Clipping the Hedge Fund
Jan. 29th, 2021 08:58 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
ysabetwordsmithHere is a rare story about rich people losing. :D Now for the important points...
1) Hedge funds do a lot of harm. We would be better off without them, because it is a gambling problem that hurts everyone, not just the people with a gambling problem.
2) This backlash happened because a bunch of ordinary people objected to a few rich fucks artificially manipulating the system in ways that hurt companies they cared about. So they did something about it. This touches on the original reason why investment was invented: it allows people to pool resources so they can have things nobody could afford individually. Build a marketplace. Buy shares in a trading ship. That sort of thing. Today it can be used to salvage businesses that sell stuff we want or need. This is related to Community Supported Enterprise, just discontiguous rather than local, which is apt for far-flung businesses.
3) We are many, they are few. The inherent flaw of inequality is that it's unstable and vulnerable to attack. By definition, the lower layers must be much larger than the upper layers. Previously, it was difficult to mobilize this mass of potential outside of, say, a revolution. But now we have social media: that makes it much easier.
Congratulations, r/WallStreetBets. You put a new tool in the box. Now it's up to everyone else to notice this and use it again, to block rich fucks from jerking the economy around like an abused dog, so we can defend the businesses that we use.
The economy is just a thing that some people made up. It is what we make of it. As a construct, it has no life of its own. So if you don't like it, do something about that. You have a shiny new tool to stick in it, and gods know there are struggling businesses everywhere. Go tell your friends. This tool only works if enough people apply it together. Kind of like democracy.
1) Hedge funds do a lot of harm. We would be better off without them, because it is a gambling problem that hurts everyone, not just the people with a gambling problem.
2) This backlash happened because a bunch of ordinary people objected to a few rich fucks artificially manipulating the system in ways that hurt companies they cared about. So they did something about it. This touches on the original reason why investment was invented: it allows people to pool resources so they can have things nobody could afford individually. Build a marketplace. Buy shares in a trading ship. That sort of thing. Today it can be used to salvage businesses that sell stuff we want or need. This is related to Community Supported Enterprise, just discontiguous rather than local, which is apt for far-flung businesses.
3) We are many, they are few. The inherent flaw of inequality is that it's unstable and vulnerable to attack. By definition, the lower layers must be much larger than the upper layers. Previously, it was difficult to mobilize this mass of potential outside of, say, a revolution. But now we have social media: that makes it much easier.
Congratulations, r/WallStreetBets. You put a new tool in the box. Now it's up to everyone else to notice this and use it again, to block rich fucks from jerking the economy around like an abused dog, so we can defend the businesses that we use.
The economy is just a thing that some people made up. It is what we make of it. As a construct, it has no life of its own. So if you don't like it, do something about that. You have a shiny new tool to stick in it, and gods know there are struggling businesses everywhere. Go tell your friends. This tool only works if enough people apply it together. Kind of like democracy.
Two salient points from the article
Date: 2021-01-30 06:54 pm (UTC)Other important things to keep in mind, though: the hedge fund survived the experience. I opined elseblog that it was like jumping off a cliff and breaking both ankles and a few ribs rather than being incinerated in the fireball the car was about to become, but survive it did. Second, and more important, the hedge fund closed out their positions on Wednesday, which was before I heard about any of this -- and probably a lot of other people, too. (That's a general rule, by the way: by the time one has heard about a financial exploit, it's too late to get on board -- and getting on then just helps pay off the peope who heard about it before then. And that's how the rich get richer.) And because the success of the exploit required hanging on to the stock until the hedge fund's positions were resolved to obtain the desired effect, there are now a bunch of people who bought during the run-up at prices ranging from very overpriced to insanely overpriced -- and aren't going to be able to get rid of at anything like what they paid for it, because the artificial demand that cranked up the price is gone now, and the number of people who actually want to own part of GameStop's business isn't really very big. Those buyers, some decent percentage of which weren't thinking about that, are also going to wind up getting hurt.
Re: Two salient points from the article
Date: 2021-01-30 07:33 pm (UTC)Re: Two salient points from the article
Date: 2021-01-31 02:51 am (UTC)And if enough people choose to lose in a way that makes the win inconvenient or unpleasant...
Re: Two salient points from the article
Date: 2021-01-31 04:41 am (UTC)Re: Two salient points from the article
Date: 2021-01-31 08:28 am (UTC)