The news this past week has been, in part, all about the Gamestop
story. Or rather, it's been about the fairy tale that a bunch of small
scale investors, using their internet discussion capabilities, suddenly
and spontaneously had the bright idea of coordinating all their efforts,
and squeezing what appeared to them to be a massive short on Gamestop
and a few other stocks. Take that, Wall Street crony
crapitalism! Admit it: it's a fairy tale that almost all of us have
entertained at one time or another as Mr. Broker-Banskster gets hoist on
his own over-speculating petard, the more so because shorting is a
wonderful way to drive companies that Mr. Bankster doesn't like out of
business . The little guy struck back, and Mr. Bankster got caught well
and royally screwed.
This narrative caught on so quickly and deeply that last week, when I did my News and Views from the Nefarium,
I talked about another subject, and one "listener" promptly attacked me
(in some pretty foul language I might add; Americans are now so stupid
that they cannot emphasize any point without dropping f-bombs); how dare
I (ran his "argument") that I talk about what I was talking about,
rather than talking about those ordinary "patriots" who had just done
battle with The Big Guys, and won!
My reason for not talking about it until now was that the story had
that peculiar "bearer bonds scandal odor" or "2008 banker bailout odor"
to it that one learns to recognize hanging around stories like this; it
hovers over them like a malodorous green cloud. For example: one thing I
thought as the story first broke was that as the price of Gamestop
stock started to soar and to put the squeeze on the shorters, that the
amounts of money needed to put on that squeeze were probably
way beyond a bunch of "financial populists" being able to raise. "Best
to wait," I thought, "to see what crawls out of the woodwork."
Consider, for example, the "adjustments to the narrative" that one reader here, M.D., shared:
Ignore The Populist GameStop Hype. Short Sellers Are Heroes
Opinion: The good guys in the GameStop story? It’s the hedge funds and short sellers.
The second article (from the Washington (Com)Post, argues the case for shorters being heroes as follows:
What
about short sellers? These are specialists who research stocks that
might go down, sometimes because bosses are illegally covering up bad
news about their companies. When short sellers identify a case of fraud
or similar, they borrow and sell the stock, hoping to buy it back at a
lower price later. Again, there is nothing evil about this. To the
contrary, it’s a way of keeping prices honest. A market without short
sellers is like a political system without investigative journalists.
This,
however, is not how GameStoppers see things. They have gone after a
short seller named Andrew Left, hacking into his social media accounts,
sharing his personal information online, ordering dozens of pizzas to be
delivered to his home in the middle of the night, and texting his
children with threatening and profane language, according to the Wall Street Journal. Perhaps not surprisingly, Left has announced he will stop playing the game. Irrational stock prices will be that much likelier.
The brazenness of these people is breathtaking.
Consider that line from the first paragraph cited above: "A market
without short sellers is like a political system without investigative
journalists." I don't know about you, but for my part, I've not seen too
many investigative journalists out in force in recent months. And then
there's this pithy aphorism: "Irrational stock prices will be that much
likelier."
Really? Give me a break.
(And, on a personal note, I actually like
going into Gamestop and actually like being able to see products, handle
them, turn them over in my hand, just as I like going into used movie
vendors' stores looking for movies, an activity abruptly halted by
lockdowns and nosebag mandates.)
But as I said, my initial reaction was suspicion of,
and skepticism about, the "financial populist" portion of the narrative,
and voila, the website of Pam and Russ Martens, Wall Street on Parade,
has a much more intriguing and balanced presentation of the story,
almost as if they were real investigative journalists, because they're
not buying either the "financial populist" narrative nor the "short
sellers and hedge funds are heroes" narrative either:
GameStop Shares: Dark Pools Owned by Goldman Sachs, JPMorgan, UBS, et al, Have Made Tens of Thousands of Trades
By Pam Martens and Russ Martens:
January 28, 2021 ~ Dark Pools owned by the biggest names on Wall Street –
such as Goldman Sachs’ Sigma X2, JPMorgan Chase’s JPM-X, UBS’ UBSA,
Morgan Stanley’s MSPL, and Credit Suisse’s Crossfinder — have been
making tens of thousands of trades in the shares of GameStop on an
ongoing weekly basis. FINRA, Wall Street’s highly compromised
self-regulator, reports the Dark Pool data on a stale basis, two to
three weeks after the trading has occurred. It is then lumped together
for the whole week, rendering it useless in terms of monitoring price
manipulation. The chart above is taken from the latest available
information from FINRA. (See our previous reporting on Dark Pools in
Related Articles below.) It’s a fair guess that you haven’t heard a peep
about Dark Pools on the evening news. The fact that you haven’t is a
perfect commentary on … Continue reading GameStop Shares: Dark Pools Owned by Goldman Sachs, JPMorgan, UBS, et al, Have Made Tens of Thousands of Trades
It's well worth pondering those first three paragraphs:
Dark Pools owned by the biggest names on Wall Street –
such as Goldman Sachs’ Sigma X2, JPMorgan Chase’s JPM-X, UBS’ UBSA,
Morgan Stanley’s MSPL, and Credit Suisse’s Crossfinder — have been
making tens of thousands of trades in the shares of GameStop on an
ongoing weekly basis. FINRA, Wall Street’s highly compromised
self-regulator, reports the Dark Pool data on a stale basis, two to
three weeks after the trading has occurred. It is then lumped together
for the whole week, rendering it useless in terms of monitoring price
manipulation. The chart above is taken from the latest available
information from FINRA. (See our previous reporting on Dark Pools in
Related Articles below.)
It’s a fair guess that you haven’t heard a peep about Dark Pools on
the evening news. The fact that you haven’t is a perfect commentary on
why mainstream media is failing the American people when it comes to
exposing Wall Street’s serial looting of the little guy.
But when a bunch of quixotic posters on a Reddit message board
can be parlayed into the exciting narrative of a Robinhood band taking
on the evil hedge funds, it goes viral on the evening news – sucking in
hundreds of thousands more unsophisticated retail investors.
And lest we forget, "research" is needed to create the bubbling opportunity:
Wall Street On Parade previously described how the retail investor was sucked into the dot.com bubble as follows:
“First, Wall Street brokerage firms issued knowingly false research
reports to the public to trumpet the growth prospects for a specific
company; second, the firms lined up big institutional clients who were
instructed how and when to buy at escalating prices to make the stock
price skyrocket. This had an official name inside the walls of the
manipulators: ‘laddering.’ Next, managers of the fleets of stockbrokers
at the various brokerage firms instructed their flock to stand pat as
the stock prices soared. If the stockbroker tried to get his small
client out with a profit, he was hit with a so-called ‘penalty bid,’
effectively taking away his commissions on the trade. This sent the
clear warning to other stockbrokers to leave their clients in the
dubious deals. Only the wealthy and elite were allowed to capture the
bulk of profits on these deals.
...
“Jack Grubman, a stock analyst at Salomon Smith Barney, was at the center of this era of collusion. He was charged by the SEC for
‘fraudulent research.’ He never went to trial or was criminally
charged. He paid a $15 million fine, was barred from the industry, and
walked away. His haul while at Salomon Smith Barney according to the
SEC, ‘exceeded $67.5 million, including his multi-million dollar
severance package.’ ”
The Martens end their article with the following warning:
Before you buy into the David versus Goliath saga of
GameStop, it would be wise to step back and do some homework on what’s
really going on.
To that I can only add my own "hear hear!" but with this caveat:
we've not yet seen everything come out about this story. But what has
come out thus far is perhaps enough to learn some important lessons
about what might be possible to do, and how narratives are
created and driven. And at the very least, it is perhaps also a warning
about not doing any business with those large banking and brokerage
houses... whatsoever.
See you on the...woops, I almost forgot today's high octane speculation, which as it turns out for today, is really high octane speculation.
As all this is going on, enter Texas once again, and this little gem of an article shared by G.B.:
Texas
AG Issues CIDs To Robinhood, Citadel, Others Over "Shocking
Coordination" Between Hedge Funds, Trading Platforms To Halt Trading
There you have it. The Attorney General of Texas is wanting some
answers, and notably, the answers he wants concern the appearance of
coordination among all involved players:
“Wall Street corporations cannot limit public access to
the free market, nor should they censor discussion surrounding it,
particularly for their own benefit. This apparent coordination
between hedge funds, trading platforms, and web servers to shut down
threats to their market dominance is shockingly unprecedented and wrong.
It stinks of corruption,” said Attorney General Paxton.
“I’m hopeful that these companies will step up and cooperate with
these CIDs in order to clear any confusion over why stock purchases were
forcibly closed and why even conversation around these stocks was
silenced.”
Overlooking for the moment theFASAB-56-like effort to remove all
public scrutiny and conversation about what has just happened, and
concentrating on just the "apparent coordination between hedge funds,
trading platforms, and web servers," (which is a polite lawyerly way of
saying that both sides - the shorters and the "financial populists" -
were coordinating partners in the event) I have to wonder if G.B.'s
speculation which accompanied the email sharing the article might be
true (and herewith is G.B.'s high octane speculation): does the
presence of the heavy algorithmic trading in Gamestop and other shorted
stocks involved in this story, plus the apparent coordination suggested
by Texas Attorney General Paxton, perhaps point to another actor, one
which, perhaps, neither side of the human actors anticipated? Are we looking at, perhaps, something caused by AI run amok? Well, maybe.
That, in any case, was G.B.'s speculation. Here's mine: why is it
that, again and again, we keep coming back to Texas? Is that state's
attorney general's involvement indicative of yet other agendas, agendas
perhaps connecting with Governor Abbot's attempts to woo the NASDAQ data
center to Texas? While there's nothing concrete to suggest such a
connection right now, I would not be a bit surprised.
