Financial version of ‘Anonymous’ movement threatens very notion of market efficiency
BY GUY RUNDLE
GameStop was a victory for the geeks over the suits, another battle between the knowledge class and capital, as the world is handed over.
There’s something piquant in that those crazy Reddit WallStreetBets folk are going after silver now.
The great gaming of the global silver market in 1980 was one of the last events of the relatively stable Keynsian era. The Hunt family of Texas — billionaires, when there were only about six of them in the world — tried to corner the market, at one point owning a third of the world’s private silver.
The effort collapsed, sending a shock through the world. But what’s striking about the great Hunt silver corner was how long it took. The effort began in 1973 — another era, of phones and telexes, open-call markets and capital flow barriers, and nothing like the layers of ever more abstract financial products available today.
Is the switch from short squeezing dying consumer chains to an old metal a tip of the hat to the old world?
Maybe, maybe not. But it seems very likely that the GameStop short squeeze and all that came after was about more than making a quick buck, and more even than the stated aim of punishing colluding hedge funds.
The mainstream financial press has had a lot of difficulty coming to grips with the GameStop thing, because of a deep-seated belief in the eternal truth of the stock market as the unchanging steering mechanism of capital.
Though the “first order” market — the buying and selling of actual bits of companies — has long since been swamped by the multiple abstract instruments that leverage bets upon them, the notion that there is a rationality and efficiency at the core of the whole process is essential to its command.
The whole funding of the Amazon/Uber revolution has relied on trading floating free of any ground-level measure of value (profits, earnings etc). But at the same time, the forces controlling financial capital have some awareness that a market cannot live up to its own implicit promise — of being an open and unbounded system — and reproduce itself.
Since the great crash of 1929 — actually since the near crash of 1910 — markets have ceaselessly introduced rules to stop the market being a market, from trading suspension, investigation of mathematical anomalies, insider trading and so on.
This only really came apart in the years 1999-2008, when a mix of greed, ideology and sheer nihilism saw the system tear itself apart. The crash of this open slather system showed that markets will always collapse over a five to 10 year period, if left to their own devices. The classical liberal idea of the “catallaxy” — a spontaneously arising order — is just a myth used to legitimate the private rights to system profits.
I’m pretty sure the dinosaurs died out when they stopped gathering food and started having meetings to discuss gathering food
A bookshop is one of the only pieces of evidence we have that people are still thinking
CTRL + V!
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