This is all fundamentally a Thomas Hobbes scenario of the masses deciding the "state of nature" no longer suits them and they want to work together
Basically Hobbes said "You might be strong, but someone will always be stronger. It makes sense to band together & agree on a few rules (form a government) so that we're stronger than any individual and we (mostly) won't get punched in the face. Otherwise, life is 'nasty, brutish, and short'"
As long as you're not an anarchist or anarcho-capitalist, this should be pretty fundamental & you agree with it, though sure different people draw the line in different places on how many rules should be made and what they should be about, which is fine, people can disagree on that stuff, that's mostly a different topic.
In the GameStop situation, we have a whole bunch of people saying:
Hey, the state of nature in the investment world is that we're all separate and weak and we get pwned by the big players. Let's band together so we're not as weak.
This is, essentially, what the large institutions are already doing. They're already a collection of people acting together.
Which is what makes this situation so infuriating: I don't particularly like all of the ways that capital markets function, but they should be roughly democratic (small "d")_in terms of access, no separate rules for different groups. A group of people that call themselves "Citibank" or whatever should not retain a privileged position above a looser group that calls themselves "WallStreetBets".
Yes, I understand the concepts behind T+2 and clearing houses calling for more collateral etc: but that's the problem right there. If those mechanisms are resulting in a privileged position for some institutions then it's those mechanisms that are flawed & antithetical to a democratically accessible market
I think people that are trying to justify this by explaining about calls for collateral and so on are completely missing the point: Those mechanisms are creating financial victims of the retail investors who lost their shirts when the price tanked because rule makers decided you were only allowed to sell GME, not buy it.
It's like saying (in possibly too extreme of an example, but I want to illustrate the point) that a murderer killing a cop is justified because if they didn't shoot the cop then they would be executed in the electric chair. That's not how it's supposed to work. Large institutions don't get to (well, I guess they do) shut down part of the market just because they'll lose money if they don't. That's the risk! It's not always a great system, but if anyone knows the rules and goes in eyes-wide-open, it's these institutions. No excuses, no "but but but collateral, T+2" and so on. You don't get to take other people's money (well, again, I guess you do) just because if you don't do it you'll lose a bunch of your own.
Basically Hobbes said "You might be strong, but someone will always be stronger. It makes sense to band together & agree on a few rules (form a government) so that we're stronger than any individual and we (mostly) won't get punched in the face. Otherwise, life is 'nasty, brutish, and short'"
As long as you're not an anarchist or anarcho-capitalist, this should be pretty fundamental & you agree with it, though sure different people draw the line in different places on how many rules should be made and what they should be about, which is fine, people can disagree on that stuff, that's mostly a different topic.
In the GameStop situation, we have a whole bunch of people saying:
Hey, the state of nature in the investment world is that we're all separate and weak and we get pwned by the big players. Let's band together so we're not as weak.
This is, essentially, what the large institutions are already doing. They're already a collection of people acting together.
Which is what makes this situation so infuriating: I don't particularly like all of the ways that capital markets function, but they should be roughly democratic (small "d")_in terms of access, no separate rules for different groups. A group of people that call themselves "Citibank" or whatever should not retain a privileged position above a looser group that calls themselves "WallStreetBets".
Yes, I understand the concepts behind T+2 and clearing houses calling for more collateral etc: but that's the problem right there. If those mechanisms are resulting in a privileged position for some institutions then it's those mechanisms that are flawed & antithetical to a democratically accessible market
I think people that are trying to justify this by explaining about calls for collateral and so on are completely missing the point: Those mechanisms are creating financial victims of the retail investors who lost their shirts when the price tanked because rule makers decided you were only allowed to sell GME, not buy it.
It's like saying (in possibly too extreme of an example, but I want to illustrate the point) that a murderer killing a cop is justified because if they didn't shoot the cop then they would be executed in the electric chair. That's not how it's supposed to work. Large institutions don't get to (well, I guess they do) shut down part of the market just because they'll lose money if they don't. That's the risk! It's not always a great system, but if anyone knows the rules and goes in eyes-wide-open, it's these institutions. No excuses, no "but but but collateral, T+2" and so on. You don't get to take other people's money (well, again, I guess you do) just because if you don't do it you'll lose a bunch of your own.
This is insane.