In the fall of 2008, America's wealthiest companies were in a pickle. Short-selling hedge funds, smelling blood as the global economy cratered, loaded up with bets against finance stocks, pouring downward pressure on teetering, hyper-leveraged firms
like Morgan Stanley and Citigroup. The free-market purists at the banks begged the government to stop the music, and when the S.E.C. complied with a ban on financial short sales, conventional wisdom let out a cheer.
"This will absolutely make a difference," economist Peter Cardillo
told CNN. "Now, if there is any good news, shorts will have to cover."
At the time, poor beleaguered banks were victims, while hedge funds betting them down as the economy circled the drain were seen as antisocial monsters. "They are like looters after a hurricane,"
seethed Andrew Cuomo, then-Attorney General of New York State, who "promised to intensify investigations into short selling abuses." Senator John McCain, in the home stretch of his eventual landslide loss to Barack Obama, added that S.E.C. chairman Christopher Cox had "betrayed the public's trust" by allowing "speculators and hedge funds" to "turn our markets into a casino."
Fast forward thirteen years. The day-trading followers of a two-million-subscriber Reddit forum called "wallstreetbets" somewhat randomly decide to keep short-sellers from laying waste to a brick-and-mortar retail video game company called GameStop, betting it up in defiance of the Street. Worth just $6 four months ago, the stock went from $18.36 on the afternoon of the Capitol riot, to $43.03 on the 21st two weeks later,
to $147.98 this past Tuesday the 26th, to an incredible $347.51 at the close of the next day, January 27th.
Comment: Sadly, they're soon going to learn that the stock market, like the ballot box, will forevermore be stacked against them. This GameStop Rebellion is - and will hopefully continue to be - great fun, for a while, but we're in the Age of Tyranny now, and pathocrats HATE being made fun of.
On CNBC talking-head Sorkin's palaver about r/WallStreetBets investors 'hurting pension funds that invest through hedge funds', commentator Louis Rossmann has reported on the fact that the day traders' 'reckless activity' has so far
saved at least one major pension fund:
Comment: See also: