The Viral Economy

[malchior]

Are we going to have to change course reasonably soon (within a decade)? Definitely.

We might not have a decade. China is aggressively attacking the dollar. Interest rates are bound to rise over 10 years. And as we all know, reigning in deficit is hard enough. Chopping off debt? Not going to happen. It's $1.9T we're going to be stuck with. Can we kick the can long enough until we're all dead and don't have to deal with it? Probably. But hat's not sustainable fiscal policy.

I still haven't heard anything that says what the consequences are though. The implication in the Fortune piece is possible inflation. That isn't really a high probability event right now - the Fed hit their announced inflation target maybe once or twice for a quarter in the last two decades. They consistently miss it low. Low energy prices, low income growth, and recession are all drags on inflation that factor into the lower probability there.

We also sometimes hear about how interest rates are going to increase - sometimes even drastically. That hasn't happened but naturally at this point the only direction is up. The pressure is less than imagined because unless inflation finally rears its head *high* Interest rates aren't foreseeably an issue either. All signs point to deflation/low interest rates for quite some time barring a broad-based recovery in the economy. There aren't any hints of that .

Even an attack on the dollar doesn't even change that math - it'll change consumer spending power for the worse but it doesn't really make those fundamental problems any worse. I'll beat on this point once more - Japan is still the example why there isn't any real immediate threat. Part of that is a relatively weak currency, part is high savings rate, and part is debt is owed domestically by the citizenry and the government - the last point is very important.

What's pretty interesting is we have more 'control' over this debt situation than we think. That is why I found the comparison to Italy ... frankly dumb in the Fortune piece. A lot of our debt is owed to ourselves. Specifically the SS trust fund. We have a couple of levers there. A few are bad - cut the benefit or raise retirement age and a better one - remove the income cap on the SS payroll tax. That latter one will help the debt situation immediately because we could cut borrowing on the 'front end' to cover the short fall funding the SS trust fund. It's a tax increase but it's all well above median income.

We also have other 'wealth reservoirs' to tap. Tax rates are historically low on people who can easily afford to pay more. That said, I don't even worry a little about this isn't because we have massive and more pressing problems that make this one easy in comparison. Also, I consider that taxing the rich is possibly one of the things we'll need to do to dig out of this mess to fix the massive inequality problem we have and this could be a convenient excuse. But I also won't hold my breath on that.

[LawBeefaroni]

I still haven't heard anything that says what the consequences are though. The implication in the Fortune piece is possible inflation.

Inflation isn't necessarily a consequence but it is a risk. Increased inflation means higher rates which means higher debt service. Since we are constantly writing new debt, we aren't locked in a rate. Imagine a jumbo ARM loan. Inflation can crush you.

Even an attack on the dollar doesn't even change that math - it'll change consumer spending power for the worse but it doesn't really make those fundamental problems any worse.

It does change things. It makes debt more expensive for the US.

We also have other 'wealth reservoirs' to tap. Tax rates are historically low on people who can easily afford to pay more. That said, I don't even worry a little about this isn't because we have massive and more pressing problems that make this one easy in comparison. Also, I consider that taxing the rich is possibly one of the things we'll need to do to dig out of this mess to fix the massive inequality problem we have and this could be a convenient excuse. But I also won't hold my breath on that.

Agreed. Both that it's necessary and unlikely. You can't fight the 1%.

[malchior]

I still haven't heard anything that says what the consequences are though. The implication in the Fortune piece is possible inflation.

Inflation isn't necessarily a consequence but it is a risk. Increased inflation means higher rates which means higher debt service. Since we are constantly writing new debt, we aren't locked in a rate. Imagine a jumbo ARM loan. Inflation can crush you.

It can but I still haven't seen any reasonable model that shows inflation as any sort of realistic risk. The ones who've consistently got it right - especially experts in IS-LM like Krugman - are pointing out the real risk is *deflation*. We've had massive spending, QE, money pumped into every market and inflation still can't get up near the inflation target. Absent some sort of massive economic wide price shock I just don't see the inflation scenario.

Even an attack on the dollar doesn't even change that math - it'll change consumer spending power for the worse but it doesn't really make those fundamental problems any worse.

It does change things. It makes debt more expensive for the US.

Maybe. Again Japan has a relatively weak currency and more than twice our debt load (~2.5x our debt load). This is probably way less risk than imagined.

[noxiousdog]

Maybe. Again Japan has a relatively weak currency and more than twice our debt load (~2.5x our debt load). This is probably way less risk than imagined.

Japan is also politically stable.

It doesn't keep me up at night, but the biggest problem is it can get out of hand in a hurry. It's one thing when you can sell debt at today's interest rates. It would be quite another at normal ones. That market can move in a hurry.

That being said, it's the right thing to do now.

[Isgrimnur]

[noxiousdog]

I was fine right up until the point he said "in the last 20 years."

Catastrophic events happen on longer time scales than that. The kind of debt that we are talking about will last way longer than 2 decades. Likely it will take a century.

[malchior]

I was fine right up until the point he said "in the last 20 years."

Catastrophic events happen on longer time scales than that. The kind of debt that we are talking about will last way longer than 2 decades. Likely it will take a century.

That is part of his point. There is no reason to worry about paying off the debt. We have never "paid off" the entirety of our debt generally speaking. For example, the previous peak before now was WW2. The peak of WW2 debt was around ~110% GDP. Much of it war bonds and owned by people within the United States. By the early 80s we paid it down to 30-40% debt levels. Current debt levels are around that ~110% mark but a lot of it is intergovernmental which is more manageable than war bonds even. It isn't something to be ignored but also not an immediate crisis either.

At some point do we have to arrest the growth of debt levels? Yes, there probably is an absolute limit somewhere out there. Does it have to decrease significantly? Eh maybe. If we held this level and interest rates didn't increase significantly there isn't really any reason to do so. Is there head room? Japan, UK, and a few other nations suggests there is quite a bit of head room possibly.

Edit: Also, the 20 year reference is almost certainly him pointing out the steady drum beat of calls from the debt inflationistas that worry that the debt will spiral out of control...any moment now. He is showing us the framework to evaluate this idea and illustrate that it is absurd that the idea never seems to die no matter how many times the prediction doesn't pan out.

[LawBeefaroni]

I was fine right up until the point he said "in the last 20 years."

Catastrophic events happen on longer time scales than that. The kind of debt that we are talking about will last way longer than 2 decades. Likely it will take a century.

That is part of his point. There is no reason to worry about paying off the debt. We have never "paid off" the entirety of our debt generally speaking. For example, the previous peak before now was WW2. The peak of WW2 debt was around ~110% GDP. Much of it war bonds and owned by people within the United States. By the early 80s we paid it down to 30-40% debt levels. Current debt levels are around that ~110% mark but a lot of it is intergovernmental which is more manageable than war bonds even. It isn't something to be ignored but also not an immediate crisis either.

We paid down that debt as the world's undisputed economic and political superpower. We financed the rebuilding of huge swaths Europe and Asia.

We don't have that going for is this time around. There is certainly nothing about debt at 110% of GDP that assures us of future reduction.



Also wasn't it Krugman who said back in March that we'd have a worldwide recession with no dry powder to dig out with?

[malchior]

I was fine right up until the point he said "in the last 20 years."

Catastrophic events happen on longer time scales than that. The kind of debt that we are talking about will last way longer than 2 decades. Likely it will take a century.

That is part of his point. There is no reason to worry about paying off the debt. We have never "paid off" the entirety of our debt generally speaking. For example, the previous peak before now was WW2. The peak of WW2 debt was around ~110% GDP. Much of it war bonds and owned by people within the United States. By the early 80s we paid it down to 30-40% debt levels. Current debt levels are around that ~110% mark but a lot of it is intergovernmental which is more manageable than war bonds even. It isn't something to be ignored but also not an immediate crisis either.

We paid down that debt as the world's undisputed economic and political superpower. We financed the rebuilding of huge swaths Europe and Asia.

We don't have that going for is this time around. There is certainly nothing about debt at 110% of GDP that assures us of future reduction.

This all still ignores the point. We don't necessarily have to pay it down. Or pay it down quickly. Or at all potentially. Nothing about this is an emergency. Other nations give us hints that suggest this isn't an emergency. Is it all happy times? No. However, this pretty much falls into 'very serious people' talk that isn't founded in any demonstrable model. It is all talk about a dangerous dog but we never even hear it barking.

Also wasn't it Krugman who said back in March that we'd have a worldwide recession with no dry powder to dig out with?

I'm not sure what he did or did not say in March. In general I generally accept his specific macro economics and nation-scale economic policy discussions - especially when he backs it up with a model. When he gets into political policy I tend not to listen so much. This firmly forms in the former with a dabble in the latter.

[noxiousdog]

You're missing that there are absolutely interest rate implications for carrying that much debt. You're right that we had super high levels of WWII debt ... and so we paid it down significantly between the 40s and the 70s. Think how much worse it would have been in 1980 if we were running 110% debt/GDP.

These things have to be thought of on those kind of time horizons.

[malchior]

You're missing that there are absolutely interest rate implications for carrying that much debt. You're right that we had super high levels of WWII debt ... and so we paid it down significantly between the 40s and the 70s. Think how much worse it would have been in 1980 if we were running 110% debt/GDP.

These things have to be thought of on those kind of time horizons.

I'm not missing it. Folks keep saying things but I'd just like to see a model. Any model at all that indicates the interest rate or inflation problems (which are the same problem in the end IS-LM wise). That is why I'm so skeptical of this argument. What I see when these debt discussions spin up is that we see that people have borderline 'religious' beliefs about debt/interest rate/inflation whatever that aren't backed by anything other than "I know it". So what is the model that shows that there are "absolutely interest rate implications"? If you talked to an economist they'd probably point to IS-LM and it'd basically support what I'm talking about for our economy and what your talking about for something that'd look a lot more like a developing economy or perhaps even some of the debtor nations in the EU.

Isgrimnur was kind enough to provide a post to Krugman talking through a simple model explaining why debt isn't a near-term problem. I've also pointed to other analogous situations (e.g. Japan) that have much higher debt loads and are struggling with deflation and central banks trying to craft negative interest rate policies. In other words, the position you are arguing have events playing out in pieces in major analogous economies right now that are disproving your argument.

[noxiousdog]

I'm not sure what you're asking because I know that you know how government bond interest rates work.

You're absolutely right that in normal situations we don't have to worry about the debt. However, look at it from your perspective. You think our government is completely dysfunctional and headed for civil war. If a significant number of people and/or governments start believing that, interest rates are going to rise.

I'm with you in that it needs to happen. I only differ in that it can't be done indefinitely as a long tail event will absolutely happen.

[malchior]

I'm not sure what you're asking because I know that you know how government bond interest rates work.

You're absolutely right that in normal situations we don't have to worry about the debt. However, look at it from your perspective. You think our government is completely dysfunctional and headed for civil war. If a significant number of people and/or governments start believing that, interest rates are going to rise.

I wouldn't characterize it that strongly. Still just to address it, we've been pretty dysfunctional for decades from an economic, fiscal, and governmental policy perspective so it isn't like we're in complete unknown territory. The market knows how to route around it so to speak. The big civil war scenario gets into black swan territory that frankly you can't model and shouldn't build policy around. It's effectively impossible to succeed at that exercise.

But instead of completely hand waving it away I'll get a little real about how I analyze it. Let's say we decide that addressing the debt is more important and we limit spending or adjust policy to promote austerity. It'll just put pressure on the economic situation that makes the black swan more likely to happen. It's a bit of trap. As an example, I think post-Great Recession austerity (aka sequestration) put some pressure on folks that probably helped Trump out.

I'm with you in that it needs to happen. I only differ in that it can't be done indefinitely as a long tail event will absolutely happen.

Right and I don't think we differ much in that. My view is just long-term is really long-term since we likely have lots of runway. Let's say Japan is close to disaster and we find out 300% GDP debt is an absolute limit with the mix of Governmental spending that Japan does. We could perhaps double our debt load more or less and still not see a inflation/interest rate beast appear. Even at the current highly elevated run rate that'd take more than a decade. And as Krugman noted Governmental spending still promotes some level of growth which will shrink the relative impact of that deficit/debt spend.

The real question to think about how long this might go -- is to think about whether we are going to be in these economic waters for a very long time. If so, that seems pretty black swan like again. Even a Great Depression length event probably wouldn't amount to that sort of spend even if we did the smart thing and fill the output gap with Governmental "make work" spending/UBI/whatever it'll look like and there was no growth effect.

As an aside, I think there are real risks out there but they have little to do with debt. The big one is COVID based and might even get mistaken for the debt beast appearing. That'd be all the pent up demand from the last year and whatever is ahead that suddenly gets unleashed and overwhelms our capacity to deliver it. That might spike prices. Would it be long-lasting enough to matter? Eh, maybe, maybe not but we might suddenly see interest rates shoot up to deal with that inflationary pressure.

[LawBeefaroni]

There is no magic % of GDP. No point at which is goes from OK debt too much debt. There is just ever-increasing risk as debt goes up.


It's ok until it isn't. It may come from a black swan event. It may come from a calculated shift from the dollar. But the idea that we can just keep growing debt with no ill effects and no risk is the height of intellectual arrogance. When we learn we're.wrong it will be too late.

[malchior]

There is no magic % of GDP. No point at which is goes from OK debt too much debt. There is just ever-increasing risk as debt goes up.


It's ok until it isn't. It may come from a black swan event. It may come from a calculated shift from the dollar. But the idea that we can just keep growing debt with no ill effects and no risk is the height of intellectual arrogance. When we learn we're.wrong it will be too late.

Who is saying there is "no risk"? I certainly didn't say that or hear that from even the Krugman example. Is it manageable is the question. And the evidence of real immediate risk is pretty much absent. Any mention of a % of GDP was more an example as a rhetorical tool that we have evidence we aren't near dangerous levels. That's it.

[Zarathud]

Krugman is right. There is risk but there is certainty that following Republican anti-debt ideology will make everything worse. Like Trumpism, it was never based on facts but fantasy. Cutting government spending will be catastrophic.

We don’t have much economic powder left. The global recession didn’t happen because we kept “essential” business open despite the spread. The recession hit those parts of the economy deemed non-essential — basically those staffed by poorer service workers in hospitality, travel, theatre, etc.

[malchior]

We don’t have much economic powder left. The global recession didn’t happen because we kept “essential” business open despite the spread. The recession hit those parts of the economy deemed non-essential — basically those staffed by poorer service workers in hospitality, travel, theatre, etc.

Yes and this ties into the stimulus discussion in the Investment thread in EBG. We pumped tons of money into an economy where demand had no outlet which inflated the casino economy. We did that instead of 'renting capacity' in businesses that are forced into slumber right now. Can we imagine if we targeted those 'non-essential' businesses and said let's put a pin in your capacity. Open your books and we'll give you 80% of your missing revenues (maybe average over the last three years) as a very basic example.

Instead, we'll have a messy restart that'll be haphazard and slow to start. I have one stage hand acquaintance that essentially is hopelessly behind on his mortgage but stable at the moment due to the moratorium. Eventually, I imagine he'll lose his home. He'll have to work through that and hope that enough work comes to get back up on his feet in a very bad situation. And we instead could have done what the Europeans did and supported his employer so they could make it through the tough time. The way we did this was characteristically stupid.

[Daehawk]

'We' didn't do this. Trump and his greedy criminal gang of incompetency did it.

[$iljanus]

Yet another unsurprising yet maddening move by the Trump administration:

The Trump administration bailed out prominent anti-vaccine groups during a pandemic

Five prominent anti-vaccine organizations that have been known to spread misleading information about the coronavirus received more than $850,000 in loans from the federal Paycheck Protection Program, raising questions about why the government is giving money to groups actively opposing its agenda and seeking to undermine public health during a critical period.

The groups that received the loans are The National Vaccine Information Center, Mercola Com Health Resources LLC, Informed Consent Action Network, Children’s Health Defense Co., and the Tenpenny Integrative Medical Center, according to the Center for Countering Digital Hate, a U.K.-based advocacy group that fights misinformation, which conducted the research using public documents. The group relied on data released in early December by the Small Business Administration in response to a lawsuit from The Washington Post and other news organizations.

I don't care if it's just a small fraction of the PPP money that was available. They shouldn't have even gotten one dollar of that money. But with the lack of vetting and the rush to get money out to struggling businesses this sort of thing was bound to happen.

[LordMortis]

I don't know who Josh Brown, CNBC contributor, is but he was on today in the background while I'm working. He really speaks to bias so whomever he is he must know everything and be speaking the truth.

He was talking about the differences between QE1-3 debt, previous stimulus debt, and tax cuts and the importance of amassing debt right now, equating the pandemic response to being in a wartime economy. I might need to subscribe to his newsletter.

[malchior]

R&P ahead. Maybe I should find the viral economy thread instead...


As I wake up to see the up up up against short sellers in an otherwise slipping market, I'm becoming less and less certain of my feelings on this. The push back against these YOLOers is getting stronger and stronger and these conservative establishment destroyers over the last decade are now clamoring for regulation. No one clawed back against all the money that went to these market makers for the last 10 months and and the last 12 years as the billionaire class literally took control of government in 2016 but now we want to protect the YOLOers from themselves as they attack the billionaire class. As I learn more and more WSB, the bets part has always been key, it's founded in HOLD MY BEER! mixed with the expletive deleted sitting at home learning how billionaires who have never done anything but work on wallstreet make their money while finding ways to pay less and less back into the system the empowers them.

These people, in no small amount (you can't blanket everyone when it comes to millions, especially when there are pumpers and dumpers among them, though I don't think the pumpers and dumpers can control this), seem to know their going to get hurt but they're enjoying the ride and in some small way doing what Occupy couldn't and what Congress and the SEC won't.

Damned ignorant socialists attacking the free market with their collectivist collusion against free enterprise. Money was never meant to be used in this way.

This is a good suggestion. Pulled off the spoiler tags.

I thought about this last night and had a few more discussions. I think this is maybe the beginning of some weird financial resistance. And what is clearly apparent is "capital" thinks the markets are their domain for extracting rents. The 2008 financial crisis really indicated this when they got made whole by the establishment. In that vein,

I almost plonked this down in an inequality thread because that is what this is ultimately about. The wealthy believed they had a tacit agreement with society. We'll provide liquidity and you'll let us tax you for it in the market. That has been upended by somewhat reckless nihilists and privateers. As one of my friends said, "You don't fuck with billionaires in this society and not see your head cut off". TD certainly showed us their cards on that angle by essentially banishing peons from interfering with the market as they see it.

[LawBeefaroni]

So the more I think about my KOSS position (or lack thereof after Monday), the less I'm botherd by it. As it hits $100 in premarket this morning, I know I would have sold Tues or Wed. $10, $20, whatever. Traditional strategies just don't factor in these kinds of runs completely devoid of fundamentals.

The YOLO attitude is what makes these runs possible. Way back when, WSB was gain porn and schadenfreude, watching winners and losers who made stupid bets on the market. No taking profits or cutting losses. You put your house into options and ride it to expiration. That's why 100%, 200% isn't enough. It's all about lambos and 5M views for your "proof." I don't think it's sustainable so I don't see it as a new paradigm but there are certainly lessons here.

[LordMortis]

A handful of hedge funds are getting smoked. Citadel, Robinhood, Blackrock, etc are all making money. Professional day traders are making money. Even some WSB instigators are probably making money. But the little guys adhering to the call to hold on and don't let the man take your shares haven't made a dime. Not until they sell. And the whole thing is founded on them not selling.

But of those who are posting and leading the charge, they are expressing the continuation of the YOLO attitude. They are expressing the acknowledgement of $1000 or bust. There may very well be a million followers who think they are smarter and will know when get off the bus and leave everyone else holding the bag, but that's been going on with Bitcoin for a decade and with TSLA for a year and real estate for nearly as long as I've been alive and coin collecting and sports cards and hedge fund management.

I'm still back and forth. I hate grifters. I hate exploiters but it sure seems like there more going on and it sure looks like the very same establishment pushing for the freedom Parler and Gov't insider knowledge and looked the other way for four years while POTUS pushed and attacked equities and gave away the farm to the .001% in reaction to their fostering and pushing toxic loans to large institutions made it less than one week before taking action against the masses learning how to attack derivatives that were designed to protect wealth of the ultrawealthy.

It's another case of legacy systems designed to retain power for the powerful not knowing how to react to technology and I'm totally not sure what to think yet. What to people with little care when they lose less that a months rent on a YOLO. What do they care if someone else made the play with six figures because they wanted to pretend to be YOLO but weren't really? What do they care if it house of cards other parts of the none dare call it QE stock market?

I mean the reaction to could totally screw up retirement and there is literally no where to put my money and yet how do you blame them? How do you blame them in much the same way how do you blame the BLM looters? They system has invested so little in them, why do they care if their actions hurt the system? And what happens if the system adapts to kick them in the teeth simply because the system can be arbitrary by will of the institution.

I'm still taking this in. I'm still learning. I accept BLM desperation but I don't accept MAGA QAnon desperation. Why? This feeds in to the same working it through process.

[malchior]

I don't think it's sustainable so I don't see it as a new paradigm but there are certainly lessons here.

I thought so too but then when I watched that interview I posted in the other thread, I re-evaluated and came to agree with him that there are 3 camps there. There are the YOLO guys, the 'revolutionaries', and the actual analysts. Maybe the third group is small but they exist in that crowd. I read some last night and it really does appear to be more complicated, That some claim they took hedge fund scalps and crowed about it told me that there is something else going on here.

Edit: Also institutional overreaction says a lot here. CNBC people losing their minds, institutional chatter, and TD declaring they were trading wrong or whatever their justification is shows that cages were rattled. It isn't a strong case yet but there is an ember there.

[LawBeefaroni]

I don't think it's sustainable so I don't see it as a new paradigm but there are certainly lessons here.

I thought so too but then when I watched that interview I posted in the other thread, I re-evaluated and came to agree with him that there are 3 camps there. There are the YOLO guys, the 'revolutionaries', and the actual analysts. Maybe the third group is small but they exist in that crowd. I read some last night and it really does appear to be more complicated, That some claim they took hedge fund scalps and crowed about it told me that there is something else going on here.

Edit: Also institutional overreaction says a lot here. CNBC people losing their minds, institutional chatter, and TD declaring they were trading wrong or whatever their justification is shows that cages were rattled. It isn't a strong case yet but there is an ember there.

Like I said in the other thread:

That's the simple version. The more accurate one is that Citadel, Blackrock and the rest of the usual suspects made 80% of the profit and flew behind WSB radar shadow. When there are congressional hearings in a year, WSB and Reddit will be in the hotseat and Citadel, et al, will be advising the legislators.

A handful of hedge funds are getting smoked. Citadel, Robinhood, Blackrock, etc are all making money. Professional day traders are making money. Even some WSB instigators are probably making money. But the little guys adhering to the call to hold on and don't let the man take your shares haven't made a dime. Not until they sell. And the whole thing is founded on them not selling.

But of those who are posting and leading the charge, they are expressing the continuation of the YOLO attitude. They are expressing the acknowledgement of $1000 or bust. There may very well be a million followers who think they are smarter and will know when get off the bus and leave everyone else holding the bag, but that's been going on with Bitcoin for a decade and with TSLA for a year and real estate for nearly as long as I've been alive and coin collecting and sports cards and hedge fund management.

They say that because they need people to hold to $1000 so they can make money. As the price goes up the risk increases dramatically but greed and FOMO also increase. People pour in, others make money. You always need the bigger sucker to sell to.

[LordMortis]

Also institutional overreaction quick action after a decade + of dormancy and resistance says a lot here.

I'm still not sure what it's saying but it is definitely saying something.

[malchior]

Also institutional overreaction quick action after a decade + of dormancy and resistance says a lot here.

I'm still not sure what it's saying but it is definitely saying something.

I don't see it as quick action. TD essentially told their customers they were trading wrong. There was no rationale offered. No regulator order involved. Nothing but a message that we won't place your order, please go somewhere else.

[LawBeefaroni]

Also, KOSS is nuts but I watched it trade every day for a month. There are very few, if any hedge funds that are broke over this. Short interest was maybe 25% of the float which was small. Like 10M shares IIRC. There were no options so no puts. GME may be a different story but at the end of the day, this is about some people making a lot of money and others losing a lot. Most of the sellers right now are pros and most of the buyers are not.

[malchior]

Also, KOSS is nuts but I watched it trade every day for a month. There are very few, if any hedge funds that are broke over this. Short interest was maybe 25% of the float which was small. Like 10M shares IIRC. There were no options so no puts. GME may be a different story but at the end of the day, this is about some people making a lot of money and others losing a lot. Most of the sellers right now are pros and most of the buyers are not.

I agree but that is because KOSS is a side story to be honest. It spread to what 5-10 retail stocks under heavy short activity like wildfire yesterday? I'm not saying there is a strong case here yet but I'm definitely listening because this is potentially another problem coming home to roost. I don't want to get caught in the crossfire.

[LordMortis]

I don't see it as quick action. TD essentially told their customers they were trading wrong. There was no rationale offered. No regulator order involved. Nothing but a message that we won't place your order, please go somewhere else.

https://arstechnica.com/gaming/2021/01/ ... s-private/

Discord also took steps to permanently ban the official WallStreetBets channel, citing moderators for "continuing to allow hateful and discriminatory content after repeated warnings."

NASDAQ CEO Adena Friedman, meanwhile, suggested on CNBC Wednesday morning that shares in these volatile stocks might need to be halted so everyone can catch their collective breath. "We do have technology that evaluates social media chatter," Friedman said. "If we see a significant rise in the chatter on social media channels… we also match that up against unusual trading activity, [and] potentially halt that stock to allow ourselves to investigate the situation, to be able to engage with the company, and to give investors a chance to recalibrate their positions."

Massachusetts Secretary of the Commonwealth William Galvin, who has overseen the state's securities division since 1995, has also called on the NYSE to halt trading in GameStop for 30 days "to allow for a cooling off period. I am hopeful that federal regulators will be looking into this as well." While the SEC hasn't publicly commented on any enforcement or investigation actions, the White House confirmed Wednesday afternoon that Treasury Secretary Janet Yellen is "monitoring the situation" surrounding GameStop stock.

[malchior]

Right and that is what I see as an overreaction. It frankly looks a little panicky.

I took quick action as softening from overreaction.

[LordMortis]

I'm not smart or informed enough to know it it's an over reaction. I am smart and informed enough to see the inaction and paid resistance to regulation as well as institutional messaging related to finances since 2009. And to see that it took exactly three days to reverse when it became clear that this is bigger than TSLA or BTC and the masses can affect the needle the way silver spoon billionaires and federal political figures do. Where were these people with the ability to affect change when POTUS was weekly moving the needle not six months?

[malchior]

That's exactly the thing that a lot of folks are asking right now. This looks ugly. Very ugly. They didn't even bother to talk about market stability or some other bullshit justification.

[Carpet_pissr]

Also institutional overreaction quick action after a decade + of dormancy and resistance says a lot here.

I'm still not sure what it's saying but it is definitely saying something.

It says The Institution pulled its hand away from the IMPOSSIBLE tiny chink in its armor, and saw a wee bit of blood, unbelievably.

Taking it up a few thousand feet, is the 21st century titled “In Which the Institutions were Injured, and Did Realize They Were Not Invulnerable”?

[Smoove_B]

Not really my area of expertise or even interest, but it feels like it's more likely that Congress will quickly pass laws to make sure Wall Street is protected from this happening again than pass relief bills giving Americans $2k checks, right?

[malchior]

Not really my area of expertise or even interest, but it feels like it's more likely that Congress will quickly pass laws to make sure Wall Street is protected from this happening again than pass relief bills giving Americans $2k checks, right?

Yes. Well. Let me revise. If they do, the Democrats should hang their heads in absolute shame. It'd also be throwing meat to the populists everywhere.

[Jaymann]

I used to shop at Gamestop before they became too mainstream.

[malchior]

I used to shop at Gamestop before they became too mainstream.

Ah yes. I think we can safely say that the 'Hipster' stock play is less than the Nostalgia stock play.

[LordMortis]

Not really my area of expertise or even interest, but it feels like it's more likely that Congress will quickly pass laws to make sure Wall Street is protected from this happening again than pass relief bills giving Americans $2k checks, right?

It's too early for polls, but I don't think Congress has the stomach to engage this openly. My money is on the SEC and related heretofore hands off regulators coming to understandings with the brokerages, regulating message boards, and crucifying select people who turned into retail investor millionaires over the last three months based on data accumulated through said understanding. Congressional activist will object but nothing will come of it.

This bet is subject to change based on "market frothiness."

[LordMortis]

Guy from "Omega Family" is on CNBC trying to make the case that the wealthy investor has been getting screwed since 2008. This won't end well for him.