GAMESTOP SAGA NOT THE REVENGE AGAINST FINANCE WE DESERVE

Real revenge requires abolishing the financial sector as we know it and the systems of oppression it fosters, wrote Max Haiven for Truthout on February 3, 2021 (February 4, 2021 in Manila).

“There’s a catharsis to actually making money off their pain a little bit,” Justin Speak, a 27-year-old evangelical pastor from California, told the New York Times in reference to his part in the great GameStop caper that saw small-time investors, coordinated on Reddit and other platforms, sabotage a series of Wall Street hedge funds by “revenge buying” the ailing video game retailer’s stock.

Speak himself made a cool $1,700 thanks to the way he and others used online stock-trading platforms like Robinhood to pump up demand for (and therefore the value of) the shares of GameStop, the movie theatre chain AMC, and other well-known brands that have a soft spot in consumers’ hearts but that have been hard-hit by the pandemic. “Eat the rich,” Speak’s wife chimed in, echoing her husband with what has become the slogan of the GameStop “movement.

While this “movement” began in online stock advice forums that purport to share tips about how to find “undervalued” companies whose shares can be bought cheap now to be sold dear later (“going long,” as it is called in the industry), it soon found a more political orientation.

By January 28, it had reached such a frenzy that Robinhood began to severely limit users’ powers to prevent what represented a kind of reverse run on the bank. In typical financial panics, spooked consumers seek to withdraw their investments for fear of collapse, triggering banks to slam their literal or metaphorical doors for fear of bankruptcy.

In this case, Robinhood and other platforms were pressured by financial and government forces to take measures to discourage consumers from investing because it threatened to upset the financial order. The enthusiasm of small investors swarming, seemingly out of nowhere, toward otherwise undesirable shares created havoc for several big Wall Street hedge funds.

These funds’ strategy had been to “short” these underperformers — to bet against their future rise in value. Hedge funds are essentially pools of very rich people’s money that borrow even more money to make risky bets on the market based on careful research into market niches. They were among the major culprits behind the frenzy of predatory lending that led to the 2008 financial meltdown.

Hedge funds bet on both sides of that crisis and many came out ahead. In that calamity’s wake, hedge funds used their connections and acumen to benefit from the bailouts. And during the pandemic, when millions have been thrown out of work and suffer economic precarity and hardship, hedge funds have been enjoying record profit.

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