The Internet Masses Use GameStop to Mess with Wall Street

Ideas and Issues
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January 29, 2021

New Orleans      Sure, I’d seen the headlines on the GameStop stock buying spree and the fact that Wall Street was scrambling at the revolt of the small investors. I’d smiled to myself, but didn’t pay much attention, assuming that it was as likely just some of the superrich whining that they lost a buck or two in the wild casino house of the stock market, which I’ve always viewed as only different than legalized gambling by a few degrees. Then I got a call from my daughter telling me that a someone she knew said they had made $67,000 running with the pack on GameStop. She was excited, so I paid attention. This is getting interesting!

In my jaded view of the stock market as legalized gambling, first we should have some disclosures. I may not be alone. Many economists are unable to parse why, as the economy here and globally is in severe pandemic induced recession, the market has been setting record highs. Secondly, even if the internet was weaponized by small investors, I’m still betting big dogs barked up this tree, too. Remember, the Federal Reserve has found that the top 1% of wealthy Americans control 38% of the value of stock accounts, and the 10% hold 84% of Wall Street’s portfolio’s worth. The little ones may have their day, but it’s a rigged game, and the rich own it year end, and year out. Just saying.

Nonetheless, it was past time for Wall Street to have a takedown. Here’s how it worked. Small investors, using no-fee trading houses like Robinhood, and organized on Reddit and elsewhere, bought into GameStop, AMC and other stocks that had been shorted, driving up the price, roiling Wall Street and one hedge fund that had been betting on the stocks losing value had to borrow $2.7 billion. Trading stopped in the runup angering some small, largely younger, investors who were riding the value. Robinhood had to borrow $1 billion to meet cash-out demands.  That’s the thumbnail. Wall Street is now trying to get control back.

Past GameStop, I’m fascinated by internet-based mass organizing against a target. This isn’t just a Bernie Sanders meme, a Tik-Tok dance, or mayhem making at the Capitol.  There’s some potential here for good and evil, but it’s wild, wooly, unharnessed, dangerous, and exciting. I’ve been reading a novel recently that mixes climate change and economics and maybe sci-fi for all I know, called The Ministry of the Future. Kim Stanley Robinson writes about something called YourLock, that was able to put Facebook, Twitter, and the rest on their knees, because it was an app that allowed you to control your data and block it from the marketplace, so just like this GameStop thing, millions and millions left the other social media apps and rushed to YourLock.

Organized anarchy via the internet is hardly an organizing model that can be easily duplicated, but just as the sun shines on an old dog from time to time, it may have some real potential, if it can be directed at the right targets. Certainly, Wall Street’s gambling emporium is a good one!