Great insight

The GameStop affair is like tulip mania on steroids
Dan Davies
It’s eerily similar to the 17th-century Dutch bubble, but with the self-organising potential of the internet added to the mix

Financial mania is like financial mania.

21 thoughts on “Great insight”

  1. So Much For Subtlety

    The GameStop affair is like tulip mania on steroids

    Well no it isn’t. The Tulip mania was irrational. What they needed was short selling so that the smart people could have deflated the bubble early. But they do not seem to have had that.

    The GameStop affair is what happens when some bright nerds on the internet notice that the Hedge Funds have gone out on a limb in order to destroy something they are fond of. And they see a chance to punish the Hedge Funds for their irrational behaviour. They could squeeze the short.

    Just as bubbles should be shorted in order to bring it to a swifter end, so should stupid shorts be squeezed so that people are swiftly punished for their arrogance and stupidity.

    Lazy journalists are just lazy and know nothing.

  2. Bloke in China (Germany province)

    Were there companies dedicated to shorting tulips then? What would they have been called? Edge funds?

  3. So Much For Subtlety

    BulbStop? WePrune?

    This is not a financial mania. Those that are squeezing the short are entirely rational. They have the Hedge funds over a barrel and cost them *billions*. At least they did until the Establishment stepped in to screw the little guy.

  4. It’s much simpler than that, as SMFS has outlined, right-wing redditors saw a chance to screw the billionaires on Wall Street who are now squealing like stuck pigs.
    They’ve also managed to expose the lie of the so-called free market and shown to anyone that’s watching that it’s rigged against ordinary people.

    https://www.mediaite.com/news/bullsht-hedge-fund-billionaire-leon-cooperman-rages-over-gamestop-surge-rips-small-investors-for-having-no-idea-what-theyre-doing/

    https://www.vanityfair.com/news/2021/01/leon-cooperman-gamestop-rant

  5. I don’t know how people can have any knowledge of what happened this week and then write that article. It’s fucking plain as day what it was all about – people fed up with the corruption and greed of companies like Melvin Capital, and saw an opportunity to give them a bloody nose, even wipe them out. Sure, some others rode that wave to make some money out of it, but hey, we can’t have the peasants actually rising up and giving their masters a kicking, even though we pretend that we want it.

    I don’t think many hedge funds will be shorting companies for a while, not unless Creepy Joe brings in some Progressive legislation to protect them and suppress ordinary citizens. Entirely possible.

  6. Dan Davies has always seemed to me to be a self-satisfied ignoramus. The fact that the Graun refers to his regulatory background tells you everything. He likes to display what he thinks is erudition:”When I think about market regulation, I’m always reminded of a saying of Édouard Herriot, the former mayor of Lyon. He said that local government was like an andouillette sausage; it had to stink a little bit of shit, but not too much.”

    What a pompous arse! It seems that Herriot visited the Ukraine in the early 30s but didn’t notice the famine. Presumably that is why Dan Davies wanted to quote him. The prick! Wrong about everything and pompous to boot. The poor man’s Simon Wrong-Lewis

  7. Interestingly, the only result for this quote in Google is that shit article where “expert” Dan Davies completely mis-characterises the events of this week. Truly an expert in something. He ought to team up with his mental equal, the Spud, to form a dynamic duo. Who on this planet writes “an andouillette sausage”? Presumably he talks about claret wine and beef meat. I have the honour of being blocked on Twitter by him for laughing too hard at his errors

  8. It is interesting that he is getting a good shoeing in the comments. With any luck, that’s the end of his career writing for the Guardian, the smug twat!

  9. Lazy journalists are just lazy and know nothing.

    I disagree with the “just”. They are also stinking, running dogs.

    There is a clear effort underway to frame the GameStop affair as a problem of allowing unqualified and unprofessional little people (retail traders) to interfere with “normal” financial activity. Media bullshit about “bubble chaos” is part of that effort. Don’t forget that the Hedge Funds use the media to undermine firms they’re shorting.

    A more sober snippet from Reuters perhaps reveals what’s going on.

    Losses on short positions in U.S. firms top $70 billion – Ortex data
    https://www.reuters.com/article/us-retail-trading-shortbets-idUSKBN29X1SW
    – “Chasing shorted companies became a trend among retail traders, rippling across U.S. markets and Europe. Ortex data showed that as of Wednesday, there were loss-making short positions on more than 5,000 U.S. firms.”

    A cynic / conspiracy theorist might even think the GameStop event was a setup to tarnish retail traders and get them leashed.

    Here’s a previous SEC Commissioner blaming the little guy and equating events to the storming of the Capitol.
    https://twitter.com/ggreenwald/status/1355152902684372995

    Gotta stop that “financial harm”.

  10. A very messy and very public massacre of a hedge fund, with no public bailout, would do more to reign in short selling by hedge funds than any legislation or regulation ever would. Wall Street companies can afford the lawyers to navigate through legislation. They cannot anticipate the actions of millions of small operators, the aggregate of which can completely flatten them.

  11. Dan Davis was/is an analyst in the fin biz, so it’s not surprising that he is also an establishment shill. Even less surprising is that so is the Guardian, which for all it epater le bourgeois posturing has always known who butters its bread. The bigger picture here is that the stock market hasn’t been a mechanism for raising capital for a while (seems private equity and bond market does that now), but derivatives driven speculative instrument. We have to read Max Keiser or zerohedge to find out the shenanigans going on. All of this adds greatly to the last days of Rome feeling I keep getting.

  12. The fact that the Graun refers to his regulatory background tells you everything.

    It certainly tells me he’s more than ignorant and lazy. Definite wagon circling going on.

  13. Ig in the uk have just said they won’t accept anymore positions on gamestop “to prioritise the service we give to clients”. No idea what that means, they are happy enough to take your money when you lose on a spread bet. Arseholes.

  14. +1 Jussi, but at least Meades might actually know something about a French politician whereas Dsquared just pulled a quote from some dictionary and claims to be always thinking about him. One is genuinely knowledgeable and the other is a pompous fuckwit

  15. Did Gamestop take the opportunity to issue some new stock?

    Re Dan Davies, I got blocked for calling him out on his claim that he started self-isolating, along with his family, in Exeter, because of C19 in January last year. He’s always ahead of the curve, the lying prick

  16. “Financial markets aren’t video games, they aren’t democratic and small investors aren’t the backbone of capitalism.”

    But what if they are. Why shouldn’t a guy treat buying $100 of Gamestop like betting on a football match? Why shouldn’t it become a market of small investors, all building their own stock portfolio rather than giving it to fund managers who aren’t any better than FTSE trackers?

    That world would probably suck for people like Dan Davies and his pals, but well, learn to fucking code.

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