Our Weekly Discontents, 2/1/2021
It's time for some GameStop theory.
Hello again. Jack Crosbie from Discourse Blog here. Last week the notoriously stable global financial system was fundamentally destabilized by a group of people using it as intended, to make themselves rich quickly. The last sentence could apply to basically any faction in the GameStop stocks/stonks debacle, because capitalism is an all-consuming beast that taints anyone who operates within its system.
Discourse Blog spent most of the week covering this: how Wall Street always wins, how the worst denizens of CNBC and Fox Business came crawling out of the woodwork, and how Joe Biden is pretty unprepared to grapple with an overvalued company best known for selling slightly sticky refurbished Xbox controllers.
But enough with our melodrama. To lead off this week’s newsletter, Discontents figured we should have a quick chat with someone who actually knows what’s going on, namely Edward Ongweso Jr., a staff writer at Motherboard, who’s been covering the story from the beginning. Here’s our conversation, edited for length and clarity.
So, it’s Sunday afternoon. Roughly where are we at with all of this? Is the squeeze happening? Is the crash happening?
So there’s been some confusion among Redditors and people watching about when this squeeze is supposed to happen. What is clear is that the options expired on Friday, so over the next few days, traders are going to be required to cover their position and come up with the stocks. We may or may not see the squeeze, which would result in a price jump for GameStop. But there's still an open question about whether it'll happen -- it looks like it’s going to happen, but it’s hard to pin down what that will look like.
For people not following too closely, are things still looking generally pretty good for like the WallStreetBets crowd, the day traders?
I think that’s the question that we’re going to have an answer to going into the week. It does look like they’re holding, and that there’ll be some upward motion [of GME stock]. But there’s also the question of will there be more trade halts, will there be more regulatory action, people stepping in to stop the squeeze?
I know I'm making you do a lot of predicting here, but what’s your best guess as to what comes out of this, with the SEC and the hedge funds adjusting to this new variable of semi-organized day traders?
I think it really depends on what narrative wins out. If the narrative that this is a bunch of retail investors in over their head who surged up a stock, then there are probably going to be more protections put in place [to stop that]. There may be attempts to weaken the ability of companies like RobinHood to operate so close to the margins. But yeah, the regulation really depends on what narrative takes hold: Is it the fault of the investors, or is the fault of the short sellers who sparked this, or is it the fault of the platforms on which they all trade?
Right. It’s been interesting seeing various interests groups hopping on this for what they want. Like the AOC/left crowd thinking this is an opportunity to “democratize capitalism,” or whatever, and people like Elon Musk who see this as an important battle in the war on short sellers. Where do you come down on these various narratives?
I mean what started all of this is short-sellers got way too greedy. A bunch of Redditors noticed that Gamestop was being shorted and was being way undervalued because of the shorts, and it was a perfect storm of events.
But the thing I'm worried about the most is this idea I'm starting to see in some of the politicians and some of the commentators that, you know, the real problem here is that people weren't allowed to trade, that not everybody has the right to trade and has the right to own stock. Most people do not own stock. Like if most people ever touch a stock it’s through their pension and retirement management. Most people never trade a stock. It’s a good way to lose money, and to gamble it away, and this idea that everyone has a right to do it is nonsense. It just suits the traders that push garbage onto people and the platforms that pull in people and make money off of selling their information to larger firms.
I’m very concerned that the message from all of this is how do we make trading easier for everybody, when that’s not going to do anything in the large scheme of things. If you really want to change things it’s not going to happen by trading stock. It might get some people rich quick, but the attempt to democratize financing I think is just a trap: the people who made the most money off this were the largest institutional firms that make money off of lending stock to people. Those are the people who are winning, not the little guy. Not the retail investor.
Now onto the rest of the Discontents.
Wars of Future Past
Kelsey D. Atherton
The Pentagon lacks the big cloud it was promised. It was supposed to happen by now, with the Joint Enterprise Defense Infrastructure ((JEDI), yes, I know) contract awarded in October 2019, but instead of building one big cloud for all the military’s secrets, the contract has been stuck in litigation ever since. Long-running military contract disputes are a durable feature of the defense industry; what was new this week is the Pentagon suggesting that, should it have to go to court to dispute the impropriety of a contract award process, it might just abandon the whole $10 billion contract as-is, and look elsewhere for storing secrets in a useful way.
This is not a news story with winners; Microsoft, which won the contract, and Amazon, which is contesting it, are companies that will be fine regardless of the outcome. The Pentagon, which desperately wants to have something approaching modern internet infrastructure, would have a somewhat more compelling case for urgency if any of the wars it was fighting had outcomes in doubt. But the Forever War, now well into its fourth presidency, is neither in danger of victory or defeat, and it’s hard to make a compelling case that better data would resolve a fundamentally political problem.
In a new report on Forever War, David Sterman outlines the whole problem about as concisely as I’ve seen it put anywhere: “Wars become endless when a belligerent adopts objectives it doesn’t have the capability to achieve, but isn’t at risk of facing defeat.”
Expect more at Wars of Future Past on that intractable problem later this week. If there’s anything the military should learn from the Jedi (yes, yes, I know, I know) it’s that skill in fighting a war means absolutely nothing if the conflict itself is designed without any possible end state.
Welcome to Hell World
Luke O’Neil
Most notably last week I interviewed economic journalist Doug Henwood about the big stocks what have you. Aside from having to explain to me what the stock market actually is he had some dour predictions to make.
The entire financial system is a giant bubble. Stocks overall are valued either close to or at the highest level relative to underlying value in history. The stock market is just insanely overvalued right now, at a time when scores of people are having trouble putting food on the table. It’s really grotesque. People are barely getting by and these characters are speculating with tons of money. Somehow it’s all going to burst. I don't know how, what will be the spark toward a collapse, but it’s all wildly over done. The difference between the stock market and economic reality has never been this wide.
Elsewhere I wrote about what I really want to do right now:
Here’s what I want I want to walk into a bar and sit down next to some fucking guy and be annoyed by every single little movement he makes and every comment about what’s playing on the TV. I want me to want him to shut the fuck up…. I want to be dragged to a dinner party I would prefer not to go to and sit there on someone’s stupid couch and reach a pita chip over and scrape it across the bowl of hummus and say ha ha that’s wild when someone is telling me a story about whatever cute little job they have and I want to go meet a friend I haven’t seen in a while and sort of not feel like it all day but then realize halfway through the visit that I love them and there’s a reason why I still know them even after all these years. Then once I’ve done all that once I’ve talked and talked I want to go home and be alone for a little while like it’s a pleasure I’ve earned not a punishment we’re all suffering through.
And later on I dipped into Engels on “social murder,” the film “From Dusk till Dawn,” and shared a few essays on alcohol dependence during the pandemic.
I used to think that drinking and doing drugs was taking me somewhere else. Not in the tripping sense I never did like those sorts of drugs but in the way that it summoned some part of me that lived inside and sent it out into the world to handle the logistics for me. A sort of publicist or travel agent that brought me places I wouldn’t have typically gone and handled the schmoozing.
Two of the three are paywalled so subscribe here for a super special Discontents discount of $4 a month good until tomorrow if you want to read.
A Lonely Impulse of Delight
Connor Wroe Southard
Last week, in this space, I said I might do my next newsletter on Goon (2011). Instead I ended up writing about Shin Godzilla (2016). There’s a lesson here about how I do this newsletter. Yes, that lesson is partly that I’m mercurial and impulsive about the art I consume, but it’s also that the fun of doing this kind of project is that I get to be that way and it may even work out well for my audience. As often as not, this newsletter ends up being a record of where my mind is in a given week, regarding stories and all kinds of other things. It usually seems to work OK? And maybe it’s even fun to read? I’m fairly happy with the Shin Godzilla piece, and I think you might be too.
So what’s up for this week? I think I’m going to try to analyze one of my favorite poems, but really it’s anyone’s guess. The only way to find out is to… sign up.
Perspectives: Past, Present, and Future
Patrick Wyman
I’ve been thinking a lot about the concept of “civilization” lately, about the categories we apply to analyze past cultures and societies and the values inherent in those categories. I wrote a little bit about that topic last week, exploring how folks have defined “civilization” and asking whether and how it’s a useful concept at all. This week, I’ll be discussing the emergence of that “civilization” in Mesopotamia more than 5,000 years ago, and how farmers and marsh-dwellers built cities and political hierarchies, and developed the first written language in the world.
The Flashpoint
Eoin Higgins
There's a certain stripe of contrarian in US media that tut-tuts activists who want to see police departments defunded and abolished by smugly asserting that abuses caught on tape are just "outlier incidents." These proclamations are usually combined with self-important rhetoric which frames the pro-cop pundit as a brave truth teller, fighting against the establishment.
Events continue to conspire against those takes.
On Friday, police officers in Rochester, NY pepper sprayed a 9-year-old girl in the face as they attempted to force the child into the backseat of a police car.
Asked about it, Rochester police union president Mike Mazzeo told reporters that spraying the child "resulted in no injury to her."
"It's very very difficult to get somebody into the back of a police car like that," said Mazzeo. "And she's 9 years old. Imagine what happens when we have a full grown individual."
Yes, just imagine.
I don't really have much else to add other than to say that if someone you follow or read frequently is still pumping out "most police are good, there's no systemic problem" takes, it might be time to stop taking them seriously.
Foreign Exchanges
Derek Davison
As you may already be aware, Myanmar State Counsellor Aung San Suu Kyi and several senior figures in her National League for Democracy party were taken into custody early Monday by the Tatmadaw, Myanmar’s very politically active military. Sometime thereafter, the Tatmadaw announced that it had declared a state of emergency and was assuming control of Myanmar, again, this time for a period of one year. The Tatmadaw’s commander in chief, General Min Aung Hlaing, will serve as head of state.
Suu Kyi’s tenuous collaboration with the Tatmadaw, as outlined in Myanmar’s 2008 constitution and its 2011 transition to civilian control after almost five decades of military rule, fractured in the wake of November’s general election. The NLD won an overwhelming victory, taking 238 seats in the lower house and 138 seats in the upper house of Myanmar’s parliament. This was only a slight improvement from its performance in the 2015 election, so not out of the norm, but apparently it was too much for the Tatmadaw. The military’s political front, the Union Solidarity and Development Party, contested the vote on grounds of fraud, and it was a decision by Myanmar elections officials midweek to dismiss those allegations that put the country on the path to what we now know was a military coup.
What happens next is very much up in the air. International pressure is already building for the Tatmadaw to reverse course. But Myanmar’s military has proven that it can resist international pressure, especially so long as China remains friendly. If it sticks to this stated one-year timeframe, the transition back to civilian rule will likely be engineered to extend military control. The Tatmadaw implemented several provisions in the 2008 constitution that were supposed to give it effective veto authority over the civilian government, if not outright political control of the country, but those safeguards failed and presumably it will want to leave nothing to chance this time around. And Suu Kyi, who was at one time the world’s most famous political prisoner before she was released and her reputation began to tarnish, will now find herself back in a familiar, though undoubtedly very unwelcome, position.
BORDER/LINES
There was a certain dynamic that played out again and again during the Trump administration: the government would institute some white nationalist wishlist item as federal immigration policy, immediately get sued, usually lose, and then run things up the chain of the federal judiciary for years, creating a mess of injunctions, stays, restraining orders, counter-orders, and rulings that made it hard to keep track of whether any particular policy was or was not in force at any given time. Trump-era immigration enforcement was very bad, but this was the only thing stopping it from being much, much worse.
Now, in the early days of the Biden administration, we’re seeing hints that a similar dynamic could basically play out in reverse, with nativists fighting tooth and nail in the courts to keep Biden from unraveling his predecessor’s immigration policies, let alone moving anything forward. It is here that Mitch McConnell and his Federalist Society pals’ long-term strategy of keeping judgeships vacant during the Obama years and then cramming the judiciary full of toadies as soon as Trump got in starts to bear fruit. Last week, Biden’s already-watered down 100-day deportation pause was blocked by a Trump-appointed federal judge, who tossed decades of precedent on the executive’s immigration enforcement discretion and issued an injunction on the grounds that the government had probably violated the Administrative Procedure Act.
The suit was brought by the Texas attorney general, who leaned on bizarre agreements that the Trump administration had signed with localities in its last weeks in office, essentially promising to consult them on immigration policy decisions, undoubtedly with the intention that they would be used in this exact way to trip up Biden. The judge didn’t issue the injunction based on this argument, but he didn’t laugh it out of court either, a concerning portend of things to come. Just a few days later, an all-Trump-appointed panel of the DC Circuit Court overturned a lower court ruling that had stopped the government from expelling unaccompanied minors without due process, ostensibly due to the pandemic. The message is clear: Trump’s gone, but his judiciary is here to hit the brakes on efforts to undo his immigration legacy.
The Insurgents
Jordan Uhl & Rob Rousseau
This week we were happy to bring on our personal attorney Respectable Lawyer for his first ever podcast appearance to talk us through this week’s Gamestop Saga, whether there’s any point getting emotionally invested in national politics in 2021, the pros and cons of forming political coalitions with people who openly fantasize about throwing you out of a helicopter and a whole lot more.
We also take a moment to vent our frustrations that despite our efforts to smooth things over through our high-powered consultancy work, the Biden Administration’s used car salesman-ass stimulus walkback still did not seem to go as planned.
Oof, that Border/Lines update. Fuck.