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From The Socialist newspaper, 3 February 2021

GameStop: Billionaires hurt at their own game

photo EPIC/CC

photo EPIC/CC   (Click to enlarge)

Luke, Gloucestershire Socialist Party

Recently, users of big online forum Reddit influenced the entire stock market, causing huge hedge funds to go into meltdown. Wall Street is now calling for regulation. These events could lead to a bigger change to market regulation than the financial crisis.

Redditors realised that hedge funds held huge 'short positions' on stocks and that they could view this information online. A short position is betting that the value of a company falls.

Hedge funds are betting billions of dollars that companies like Blackberry, Gamestop and Nokia will decrease in value, because they're companies with big standings but have become outdated and aren't expecting any growth. However, Redditors have influenced thousands of ordinary people to invest in these companies.

Lots of people buying shares of Gamestop will increase the value of the share, so the people buying them are making massive returns. Meanwhile, hedge funds with short positions are losing billions.

On 26 January, Gamestop opened at $88 a share on 26 January. It peaked at $469 a share on 28 January.

So, while the normal people who are investing are taking risks, they have been able to take huge sums of money away from billionaires and Wall Street.

Obviously, the capitalist class isn't happy that ordinary people are playing their game and manipulating the market to make money, the way that the capitalists normally do.

The difference is that they're now on the losing side, and are now arguing the game is unfair.

Some brokerage apps - which people use to buy shares - ceased trading for these companies. People could no longer invest, and the prices began to fall.

They said that their servers were struggling to cope with the amount of traffic, but it's no coincidence that the capitalist class wanted this. The stock market and capitalist class are being criticised for not allowing a 'free market'.

These events changed people's lives. There are stories online of people thanking Reddit as it allowed them to pay their medical costs or next month's rent.

It has also opened a lot of people's eyes to the system we live in, and how the capitalist class is able to make vast amounts of money with no actual work and producing no value.

Capitalists still in control

The comeuppance of a few greedy hedge funds is hilarious - and welcome! But those left outlets which have suggested that this 'short-squeeze' is in itself a threat to the capitalist system are mistaken, sadly.

Even if every hedge fund in the world were bankrupted at once, which is not on the cards, industry, finance and the economy as a whole remain privately owned. Just look at how the capitalists shut down trading when small investors went too far. Instead, the whole sector should be nationalised under democratic workers' control and management.

Some small investors will make big money at the hedge funds' expense; others may be left carrying the can, and lose their homes, when the bubble bursts. And the latest move - some small investors trying to short-squeeze big banks' control of silver - seems implausible at best.

Meanwhile, big investors will lose some capital but not control of the engines which produce it. Hedge fund managers may lose their jobs, but will waltz into other ones.

For the most part this does not seem to be ideological spite against the hedge funds, but small investors trying to make some money off a bubble. Some working and middle-class people in the US are reportedly throwing their college or retirement funds into it, gambling that they can then cover medical bills and so on. This in itself is an indictment of the system.

James Ivens, East London Socialist Party

Mini-revolution in murky world of finance capital

The Wall Street commentator on Newsnight seemed genuinely lost at what had happened. He couldn't understand how thousands of 'little people' - with a nostalgia for old brands that were about to fall victim to Wall Street - could be rallied against Wall Street to bring a big beast down.

But he only called for reform from above. Yeah right, like Wall Street will ever allow that.

How incredible too that when thousands of normal people do what Wall Street does, the regulator steps in and closes them down. So much for the free market.

This was a mini-revolution in the murky world of finance, and it may be a harbinger of the actual revolution to come.

Nancy Taaffe, Waltham Forest Socialist Party

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In The Socialist 3 February 2021:

Trade Unionist and Socialist Coalition

Launching a political alternative to cuts, poverty and job losses

Why I am attending the TUSC local elections online conference

South Yorks TUSC ready for electoral fight

What we think

Workers' rights and safety: Trade union mobilisation could force more Tory U-turns


Socialist Students open letter to Rent Strike network

Children in care: Privatisation is not working

Multimillion-pound rental firm demands thousands from homeless asylum seeker

Covid outbreak at Kent asylum detention centre: Napier is not fit for purpose

New anti-protest law: State forces want more power to crush the protests that are coming

Workplace news

Usdaw conference stripped of democracy by leadership

Usdaw Broad Left rally brings together those campaigning for a fighting union

Strong union lead needed to stop DVLA Covid spread

HMRC: We demand a pay rise without cuts to terms and conditions

Workers fight British Gas 'fire-and-rehire' plans

Vote Steve Hedley for RMT general secretary

The NEU's 'big announcement' - lessons need to be learned

Yorkshire aerospace workers strike against pay disparity

Workplace news in brief

The Communist Manifesto

The Communist Manifesto - A guide to understanding society, and how to change it


1971: Rolls-Royce crisis - when the Tories nationalised in order to secure the interests of British capitalism

Readers' opinion

GameStop: Billionaires hurt at their own game

The Socialist Inbox

International news

Covid 'vaccine wars' underline failure of capitalist nation states to deal with the global pandemic

Campaigns news

New members meeting in the South West - preparing for the battles to come

Why I rejoined the Socialist Party

Help us raise the funds to fuel the working-class fightback

Save our square: we need social housing and public services

Stop Labour council's eviction of Stratford Circus arts centre


Home   |   The Socialist 3 February 2021   |   Join the Socialist Party

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