GameStop: The Tip Of The Corruption Iceberg

“And pruned the hedges of many small villages.” – Three Amigos

Amazing what happens when you find the world is corrupt . . . .

GameStop®.

In a world filled with COVID-19 shutdowns and Internet sites where you can download nearly any game ever made for low prices, it seemed like a sure thing that GameStop™ would fail. Except . . . people liked going. The profits weren’t through the roof, and the business model was older. Heck, the last time I was in a GameStop™ was over eight years ago, and about half the shelf space was pop-culture memorabilia and nerd toys, not games.

Never mess with weaponized autism.

Seeing this, the Wizards of Wall Street® decided to “short” GameStop™. I’ll explain what that is, and I promise you my analogy will be far funnier than what CNN© does unintentionally – and that’s a high bar.

Let’s pretend that you and I are friends. You brought the latest Pac-Man© cartridge game. Since you trust me, you lend it to me.

Addled on Monster™ Energy Drink© and chicken tendies, I waddle down to the local GameStop©. Since there is a relative shortage of Pac-Man™, GameStop™ offers me $50 for the cartridge. I pocket it and go home.

Two months later, you sober up and remember I borrowed your vidya game, and ask for it back. I waddle my greasy fingers down to GameStop© and buy a used cartridge. It’s not the original one that you lent me, sure, but you’ll never know the difference, not with your hygiene.

Since Atari© has made a metric buttload of additional Pac-Man© cartridges, the price to buy a used version is now $30. I buy it. I give it back to you. I pocket the $20, and no one is the wiser.

Last week was like no other . . .

That’s a short sale. I borrowed a commodity – one Pac-Man© video game cartridge (minor wear and tear excluded) is functionally exactly the same as any other Pac-Man™ cartridge.

That’s (sort of) what the hedge funds were trying to do with the shares of GameStop©, but with one crucial difference: the price went up. And they sold more shares of GameStop™ than exist.

That can happen in two ways. The first is legal. If I owned 100 shares of GameStop©, my broker could loan them to someone going short. They’re selling legal, actual shares. I might really, really, like GameStop™, so maybe I buy 100 more.

My account says that I have 200 shares of GameStop© now. I think I have 200 shares of GameStop™, but in reality, my broker only has 100. The same thing happens in a fractional reserve bank (like your bank) in that if you put $100 in, the bank might loan it all out. You think you have $100, but that $100 was loaned to someone. Just like shorting a stock, it sounds illegal, but it’s not.

So how does that work with my previous analogy?

Ahh, in a perfect world.

It’s exactly the same. If the price of Pac-Man© goes from $50 to $30, then I make $20. But if there’s a fire at the Pac-Man© cartridge plant in Roswell, New Mexico (because they use alien slave-labor from Arcturus to make them), and the price goes up to $100?

I’m out $50. But how often do the Arcturans revolt? Not often.

So, we’ve seen how my little deal could go wrong. But how wrong could it get? Infinitely wrong. Let’s say that I do this with 1000 Pac-Man© games, since it’s a sure thing. So, GameStop© gives me $50,000. Now I just sit and wait.

Yup, the hedgies lost billions.

But the fire thing happens. And since everyone else sold all of their friend’s Pac-Man© games before the factory caught fire, the price goes up. Way up. Like up twenty times in price. Let’s see, 20 times $50 is . . . $1,000 a copy. So now, since I borrowed that $50,000 in hopes of making $20,000 when the price went down, I’m actually in really bad shape.

I owe 1000 games times $1,000 dollars. I owe my friends, collectively, $1,000,000.

Ooops.

Musk is no fan of short sellers since they tried to destroy Tesla® a few years ago.

This is what the hedge funds did. And since (I believe) some of them are what is known as a “market-maker” they have 21 days to come up with those games (shares). 21 days is forever, so don’t worry about those billionaires – most of them are still billionaires – they just will have to wait until next month to buy that second volcano island death lair.

This is the situation that the Reddit© group r/wallstreetbets found – GameStop© was horribly oversold by hedge funds, and just a few people buying could start pushing the price up.

At one point, one of the r/wallstreetbets early investors in the short squeeze was up $48,000,000. That’s not a typo.

With a short, there’s a lot of power as the price goes up. The Hedge Fund Leech that runs the hedge fund starts to get nervous, and adds to the buying pressure as he tries to buy stocks to “cover his short.” This actually increases the price, sometimes causing it to go upward. A lot upward.

If that was all that happened, it would have been an amusing story. Wall Street Leeches get one-upped by message-board posters. Ha ha!

Something wonderful about that, right?

But that’s not all that happened. Immediately, the news media, (some) trading houses (most notably Robinhood©) and the talking heads began talking about how this was bad. The people who normally distort the economy and screw over the middle class don’t really like it when the weapons that they use are used against them.

Google®? Not on your side.

Well, actually none of them are on your side.

Huh. And they invest big dollars for that privilege. How much money have they given Janet Yellen, Secretary of the Treasury? A lot.

Whose side is Joltin’ Janet on? Not yours.

Last week on Thursday and Friday the powers that be told the markets to “shut down” the Internet Freedom Party raid on the financial leaches. In fact, several articles extolled how the Hedge Fund Leeches were the real heroes.

I’m feeling so sorry for him!

It’s a big game, but you and I are not supposed to play. You’re supposed to buy shares in your 401K so the Hedge Fund Leeches can take your money and collude with each other to own the economy. The free market is, in principle, a great thing. People buy and sell. The market allows the prices to be shared by all.

Well, I used to be the guy in front.

But Monday? Someone spent a quarter billion dollars to depress GameStop©. It’s analyzed here (thanks to r/wallstreetbets):

Also, people forget this: there were Hedge Funds on the other side of the deal. Vampires don’t need prices to go down, they can also make money when prices are going up.

Who knew that Karen ran the SEC?

No. Big players distort prices, they sell and buy options to make money on stocks that they intend to dump for short term profits after manipulating the markets. That this financial vampirism actually destroys companies, jobs, and communities?

And they will call you anything to make a buck.

Who cares? Not the Wall Street Hedge Leeches. Here’s Tucker Carlson with a discussion about one Wall Street Hedge Leach destroying an entire town in Nebraska. For a few million bucks. They would do that to you, your family, and everyone you know for a 2% return.

If you’re not mad, you’re not paying attention.

None of this is financial advice, you hosers. So, take off, eh. All of the memes are “as found” on the Internet.