concerned.
Talking heads, politicians, and everyone not batshit crazy over GME knows a lot of retailers were going to get hurt. A meme stock is prime pump and dump territory. But why are so many so concerned about retail investors not simply dumping their savings into long term index funds but instead trying to play the market in the first place? Because we all know the market is not meant to be an opportunity for retail, the rules are not in our favor, the institutions are not our friends. You hear CNBC commentators complain, 'These people are treating the market as gambling.' and the outrage isn't regarding the accuracy but that people are saying the truth out loud now.
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Re: Wall Street / GameStop Mania
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Originally Posted by
a completely inoffensive name
The concern that we feel comes from the notion that somehow, someway, these people are going to lose their money when they expected good returns. But when redditors are openly bragging about buying in at $475 peak just to HODL I mean...like I said it is not even about the money at this point so I can't even be concerned.
Talking heads, politicians, and everyone not batshit crazy over GME knows a lot of retailers were going to get hurt. A meme stock is prime pump and dump territory. But why are so many so concerned about retail investors not simply dumping their savings into long term index funds but instead trying to play the market in the first place? Because we all know the market is not meant to be an opportunity for retail, the rules are not in our favor, the institutions are not our friends. You hear CNBC commentators complain, 'These people are treating the market as gambling.' and the outrage isn't regarding the accuracy but that people are saying the truth out loud now.
What does that change? Why do you care? Who gains? What supports the validity of the tacit narrative that most participants were consciously sticking their necks out in order to strike some kind of symbolic blow against exclusionary institutions, and their material losses or gains don't matter? Where's the blow against the elites?
Here's what's actually going on. From my vantage, a bunch of people got wiped out, Wall Street elites collectively made a bag of money, and there's raucous cheering that Main Street got to lay down in the casino. :shrug:
"The GameStop Rally Exposed the Perils of ‘Meme Populism’"
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Last week, a motley mass of shitposters, gambling enthusiasts, and disaffected Zoomers — united by hate for Wall Street and love of chicken tenders — beat a multibillion-dollar hedge fund at its own game. Through their collective intelligence and audacity, users of the Reddit forum WallStreetBets executed a sophisticated “short squeeze” that took money away from some billionaire speculators, gave it to some badly indebted workers, and made a mockery of neoliberal capitalism’s legitimizing myths. Unfortunately, right when these working-class retail investors had Wall Street’s titans on the run, the plutocracy’s visible hand appeared to reach down and thwart them: Robinhood, a trading app popular with young recreational investors, suddenly barred its users from buying GameStop shares, thereby relieving pressure on the hedge-fund shorts.
That is one way of recounting the GameStop rally, anyway.
Here is another: A group of small-time speculators — including some finance-industry professionals — orchestrated a pump-and-dump scheme that involved convincing a lot of financially inexpert (and/or politically disaffected) people that they could stick it to Wall Street’s largest money managers by … bidding up the price of an equity that is owned by Wall Street’s largest money managers. This generated enough momentum to trigger a “short squeeze,” and the price of GameStop shares shot to the moon. Wall-to-wall media coverage ensued. Inexperienced investors bought the hype, and began piling into what now resembled a Ponzi scheme: When the bubble finally burst, those who bought in early would have a chance to cash out before the stock fell beneath their break-even price; those who bought late would have little warning before the “dump” wiped them out. By late last week, so many people were buying GameStop shares over gamified phone apps that regulations aimed at ensuring the stability of financial markets kicked into gear. The stock market’s central clearing hub calculated that it faced a high risk in facilitating more GME buys, and demanded billions in collateral from brokerages ordering such trades. Lacking the funds necessary to meet this demand, Robinhood was compelled to restrict GameStop buying on its platform while it sought an infusion of liquidity. That pause hastened the inevitable end of the GameStop rally, which ultimately achieved little beyond popularizing participation in stock trading (a development that will enrich Wall Street at the expense of working-class people with gambling problems).
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These actions weren’t cynical. At least, not typically. And in the context of the GameStop media firestorm, they may well have been reasonable. On one level, the GameStop story was an object lesson in the power of collective action and absurdity of market fundamentalism. By pooling their wits and capital, a large number of relatively low-wealth, low-clout individuals took money away from a hedge fund. What’s more, they did this in a manner that served to delegitimize financial markets as all-knowing arbiters of economic value: When the share price of a brick-and-mortar video-game retailer increases 20-fold in the course of a month, the notion that there is a tight correspondence between market prices and objective worth becomes difficult to sustain. And absent that premise, the case for entrusting our nation’s investment needs to unaccountable private actors becomes harder to make. The American left is in sore need of converts. When a story with this kind of radicalizing potential becomes national news, progressives may be well-advised to engage with it, so as to steer popular understanding of the event in an egalitarian direction.
But if the left can benefit from engaging trending news stories, so as to remake them in its own image, there is also a risk that chronic immersion in such stories will have the opposite effect: Instead of imbuing social-media uproars with the values of the left, the left may find itself imbued with the values of social media... Nevertheless, the republic of tweets is no popular democracy.
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All these distortions were present in last week’s GameStop discourse. As a substantive matter, it was never easy to explain how thousands of people overpaying for GME shares was supposed to threaten the capitalist order. Whatever utility the GameStop rally theoretically had as a spectacle, its first-order consequence was to transfer wealth from ordinary Americans to Robinhood and Wall Street market makers.
[...]
In a social-media discourse that was demographically representative of the nation as a whole, it seems unlikely that the phrase “working-class retail investors” would be spoken unironically. But on a platform that drastically underrepresents the supermajority of Americans who have less than $1,000 in savings, it was possible for some progressives to mistake the cause of recreational investors for that of the proletariat.
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These analytical errors matter. If the ethos of social media leads the left to prize populist sentiment over progressive substance, then its energies will be ripe for misdirection by reactionary forces. Condemnations of the Fed for bailing out corporate America with its easy money policies can sound populist. But their policy implications are brutally regressive. Rallying to the cause of Robinhood traders may feel righteous. But it also has led leftwing lawmakers to the precipice of endorsing deregulation to facilitate riskier recreational speculation.
In the hands of a well-organized progressive movement — one accountable to working-class constituencies, and tolerant of internal dissent — social media is a powerful weapon. In those of an agglomeration of progressive media addicts and creators — who are accountable primarily to their followers, employers’ traffic expectations, and Patreon subscribers — social media is a potent brain toxin that causes its victims to mistake spectacle for substance, anti-intellectualism for anti-elitism, conspiracy theorizing for critical thinking, and the interests of iconoclastic college graduates for those of working people writ large (in severe cases, it may even lead a supposed leftist to mistake Ted Cruz for an ally in the fight against high finance).
[...]
The perverse incentives that produced this misallocation of memes and energy aren’t going away. And everyone who tries to effect change through posting is subject to them (the incentive to cater to Twitter’s appetites probably informed my decision to write a column on the incentive to cater to Twitter’s appetites rather than one on, say, the coup in Myanmar). But we all need to do our best to swim against the tide — because a left that is optimized for the production of social-media spectacles, instead of the passage of social democratic reforms, will be exactly as threatening to Wall Street’s rentiers as a brief spike in the price of GameStop shares.
Too much libertarian mindset.
Also, index funds are almost always better than dipping into retail.
If you're looking for thrilling subversive narratives, this Internet story about AFL-CIO president John Sweeney is more my tune:
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One of the more surreal moments of my life starred John Sweeney. During the Detroir Newspaper Strike I worked at the Metro Detroit AFL-CIO, & part of my job was a combo of political pressure, street theater, & conspiracy to subvert corporate power. Once when we were doing civil disobedience we had Sweeney there to get arrested. I was designated to deal w the police, so I was hanging across the street. As things were getting testy, and the police seemed to be losing their patience, I got a call from Sweeney’s assistant. It was something like “write down this number...[gives number]...that’s Senator Kennedy’s phone on the floor. Tell him he needs to call the Senator ASAP.”
I waded in to the scrum & told him he needed to call Senator Kennedy ASAP. I dialed & handed him the phone. The police started arresting people, including the woman I was kindasorta dating. People were screaming & chanting, pushing back & forth. And in the middle of all this loosely organized mayhem, Sweeney cupped the phone around his mouth & had a calm conversation w Kennedy. After about a minute he hung up, handed me my phone, & told me they’d just gotten a deal to raise the minimum wage.
Then he went & got arrested
Comfortably swaying with principled mayhem, while being a shrewd institutional operation, & doing it all in a pleasant & soft spoken manner...it was a pretty good example of John Sweeney.
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Re: Wall Street / GameStop Mania
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Originally Posted by
Montmorency
Wall Street elites collectively made a bag of money, and there's raucous cheering that Main Street got to lay down in the casino. :shrug:
Not all of them, there were some hedge funds that were big losers and lost billions. Interested to see how big of a hit Melvin took once they closed out their position.
How many times have I already said that meme stocks were prime for pump and dump tactics and that many eagerly holding were gonna get hit hard. I think you are just talking past me cause you already have this idea in your head and you are just bouncing off of me without actually replying to me. I've not said in any way that people were not manipulated, only that the moment was driven by a populist sentiment that it doesn't matter what retail does, the market will find a way to take their money so we might as well make a few hedge funds hurt as well.
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Re: Wall Street / GameStop Mania
Bro, that was all my exact point: Why does that matter to you? What's valuable about a bunch of people enriching elites to hurt a single hedge fund (and let me tell you, all its managers are going to be just fine)? What's populist about that?
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Re: Wall Street / GameStop Mania
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Originally Posted by
Montmorency
Bro, that was all my exact point: Why does that matter to you? What's valuable about a bunch of people enriching elites to hurt a single hedge fund (and let me tell you, all its managers are going to be just fine)? What's populist about that?
Why does it matter to me? Cause I think this Gamestop thing highlights the degree to which individuals of all types will willingly self-destroy their bank accounts as long as you feed them into this wide-spread anti-Wall Street sentiment. Specifically, it's interesting to me how in contrast to the Trump supporters slowly killing themselves with bad policy because of racism, the Gamestop meme seems to be shared across the political spectrum. I'm sure many of those losing money on this thing are Trump supporters, many are Bernie-Bros.
I think it is dangerous that we have this boogeyman created out of 2008 that holds sway over a large majority of the American public. Wall Street greedy and keeps Main street poor. Bernie at least imo attempted to channel this kind of sentiment into policies that were good-ish, sometimes. But at the end of the day the 'adult' in me knows that financial markets do a lot of good work that goes unrecognized, they serve a purpose imperfectly and it is dangerous for the everyday citizen to be enthusiastic or indifferent to the idea of 'burning Wall Street down'.
I harp on the sentiment because I think it is very difficult to have a situation where, yes, wall street fucked up 13 years ago and got bailed out while regular people didn't. And now people see that this flawed institution with the money to resist political reform is continuing to do just fine while the world shakes and moves. And now when the next moment to make a difference comes, is the political response going to be proportional to the issue at hand or will public sentiment demand extreme measures.
We could fund a good chunk of the welfare state (and a more vigilant SEC) off a financial transaction tax, but to me it seems that would be too modest, too boring vs more flashy wealth taxes and other punitive measures.
What's valuable about what just happened...well I think there is a lesson here somewhere. Bad policy in 2008 generated sentiment which then fueled public behavior that was taken advantage of. The inability of government to protect the public pushed people into making ill-informed decisions that only get themselves into further danger. Now the government is unable to bring closure to the sentiment because here it was entirely individuals choice to download Robinhood and partake in such risky behavior and the ones who will going to jail for market manipulation are likely the individuals lionized for trying to stick it to Wall Street. Thus the government is unable to properly bring closure and this feedback continues. The psychology of it all needs to be examined.
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Re: Wall Street / GameStop Mania
OK, I thought you were propounding that the sentiments of the WSB masses were accurate and their handiwork was somehow, laudably, successfully destabilizing to Wall Street (i.e. direct advocacy), when you were sticking with the more abstract sociological analysis that we all basically agree with. Though the long-term implications are unclear.
Financial markets can potentially serve a useful purpose within capitalism, but that doesn't allow us to bypass debates about the nature and application of capitalism, let alone whether the contemporary metastasis of financial institutions and practices remotely serves our interests in some construction.
To your point about the purposes of financial markets, note that any institutional actors shorting the short in late January could have made billions, and any retail actors making a quick buck from timely trades were probably doing so on the losses of Greater Fool retail traders.
None of the estimates on a financial transaction tax that I've seen (such as Sanders') exceed low hundred-billions, which won't fund much. Unless those financial transaction taxes were scaled up the level of income tax...
The point of the mentioned "punitive" taxes is that they actually reach the needed scale for trillion-dollar funding. None of the most extreme taxes proposed during the Dem primaries would even make a dent in reversing wealth inequality; they would only slow down its rate of increase, at FULL implementation. (Important point for the conservatives here!)
We gonna need mad taxes.
Final note: When Main Street moves into retail stocks and such, Wall Street always wins, which is why (institutionally) they want it and promote it (this is distinct from elitist snootiness as self-expression). How often does a casino lose by attracting more poker players?
Edit: Anyone else just now noticing what a huge scam it is that society transferred retirement funding almost wholesale into the stock and money markets?
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Re: Wall Street / GameStop Mania
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Originally Posted by
Montmorency
OK, I thought you were propounding that the sentiments of the WSB masses were accurate and their handiwork was somehow, laudably, successfully destabilizing to Wall Street (i.e. direct advocacy), when you were sticking with the more abstract sociological analysis that we all basically agree with.
I think to some degree the sentiments are accurate. Wall Street is by and large immune from real reform, it does facilitate the transfer of wealth upward by some mechanisms, those who exist within Wall Street culture are in an incredibly sheltered and privileged bubble. WSB destabilizing to Wall Street directly, absolutely not the sharks got their blood. But definitely destabilizing to long term political management of wall street. This will be remembered as yet another 'lesson' in how Wall Street kicked around the little guy and 'stole' all his money.
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Financial markets can potentially serve a useful purpose within capitalism, but that doesn't allow us to bypass debates about the nature and application of capitalism, let alone whether the contemporary metastasis of financial institutions and practices remotely serves our interests in some construction.
Too far out into the weeds for me to even discuss.
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To your point about the purposes of financial markets, note that any institutional actors shorting the short in late January could have made billions, and any retail actors making a quick buck from timely trades were probably doing so on the losses of Greater Fool retail traders.
Real players reacted quickly, WSB is running the same play for weeks straight. Those who saw the squeeze joined in to make money on the rise and when shorts began to cash out, they started new shorts on the inflated stock and are currently making money on the dip.
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None of the estimates on a financial transaction tax that I've seen (such as
Sanders') exceed low hundred-billions, which won't fund much. Unless those financial transaction taxes were scaled up the level of income tax...
Percentages can be tweaked, Sanders' proposal has 5 thousandths of a percent on derivatives. Also, the range you quoted was $60 to $220 billion annually, Biden's universal pre-k is $775 billion over ten years. So this FTT could fund it even on the lower end.
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The point of the mentioned "punitive" taxes is that they actually reach the needed scale for trillion-dollar funding. None of the most extreme taxes proposed during the Dem primaries would even make a dent in reversing wealth inequality; they would only slow down its rate of increase, at FULL implementation. (Important point for the conservatives here!)
Wealth tax with any real teeth would shock the economy, prompt large efforts at tax avoidance and has difficulties with administration and assessment. If you want trillions of dollars, just do what everyone else does and create a VAT.
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Final note: When Main Street moves into retail stocks and such, Wall Street always wins, which is why (institutionally) they want it and promote it (this is distinct from elitist snootiness as self-expression). How often does a casino lose by attracting more poker players?
More complicated than this, I don't think people generally cared for the volatility that WSB created although there was good money to be made from it. Markets have (for good reason) automatic trading halts and 'circuit breakers' to combat rapid rises and falls in securities and indexes.
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Edit: Anyone else just now noticing what a huge scam it is that society transferred retirement funding almost wholesale into the stock and money markets?
US companies would not be competitive if they had to carry pensions, GE has been struggling for a while to maintain theirs.
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Re: Wall Street / GameStop Mania
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Percentages can be tweaked, Sanders' proposal has 5 thousandths of a percent on derivatives. Also, the range you quoted was $60 to $220 billion annually, Biden's universal pre-k is $775 billion over ten years. So this FTT could fund it even on the lower end.
If you taxed stocks at like 10% per transaction, you might encounter real Laffer Curve issues as it would drastically limit the liquidity of the markets and incentives to trade stock. I'm surprised you didn't note this even as you were criticizing wealth taxes as prone to economic shock.
The reality is we need multiple interlocking tax and regulatory schemes, in transnational alignment, to even begin to reduce wealth inequality through government transfers, which is absolutely a core objective of a tax regime (and was recognized as such during the New Deal).
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If you want trillions of dollars, just do what everyone else does and create a VAT.
See my last sentence.
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More complicated than this, I don't think people generally cared for the volatility that WSB created although there was good money to be made from it. Markets have (for good reason) automatic trading halts and 'circuit breakers' to combat rapid rises and falls in securities and indexes.
This might be responding to something else. What I meant was merely that more small actors participating in financial markets actually suits the big actors who can manipulate them (e.g. the old, now-illegal (?) schemes in which brokers and advisors in the 80s or 90s would call up small account-holders with advice on what to buy and sell, and meanwhile institutional actors who knew the same brokers would be offloading risk by pricing in that the small actors were soaking up excess stock or whatever).
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US companies would not be competitive if they had to carry pensions, GE has been struggling for a while to maintain theirs.
Who said the companies have to carry pensions - or healthcare access?
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Re: Wall Street / GameStop Mania
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Originally Posted by
Montmorency
If you taxed stocks at like 10% per transaction, you might encounter real Laffer Curve issues as it would drastically limit the liquidity of the markets and incentives to trade stock. I'm surprised you didn't note this even as you were criticizing wealth taxes as prone to economic shock.
I didn't note it because there is several orders of magnitude difference between 10% and 0.005%. When I said it could be tweaked, I meant 'how about 0.008% or 0.01%'. Having an FTT at the right amount could also benefit markets through mechanisms noted in your original source.
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The reality is we need multiple interlocking tax and regulatory schemes, in transnational alignment, to even begin to reduce wealth inequality through government transfers, which is absolutely a core objective of a tax regime (and was recognized as such during the New Deal).
This is true but does not entail applying every tax we can conjure up to achieve high revenues. Still need to asses each one rigorously and see where it fits as whole into the framework.
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This might be responding to something else. What I meant was merely that more small actors participating in financial markets actually suits the big actors who can manipulate them (e.g. the old, now-illegal (?) schemes in which brokers and advisors in the 80s or 90s would call up small account-holders with advice on what to buy and sell, and meanwhile institutional actors who knew the same brokers would be offloading risk by pricing in that the small actors were soaking up excess stock or whatever).
Ahh gotcha. Well time will tell on how Congress and the SEC view DeepFuckingValue and whether he engaged in market manipulation by using social media to purposely drive up a stock that would suit his portfolio. Will have implications on the interaction of social media and market actors.
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Who said the companies have to carry pensions - or healthcare access?
Any specific alternatives you are thinking of? Universal retirement accounts provided by the government w/ matching contributions?
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Re: Wall Street / GameStop Mania
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Originally Posted by
a completely inoffensive name
I didn't note it because there is several orders of magnitude difference between 10% and 0.005%. When I said it could be tweaked, I meant 'how about 0.008% or 0.01%'. Having an FTT at the right amount could also benefit markets through mechanisms noted in your original source.
This is true but does not entail applying every tax we can conjure up to achieve high revenues. Still need to asses each one rigorously and see where it fits as whole into the framework.
I referred to stocks because Sanders' plan would have taxed them (their transfer) at 0.5%. His 0.005% rate was for derivatives. I doubt that a 3% wealth tax - which could never induce enough avoidance not to be worth the while - could possibly be as disruptive and limiting as a financial transaction tax that bumps the rates up even into the single integers.
Taxing the movement of financial instruments (prospective gain) is IME inherently less efficient and effective, and more disruptive, than taxing earned income (realized gain, liquid) or taxing wealth (realized gain, less liquid, usually financial instruments or real property). That doesn't mean you can't do it - we already do - but the marginal and revenue limits are tighter than for other kinds of taxes.
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Any specific alternatives you are thinking of? Universal retirement accounts provided by the government w/ matching contributions?
It's tough, because government pensions as well as private pension funds predominantly invest for capital returns to, in principle, multiply and shore up their assets, minimally in index funds. In the short term, any sort of reform has the potential to hurt retirees or near-retirees.
For example, the Netherlands relies on private non-profit pension funds independent of employers, but as money-managing funds they do naturally reinvest the contributions.
Besides a pure payroll-tax and defined/matching-contribution system, it's hard for me to imagine how to avoid getting the performance of financial markets implicated in retirement. Even socialist proposals for sovereign wealth funds (to distribute dividends of creeping collective ownership) assume the existence and performance of financial markets; not only assume, but potentiate, align their incentives with.
Would need a more expert perspective here than I can offer. Meanwhile, I can identify some desirable attributes of pension or retirement systems for consideration:
1. Less emphasis on prefunding mechanisms
2. Function as a de facto basic income (comprehensive rather than supplementary)
3. Not dependent on, or constructive of, greater shareholder and owner influence over economy, government, and society
Then again,
https://i.imgur.com/5PQ54ME.jpg
we do got that Big Money. (From MattYg)
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Re: Wall Street / GameStop Mania
As expected by many, and definitely wanted by some, the GME stock cratered in the weeks after the mania, trading now at about 63 dollars.
However, the SEC is expected to research the topic quite heavily and apparently the person who started this is under investigation by the SEC as well.
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Re: Wall Street / GameStop Mania
Sorry for reviving this thread. How's the situation now?
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Re: Wall Street / GameStop Mania
This might happen again. And those who manipulate the market should get punished, imo.
Too bad there aren't whistleblowers in this field. There should be. They'd get good rewards, as stated by Oberheiden P.C., a law firm.
