Wednesday, January 27, 2021

Last Call For Trading Places, 2021 Edition

Internet-based "pump-and-dump" stock schemes are nothing new. A big investor buys huge amounts of a penny stock and cashes out with a volume big enough to crash the stock price again, leaving all the other investors who bought the stock expecting it to go up with huge margin calls instead. This time though it's the small day-traders who are doing it, and their victims are massive hedge funds expecting continued economic catastrophe as COVID-19 rages on through our Trump-shattered economy.

GameStop is a struggling, kind of boring, mid-size retailer stuck in a legacy business — selling physical video games. But it’s also pretty much the only company anyone on Wall Street is talking about right now after its stock rose 160% in a matter of hours on Monday morning to an all-time high of $159. (By day’s end, GameStop’s price had been cut by more than half, but that still left it up more than 300% this year and almost 3,000% from its 52-week low. And it was up another 15% at Tuesday’s open.)

It isn’t GameStop’s precipitous rise, impressive as that’s been, that has everyone fascinated. Instead, it’s what is fueling that rise: concentrated buying by thousands upon thousands of small individual investors who are using sites like Reddit and Robinhood to drive up what are now being called “meme stocks.” GameStop is the best-known of these meme stocks, simply because its gains have become so outrageous. But it was preceded last year by Hertz and Kodak, which, despite having struggling businesses, saw their stock prices soar when they became Reddit darlings. And now stocks like AMC, Nokia, and Blackberry (which is, yes, still in business) have also caught Redditors’ fancy.

It’s easy to see the meme-stock boom as just a speculative bubble, and evidence of how the current stock market has lost touch with reality. Speculative bubbles in so-called “story stocks” are, after all, familiar things on Wall Street. In the late 1950s, uranium stocks soared, followed a few years later by bowling stocks, and then RV stocks. (In 1969, a company called Skyline Homes saw its shares rise twentyfold.) And we all know what happened to internet stocks in the late ’90s. But in fact, what’s happening with meme stocks is very different from those previous crazes.

In a classic speculative craze, investors may take cues from each other — the fact that everyone is buying internet stocks makes you think it’s smart to buy internet stocks — but they’re not working together to make stock prices rise.

With meme stocks, on the other hand, that’s exactly what’s happening: The small investors on the r/Wallstreetbets subreddit (which has 2 million subscribers) and other sites are taking part in a conscious collective effort to drive the prices of these stocks up. No one is in charge of this effort, though, of course, some voices are louder than others. But it is a self-organized campaign with people using the message boards to communicate with each other, encourage each other, and reassure each other (thus the many posts on r/Wallstreetbets admonishing fellow “autists” — their self-mocking term for each other — to not lose their nerve and to keep holding GameStop’s stock). Thus threads with titles “We are the captains now,” “Have no fear, GME gang. We are consolidating in preparation for tomorrow’s moon landing,” and “GME — it never has to end.”

In other words, what’s happening with GameStop looks less like a speculative bubble and more like a contemporary, internet-mediated version of the “bull raids” that were characteristic of the stock market in the early 20th century, when organized pools of investors would combine to drive stock prices up.

Perhaps more interestingly, it also looks a lot like what happened during the 2016 presidential election. Over the course of that campaign, a loosely organized community of alt-right meme lords and their followers, centered on sites like 4chan and Reddit, adeptly used social media to elevate Donald Trump’s candidacy while barraging Hillary Clinton with an endless flow of memes targeting her supposed inauthenticity and corruption. What they did, in effect, was exploit the opportunities created by social media to disrupt the normal workings of the political system, at least in part for the lolz. The traders on r/Wallstreetbets — which describes itself, tellingly, as “Like 4chan found a Bloomberg Terminal” — are trying to do the same thing to Wall Street. 
Yep, that's right. The memelords of the day-trading set have declared war on Wall Street, and there's enough capital, expertise, and timing experience when combined to cause some major hedge fund managers some real nightmares, simply by having enough leverage when banded together to flip the script on shorted stocks. 

It's probably not going to end well, but maybe this will finally bring about some badly needed Wall Street reform, not that the Biden administration doesn't already have a crapton to do.

Our Little White Supremacist Domestic Terrorism Problem, Con't

The FBI is changing tactics on the Capitol insurrection suspects, moving to build federal conspiracy and sedition cases that carry sentences of decades in prison.

Authorities are sifting through reams of evidence—including more than 200,000 digital tips gathered from social media, members of the public, confidential informants, local news and surveillance footage, according to court filings and people involved in the cases. In recent days, investigators also have started receiving nonpublic evidence gathered from more than 500 grand jury subpoenas and search warrants, officials said, bolstering efforts to gain a clearer picture of what happened on Jan. 6.

Prosecutors already have charged more than 150 people with federal crimes related to participating in the riot, and officials said Tuesday they expected the flood of cases to slow as authorities turn to what was happening behind the scenes.

“We are going to reach a plateau in the very near future,” the acting U.S. attorney in Washington, D.C., Michael Sherwin, said, adding that investigators are increasingly focusing on “possible coordination among militia groups” and people from different states who “had a plan to travel here before the sixth and engage in criminal conduct.”

The sprawling investigation includes FBI agents who normally handle a range of other matters, including securities fraud, public corruption, drugs, and gangs, court filings show.

FBI field offices from Arizona to New York have fanned out to make arrests, search homes and interview witnesses, family members and associates. Homeland security agents and local law enforcement have also taken part in the investigation, according to the filings and people involved.

Current and former law-enforcement officials said the effort was comparable with some of the largest investigations in the FBI’s recent history, such as the Oklahoma City bombing and the Boston Marathon attack. The result has been a rapid-fire series of criminal complaints, arrest and search warrants, with grand jury indictments and more arrests, including those involving additional assaults on police officers, expected later this week.

Officials said they expected little to change in the investigation as Biden appointees take over the Justice Department. “If the evidence is there, and we can identify someone, they’re going to be charged regardless of who is in the White House,” Mr. Sherwin said.

Five died amid the violence at the Capitol, including a U.S. Capitol Police officer and a 35-year-old military veteran who was shot by police. Three died while suffering medical emergencies.

Investigators’ next challenge will be taking a cascade of low-level criminal charges like unauthorized entry into the Capitol and using them as predicate offenses that allow agents and prosecutors to dig further in their attempt to build a broader case for conspiracy, law-enforcement officials said.

“The arrest is only the starting point,” said Richard M. Frankel, the former special agent in charge of the Newark, N.J., FBI field office. “Now they can go back and say, ‘Is this an organized effort to violate Congress, and do further criminal acts?’”
In other words, the terrorists are going to be facing the rest of their lives in federal prison, as it should be. There must be overwhelming and catastrophic consequences to these acts, and they have to end any notion that they will be allowed to happen again.

The commander of the D.C. National Guard said the Pentagon restricted his authority ahead of the riot at the U.S. Capitol, requiring higher-level sign-off to respond that cost time as the events that day spiraled out of control.

Local commanders typically have the power to take military action on their own to save lives or prevent significant property damage in an urgent situation when there isn’t enough time to obtain approval from headquarters.

But Maj. Gen. William J. Walker, the commanding general of the District of Columbia National Guard, said the Pentagon essentially took that power and other authorities away from him ahead of the short-lived insurrection on Jan. 6. That meant he couldn’t immediately roll out troops when he received a panicked phone call from the Capitol Police chief warning that rioters were about to enter the U.S. Capitol.

“All military commanders normally have immediate response authority to protect property, life, and in my case, federal functions — federal property and life,” Walker said in an interview. “But in this instance I did not have that authority.”

Walker and former Army secretary Ryan D. McCarthy, along with other top officials, briefed the House Appropriations Committee on Tuesday behind closed doors about the events, the beginning of what is likely to become a robust congressional inquiry into the preparations for a rally that devolved into a riot at the Capitol, resulting in five people dead and representing a significant security failure.

The military, which isn’t structured to be a first responder like law enforcement, took hours to arrive at the scene primarily because the Capitol Police and the District government hadn’t asked the D.C. Guard to prepare a contingency force for a riot. The Capitol Police chief also didn’t call Walker to tell him a request for Guard backup was imminent until about 25 minutes before rioters breached the Capitol.

But the restrictions the Pentagon placed on Walker also contributed to the delay. He needed to wait for approval from McCarthy and acting defense secretary Christopher C. Miller before dispatching troops, even though some 40 soldiers were on standby as a quick reaction force. That standby force had been assembled in case the few hundred Guard members deployed that day on the District’s streets to assist police with traffic control and crowd management needed help, Walker said.

The Pentagon required the highest-level approval for any moves beyond that narrow mission, in part because its leaders had been lambasted for actions the D.C. Guard took during last June’s racial justice protests, including helicopters that flew low over demonstrators in D.C. Top officials concluded those maneuvers resulted from “fragmentary orders” that hadn’t received high-level approval and were looking to prevent a repeat of that situation.

“After June, the authorities were pulled back up to the secretary of defense’s office,” McCarthy said in comments to The Washington Post. “Any time we would employ troops and guardsmen in the city, you had to go through a rigorous process. As you recall, there were events in the summer that got a lot of attention, and that was part of this.”
The people that made the terrorist attack on the US Capitol three weeks ago possible weren't all just the seditious terrorists.  They were US government officials working for Trump.
Homeland Security is taking al this seriously, seriously enough to issue a National Terrorist Advistory System warning.
Using a federal system designed to warn all Americans about terrorist threats to the U.S. homeland, the Department of Homeland Security has issued a warning that anger "fueled by false narratives," especially unfounded claims about the 2020 presidential election, could lead some inside the country to launch attacks in the coming weeks.

"Information suggests that some ideologically-motivated violent extremists with objections to the exercise of governmental authority and the presidential transition, as well as other perceived grievances fueled by false narratives, could continue to mobilize to incite or commit violence," according to a bulletin issued Wednesday through the DHS National Terrorist Advisory System -- or NTAS.

The system was last used to issue a public warning a year ago, when DHS issued a bulletin over potential retaliation by Iran for the U.S. assassination of Iranian military commander Qassem Soleimani in Iraq days earlier. A year before that, DHS issued a bulletin through the same system to highlight the threat from foreign terrorist groups like ISIS or al-Qaida.

But over the past year, domestic terrorists "motivated by a range of issues motivated by a range of issues, including anger over COVID-19 restrictions, the 2020 election results, and police use of force have plotted and on occasion carried out attacks against government facilities," and "long-standing racial and ethnic tension -- including opposition to immigration -- has driven [domestic terrorist] attacks," the bulletin issued Wednesday said.

"DHS is concerned these same drivers to violence will remain through early 2021 and some [domestic terrorists] may be emboldened by the January 6, 2021 breach of the U.S. Capitol Building in Washington, D.C. to target elected officials and government facilities," the bulletin added.
In other words, DHS believes more domestic terrorist attacks from Trump supporters are coming.
So do I.
Be careful.

Giving Joe A Grade So Far

 My long-time friend Imani Gandy over at Rewire News has shared her thoughts on the first week of the Biden-Harris administration, and even though Imani and I greatly differed on who we wanted to be the Democratic candidate, like all of us, she came to the realization that we had to beat Trump, and Joe Biden was who we chose to do it.
And you know what? If Imani's now sold on Joe's slam-bang first week of progressive policy choices and actions, then everyone should be sold on it. Joe Biden and Kamala Harris are the real deal.

“I want a Biden presidency like I want a brick to the face.”

That’s what I tweeted in May 2019, a few weeks after Biden announced his candidacy. To say I was unenthusiastic about a Biden presidency would be an understatement. Throughout the primary, I routinely urged Biden to drop out. I wanted a progressive president. Someone who would not only undo the damage that Trump wrought, but who would also be forward thinking. I was drawn to Elizabeth Warren’s nerdy energy. She was the person for the job, in my estimation.

But Joe Biden? No way.

“What’s so irritating is that it doesn’t seem like Joe Biden wants to be president. He just wants to have been president,” I tweeted in December 2019. And I believed it. His decision to jump into the race struck me as a self-aggrandizing and feckless attempt at relevance, considering he first ran for president in 1987, right around the time I was obsessing over Cary Elwes and Robin Wright in The Princess Bride.

Ultimately, I thought his candidacy was simply a reflection of vanity. He didn’t really want to put in the work that being president after Trump would require; the presidency was simply the last notch that he wanted to be able to etch onto his political bedpost.

But Biden became the nominee, and I resigned myself to voting for him. I was not happy. Nor was I optimistic. I assumed that he would just be a maintenance president. Someone to turn the clock back to 2016, but not necessarily someone who would move the country forward. And after he won the election, his chatter about the need for unity irritated me because I don’t want to unify with Trump supporters nor do I think I should have to.

Well, it’s been less than a week of the Biden-Harris administration, and I have to say, I have been pleasantly surprised. For a man who is 78 years old and has been in government since government was invented—who compromised with segregationists and fought for their cause by sponsoring a bill that, according to civil rights attorney and then-director of the NAACP Legal Defense Fund Jack Greenberg, would limit courts’ power to order busing as a way to desegregate schools—Biden has charged out of the gate swinging when it comes to the rights of people that the Trump administration either outright ignored or sadistically antagonized. He has done exactly what he should do to set the tone for this new administration, and if he keeps up this pace—and if progressives keep up the pressure—Biden has an opportunity to become a transformative president.
I agree completely. Biden wasn't my first choice either a year ago.  Now?
He's already shown that he's well on his way to being the person we need in the White House.


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