The Battle of GameStop

If you ever want it explained to you about Wall Street or unregulated capitalism, I find it helpful to refer to gangster movies.

Want to understand how insurance works? Watch Goodfellas.

Want to understand hostile takeovers? Watch The Godfather.

Want to understand corporate espionage and insider trading? Watch The Departed (or an actual movie about Wall Street crimes, Wolf of Wall Street).

Want to understand shorting stocks? Here's the opening bit to Miller's Crossing:

It's gettin' so a businessman can't expect no return from a fixed fight. Now if you can't trust a fix, what can you trust? - Johnny Caspar

What's happening in the real world is that the stock markets are reeling from a running gambit that hedge funds (Think billionaire vultures) had been using of "Shorting" the stock value of a retail company GameStop (Remember Blockbuster Video? GameStop is kind of like them but selling video games instead of movie rentals) for quick profits, only to get exposed by Reddit (social media) investors realizing those hedge funds overextended themselves (took on massive debts to pull off the Short) to where they were vulnerable to "Squeezing" (artificially raising the value of the Shorted stock so that the hedge funds can't turn a profit).

In short: The hedge funds are Johnny Caspar trying to make money off a fixed fight, only for Bernie (the horde of small investors) to flip the fix to make money while Caspar eats the losses.

For more details, let's go to Derek Thompson at The Atlantic for his take:

...To see how the whole thing went down, imagine a kind of misshapen nesting-doll set with four characters: GameStop, hedge funders, Reddit traders, and zillions of retail investors.

At the center is GameStop, which is not a great company. In 2019, the strip-mall fixture lost almost $500 million. In 2020, a pandemic forcibly shut down many of its stores and gutted its revenue...

I don't blame GameStop: they didn't ask to get Shorted by the big hedge funds like Melvin Capital (wait, seriously, they named themselves Melvin??? What the hell, was "Eagle Fang" already taken or something?).

One layer up, you have institutional investors, such as hedge funds, which “shorted” GameStop, or bet that the value of the stock would decline. Depending on how you look at it, short sellers are heroes of capitalism identifying rotten companies and industries on the verge of collapse, or they’re corrupt worrywarts picking on lovable, vulnerable firms. Either way, GameStop was one of the more popular targets of these hero-villains. By one metric, the company was the second-most-shorted firm out of more than 6,000 companies listed in the New York Stock Exchange and Nasdaq. If GameStop’s stock continued to fall, as it had consistently since 2013, hedge funds that had bet against the company would have gotten even richer than they already are...

Thompson doesn't seem to recognize the pattern of rich-brat bullying underlying the way the hedge funds were picking on GameStop. I highlighted the part he's ignoring as a sign that Melvin and the other investment groups weren't using Shorting tactics to weed out bad companies: The hedge funds enjoyed having an easy target like GameStop around to Short in order to generate billions in profits with little risk (because Shorting is a fixed fight). But risk did show up:

But they didn’t. That’s because, as short sellers were targeting GameStop, online investors were cooking up ways to target the short sellers. A band of Reddit users, led by a trader who goes by the YouTube name “Roaring Kitty,” had for months been eyeing GameStop as a tasty investment. Over the course of several months, they spelled out a detailed plan to buy up GameStop’s stock and push up the price, punishing the hedge funds and forcing them to cover their position by rushing to buy back shares, which would push up the stock’s value even more. This is called a “short squeeze,” and it seems to have served at least two purposes for the Reddit investors: sticking it to hedge funds and getting a little rich. Both happened. One hedge fund, Melvin Capital Management, has lost at least $2 billion, while Roaring Kitty is now estimated to have made more than $13 million on his GameStop investment...

What happened at the social media level was akin to a revolution, a sort of Occupy Wall Street where instead of protesting in the streets the lower rungs of society entered the trading floor to beat the rich kids at their own game. It not only brought about financial ruin for Melvin (with rumors of filing for bankruptcy because its debts on those Shorting deals are due soon) but sent much of Wall Street into a collective panic. If the day traders and middle-class self-taught investors can spot a Short taking place, any quick-rich plan to Short a company for billions is now at risk of getting Squeezed. Back to Thompson:

Maybe the only long-term outcome of the GameStop fiasco is that hedge funds will be more cautious about establishing enormous short positions in cheap brand-name companies, and investors will learn that stock manias, like memes, disappear as quickly as they go viral. Perhaps all we’ll remember from the past week is that a few hedge funds’ greedy doltishness accidentally helped mint some Robinhood millionaires, while a bunch of latecomers set their money on fire for lolz.

But something tells me that we’re at the dawn of something stranger. For a week, takes have flown wildly around the internet that tried to capture this saga in a tweet. The investor and former Trump White House communications director Anthony Scaramucci compared what we’re seeing now to the “French Revolution of finance,” with an army of scrappy traders engaged in a moral uprising. Others worried that the GameStop bubble was turning into a collectivized Ponzi scheme, in which innocents were being lured into a ruse that would take all their money after the market corrected. Given that online trading has been restricted and the company’s stock is now in a free fall, both the Mooch and the Debbie Downers might be right...

What Thompson refers to is how Robinhood, the brokerage site that started this Squeeze play, stopped all trading on GameStop and other Shorted stocks like AMC Theaters, preventing the investors from doing what they wanted (to either sell themselves before the artificial high prices dropped, or to buy even more to squeeze the hedge funds into full bankruptcy). That freeze turned a revolution into a meltdown, leading to one class action lawsuit already. There's a likelihood the Squeeze was as rigged as the Short.

We're witnessing in real-time the public exposure of one of Wall Street's greediest tricks (market manipulations) at the expense of the common ground-floor investor getting screwed either way.

In some respects, it's a damn good thing there are reform-minded Democrats now in charge of Congress to investigate this whole shell game. Have at 'em, Liz Warren and Maxine Waters. I hope you root out the whole rotten gang of greedheads.

What Florida Republicans Want: No More Voters

If we return our attention to the state level, we'll note that the Republicans have decided to give up on the people and take more power unto themselves.

For example: Passing legislation to make it harder for Florida voters to pass their own amendments. Via Lawrence Mower at the Tampa Bay Times:

 Gov. Ron DeSantis on Friday approved legislation that would crack down on citizen petitions, a move that is likely to quash future ballot initiatives disliked by Republican lawmakers and corporate donors.

The bill, which takes effect before the 2020 election, makes it drastically harder to collect enough signatures to make it onto voters’ ballots.

And it will solidify Republican control in Tallahassee by eliminating one of the last threats to their power: the ballot box...

The Republicans have garnered political control of the Sunshine State ever since the demographic/party shifts that changed everything in the 1990s. After the last elected Democratic governor in Lawton Chiles passed away, everything went to the GOP. Even though a solid majority of voters remain Democratic... even as the voter shifts of the last ten years away from Far Right dogma are causing cracks in GOP domination.

The clearest sign of those cracks was the Amendment referendum process. Unable to break the GOP's control of the legislature via gerrymandering, the center-left population have resorted to petition-driven referendums to create State Constitutional Amendments - like anti-gerrymander rules, medical marijuana, funding for clean water and wetlands protection, classroom size limits to stop overcrowding poorer schools - that the conservative legislators can't ignore (well, actually they do, but it stops them from passing laws that would hew further Right Wing). Back to Mower:

What the legislation is sure to do, however, is stifle the last area outside of statewide Republican control in Florida.

Republicans have dominated the Legislature, Cabinet and governor’s mansion for the last 20 years, and every member of the state Supreme Court has now been appointed by Republicans.

But liberal groups and others have seen some success getting their priorities into law by proposing amendments to the state Constitution.

Over the last several years, at least 60 percent of voters have changed the Constitution to require the Legislature adopt fair voter districts, allow medical marijuana, protect environmental lands and restore the right to vote for felons.

And more amendments are on the way — or were on the way before DeSantis signed the bill Friday...

Republicans have fought every measure that a supermajority of Florida voters supported - which has to include a sizable number of fellow Republicans - because they don't fit their agenda of tax cuts, social aid cuts, school funding cuts, and aggressive land development for their rich construction buddies.

Referendums proposed for the coming 2020 ballot included a Minimum Wage ballot to fight the 20-year-plus stagnation of wages for every non-CEO worker, an "Energy Choice" option to break the monopolistic practices of the regional utilities, a statewide ban on military-grade assault rifles commonly used in mass shootings, a separate Universal Background Check amendment, an Open Primary system similar to California's that had all parties as a primary choice (meaning a district could have TWO Republicans in the final election or TWO Democrats in the final, meaning the extremists don't have safe seats either way), a Medicaid Expansion (which the state GOP definitely doesn't want to do), and Taco Trucks On Every Corner okay I made that last one up, but the rest of them are real. Follow that link to Ballotpedia to see more.

Those are issues that matter to the voting public, and things that a supermajority - 60 percent of voters - might want the state government to do.

But none of them are things the Florida Republicans want. They openly refuse to pass laws supporting ANY of that already, because each one offends a lobby group they rely on for campaign funding and future cushy no-show jobs.

They're also terrified of some of the election reform amendments that could pass that would break the Minority Rule they now inflict on the state. Florida Republicans rule without accountability, refusing to answer to the cries of local residents screaming for financial aid to cover feeding their kids and paying for schools and keeping roofs over their heads. The state GOP doesn't want to do anything about regional ecological disasters like toxic algae that are clearly man-made from Big Sugar and overdevelopment consuming our wetlands. 

You see, Florida Republicans are making too much money off of all that. So rather than do what the majority (most Florida residents) wants - clean water, safe schools, healthy families - the state GOP will indulge the minority's (the Obscenely Rich) whims.

What Florida Republicans want is for Florida Voters to sit down and shut up, FOREVER.

This should be as obvious a sign to my fellow Floridians why we needed to stop voting Republican the last eleven years I've been screaming that, and why we all need to stop NOW on voting Republican ever again. Our rights are getting bled dry, one cut at a time, while Republicans feast on our bones and keep us caged. As of today, the only power we have left is the power to VOTE EVERY REPUBLICAN OUT OF OFFICE. For the LOVE of GOD and HUMANITY, that's the one thing WE NEED TO DO.

Grand Theft Elections

Update: (Not again! Every time it gets busy at work, I miss getting added to the daily Mike's Blog Round-Up at Crooksandliars.com! Sigh. Thank you this time to Frances Langum of the Professional Left podcasts!)

It used to be, not even that long ago, that the political parties showed at least some deference some respect to how the voters made up their minds each election cycle.

But something changed with the Republican Party. Whatever it's been that has driven that party further to the Right on issues, it's also driven them to a point where they won't even give Democrats a modicum of respect when the voters side with Dems.

We've seen it at the national level, when the Republicans dismissed and belittled Bill Clinton's Presidency, even pursuing any hint of scandal to find a way to impeach him out of office. We've seen it from Day One of Obama's entire tenure - with a plan of obstruction and denial on a scale never before seen - where they even denied Obama was an honest-to-God American.

And now we're seeing it at the state level. In situations where the voters have put a Democrat into the governor's office (or other elective executive offices like the Attorney General in Michigan), the Republican-controlled legislatures are holding "lame duck" sessions passing extremist laws taking away much of those offices' power or authority to do ANYTHING.

We saw it last elections in 2016 when North Carolina's GOP legislature decided to kneecap the incoming Democratic governor there (via Tara Golshan at Vox.com):

Within 48 hours, on a late December night in 2016, the Republican-controlled state legislature passed a series of bills that pulled Cooper’s ability to make key cabinet appointments without their approval, drastically cut the size of Cooper’s administration, and changed the Board of Elections so that Republicans would control it in election years. They ensured lawsuits had to first go through the Republican-controlled appeals court, before the Democratic-majority state Supreme Court.

Democrats — who thought of Cooper’s victory as one of the few bright spots in an otherwise devastating year for the party — were blindsided...

It doesn't matter if the North Carolina Dems have fought every twisted GOP law in the courts. It's caused just enough delay and confusion to where Governor Cooper has achieved little in office. A perfect example the state Leges in Michigan and Wisconsin are following with great relish.

Worse, the Republican legislatures are insulting the voters directly. Voter referendums that went against GOP dogma - like raising the minimum wage, or opening up voter registration to make it easier to vote - are being blatantly ignored, sabotaged, and overwritten.

To note what is happening in Michigan (via Nancy LeTourneau in Washington Monthly but linking to Paul Waldman in the WaPo ):

Republicans are responding to a Democratic sweep of statewide offices by giving the legislature the ability to overrule the attorney general on state lawsuits and take authority over campaign finance regulation away from the secretary of state. They are also considering a bill to cut off voter registration 14 days before every election, in effect overruling a same-day registration initiative voters just passed...

...Michigan activists had organized to get enough signatures to put a couple of items on the ballot: an increase in the minimum wage and paid sick leave for all workers. If those initiatives had been approved by voters, a two-thirds majority in the legislature would be needed to amend them.

In September, both of those measures were passed, exactly as written, by the state legislature, ensuring they would be removed from the ballot. Over the last week, however, Republican legislators have amended them via a simple majority vote...

The Republicans knew those referendum items were too popular, so they staged a fake-out to get them removed from the ballot and then when all was safe rewrote everything so that the voters would get screwed.

This is not governance. This is bullying.

If we can go back to Golshan at Vox:

“North Carolina set a precedent in playing a kind of political hardball that we haven’t seen in other places,” Rick Hasen, an election law scholar with the University of California Irvine, said. “Does it spiral out of control? This has been more asymmetric with Republicans, but I don’t think it would always stay that way...”

In Wisconsin, some of these proposals passed on Wednesday, and Republican Gov. Scott Walker said he would sign them into law. In all, they would limit Evers’s power to change policies around welfare, health care, and economic development, cut down early voting, and allow the Republican-led legislature to undermine the attorney general, giving them the power to block his decision to remove Wisconsin from federal lawsuits.

“Power-hungry politicians rushed through sweeping changes to our laws to expand their own power and override the will of the people of Wisconsin who asked for change on November 6th,” Evers said in a statement.

In Michigan, a Republican proposal would guarantee the GOP-controlled legislature the right to intervene in any legal battles involving state laws that the attorney general may be reluctant to defend, like restrictions for same-sex couples looking to adopt...

This isn’t normal. There’s a basic understanding in a democracy that when one party wins, they have won.

But Republicans across the country are explicitly rejecting election outcomes. In Wisconsin, the Republican state House Speaker Rep. Robin Vos said the reforms were necessary because otherwise, he said, “we are going to have a very liberal governor who is going to enact policies that are in direct contrast to what many of us believe in.”

These legislatures are turning to extremes, and before long those extremes can become the new norm.

“It’s a further devolution of norms of democracy, where the losers accept the results of an election and move on,” Hasen said. “This is about polarization generally, and a break down of political norms...”

Back to LeTourneau:

Over the last few years, we’ve witnessed many examples of how Republicans have been willing to spit in the face of our democratic principles to maintain their power. But this one should probably take its place at the top of the list. Could it be any more obvious that Republicans have nothing but contempt for the voting public? If this little charade is allowed to stand, what it will take to wake people up to that reality?

This has been one of the reasons why I'd been screaming STOP VOTING REPUBLICAN for the longest time. Republicans are not concerned with leading or responding to the people's will: Republicans want power and more of it, and Republicans want their tax-cut and patriarchal Utopia at all costs. They are willing to bend and break every rule to keep in power even when the majority of Americans are telling them NO We Do Not Trust You With That Anymore.

This is how we've gotten to Minority Rule of an increasingly shrinking and dying party unwilling to accept their losses when they happen and rebuild into a more responsive party.

It would be pretty to think that the growing Majority of Voters will push back, stop voting Republican, drive them out of office. But the bastards are exploiting their ungodly advantage of Gerrymandering to rig the votes, to give them enough seats in the Legislatures to keep rigging more votes and more tricks and more obstruction to favor them.

We're not going to see a truly representative state where the Republicans hold sway. They can't afford to let that happen. We are not going to see any salvation until Gerrymandering itself is wiped out of our electoral process once and for all.

Until then, every election is under threat of thievery by the GOP.

Gods help us.

The Sins of Minority Party Rule (w/ Update)

It should be noted that a majority of Americans do not support trump and his lackeys on their horrific child kidnapping plan along the U.S. border. And yet, Congress is dragging its collective feet on the matter because both the House and the Senate are under Republican control, and the Republicans are profiting from this overt racism.

It should be noted that a majority of Americans do not support massive tax cuts for the rich, yet the Republicans controlling Congress passed a massive tax cut bill last year that only profits the rich and has done NOTHING for our nation's middle-income and working classes. Worse, they are poised to pass another deep tax cut bill for the upcoming 2019 budget.

It should be noted that a majority of Americans want affordable health care, yet the Republican Party in charge of everything keeps pursuing a Kill Obamacare agenda that hurts everyone but plays to their Obama-hating voting base.

It should be noted that a majority of Americans are Independent voters but tend to (barely) vote Democratic. But the Republicans control much of the federal government and a majority of state legislatures/governors, meaning that much of the legislation being passed aren't what the majority of voters wants or needs.

To take notes from Steve M. over at No More Mister Nice Blog:

ONCE AGAIN, IT'S REPUBLICANS WHO ARE OUT OF STEP WITH THE REST OF AMERICA

CNN:
Two-thirds of Americans disapprove of the Trump administration's practice of taking undocumented immigrant children from their families and putting them in government facilities on US borders, according to a CNN poll conducted by SSRS. Only 28% approve. But among Republicans, there is majority support for the policy....

Quinnipiac:
American voters oppose 66 - 27 percent the policy of separating children and parents when families illegally cross the border into America, according to a Quinnipiac University National Poll released today.
Republican voters support the separation policy 55 - 35 percent, the only listed party, gender, education, age or racial group to support it...

I say this all the time: America is not primarily a conservative heartland that's besieged by a left-leaning minority living on the coasts and using elite status to tyrannize the majority. The major fault line in this country is between Republicans and everyone else in America. I'm not saying that this is a liberal country (although it is on a number of issues), but it is not a conservative country. Republican dominance of our government at the federal and state levels is largely an artifact of electoral gamesmanship and a highly effective conservative propaganda machine that successfully demonizes Democrats; it doesn't reflect majority support for Republican policies...

What's happening here is what's called Minority Party Rule. It's not about political rule of an ethnic or religious minority - although in some nations like Syria and Iraq it worked out that way - it's about political rule by a group that does not reflect the political will of the majority.

John Cole over at Balloon Juice once brought up a desire to talk about Minority Party Rule in America, although I haven't seen a thorough article posted yet. It's a complex argument to make and hard to stay focused on because the rage of the idiocy of it all takes over and you have to step away for an hour before continuing (this has been a blog post months in the writing)

Minority Party Rule in the United States is a headache because our electoral system is based on Winner-Take-All: whoever gets the most votes - even if it's not a majority of votes - just wins that seat. As a result in certain elections where a spoiler third candidate runs - Perot in 1992 and 1996 for the Presidency, the gubernatorial elections that left Maine with unpopular LePage - a candidate the majority of voters didn't want can end up winning.

The Presidential election process takes on an extra layer of the Electoral College where it's not who wins the overall popular votes but who wins enough states (with their Electoral values). This was how trump - garnering only 42 percent of the popular vote below Hillary Clinton's 45 percent - stole the presidency (well that and Russian sabotage, but that's a separate rage point).

If we witness Minority Party Rule overseas, it's usually in the form of dictatorships where the ethnic or religious minority had been granted undue control of the nation or had played factions among the majority against themselves. Those nations tend to have bad histories of human rights abuses and civil wars because the majority population flares up against the minority that rules through force and corruption.

Minority Party Rule itself isn't always a problem: Most parliamentary systems are multi-party and rarely does a majority party gain enough seats to rule without hassle. Most elections won by a plurality forces the large parties to form coalitions to create a government stable enough to rule until the next set election (some coalitions do fall apart over certain issues, in which case the government falls and emergency elections kick in). The system still is responsive enough to react to crises that should force the right leadership into making the right coalitions to keep things working.

But in the system we have - a Federal Republic (not an actual democracy) of checks and balances -
it's harder to hold a government accountable when ONE party holds the key to ALL branches of government the way the Republicans currently control the Legislative, Executive, and Judiciary. Especially when that control came not due to the majority supporting it but due to rigging and gaming the electoral process.

When you look at the current leadership in DC, you'll see a Republican Party led by the likes of Ryan, McConnell and trump who all know they do NOT need to answer to the majority - they need to placate their minority base - and so they govern as they please, even in the face of polling numbers that mark them as some of the most unpopular life forms in modern memory. All they have to do is stoke their base to turnout for the midterms, all they have to do is keep their deep-pocket funders rolling in their tax-free profits, and let gerrymandering and voter suppression do the rest.

The only thing holding a Minority Rule Party like that accountable is The Reality-Based World. Bad governance leads to mistakes, which leads to disasters, which leads to outrage and angry majority voters who finally get sick of it all and try their best to flip the bad actors out of power.

Sad thing about that is, by the time those disasters take place - think the Iraqi Occupation, think Katrina, think the CDO Housing Subprime Bubble - the damage has been done. Innocent people have suffered, honest lives lost.

And then, damn us all, the SOBs responsible for all that avoid criminal accountability and regain the chance to lie and bully and steal their way back into power again.

Which is why we're facing a new round of disasters - Say hello to the Republicans trying to gut healthcare and Social Security! Say hello to trump's Baby Jails for immigrant toddlers! Say hello to trade wars against Canada and our FORMER Euro allies! - that will consume this nation in darkness, debt, and despair.

We can't keep playing this back-and-forth of sane Democratic MAJORITY leadership and insane Republican MINORITY misrule.

We really can't.

FOR THE LOVE OF GOD STOP VOTING REPUBLICAN. Fight back against gerrymandering. Get everyone you know registered to vote and balloting this midterms. It matters. FOR THE LOVE OF GOD, OUR NATION AND OUR CHILDREN MATTER.

(Update 6/30/18): I still seem to be writing this out ahead of the Beltway curve. Dana Milbank at Washington Post is thinking along the same lines:

Republicans have been defying gravity for some time. As New York magazine’s Jonathan Chait reminds us in a smart piece, they lost the popular vote in six of the last seven presidential elections. Electoral college models show Republicans could plausibly continue to win the White House without popular majorities.

Because of partisan gerrymandering and other factors, Democrats could win by eight percentage points and still not gain control of the House, one study found. And the two-senators-per-state system (which awards people in Republican Wyoming 70 times more voting power than people in Democratic California) gives a big advantage to rural, Republican states...

The backlash is coming. It is the deserved consequence of minority-rule government protecting the rich over everybody else, corporations over workers, whites over nonwhites and despots over democracies. It will explode, God willing, at the ballot box and not in the streets...

I dread it will explode, not from the majority fighting to take their power back but from the minority of Angry White Guys terrified of losing power they don't deserve.

Buying and Selling Mulvaney

What the ever-loving fuck was this (via Vox.com)?

Want a favor from a member of Congress? Give him money. That was the advice Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau and head of the Office of Management and Budget, gave to a group of some 1,300 bankers and lending industry professionals at a conference in Washington, DC.

Mulvaney, a former South Carolina representative, said he would only meet with lobbyists who had donated to his campaign while speaking at the American Bankers Association conference on Tuesday, the New York Times reported. “We had a hierarchy in my office in Congress,” Mulvaney said. “If you’re a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”

So even if a lobby group needed to speak to Mulvaney on the merits - on an actual issue that impacted his state/district/citizenry - that group STILL couldn't speak to him without paying up a campaign contribution first?

HOW THE HELL IS THAT NOT BRIBERY???

Oh, right. This is why:

The anticorruption interest is not sufficient to displace the speech here in question. Indeed, 26 States do not restrict independent expenditures by for-profit corporations. The Government does not claim that these expenditures have corrupted the political process in those States... A single footnote in Bellotti purported to leave open the possibility that corporate independent expenditures could be shown to cause corruption... For the reasons explained above, we now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption...

I call bullshit, Justice Kennedy. Mulvaney just made it perfectly clear that as an elected official he would listen only to those who Pay-To-Play. Any excuse he has now about "oh, we will listen to our constituents too" is too much ass-covering on his part.

And what the hell would be stopping Mulvaney from playing this Pay-To-Play scam now that he's in charge of the Consumer Financial Protection Bureau, an office he is openly undermining by telling the banks and financial institutions under its review ways they can limit and shut the Bureau down.

Money is not Free Speech, you goddamn Conservative Greedheads. Money is a tool to buy and sell things. And with enough money, you can buy up politicians and sell out our nation. The ones who don't have any money can't play this fucking game.

Citizens United ruling is one of the key factors our nation is fucked up now with the corruption of trump drowning us all in the rot.

We are so very royally fucked.