When major online platforms restricted trades in certain stocks earlier this week, apparently to ease the pain of hedge funds with costly “short” positions, thousands of investors concluded that the fix was in. As stocks like GameStop and AMC rocketed upwards, firms that had misjudged the power of retail investors to execute a “gamma squeeze” – which forces short sellers to cover their positions at any price – racked up billions in losses. None of this was illegal or even unethical. The outrage seemed to be that the “plays” had been made by average investors meeting in a Reddit group rather than the usual suspects on Wall Street. (/WallStreetBets, which was set up in 2012, currently has six million followers – up from 1 million at the start of this year.)
The specifics of the group’s triumph over professional money managers may not be as important as the humiliation they inflicted. For decades the titans of Wall Street have liked to think of themselves, in Tom Wolfe’s ironic phrase, as “Masters of the Universe.” Arrogance and condescension became part of their brand. Any American who remembers how few of these high flyers paid any price for their role in the 2008 financial crisis will celebrate their comeuppance, particularly if they were fortunate enough to get in on a piece of the action.
The evident glee at Wall Street’s humbling also fits into a wider pattern of anti-elitism. Much of former President Trump’s appeal to his base came from the ease with which he peddled conspiracy theories. In his view China, international bodies like the WTO, NATO or the UN, even domestic news media were always scheming against the average citizen. Trump’s cynicism encouraged other malcontents and iconoclasts and the fruits of their weaponized imaginations will long outlast the end of his presidency. QAnon’s mad conspiracies are part of this legacy, and so is the David vs Goliath spirit of the /WallStreetBets group.
Wall Street’s shorting of GameStop shares was justifiable by traditional measures but the concerted action of the Reddit investors inverted the conditions in which rational action remained sensible. Damir Marusic, cohost of the podcast “The Wisdom of Crowds” writes, their motivation “simply doesn’t map onto the traditionally rational universe.” Their discussion threads display “a kind of in-group solidarity at play—us against the fat-cats—that is encouraging this destructive brinksmanship. ‘We might not come out ahead,’ they’re saying, ‘but if we drive some greasy billionaire to suicide, it will have all been worth it.’” Anger like that was Trump’s specialty, an emotion that he nurtured for years, right up to the storming of the Capitol.
Whether the enemy is China, Facebook or Wall Street, the Trumpian genie will not return to its bottle. Earlier this week the historian Heather Cox Richardson noted that “The dangers of Trumpism are becoming clearer each day.” Not only in the “national terrorism bulletin that warned of violence from domestic extremists angry over `perceived grievances fueled by false narratives’ but also in the more immediate form of Congressional representatives. Consider, for example, Marjorie Taylor Greene, a QAnon adherent who is notorious for harassing a survivor of a school shooting – calling him a crisis actor in the pay of George Soros – and for Facebook posts in which she responded positively to a commenter talking of hanging former Secretary of State Hillary Clinton and President Barack Obama and another talking of killing House Speaker Nancy Pelosi.”
The Wall Street Journal recently interviewed the founder of /WallStreetBets, Jaime Rogozinski, a former IT consultant for the Inter-American Development Bank. He described the volatility produced by the group as “a little like watching one of those horror films where you can see the bad guy slowly going up the stairs.” Commenting on the ease with which average citizens can coordinate themselves to trade stocks at volume he said: “A massive group of people have organized [to the point at which] they collectively have a seat at the poker table, which was previously invite-only. You can’t ignore them anymore.” In the wake of the Trump presidency a similar dynamic has taken hold in many other spheres, not only in American politics, but anywhere in which average citizens can pool their knowledge, or resentments.
