JoNova

A science presenter, writer, speaker & former TV host; author of The Skeptic's Handbook (over 200,000 copies distributed & available in 15 languages).


Handbooks


Advertising


Australian Speakers Agency



GoldNerds

The nerds have the numbers on precious metals investments on the ASX



The Skeptics Handbook

Think it has been debunked? See here.

The Skeptics Handbook II

Climate Money Paper



Archives

What will unify the USA–  How about hatred of the corruptocrats?

The USA might just unify despite Joe Biden. There are not many things that can bring the Occupy and Antifa crowd together with Proud Boys but sticking it to the overlords of Wall Street is just the ticket.

The Gamestop monster battle between the ruling class and the peasants

The naked short sellers of Wall Street were never a healthy part of a free market — they were selling shares they didn’t own. Their predatory behaviour could create the very destruction they profited from, ruining potentially productive assets in the process. In a bonfire of gambling greed, the Predators could effectively sell more shares than even existed  — betting they could drive the price lower and buy back for a bargain. But the little-guy-punters in the reddit/Wallstreetbets crowd got organized and called the bluff. They pushed the $4 stock to $400, busting the Smarty-pants players and reveling in it. There are estimates that hedge funds have already lost nearly $20 billion. One group of short-selling gurus have been burnt so badly they’ve abandoned publishing short selling research. The wake from this is just beginning.

The problem for the Democrats is that this wave is a form of Draining The Swamp. There is no identity politics involved. This kind of unity will bite them.

There is a kind of democracy to this response. People are voting with money.

GameStop insurgency is just the latest rebellion against ‘the Big Guys’

Glenn Reynolds, New York Post

Tech overlords are quashing dissent. We’re in the middle of what our betters call the “Great Reset,” when the power of big institutions and the Really Smart People™ is supposed to be re-established after the unfortunate deviation of the Trump years. The hoi polloi are supposed to know their place now, especially those annoying loudmouths on the Internet.

How’s that working out? Just ask Melvin Capital.

Writing for The Post this week, Charles Gasparino explained why the little guys got together to buy GameStop: “Mostly, they’re out to hurt the big guys.”

The Big Guys’ problem is that nobody likes them much. From Silicon Valley to Wall Street, they’re deeply unpopular with ordinary Americans, on both the left and the right, resentment they’ve stoked with selfishness, arrogance and condescension. Their solution to this unpopularity has been to use their control over online platforms, and their influence over the government, to silence their critics.

But they can’t stop the signal. No sooner did the tech giants collude to shut down Twitter alternative Parler than a new revolt sprang up somewhere else entirely among stock traders on Reddit. What will it be next? Truck drivers refusing to deliver food to Silicon Valley? Plumbers boycotting “woke” executives? It’ll probably be something cleverer and less foreseeable than that, but it’ll be something. The more the techno-elite tightens its grip, the more Americans will slip through its fingers.

The little guys also exposed just how crooked the game is.

The Octopus of Wallstreet fought back — but with a form of cancel culture, not finance

Tellingly, the Pros on Wall Street didn’t try to outsmart the amateurs.  As the Hedge Fund Melvin Capital burst into flames, one of the major brokerages called Robinhood suddenly just banned the punters from buying Gamestop shares, thus thwarting the little players. In some cases Robinhood even sold off shares without permission from the owner. The broker that was supposedly there to make investing possible for everyone with no fees was one of the cartel — protecting friends like Citadel and Melvin Capitol.

One rule for you, and no rules for the rulers

The reddit day traders must have felt under seige. The server hosting the r/Wallstreetbets also piled on, with Discord banning the group for “hate speech” of all things. The banning was nothing to do with Gamestop, said Discord, it’s just a coincidence it happened at the exact same time… Sure.  Meanwhile the reddit WallStBets group has grown to over 3 million members, and somehow it managed to find other servers, and came back online.  But the actions of Robinhood and Discord show the platforms don’t want customers as much as they want control of their customers– the ability to shape the conversation.

As Tyler Durden said: “Robinhood, is effectively joined at the hip with hedge fund Citadel, which in turn is a part owner of Melvin Capital which was destroyed by the short squeeze that Robinhood banned, so a clear conflict of interest”.

During the ban by Robinhood, the price of Gamestop dropped by 40% within hours. But furious reddit investors fought back again, this time launching a class action lawsuit, and flooding Google with over 100,000 bad reviews for Robinhood. The Google tentacle of the oligopoly promptly deleted all those bad reviews, saying they were “coordinated or inorganic” — as if the peasants could not be genuinely angry about losing their money, even as the overlords kept changing all the rules.

By the way, the same hedge fund Citadel, which part owns Melvin Capital  has previously paid $800,000 in speaking fees to Janet Yellen. She is, of course, the former Federal Reserve chair who is now the newly confirmed Treasury Secretary. Theoretically, she’ll be advising President Biden on the Gamestop and Robinhood “disruption”.

See how this works? Potentially, Big Money could almost buy anything.

Easy money, especially the Quantitative-Easy kind that’s printed from thin air, has had ten hot years to weave its way through the layers of power — greasing palms. The bail outs of 2008 rescued the Corruptocrats then, and made them bigger.  In some sense we reap what we sowed.  No one went to jail.

As Voxday says:

One thing is clear from all of this. The American public is not going to support another bank bailout once the next financial crisis begins. They’d rather see Wall Street burn, and rightly so.

The Gamestop Bubble hasn’t popped yet, but pop it will. The thrill of taking down the Big Guys will hopefully take the sting out of the pain, but the last man holding the $300 Gamestop has a long way to fall.

Terry McCrann points out that Naked Shorts are illegal:

It seems clear that the basic rules of shorting were ignored. It appears that over 100 per cent, perhaps as much as 150 per cent, of GameStop was sold.

This means there’s been naked short-selling — when you sell a stock without having borrowed scrip — as you self-evidently cannot borrow more than 100 per cent of a company’s issued stock, and naked short-selling is illegal, even on Wall Street.

Fake shares. Fake News. Fake Elections. Fake Democracies.

But if the masses just stand up together, they can still win.

9.8 out of 10 based on 97 ratings

143 comments to What will unify the USA–  How about hatred of the corruptocrats?

  • #
    Susan Fraser

    Thanks!! Jo for your pithy precis.
    I really am enjoying the Gamestop goings on, but couldn’t unpack it satisfactorily.

    Now, I’m satisfied. And pleased. Let’s all drain the swamps around us.

    422

    • #
      Contemptible Blackguard

      Michael Lewis will have a field day with this one after his hit topper The Big Short. There is a section in his book where the Wall Street Blood Suckers at Goldman’s, or one of those low-life leaches considered the Ratings Agencies lesser beings. They had a saying for one of the Ratings Agencies guys: ‘The Schlepp from Podunk U’ which was a put down that meant he was dumb as Dog S… but they were so smart. Now – who are the Schlepps from Podunk U?

      And now they are running for the Regulator crying poor again. Will it be QE version 4 courtesy of Janet to save the suckers? Best news I have heard for a long time.

      281

    • #
      OldOzzie

      There was a similar short squeeze here in Australia, from memory late 60s, and the Sydney Stock exchange did a Wall Street and protected the rich by blocking the short squeeze.

      92

      • #
        Deano

        Was that connected with the nickle boom? That was centered in Western Australia but I believe it was an Australia wide stock market phenomenon. I was about 10 at the time so wheeling and dealing wasn’t on my list of daily chores.

        40

        • #
          James Murphy

          Poseidon Nickel, not to be confused with the Poseidon Adventure

          40

          • #
            OldOzzie

            James it wasn’t Poseidon Nickel, though that was a real Bubble in itself

            Terry McCann finally helped my memory

            Taking on Wall Street shorters at own game

            Terry McCrann

            We saw exactly the same thing happen in Australia nearly 50 years ago, in a much more primitive (both regulatory and operational) context when shorters sold close to 150 per cent of the stock in a penny-dreadful called Antimony Nickel. It led to the banning of naked short-selling, but so-called “covered” short-selling is allowed. This is where the seller borrows the stock from an institution.

            31

            • #
              OldOzzie

              Just continuing on from

              It led to the banning of naked short-selling, but so-called “covered” short-selling is allowed. This is where the seller borrows the stock from an institution.

              Except the stock isn’t borrowed. It is not well known — and those, seemingly few, who do know don’t want to talk about it for obvious financial self-interest — but short-selling is only possible in Australia because in 1990 the (Hawke Labor) government specially changed the Tax Act.

              When you sell a share, you have to be able to deliver title in that share to the buyer; and you can only do that if you “own” the share. You can’t sell a “borrowed” share on the ASX; and a short-seller doesn’t. They sell a share they have acquired from an insto — albeit in a complicated “form” contract where they are obliged to sell it back. But there’s the problem: the insto has disposed of the share to the short-seller; it has disposed of an asset and has thereby triggered a tax event.

              Enter the — happy to scratch the big end of town’s collective backs — government to change the Tax Act. So when an insto disposes of a share under a buyback contract, it is generously and uniquely deemed not to have disposed of the share. Thus, apart from anything else, is how we get a Tax Act passing 100,000 pages.

              61

              • #
                Tilba Tilba

                So when an [institutional investor] disposes of a share under a buyback contract, it is generously and uniquely deemed not to have disposed of the share.

                It seems to me there is a rationality to this. In general the “buyer” is borrowing the shares, with no money changing hands, and will “sell” them back to the insto at the end of the day.

                There is a fee paid to the insto for lending the shares, that they would need to declare as income, but it’s not really a capital gains event.

                10

    • #
      OldOzzie

      Google Is Coming to Robinhood’s Rescue, Deletes 100,000 Negative Reviews

      The stock trading platform Robinhood found itself in some serious hot water with Americans all over the country after it effectively shut down trading of various stocks that had become popular during a recent stock market revolution spurred on by the subreddit r/wallstreetbets.

      In anger, many users went to the Google Play store and proceeded to leave bad, one-star reviews.

      Google began deleting bad reviews until it had deleted around 100,000 of them. Gizmodo reached out to Google to ask why it had done so and received the explanation that the reviews were “coordinated” and “inorganic. When Gizomodo followed up by asking how these reviews were inorganic given the current events, Google stopped responding:

      290

      • #
        Curious George

        You misunderstand. Whatever elites do they do for your own good. True, they get rich in the process, but they always care for you foremost.

        70

      • #
        Gary Simpson

        I’m confused – I was always told that Robin Hood robbed the rich to give to the poor. What a topsy turvy world we now inhabit.

        40

    • #
      OldOzzie

      From Thread below Lance

      January 30, 2021 at 8:31 am · Reply
      America seems, now, to be living in a 2 tiered legal system run by a ruling class oligarchy.

      “If you are not a member of the ruling oligarchy, you can buy a stock only when it benefits the ruling oligarchy, but not when the oligarch shorted the stock and will lose money. In that case, you can only sell. They, the esteemed members of the system, on the other hand, can do what they want at any point to win the rigged game. ”

      https://www.theblaze.com/op-ed/horowitz-the-robinhood-gamestop-scandal-lockdowns-and-a-two-tiered-justice-system

      Such a system cannot last. It won’t end well for anyone.

      131

      • #
        OldOzzie

        FISA vs. Liberty

        A surveillance judge clarifies that the FBI can falsify evidence without much fear of punishment.

        The government employees of the “resistance” who never accepted Donald Trump as our president have finally performed a useful public service. Together with the judges of the U.S. Foreign Intelligence Surveillance Court, they have demonstrated for all Americans how easy it is to turn the spying tools of the federal government against domestic political opponents.

        Even after the Obama-appointed inspector general of the Department of Justice found “at least 17 significant errors or omissions” in a series of approved surveillance warrant applications to spy on Trump associate Carter Page —and even after a criminal conviction of an FBI attorney for doctoring an email to make it appear that the patriotic Mr. Page had never assisted U.S. intelligence—the FISA judges are still refusing to apply any significant punishment to the government officials who misled them.

        But if the representations about a Trump associate are not correct, don’t expect Judge Boasberg to actually do anything about it. This is the kind of appalling Beltway abuse of power that inspired voters to elect Mr. Trump in the first place.

        270

        • #
          OldOzzie

          Is Judge Boasberg joking when he suggests the convict has suffered from some kind of media circus? Readers wondering how often Clinesmith has been trailed by a pack of press photographers will note that the rare stories about him are generally illustrated with a years-old official photograph. In the months after his offenses were detailed by the Justice inspector general, there was an almost complete blackout of the story in major media outlets.

          Federal District Court Judge James Boasberg said that while Clinesmith’s actions were serious, the warrant application probably would have been approved anyway without his misstatement. Boasberg also serves as the presiding judge of the Foreign Intelligence Surveillance Court.

          The judge is wrong, which suggests that Mr. Boasberg couldn’t even be bothered to read the inspector general’s report.

          There was a reason Clinesmith doctored the infamous email and it was only after his fabrication that another official signed off on the final renewal of the surveillance warrant.

          Three years ago this column asked:

          Can it possibly be true that the evidentiary standards for obtaining a federal warrant allowing the government to spy on the party out of power are significantly lower than in a professional newsroom?… it appears either that the Obama administration engaged in historic abuse or that the FISA court cannot be trusted to protect our liberties, or perhaps both.

          We now know that the answer is both. Until the abolition of the FISA court, no American’s liberty will be safe.

          230

        • #
          OldOzzie

          Understanding the Institutional Protection Racket Via Congress, Main Justice DOJ, FBI and FISA Court

          Posted on January 29, 2021 by Sundance

          Many people are now becoming aware of the severity of self-serving corruption in/around the institutions that frame our government. Considering that Sundance has a target on his back; and considering that it is only a matter of time before that targeting gets ugly; let me remind everyone of just how severe the issues are confronting our nation.

          Having met with many of the top-level key DC players (including Durham inc) in the “Spygate” investigation/review or (__fill in_ the blank_with whatever name you need), here’s the ugly truth. The staff of the legislative bodies have/had no intent to actually facilitate any sunlight upon the FISA, DOJ-FBI corruption that took place over three years.

          How do I know that?

          Well, first having sat in a room with the legislative staff, top people who actually write the briefs and inform both congressional representatives on House Committees and Senate Committees, including the chiefs-of-staff for the chairs, it was clear they did not even know the information from within their own research when spread over time. Accepting this reality leads one to a natural conclusion… they don’t know, because they choose not to know… & they choose not to know, because everything is a pantomime for public display.

          The system of DC is based on a series of unwritten rules… “You don’t out me, and I will not out you… and that will protect us both.” These rules cross over both parties to the extent they usually have a common enemy, us. The staff of Judiciary Committee Chairman Lindsey Graham, Homeland Security Chair Ron Johnson and even the staff of House Oversight Ranking Member Jim Jordan are purposefully and willfully blind.

          They choose not to know things; or at least they claim not to know and do an exceptional job of purposeful pretend.

          “The FBI has reviewed this letter and confirmed its factual accuracy?”
          Really?

          As we have just shared, the July 2018 letter itself is filled with factual inaccuracies, misstatements and intentional omissions. So who exactly did the “reviewing”?

          This declassification release raised more questions than any other; and yet no-one, not a single investigative body, asked questions about it…

          Why?…

          Because the letter itself was prima-facie evidence of lies directly from the special counsel of Robert Mueller and Andrew Weissmann. No-one in the executive branch, legislative branch or even judicial branch wanted to highlight the corruption of the special counsel.

          Here’s the Full Letter. – 14 Pages PDF I strongly suggest everyone read the 14-pages slowly. If you know the background, this letter is infuriating… AND keep in mind, every single staff member in the House and Senate (those investigating the issue) said they never saw it.

          That’s how badly broken the system of justice, and the system of checks-and-balances in Washington DC, really is. What we are seeing now in the blatant targeting, silencing, and outright in-your-face behavior is a downstream result of the system knowing everyone is too far gone…. they have nothing to fear now.

          A very long and interesting read

          America is totally broken – as Lance said above – America seems, now, to be living in a 2 tiered legal system run by a ruling class oligarchy.

          230

    • #
    • #
      OldOzzie

      The GameStop Saga Isn’t About Finance, It’s Part Of The Ongoing War Between Elites And Populists

      The rules here are simple: Heads Wall Street wins, tails you lose.

      They all miss the point. What’s happening right now has nothing to do with hedge funds or free markets or pricing theory or any of that. What’s happening right now is another front in the major war taking place in institutions and countries across the world: It’s the elite versus the populists.

      Wall Street has a long, storied history of viciously crushing short-sellers. It’s something of a local pastime. Just ask David Einhorn, who wrote an entire book on the industry’s efforts to destroy him for the crime of shorting the stock of a bank that was covering up the fact that a huge chunk of its loans were garbage and would never be paid back. The GameStop saga isn’t about the benefits, or evils, of short-sellers.

      The real story is how “retail investors” — the industry term for regular people who day trade now and then or have a small brokerage account for retirement or to buy stocks every now and again for fun — figured out how to take down a financial leviathan. It’s not that Wall Street dislikes retail investors, it’s that Wall Street views them as little more than commission factories for the big brokerage houses.

      See, retail investors don’t move markets. Until they do. Which, in the case of the Redditors bidding up GameStop stock, they did. And that cannot be tolerated. The whole GameStop saga isn’t about finance or politics. It’s David vs. Goliath, the have-nots vs. the haves, the underdog vs. the heavy favorite with the best talent and training and equipment money can buy. It is a perfect microcosm of the war between the populists and the elites, the individuals vs. the institutions, the people vs. the powerful.

      A bunch of internet randos found a way to take financial advantage of a company that had backed itself into a corner. They banded together, executed the strategy, and made bank. They used the exact same rules and systems that Wall Street has used for decades to screw individual investors out of their money.

      That was the Redditors’ real crime. Because that’s not allowed. You are not allowed to use the same set of rules for your own advantage.

      The rules here are simple: Heads Wall Street wins, tails you lose. The institutions set the rules, not you. The elite, not the populace, will determine what is allowed and what isn’t.

      120

  • #
    PeterS

    So how come the likes of Antifa haven’t burnt Wall Street? The answer is obvious. They are only interested in hurting those who are not of the left and Wall Street are friends of the left.

    350

    • #
      • #
        OldOzzie

        EXC: Biden Treasury Sec Yellen Paid By Chinese Communist Party-Linked Group.

        Treasury Secretary Janet Yellen’s financial disclosures reveal she was paid to speak at Caixin – a Beijing-based media outlet with ties to the Chinese Communist Party, The National Pulse can today reveal.

        The financial relationship is revealed via her most recent disclosure as item 33 on a 68-item-long list titled “Filer’s Sources of Compensation Exceeding $5,000 in a Year.”

        “Caixin, which Hu founded after leaving Caijing in 2013, has been able to navigate China’s media landscape better than most. Some attribute this to Hu’s savvy and personal connections — she comes from a line of Communist Party intellectuals and maintains a friendship with Wang Qishan, China’s vice president.”

        Yellen’s ties to Chinese Communist Party outlets is surely another cause for concern.

        100

        • #
          Harry Passfield

          The more I read on this the more I realise that Trump wasn’t deposed for political reasons: they knew he could be close to knowing their financial reasons. It’s always the money.

          50

  • #
    MrGrimNasty

    I’m not entirely convinced this should be celebrated. I’m not sure what the whole picture is. Is the aim really just to ‘stick it to the man’?

    In fact this sounds not a million miles from proposed XR tactics to disrupt/destroy the ecomony/markets/banks through coordinated financial mischief, thus ENABLING the great reset, not protesting it.

    Who is friend and who is foe? It’s not very clear these days.

    272

    • #
      wal1957

      I’m not entirely convinced this should be celebrated.

      Agreed.
      The question I have is why is it okay for the”big boys” to do this and not the “little guys”? For the big guys to cry foul now doesn’t pass the pub test. They have been doing this for years without any complaints.The same rules should be applied equally. If there is a problem, fix it.

      The fact is that nobody wanted this addressed until the big guys got burnt. They were happy with gaming stocks because they were making $$$. They will get very little sympathy from the average punter.

      220

    • #
      bobn

      Absolutely it should be celebrated. The hedge funds routinely manipulate stock prices through leveraged betting either long (bid up) or short (force down). The small investors have found a way to expose this manipulation. As the hedgies had pushed Gamestop down through leveraged bets the small guys did the opposite and bought up the actual stock. Its a poker play and the small guys have called the rich guys bluff, which through the hedgies leveraged gambling will cost them a mint.
      If the Hedge funds hadn’t been gambling and manipulating stock prices then there’d be no issue. The tide has gone out and the Hedgies have been swimming naked.
      Hedge funds will have to think twice in future before manipulating markets.

      140

      • #
        cohenite

        The only problem bobn, is that the hedgies own the market. The whole ‘system’ in the US is so corrupt it leaves slime marks as it moves. Trump showed there is not a political solution.

        70

        • #
          GlenM

          too much to overcome, unfortunately. We know that history is full of venality in such places. Rot you swine.

          40

      • #
        MrGrimNasty

        But some pension funds (yours?) have exposure to hedge funds. It’s usually a relatively small proportion of the investment portfolio, but increasing.

        According to the OECD.

        “What is undoubted is the growth in the hedge fund market in recent years, with estimates putting assets under management of the 10,000+ funds at over $1trillion. Much of this increase has come from institutional investors, and pension funds in particular. Though estimates vary, up to 20% of European and American pension funds and 40% of Japanese pension funds are thought to invest in hedge funds.”

        Like it or not, hedge funds are one of the ‘jenga blocks’ of our financial system.

        Still celebrating?

        If there’s a problem, deal with it through regulation, not reckless activism.

        40

        • #
          Analitik

          Regulation has failed since vested interests of the big players are what the system is designed to protect – they don’t spend all that money on lobbying and for election financing just to feel good.

          Yes, innocent pension funds chasing some measure of return in an effectively zero interest rate environment have exposure to hedge funds but that is a further sign of disfunction brought about by the monetary policies bailing out the financial sector. If you believe that the current financial environment is sustainable, then you might as well believe in green energy and Global Warming, too. Everything is leveraged to the hilt and counterparties are so entangled through multi-order derivatives that no one can truly tell what the underlying value of a fund’s (hedge, mutual, pension, exchange traded – take your pick) position is. Never has Goodheart’s law* been so apt as when looking at derivative trades.

          I first thought the wallstreetbets thing was idiocy as the inevitable correction would crush those long Game Stop (& the other targeted heavily shorted stocks) but ETF rebalancing could well give them enough of an exit window to not be the ultimate bagholders. It would take “crackerjack timing” but the whole strategy was a highly speculative play in the first place.

          *When a measure becomes a target, it ceases to be a good measure.

          10

  • #
    another ian

    Chiefio with what might be called “A Modest Suggestion”

    “All I Ask Is That Washington D.C. Show Us The Way By Example”

    https://chiefio.wordpress.com/2021/01/29/all-i-ask-is-that-washington-d-c-show-us-the-way-by-example/#comments

    90

    • #
      Harves

      Market in free fall since 20 January. Now what happened on that day?

      270

      • #
        Ian

        the facts

        Hey Harves. How about looking at the facts? Here are the closing figures for the Dow Jones and the Australian All Ordinaries since January 20.

        Dow Jones All Ordinaries
        20/1/21 30930.52 7051
        21/1/21 31188.38 7107.1
        22/1/21 31176.01 7078.8
        25/1/21 30996.98 7111.4
        27/1/21 30937.04 7060.2
        28/1/21 30303.17 6917.6
        29/1/21 30603.38 6870.9

        Since January 20 the Dow Jones has fallen 1.1% This certainly ain’t freefall or anything like it.

        In contrast the Australian All Ordinaries has fallen 2.57% since January 20%. This is a 2.33x greater fall.

        I doubt Biden’s inauguration had anything to do with the fall in the All Ordinaries

        221

        • #
          Harves

          Not sure what imaginary Dow Jones figured you are looking at, but the close on the 29/1 was 29982, not your make believe 30603.

          So Dow Jones down 3% since Biden started attacking US jobs… but shhh,.
          Remember when Trump’s inauguration was supposed to lead to a global recession and every minor fall was cheered by the media as proof of their collective predictive brilliance … how times change.

          220

          • #
            Ian

            Yes you’re right. I record the Dow,All Ords and ASX daily as I have an SMSF. The data are from the CommSec site in Australia as at close of business which is 1.00pm Australian Eastern Daylight Time so the US figures are for the previous day. My sincere apologies for my elementary error.

            That said US stocks ended at all-time highs on Wednesday January 20. The inauguration of President Joe Biden and expectations for more government stimulus, in addition to a so far successful earnings season, pushed the market higher. In contrast the Dow fell by 2.04% on Friday 29 due largely to the impact of Reddit traders rather than to the Biden presidency.

            26

            • #
              Harves

              The market ended higher BEFORE Biden had got to work with his record number of generally anti-American Executive Orders. Doesn’t take a high IQ to figure out his ear on fossil fuels and open borders policies won’t be great for the economy.

              130

    • #
      another ian

      And in comments at Chiefio

      “C’mon Man!

      Didn’t you see that GM has figured this all out. They are going to be carbon neutral by 2040.

      GM figured out how to manufacture steel, plastic, rubber, glass and a whole bunch of other stuff without any fossil fuels or CO2 footprint (why do they call it carbon footprint anyhow when it ain’t) to make new vehicles. They seem to have also figured out how to mine and process lithium, copper, and other metals needed without the same. They can make wind turbines and solar panels to power everything without fossil fuels with no carbon footprints at all. They apparently figured out how to modify the grid to handle the demand for non-fossil electricity distribution to charge these too, or is it everybody going dark? ,

      Amazing stuff, unless it is like the EU not counting burning wood pellets for electricity production in their emissions numbers, no?

      C’mon Man!”

      200

  • #
    Graeme P.

    This first I heard of this was when one of my boys came home yesterday saying he made $500 on his train ride home yesterday. In and out in 1 1/2 hours. He actually profited $900 but the taxman’s share was to the tune of $400.

    200

  • #
    Asp

    When futures and other derivatives were introduced into the financial markets, their intended function was to reduce market volatility, and therefore make investment in long term projects that much more secure. However, in a market where players, through short selling, are able to make money both on a rising and falling market, market volatility is encouraged, as it magnifies the insane money that players are able make. All this without contributing to the real economy in any tangible way. Despite its disputed lack of economic benefit (apart from the select players making insane amounts of money), the finance industry has managed to convince various governments, including Australia, that this is an integral and necessary part of market operation.
    I have never been able to understand how it is possible to sell something that one does not own. Further, short selling is akin to market speculation, for which people could get shot in the immediate aftermath of WW2.

    270

    • #
      Lawrie

      I have had two careers, the Army Reserve for 28 years and a farmer since I was born. Both occupations deal in reality. You have so many cows, acres or soldiers and skill and knowledge can maximize their productivity. Drought and the enemy can diminish productivity but it is all real. Shares are real as are the companies they represent. Instead of one person owning a company it can be owned by thousands but each of those thousands is a real owner. The scum that infest Wall Street and the hedge funds make their money by trading your shares often without you knowing it. How can that be legal? Only by government interference. I understand that I can lease my land to someone else and he can make money from it but the land is still mine and I receive the rent payments whether the lessee makes money or not. With shares that is not the case. The scum use my shares for their benefit but do not pay rent and what happens to the dividends? Why are governments worried about volatility in the share market to the extent they permit dodgy behaviour that actually creates volatility. Short sellers try their best to ensure the share price falls which creates a false value of the share. If left alone share prices would just reflect sales, profits and other tangibles which would allow buyers and sellers to trade shares as they would any other commodity.

      The mere fact that hedge fund managers make so much from contributing so little means that corruption is rampant. What they do may be legal but it is unethical and to see them lose is gratifying. I recall in the GFC the ads for 2nd hand Ferraris, followed by ads for luxury apartments, followed by social pages filled with blonde bimbos looking for rich partners. I thought it could not happen to better people. One of the biggest problems in this country is the amount of money sloshing around in Super funds making a lot of people very rich at the expense of the folk who own the super. 32 billion in fees every year. I have a SMSF that I manage and achieve better results in an hour a week. The real problem is that our society encourages and supports far too many parasites fed by fewer and fewer innovators, producers and doers. My wife broke her wrist a few months back and we needed to attend the local hospital several times. I observed far more people staring at screens and carrying clipboards than treating patients. Administration uses 60% of the health budget. Like hedge fund managers there are too many parasites.

      Ivomectin anyone?

      440

      • #
        Anton

        What are GFC and SMSF? Fewer acronyms please!

        714

      • #
        cementafriend

        Lawrie, not quite right. No one can trade shares that you personally own. I think you are referring to large Super funds and Managed funds that trade on the behalf of members. These funds can lend shares but normally do get some rent. Yes, the fund managers can make money for themselves and they can make or lose money for the fund. Personally, you could get rent from shares that you own in option trading. You would need to own a contract parcel. I think that is 1000 shares in say a bank at around $20/share on the ASX. You could sell a call options at above the market price. If the option is not exercised you make some rent through the selling of the option. If it is exercised you make some capital gain (but would miss out on potential gains if the price goes up lots). While there is some risk taking in options there is a formula to actually work out a normal option price based on time and interest. There are computer programs for that if you are not good at maths.

        40

        • #
          Richard C (NZ)

          cementafriend >”No one can trade shares that you personally own”

          Herein lies the Robinhood problem.

          The following comment was posted under the ZeroHedge article: ‘Cash-Strapped Robinhood Scrambles To Raise $1 Billion From The Rich’:

          leicestersq 1/30/2021, 1:50:25 AM

          I was musing over what ‘ownership’ of a share really means.

          What it should mean is that there is a central register somewhere, and if you own a share your name should be on it as the owner. A good example of this is the bitcoin ledger. If your id is on the ledger, then you own it.

          Now I am guessing that the way that things work with Robin Hood is that they normally buy shares, put their name on the ledger. Then they have their own ledger to record which of the customers really owns the shares. In this paradigm the customer’s name isnt on the central ledger.

          There are some benefits in this approach, but there can be a big problem if RH were then to sell shares on their own ledger that isnt backed up by shares on the central ledger. I dont think I am guessing too hard to say RH have done this, and gone short. Normally perhaps not a problem, but with all of the trades going one way, I suspect RH has a ledger saying that they have X shares that they owe to customers and this number is vastly less than the Y shares that the central ledger says that they own. Hence RH now need huge amounts of money to make good on their commitments. Of course they cant make good because there are not enough shares out there to do this as all of the retards are holding the line and buying the dips.

          If I am right in my description above, the whole system needs to be reformed. Every customer who buys a share should have their name and only their name on the central register. That way you cant get into this mess. When it all goes down, huge numbers of people who have RH accounts and think that they have shares will find that they have been Corzined.

          Also in the thread are comments referring to the 2 day (!) RH settlement window (a vestige of paper trading regulations). Example:

          pods – RH was fractionally reserving shares and making $$ off the T+2 day float. Works well for churn. Burns their backsides for 1 way ticker. Burns the house down when its a 1 way moonshot.

          I highly recommend that article, especially Tyler’s quote from SilentCal explaining why @RobinhoodApp restricted trading in the short-squeeze stocks at the end of the article.

          100

          • #
            Richard C (NZ)

            Further to RH share “ownership” above from a new article at ZeroHedge:

            Practically speaking, in margin accounts [such as most RH accts], the client does NOT own *any* securities. Rather, margin account holders “own” a promise from their broker.

            Yay.

            10

        • #
          Richard C (NZ)

          cementafriend >”No one can trade shares that you personally own”

          They can if you lend them your shares (at a price – but who pockets the fee?).

          Mark Cuban at ZeroHedge:

          When someone shorts a stock that is already heavily shorted, they have to pay a fee to borrow that stock. In the case of $GME that fee has been hovering around 30% this week. Shorts have to pay (Price x .30)/360 per day.

          And,

          This is one more way that Wall St takes advantage of the little guy. If you are moving from RH, look to see if you can find some place that allows you to hold the shares and lend them in YOUR name, so you get the Yield (Yield Farming in stocks !).

          10

          • #
            Richard C (NZ)

            Mark Cuban again:

            RH’s margin client (a retail investor) *thinks* he own shares. He never did, because it’s a margin account.

            RH itself actually owned the shares (in Street name).

            RH lent those shares to a HF PB (aka “hypothecation”), in exchange for daily borrow fees.

            That loan creates a debit/credit relationship between RH and PB. The PB took those borrowed shares and re-lent them to its client, who sold them to a 4th party. The RH client and the 4th party simultaneously “own” the same shares.”

            00

    • #
      RexAlan

      Hi Asp, in the futures markets before cash settlements were allowed the “short” sold futures contract was a promise to deliver whatever was being traded. Contracts would typically run anywhere from 1 month to 12 months. Therefore if the “short” sold promise to deliver had not been bought back or “covered” before the expiry of the contract which is a legally binding document, the seller of the contract had to come up with the goods. In Australia a cattle futures contract was from memory I think was 30 head of cattle, a wool contract was a specific amount of wool. This as you can imagine would be quite difficult for anyone who was not in the cattle or wool business.

      When cash settlements were introduced, at the termination of a contract which had not been bought back or “covered” the difference between the contract price and the current “spot” market price was to be paid.

      On the opposite side of the ledger a bought “long” contract was a promise to deliver, in this case the cattle or the wool; or after cash settlement were introduced the dollar difference between the contract price and the “spot” market price.

      70

  • #
    Serge Wright

    This coordinated attack on the big guys in Wall St has been a long time coming and it demonstrates the power that social media has given to the small investor. It’s now very likely we will see new laws rushed in to protect the big players at the expense of the little guys, because the big guys belong to the same cancel culture club as those now in power. The twist of irony here is that the new government wants to cancel all fossil fuel production and create a great reset, which is an act of economic vandalism that will not only kill every hedge fund, but will leave Wall St in a smouldering pile of ruins, along with big tech and big finance. The old saying “be careful what you wish for” is all that needs to be said for what will now follow.

    260

  • #
    WokeBuster

    Finally something people can unify around. I can see alliances being forged here.

    110

  • #
    William

    Why is the song “Springtime for Hitler” playing in my head?

    110

  • #
    Susan Fraser

    Is it only the US that allows trading something you don’t actually own?

    Why not ‘Reset’ this to honestly trade only that which is backed by legal title?

    120

    • #
      Anton

      To implement a short position, you borrow shares from someone willing to lend them to you, then sell them (“selling them short”) and buy them back for less after they have fallen in value. Then you repay your loan with them. With long positions you can lose only as much as you bet, but with a short position your losses may be unlimited (if the shares rise continually instead), and the loan will itself cost.

      There is an unusual coalition of the Left (eg Alexandria Ocasio-Cortez) and small-is-beautiful free-marketeers gunning for Wall St over this one. Suits me.

      170

    • #
      OldOzzie

      Susan Australia also allows trading something you don’t actually own?

      Who Benefits From Lending Shares in a Short Sale?

      A short sale is a common type of trade in the financial world. It involves selling an asset that a trader does not own. The trader borrows the asset, then—by a specified later date—buys it back and returns it to the asset’s owner. The investment philosophy is that the borrowed asset will decline in price and the investor will earn a profit by selling at a higher price and buying back at the lower price. Selling short is done on margin and is a risky endeavor due to the unlimited potential loss.

      In determining who benefits from lending shares in a short sale, we first need to clarify who is doing the lending in a short sale transaction. Many individual investors think that—because their shares are the ones being lent to the borrower—they will receive some benefit; but this is not the case.

      Benefits From Lending Shares

      When a trader wishes to take a short position, they borrow the shares from a broker without knowing where the shares come from or to whom they belong. The borrowed shares may be coming out of another trader’s margin account, out of the shares being held in the broker’s inventory, or even from another brokerage firm. It is important to note that once the transaction has been placed, the broker is the party doing the lending, not the individual investor. So, any benefit received (along with any risk) belongs to the broker.

      The broker does receive an amount of interest for lending out the shares and is also paid a commission for providing this service. In the event that the short seller is unable (due to a bankruptcy, for example) to return the shares they borrowed, the broker is responsible for returning the borrowed shares. While this is not a huge risk to the broker due to margin requirements, the risk of loss is still there, and this is why the broker receives the interest on the loan.

      In the event that the lender of the shares wishes to sell the stock, the short seller is generally not affected. The brokerage firm that lent the shares from one client’s account to a short seller will usually replace the shares from its existing inventory. The shares are sold and the lender receives the proceeds of the sale into their account. The brokerage firm is still owed the shares by the short seller.

      The main reason why the brokerage—not the individual holding the shares—receives the benefits of lending shares in a short sale transaction can be found in the terms of the margin account agreement. When a client opens a margin account, there is usually a clause in the contract that states that the broker is authorized to lend—either to itself or to others—any securities held by the client. By signing this agreement, the client forgoes any future benefit of having their shares lent out to other parties.

      120

      • #
        OldOzzie

        The Bottom Line

        Short selling is a risky trade but can be profitable if executed correctly with the right information backing the trade. In a short sale transaction, a broker holding the shares is typically the one that benefits the most, as they can charge interest and commission on lending out the shares in their inventory. The actual owner of the shares does not benefit due to stipulations set forth in the margin account agreement.

        90

    • #
      Lawrie

      They do it here in Australia as well. When you see share prices falling it is usually because of two things; panic and greed. People borrow money to buy shares, the shares start falling and then are sold to reduce debt. They keep selling while borrowed money is in play then they stabilise as long term and paid up share holders hold on to a share they have confidence in and believe is good value. Greed comes into play with the hedge funds and short sellers who are hoping the price falls. They do not care who they hurt only how much money they can make; scum in other words. The share market is volatile because of speculators and parasites.

      100

  • #
    Richard Ilfeld

    Government is force.
    You learn this by reading Kevin Williamson, a very smart, lucid, and literate person.
    All governance, if you resist it sufficiently, eventually boils down to the government
    sending men with guns to impose their will.
    The corruptocrats will send their peons to get us peons.
    It is not an accident they have started doing loyalty tests on the National Guard;
    they know they don’t have popular support and will have less as their policies spread more misery.
    They have seen soldiers in other places, ordered to fire on their fellow citizens, refuse, or sometimes,
    turn the guns around.
    It is really hard to imagine what it would take to get the folks in red America to engage in the kind of street violence
    against hated institutions that the blue cities have regularly enjoyed for the last few years.
    The provocation would likely be at the level of some minor bureaucrat, far from the solons giving the orders.
    On the other hand, the folks might not be as mindless and ineffective; Portland’s reputation as a city is ruined and it’s tourist trade
    is shot, but that wasn’t the target or the stated intent;
    in contrast these fiscal guerillas seem to have been on point and effective.

    Part of the intensity of the cult of the left is, I think, due to a pretty rational fear that they are playing in an emotional arena where the backlash could be pretty
    severe; one of the reasons they can never let up and never let any part of life be non-political.

    When you use every means available, you also eat your seed corn; if you misjudge you could be really hungry next year.

    150

  • #
    garry b

    “Short” trading is happening in Australia. Who benefits? Stock exchange-more turnover. Institutions-fees. Brokers-fees. Hedge funds/traders, market manipulators-who know what the truth is. Put and call options are fairly straight forward, but the concept of “borrowing” shares from an actual owner, and then selling these shares on market, seems more like a legal fiction. If the shares are sold, then at a minimum, the lender who “lent” the shares ought to be deemed to have sold them and CGT, if appropriate, be assessed.
    No doubt the people engaging in these trades have self-serving arguments to legitimise their activities, but why should the ATO and the government encourage having the stock exchange being a casino.
    In the event of a serious market downturn who ultimately guarantees that all third parties can back up their transactions with cash. Does “short selling” itself make things potentially worse?

    161

  • #
    el gordo

    It wasn’t in Karl’s manifesto.

    ‘It’s the trading mania story that has captured the world’s attention, moving beyond the realms of market insiders, onto the nightly news and into the corridors of power. The tale of the little-known and struggling video game chain with 4000 stores across the United States that became the most heavily traded stock in the world is almost too wild to be true.

    ‘There are moments in financial history that define a generation, and the extraordinary battle between hedge funds and day traders over shares in GameStop, and the revolutionary movement it has unleashed, looms as one of those.’ (AFR)

    131

  • #
    Anton

    Although knowledge that the central bank acts as lender of last resort to a local bank suffering a liquidity crisis serves to reduce the likelihood of such a crisis, it also gives bankers an incentive to make riskier loans. That is because they can make more money that way and they know they will be bailed out if it goes wrong. This is called moral hazard. Regulation has been the solution to this problem, but it proliferates in a battle of wits between bankers and regulators which the latter are unlikely to win. Penalties on irresponsible bankers beyond mere fines would indeed be a more effective deterrent. Higher levels inside erring banks can be held accountable – which is vital – by warning those under them that if they cannot point to somebody above them then they will themselves be held responsible. After Iceland’s banks failed in 2008, with debts too big for Iceland to cover but not too big to endanger the world banking community, several dozen of its senior bankers were handed jail sentences of up to seven years. They were brought to account by one dogged hero, Olafur Hauksson, who before the 2008 crash had been the policeman for a small Icelandic town and who had no special financial expertise. (Possibly paywalled)

    https://www.ft.com/content/dcdb43d4-bd52-11e6-8b45-b8b81dd5d080

    When the next crash comes there is likely to be, at first at least, not a bail-out of banks but a bail-in: holders of deposits, and of stocks and bonds issued by banks in their own name – their way of getting hold of central bank money earlier – will have to pay the debt. (This fact was disclosed at the November 2014 G20 meeting.) Uninsured depositors will lose their money above a locally chosen threshold by having it turned into equity in a ‘bad bank’ which holds the bad debts. (Governments may insure some accounts up to a certain sum.) This trick was trialled in the Cyprus banking crash of 2013.

    160

    • #
      Sirob

      Anton, here in Australia the people successfully stopped the passing of the cash ban bill that would have been a chess move to force people to keep their currency in banks even if rates went negative.

      The banking amendment deposits bill 2020 recently put to the parliament by Malcolm Roberts was unsuccessful even though it has no retrograde effect or cost to banking or business. It was to protect deposits against bail-in uncertainty.

      https://citizensparty.org.au/media-releases/two-months-win-fight-protect-australian-bank-deposits-bail to existing law recently

      Iceland was able to pull off that victory and not be held in debt bondage because it has a relatively smaller and more importantly, a homogeneous society.

      Where as Ireland, who has a relatively bigger population and a less homogeneous society – it could be argued minipulated by the tech giants to be more “woke”, I wonder if that goes hand in hand with incompatible immigration – allowed itself to be shackled by the banks. They are still paying for it.

      Pity they didn’t learn from Iceland. Classic case of ‘divide and conquer’

      80

  • #

    Having traded for years I can point to all sorts of nefarious activities in the brokerage world.

    Of course trading has its risks but we cannot allow hedge funds to bend and break the rules, as they did here, and pretend there is “nothing to see here”.

    I hope Robinhood goes under over the completely wrong actions. It supposedely prided itself on being able to enable small investors into the market, but as pointed out, as soon as the call came from its big mates it obliged by restricting trades for its account holders, whilst the big boys were able to do whatever they wanted.

    230

  • #
    OldOzzie

    AFR – Day traders shake Wall Street to its core

    The GameStop saga has left investors wondering whether the rise of retail investor control is a flash in the pan or a new paradigm in investment returns.

    It’s the trading mania story that has captured the world’s attention, moving beyond the realms of market insiders, onto the nightly news and into the corridors of power. The tale of the little-known and struggling video game chain with 4000 stores across the United States that became the most heavily traded stock in the world is almost too wild to be true.

    There are moments in financial history that define a generation, and the extraordinary battle between hedge funds and day traders over shares in GameStop, and the revolutionary movement it has unleashed, looms as one of those.

    But GameStop’s rise from a company worth about $US200 million in April last year to a giant worth more than $US25 billion at one point this week is also the latest bewildering chapter in the long history of speculative mania and bubbles.

    Professional investors are baffled.

    “It’s symptomatic of the amount of cash out there,” says Monik Kotecha, the founder of Insync Funds Management. “I think that largely gives retail investors the capacity to get involved. With GameStop it’s a concerted effort to go against the hedge funds.

    “It’s speculative in nature and doesn’t make any sense, but there are parts of the market which don’t make any sense now, there’s bubble-type behaviour and this is part of it. But I wouldn’t say the whole market is part of a bubble.”

    In the US, politicians were divided about how to respond to the trading frenzy. On the Democratic party’s left, Senator Elizabeth Warren and Congresswoman Alexandria Ocasio-Cortez slammed any moves to restrict retail traders’ ability to buy shares in a small basket of companies including GameStop. They argued there were double standards on display, given reckless risk-taking by Wall Street banks triggered the global financial crisis just over a decade ago, and the hedge funds didn’t face similar restrictions.

    On Thursday night, free brokerage app Robinhood controversially announced it would limit trading in some targeted securities, with message board Reddit moving to restrict access to forums used to manipulate stock prices.

    In the US, politicians were divided about how to respond to the trading frenzy. On the Democratic party’s left, Senator Elizabeth Warren and Congresswoman Alexandria Ocasio-Cortez slammed any moves to restrict retail traders’ ability to buy shares in a small basket of companies including GameStop. They argued there were double standards on display, given reckless risk-taking by Wall Street banks triggered the global financial crisis just over a decade ago, and the hedge funds didn’t face similar restrictions.

    On Thursday night, free brokerage app Robinhood controversially announced it would limit trading in some targeted securities, with message board Reddit moving to restrict access to forums used to manipulate stock prices.

    Questions over the trajectory of interest rates, and the battle between growth and value stocks, will persist for some time. In the meantime, the GameStop saga has reminded investors that in this environment of easy money, even market minnows can make a very big noise.

    100

  • #
    RossP

    Interesting perspective from a Newsmax interview with Jordan Belfort ( the actual “Wolf of Wall Street” )

    https://www.youtube.com/watch?v=5wYx88DBtTE&feature=emb_logo

    60

  • #
    Sirob

    We all know the markets are rigged, the precious metals markets have been subject to all kinds of market manipulation since the 1970’s.

    Those of us who have been paying attention to it have been amazed by what has transpired over the years, especially since the early 2000’s.

    Bailouts of the big merchant banks not only occured due to toxic mortgage securities – CDO’s & CDS’s – but on the horizon is the ever growing overhang in the precious metals market. Although it’s a much smaller market, it’s a strategic market.

    Of course many have realised that when the shorts finally get their heads handed to them settlement will be in paper or electronic currency (fiat currency) rather than the actual metal.

    But never mind, gold and to some extent, silver, are the ultimate barometers of the health or sickness of the entire financial system. Even though the big banks and their proxy warriors in gold mining have been at pains to keep the spot price relatively low and not draw attention to the slow march up it can’t be denied that our fiat currencies are being destroyed, albeit in a controlled way until a collapse is part of the playbook for a global reorganisation of our world.

    Boris

    150

  • #
    OldOzzie

    ‘Boomers no longer control the market,’ says 16yo Reddit trader

    A Melbourne high school student and active member of the notorious WallStreetBets social media forum has lashed Robinhood’s decision to restrict trading activity by its customers, but experts say Australia’s market integrity rules would prevent it ever coming to that.

    Dan Tadmore, 16, joined the Reddit forum WallStreetBets in April last year, shortly after Victorian Premier Daniel Andrews brought forward school holidays amid the escalating pandemic.

    While indulging his newfound passion for investing his pocket money in the sharemarket, and enjoying a distraction from his hectic Year 10 study and sporting schedule at an elite private school, Mr Tadmore also inadvertently became an eyewitness to the plotting of a “short squeeze” that this week boiled over from the sub-reddit and shook global financial markets.

    That now-infamous attack by day traders sparked a 700 per cent rally in US stocks such as GameSpot, parent company of Australian electronics retailer EB Games. It wrongfooted institutional investors, culminating in a $US2.75 billion ($3.6 billion) rescue package for hedge fund Melvin Capital.

    Reddit founder Alexis Ohanian, visiting Australia with tennis superstar wife Serena Williams ahead of the Australian Open, said the influence of social media communities over the market was the “new normal”.

    “This is a seminal moment,” he told CNBC’s Squawk Box. “I don’t think we go back to a world before this because these communities, they’re a byproduct of the connected internet.”

    “A lot of young people don’t really remember the global financial crisis. This is really our first awakening about how corrupt Wall Street can be,” the budding investor told AFR Weekend.

    “That was exposed when Robinhood took GameStop off their buy list. A lot of people are furious and I think it’s horrible. I use an online trading platform and I don’t want them to limit what I can buy. It’s a free market.”

    He said the 5.5 million-strong sub-reddit should “not be underestimated”. While casual observers would be struck by the crass language, liberal use of emojis and generational in-jokes, that facade belies an underlying prudent approach to wealth creation.

    “A lot of people might think it’s just a bunch of idiots throwing darts at a dartboard and trying to pick stocks but there is actually a lot of fundamentals, there are people there who have done a lot of research.

    “That’s why they pulled off the short squeeze. It’s people power … Boomers no longer control the market.”

    90

  • #
    OldOzzie

    GameStop’s Reddit army changes the game for good

    The companies around the world that have attracted the most attention of short sellers, are not victims of a rigged system.

    Good poker players know that if they are seated at a table of novices, they’ll lose everything if they don’t adjust the strategy.

    If the player bets aggressively on a strong hand, too many gamblers will come along for the ride and one will get lucky. You have to play the cards you’re dealt and the players you’re seated with.

    This week, finance’s top poker players were joined at the table by a Reddit army of day traders who have bet big and raked winnings from the so-called masters of the universe.

    Mobilised by social media they hunted out hedge funds that bet against struggling video retailing group GameStop by snapping up cheap options that sent the share price soaring. The twentyfold pop in Gamestop put hedge fund Melvin Capital out of business.

    That remarkable raid triggered one of the greatest short squeezes of a generation. Traders fearing they would not only lose money, but get put out of business, covered their shorts in fear of being targeted.

    And the collective market of day traders and cashed-up opportunists hunted for heavily shorted stocks, pushing up their share prices.

    Goldman Sachs prime brokers told clients that Wednesday was the worst-ever day for long/short equity hedge funds, with some that are down between 20 per cent and 40 per cent so far this month.

    The prime unit, which provides loans to hedge funds, had its largest day of unwound bets since September 2016 as hedge funds retreated.

    “The consensus among my hedge fund friends is that the game has changed over this,” said one unnamed hedge fund trader.

    “It’s coming into my consideration too. I regularly take on retail favourites but this plays into their hands.”

    Galvanised by American traders, Australian day traders stormed stocks that were the most shorted, based on data available.

    This is not a battle of good and evil

    The GameStop phenomenon has generated reams of interest about the morality of markets. This was revenge, for the greed and bail-outs of Wall Street delivered by a digital mob that played hard and smart.

    Politicians and social media personalities used GameStop to build some cred and sounded their own rallying call, not of equal opportunity, but of equal income. Meanwhile the market commentariat wagged fingers at the absurdity of all.

    But morality and markets have never mixed well and they never will.

    This is not a battle of good and evil, of young and old. This is a battle of technicals and fundamentals.

    The companies around the world that have attracted the most attention of short sellers, are not victims of a rigged system.

    They are victims of disruption, mismanagement and circumstances out of their control that make it harder for them to make a buck.

    “So long as governments persist in tranquilising civil unrest and wealth divides exacerbated by the pandemic via monetary handouts, then we could continue to witness [GameStop] style speculative mania,” says one hedge fund trader.

    The game has changed.

    120

  • #
    John R Smith

    What will unify the US?
    I keep looking for mature adults to tone down the rhetoric.
    But the 80 year old Pelosi coughs up language like “the enemy within”.
    And CNN Talking Empty Heads invent “MAGA tear-a-wrist”.
    These labels aren’t spontaneous, they are focus grouped.
    Provocation is the intent
    Destruction of the Bill of Rights the goal.
    And so it’s aspirations to the World.

    220

  • #
    2dogs

    you self-evidently cannot borrow more than 100 per cent of a company’s issued stock

    Not true.

    e.g.
    1. Borrow a 20% holding.
    2. Sell it to someone else.
    3. Borrow the holding back from the person you bought it from.
    4. Repeat steps 2-3 as many times as you like.

    At each iteration, the shorter creates an obligation to deliver 20% of the shares of the company. The shorter can create as many of these obligations as it wants.

    In each case except the last sale at (2), the counterparty is holding not shares but a right to receive them. These rights are not tradeable as shares.

    80

    • #
      2dogs

      Sorry, step 3 should of course say “Borrow the holding back from the person you sold it to”

      10

      • #
        Brian the Engineer

        It looks like free money to the person lending the stock until the borrower goes bankrupt owing them shares.
        they don’t see the risk, or they do and think it’s worth the payoff.

        20

        • #
          2dogs

          Yes, absolutely the person lending their stock is taking a risk that the shorter won’t be able to repay the shares when they become due.

          This is not a free service. They charge a fee to the shorter for borrowing their shares. That fee should compensate them for taking on this risk. It’s meant to be worth the payoff.

          20

    • #
      Hanrahan

      These steps are not cumulative. legally you only have two or thee days to deliver ‘good” shares or the broker SHOULD close out the position.

      In fact you would be unlikely to do step 1. There would not be 20% available to borrow at any given time.

      10

      • #
        Analitik

        The 20% is obviously just to set a simple figure for the example – 2 dogs could have just said 20 shares.

        00

    • #
      Analitik

      Once you get to step #4, you enter the illegal position of a naked short which, as Hanrahan points out, can only be sustained until the shares must be delivered.

      10

      • #
        2dogs

        No, at no stage in the above is a short “naked”. Everyone who contractually should be holding actual shares will be holding actual shares at the end of this.

        Just note that all of the “longs” here except the final holder aren’t contractually holding actual shares – the are holding share futures. They exchanged their actual shares for a share “future” and a fee.

        00

        • #
          Analitik

          Borrowed shares cannot be resold – they are tagged to ensure this doesn’t happen.

          See this twitter thread which beautifully explains how the whole process of buying a share on Wall Street works in actuality, as opposed to a simple direct exchange of share for money between buyer and seller.

          It’s actually very good for explaining why the Robinhood shutdown wasn’t case of malicious rule bending but a symptom of the Wall Street process falling apart because the trading patterns are nothing like the usual ones that the system was created to deal with (& maximise profits through)

          https://mobile.twitter.com/compound248/status/1355274739351248898

          10

          • #
            Analitik

            Borrowed shares cannot be resold

            More accurately, they cannot be loaned so you cannot resell them as a compounded short.

            00

          • #
            2dogs

            Borrowed shares cannot be resold – they are tagged to ensure this doesn’t happen.

            No. There is no such tagging. Why would any buyer accept settlement of a sale with shares that had been so tagged?

            00

  • #
    Hanrahan

    There may be some here with an Interactive Brokers account. Be aware that they too restricted selling of a number of stocks involved in the short squeeze.

    2 days agoInteractive Brokers said: “As of midday yesterday, Interactive Brokers has put AMC, BB, EXPR, GME, and KOSS option trading into liquidation only due to the extraordinary volatility in the markets.

    30

  • #
  • #
    John Galt

    Fixing an election is illegal, too, but if you control the corrupt judges you won’t get prosecuted.
    But you might get punished by the people you think are your slaves when they have had enough.

    Henry Bowman, where are you?

    130

    • #
      Hanrahan

      I muze on weather it is possible for Americans to get so upset they actually revolt with the AR 15 substituting for Madame la Guillotine. This election theft and censorship have been a massive abuse and enshrining the means of election phraud into legislation as proposed would add insult.

      Couldn’t happen in Australia: She’ll be right mate!

      71

      • #
        Tilba Tilba

        This election theft and censorship have been a massive abuse and enshrining the means of election phraud into legislation as proposed would add insult.

        The US National Cybersecurity Center said there was no election fraud, and that it was the best-run general election ever held. The US Department of Justice under Attorney-General William Barr stated there was no election fraud – certainly nothing on a scale to change the result.

        Do you have a view about these authorities, in relation to claimed “election theft”?

        316

        • #
          Kalm Keith

          “The US Department of Justice under Attorney-General William Barr” :

          would never tell a fib.

          Ever.

          141

        • #
          robert rosicka

          Didn’t Barr make a couple of million working for Dominion ?

          81

        • #
          James Murphy

          I have to wonder, is “Tilba Tilba” just trolling? How could any sane or real individual place so much trust in organisations which have repeatedly demonstrated that “truth” is flexible and transient.

          The WHO happily tweeted the Chinese claim that the wuhan flu was not human to human transmissible
          Governments said everything w<ill return to normal once a vaccine appears, yet there is a lot of evidence to show that measures put in place will stay (e.g. NSW wants to keep the contact tracing system going regardless…)
          Governments said masks were not effective and there was no need to wear one, now, of course, masks are compulsory in a lot of places, thanks to government edict.

          141

          • #
            Tilba Tilba

            I have to wonder, is “Tilba Tilba” just trolling? How could any sane or real individual place so much trust in organisations which have repeatedly demonstrated that “truth” is flexible and transient.

            I’m deeply sceptical of most things, and want to see the lab equipment (metaphorically) before I accept someone’s analysis as being the truth, or close enough. My faith in institutional propriety is pretty good – yes – but it is conditional, as I say.

            That all makes me allergic to conspiracy theories, and mad uninformed rumours and chatter on websites with an axe to grind. I also avoid all the paranoia that permeates the Internet … that everyone is a liar and not to be trusted. In such a world, rumours run rampant.

            For example the confusion between “Dominion” voting machines and “Dominion” energy above, in an attempt to discredit William Barr … these sorts of mistakes (deliberate or just grossly uninformed) happen constantly.

            The reality is – at least for this sane and real individual – that no-one has come close to proving the election was rigged or stolen, yet people state as much as if it’s proven fact and a done deal. Do people really believe 85 judges are corrupt?

            Hillary Clinton conceded gracefully within 24 hours, in an election that was closer than this one. She was also blind-sided by the execrable James Comey coming out days beforehand saying the FBI had an open file on her emails.

            Nevertheless she accepted the result promptly … I’m afraid that Donald Trump’s ego and narcissism doesn’t let him concede to Sleepy Joe, and has descended into sore-loser territory.

            He primed his MAGA base for months – saying that if he lost the election it would only be because it was rigged. This is arrogance at a new level, and I suggest it cost him a lot of swing voters.

            27

            • #
              Analitik

              Hillary Clinton conceded gracefully within 24 hours, in an election that was closer than this one. She was also blind-sided by the execrable James Comey coming out days beforehand saying the FBI had an open file on her emails.

              The Deep State conspired against Hillary in 2016 – ROFLMAO

              71

      • #
        Tilba Tilba

        Couldn’t happen in Australia: She’ll be right mate!

        I’ve worked on a lot of state and federal elections, and you’re right – it couldn’t happen here. For a start, most Australians don’t take politic – or themselves – too seriously, but mostly we also have professional and non-partisan electoral commissions. They work.

        311

        • #
          robert rosicka

          I’m confused , what happened in America couldn’t happen here but nothing happened in America?

          190

          • #
            Tilba Tilba

            I’m confused , what happened in America couldn’t happen here but nothing happened in America?

            No – that is putting words in my mouth. I said that an election couldn’t be stolen or rigged here, because of paper ballots and professional electoral commissions. I said nothing about whether there was a rigged or stolen election in the US (but I remain deeply sceptical there was).

            16

            • #
              robert rosicka

              Your words !

              “The US National Cybersecurity Center said there was no election fraud, and that it was the best-run general election ever held. The US Department of Justice under Attorney-General William Barr stated there was no election fraud”

              And >

              “ I’ve worked on a lot of state and federal elections, and you’re right – it couldn’t happen here. ”

              70

  • #
    another ian

    Around here when a neighbour and I are on fire duties our call sign is GFC – “Geriatric Fire Crew”

    70

  • #
    JB

    Non existent shares and non existent voters in a non existent United States. A fantasy world indeed.

    60

    • #
      Harves

      … not to mention non-existing Russia collusion and non-existing murderer of Ashli Babbet? Funny how if a black person is killed the policeman is immediately named and shamed and stood down… immediately followed by free Nikes and TVs … but in this case …. nothing.

      150

  • #
    Alice Thermopolis

    On corruptocracies – financial and climatic – here’s an interesting post:

    https://quadrant.org.au/opinion/doomed-planet/2021/01/when-smart-people-get-the-climate-crazies/

    “If Machiavelli set out to devise a strategy to drive the greatest wealth transfer in history, monetizing “climate change” on the pretext of saving planet Earth from an anthropogenic apocalypse would be at the top of his list. Globalists and climate controllers are very keen on it too. One of them is former rock-star central banker, Dr Mark Carney, OC, the UN Secretary General’s new Special Envoy for Climate Action and Finance.”

    90

    • #
      Kalm Keith

      Good.
      This aspect of our enslavement to an untrue threat needs emphasising.

      50

    • #
      another ian

      Alice

      Don’t forget this acronym – “EyI”

      “Educated tey Ignorant”

      00

    • #
      Sirob

      Any of the banks and big speculators will be for “monetising climate change”. It opens up almost infinite possibilities of new financial derivatives that will produce nothing useful for society but enrich the few at the expense of the many. Not to mention that it’ll be one of the pillars to keep us in a state of arrested development.

      100

  • #
    another ian

    Revenge – a dish best served cold”

    http://www.smalldeadanimals.com/2021/01/30/gamestop-rebellion/#comment-1404468

    Goes with “Beware the anger of patient men and women”

    40

  • #
  • #
    another ian

    “Biden’s Worst Executive Order Went Almost Entirely Unnoticed”

    https://www.lucianne.com/2021/01/29/bidens_worst_executive_order_went_almost_entirely_unnoticed_52883.html

    Via Catallaxy files

    30

  • #
    Fuel Filter

    O/T, but not really…bunch of info on this topic.

    AC’s News Brief for today with about 30 links. Many quite interesting 😎😈🇺🇸
    You guys should bookmark him, but then, again, I keep saying that…

    https://www.anonymousconservative.com/blog/news-briefs-01-30-2021/

    00

  • #
    CHRIS

    Burmese military looking to stage a coup. How many guesses is needed to show that this is backed by the CCP? With Burma under their control, the CCP can then look to annex Hong Kong and Taiwan, and eventually take over SE Asia. And what is being done to stop this global domination? Absolutely nothing, thanks to the Neville Chamberlains of the Western World. The next chapter is the reaction of Indonesia, particularly in relation to the CCP takeover of the South China Sea. If Indonesia supports the CCP, then we are doomed.

    20

  • #
    Roger Knights

    Does anyone know how influential the buying of far out-of-the-money call options have been in squeezing the shorts? Doing that in large volume provides an asymmetric, leveraged way to goose the stock price. It causes a “gamma squeeze” or “convexity squeeze.” Market makers who sell those options are forced to buy stock to cover themselves.
    I suspect, as does Zero Hedge, that some of the rise in TSLA (Tesla) was due to this squeezing.

    40

    • #
      Analitik

      I posted this on reply to another comment earlier but as part of explaining how the Wall Street mechanisms are failing, rather than there being an overt conspiracy*, options are explained in this twitter thread. It’s summarised on ZeroHedge but I always like to link to the primary source.

      https://mobile.twitter.com/compound248/status/1355274739351248898

      *The Robinhood shutdown was a function of how the Wall Street systems are constructed for their “normal” trading flows. The actions by the wallstreetbet followers are creating trading patterns that are nothing like normal with the result that counterparty risk management processes are causing massive liquidity shortfalls. Of course the excuses for High Frequency traders to exist is to create liquidity but that is just one of the lies being exposed on this saga.

      Note that one of the ways Robinhood makes money is to lend shares purchased by its clients to hedge funds for shorting. Most people think they only make money by selling their trade orders to the High Frequency traders for front running. So the little retail investor gets leveraged in a couple of ways.

      Also of note is that the huge price spikes in Game Stop and other targeted stocks are now creating their own momentum through ETF rebalancing further creating demand and driving up the prices. Ultimately, ETF investors may end up as the bagholders when this totally falls apart, if the wallstreetbet crowd can bail quickly enough, which would be justice IMO for the stupidity of the strategy of blindly following the market.

      30

    • #
      Analitik

      Sorry, here is the second twitter thread with the discussion on option flows. The first link is still well worth reading

      https://mobile.twitter.com/compound248/status/1355278778239479809

      10

  • #
    another ian

    Latest Pointman

    “SELLING THE COUP TO THE DEPLORABLES.”

    Important message at the end (IMO)

    https://thepointman.wordpress.com/2021/01/30/selling-the-coup-to-the-deplorables/

    20

  • #
  • #
  • #
    Kim

    There’s a good article on ZeroHedge explaining the “plumbing” of the system : ‘It’s Not Just Robinhood, Reddit Rebellion Has Clogged Entire Financial System’s Plumbing’.

    20

  • #
  • #

    Hedge fund managers are not evil. They use short positions in companies whose shares they believe are overvalued, to offset the risk of long positions in companies they think are undervalued.

    That strategy is more difficult than just buying and holding stocks. It typically reduces gains in bull markets, offset by reducing losses in bear markets.

    No one is forced to invest in any hedge fund — such investments are voluntary and legal.

    The few people/companies who do short sales as their PRIMARY investment strategy probably had poor returns since March 2009. But some of them provide the service of alerting investors to companies committing financial fraud, and “cooking their books”. One such company was Citron Research, which provided free reports for about 20 years, with surprisingly good accuracy.

    Citron Research was a short seller caught by the GME short squeeze. But it was their money to lose. They just announced they would no longer do short sales, which had been their primary investment strategy for two decades. That surprising capitulation might be a sign of a market peak — remember that every short sale is bullish in the long run — every short sale requires a future stock purchase to close the trade.

    GME is a failing company, with an unprofitable business plan. In the long run the shorts will most likely be right, and most of the people paying hundreds of dollars a share for GME will end up losing money, IMHO.

    Wild speculation like this is common near the end of bull markets.

    40

    • #
      Sirob

      Richard, GME reminds me of Barrick Gold, how it lost many mum & dad investor’s money during their legendary “hedge book”, with no forward purchases anywhere in sight I might add, in the 2000’s onwards.

      It can’t be proven but mountains of circumstantial evidence would lead a rational person to conclude, Barrick Gold, although it was a real mining company with a history of gold production, became a fraud front in cooperation with central banks and big bullion banks to artificially suppress the price of gold on the Comex.

      10

      • #
        Hanrahan

        Had forgotten about Barrick but they did indeed sell forward years of production. I was a gold bug back then and hated them.

        They did their last stock split in ’93 and were $25 then, still are. The same investment in the metal would have seen >X5 price gain. They STILL are not a Mom & Pop share.

        10

        • #
          Sirob

          Yes, they only had forward sales but a genuine hedge requires both, forward sales and forward purchases. Both legs are required for a true ‘hedge’.

          The size and low price of their forward purchases were the main way they sent market signals that kept the price artificially low in conjunction with bullion bank shorts.

          00

          • #
            Sirob

            That should read

            “The size and low price of their forward [sales] were…..”

            00

          • #
            Hanrahan

            Both legs are required for a true ‘hedge’.

            That’s not true, a producer does not normally buy gold. They can forward sell via long dated puts to “lock in” a price. They are not “naked” because their production is their offset. This is normally limited to 3 or 6 months production, not what Barrick did.

            Junior miners may do a deal with a royalty company or other financier whereby they forward sell some of their production for a period of years or even “life of mine” but this is contractual and ethical. The royalty company has become a partner in the mine. Wheaton is a well known royalty company.

            Non financial advice, I am not licensed: Barrick [ticker GOLD] may finally be a buy. The last few years they have been paying little dividend and paying down debt to where it is now 0.16:1 d/e ratio and thus able to benefit from predicted POG rises. DYOR

            00

            • #
              Sirob

              That’s not true, a producer does not normally buy gold. They can forward sell via long dated puts to “lock in” a price. They are not “naked” because their production is their offset

              I disagree. The gold must either be “registered” or “eligible”. Gold in the ground isn’t able to be delivered. If not on the comex but by private contract then it’s foolishly risky unless the bullion bank you’re selling to is in bed with your scheme to suppress the price. I wonder who underwrote their risk? Could it be the bullion bank?

              It’s an unacceptable risk to the company and their shareholders only selling forward because the company doesn’t control many natural factors that could interfere with its mining outcome and hence, delivery.

              The offset to such risk is a forward purchase leg as insurance. If the purchase isn’t needed due to targets met, then well and good, but that is true hedge. Not just gold in the ground.

              00

            • #
              Sirob

              Read Bob Landis’ analysis of Barrick’s hedge book liabilities 15 years forward if gold goes up.

              10

    • #
      Sirob

      Permit me another post regarding “not evil people”.

      A former student of mine who was at the time we became acquainted a not long retired former CFO of telstra. He had a Chicago University MBA and spoke of Milton Friedman in reverent tones as he was taught, among others, by Friedman.

      We had similar interests in some things and we got talking after many classes on a wide variety of topics.

      After some discussions on macro economics and monetary issues it became clear that his education equipped him very well with how to ‘game’ the ‘system’ – that was in fact a large part of his job at telstra.

      He acknowledged that a fiat money system that allows banks to borrow short and lend long is destined to a conclusion of only two outcomes – hyperinflation or deflation. The debt that accumulates in such a system can’t actually be repaid/retired so it must be thrown off, somehow.

      His response was “but that’s ok, central banks opt for a deflation and the system can start again… That is perfectly reasonable, all the overhang is gone”. He was serious! I asked him if it wasn’t a concern that many innocent people would have their financial lives ruined through no fault of their own?

      To my horror he didn’t have the capacity or the presence of mind to understand whether the system was flawed or not. Nor consider that a system that ruins the lives of many people, who happen to be living at the time when the debt can’t be carried any longer might be an important consideration on the worthyness of the system. He was unable to step outside the system and critique it.

      So much for education. But it got me thinking, he wasn’t an evil person but he was unable to see the implications that the consequences of, his and others, decisions, in such a system inevitavly befall evil/injustice on many many people.

      Again, so much for education.

      30

      • #
        another ian

        There is a “BC” cartoon from a long time ago you need to see on “Too Much Education”

        10

      • #
        Tel

        Sadly I think your friend understood perfectly well but pushed it to the back of his mind and didn’t want to talk about that side of things.

        00

    • #
      Graeme No.3

      Ashanti Gold? About the same time?
      Needed the price of gold to stay down or their forward “sales” would have bankrupted the company. By an odd coincidence the then Chancellor of the Exchequer (Gordon Brown) decided to sell most of the UK inventory, keeping the price down.

      20

  • #
  • #
    Ed Zuiderwijk

    Guess what: it’s the fault of the government giving people all that dosh to play with.

    https://www.independent.co.uk/news/world/americas/gamestock-stimulus-check-jeffrey-gundlach-b1795274.html

    How more deluded can you get?

    10

  • #
    Ryan

    The slimy ways of wall street ought to be despised. What solutions have been put forward to combat this short selling? I’m no financial expert but I’ve read there is a legitimate reason for shorting; to apparently counter-balance an increase in a share price whose fundamentals don’t back up the gain. The issue here is hedge funds and other institutional investors shorting 140% of all GME shares…which makes no sense. Surely a possible solution would be to limit this, and to limit it substantially whilst still maintaining this apparent counter-balance.

    10

  • #
    CHRIS

    Short selling: basically Bulls VS Bears. The Bears start it, and the Bulls try to stop it. I once shorted Sons of Gwalia shares when the company announced they were diversifying from gold; I made a tidy profit as the shares slumped from $7 to $3.50. Short selling is a part and parcel of the Stock Exchange; if company management want to make stupid decisions that tank their share price, then stiff luck. Shorting is all part of C-A-P-I-T-A-L-I-S-M. Live with it.

    00