GameStop – The Casino at Broad and Wall

I thought it was a very strange story. “Analysts confounded by GameStop price moves” read the headline in the business section of one of the world’s most widely read newspapers. “Recent volatility in the stock of GameStop has confused analysts following the video game retailor” read the lede line.

That there had been great volatility in the price of a share of GameStop was not debatable. The stock was trading below $20 a share at the end of 2020. On January 29, 2021 it hit $325. That’s a jump of 1,625%. If you had bought 100 shares on December 31, you would have paid $2,000. On January 29, one month later, your 100 shares would have been worth $32,500. If you think you understand the stock market that is a mindboggling increase. Certainly one to “confound” and “confuse.” But as your intrepid reporter wrote in my primer for the National Center for Business Journalism, stock markets are not what they used to be.

My grandmother Edna gave me ten shares of AT&T stock when I graduated from the 8th grade. She was a big believer in the stock market and AT&T, at the time the national monopoly telephone company and the most widely held stock in the world, was her favorite. At a monopoly utility, its revenue and profit was controlled by the government. In return, it held an exclusive franchise which made it a company almost completely protected from competition. As a result, the stock price remained very stable. And so did the dividend. The shares provided holders with a high degree of safety and a steady income.

In other words, AT&T shares traded predominately on their fundamentals, based on the health and business of the company and also on the health of the economy as a whole. In 1965, total trading volume for the year ran a few of billion shares.

Today the New York Stock Exchange can trade a couple billion shares between the opening and lunch. And swings in stock prices, where a one percent a day move was once considered extreme, can now be seen moving ten, twenty percent or more in a day.

The reason should neither confuse or confound. The simple truth is that the market has evolved from a relatively staid place where companies came to raise money for their growth and expansion and investors came to put their money to work for the benefit of the overall economy, to a casino where people with money try to out maneuver other people with the goal of adding to their money horde.

The stock market is no longer a good indicator of the health of the economy. It is, at least on a short term basis, decoupled from reality, manipulated by big time traders who care nothing about the prospects for a company. They just trade the company stock because they have identified certain characteristics in price movements which they believe can make for profitable trades in the short run.

So a battle between short sellers, who were betting that shares on GameStop (ticker symbol GME) would go down, found themselves challenged by a group of day traders who thought it would be fun to gang up on the so-called pros. The day traders, lacking the large bankroll of the hedge funds, banded together and bought the stock without concern for the company’s lackluster performance and poor prospects. That drove up the price, which put the squeeze on the hedge funds which had shorted the stock.

Definitions: shorting a stock means borrowing stock you do not own and selling it, making a bet the price will go down, enabling you to buy at a lower price and return the borrowed stock. Hedge funds sound like they are following a rational, conservative strategy but are really just large pools of money from rich people willing to take very large chances in the hopes of making even larger profits. Because they are only available to so-called sophisticated investors, they are virtually unregulated.

Why do we care?

Part of me says we shouldn’t care. Just recognize that the markets are manipulated and individuals should probably stay away. Refrain from judging a political leader’s performance by the movement of the Dow Jones average. And chalk the newspaper story referenced above to the work of a poor reporter operating in an environment where where are few editors.

But one thing about the GameStop affair bears note, as indicated in the chart below:

From CRS Report

In the midst of the wild price movements a discount brokerage, Robinhood, which caters to the day-trader crowd, restricted trading in GameStop shares. There are some situations where a brokerage has the right to do this. But they generally involve risk exposure for the broker involving a client who has borrowed on margin or sold short and may not be able to cover loses. My understanding of the GameStop incident is that Robinhood blocked all trading, even for those individuals who owned the shares and now wanted to sell and collect their profits. The broker would face no risk in that trade.

The Congressional Research Service has identified policy issues for Congress to consider as a result of GameStop. But I have a feeling this will just result in more talk and no action. It is interesting to note that hedge fund manager Leon Cooperman complained loudly about the day-trader’s action. The hedge fund managers for once found themselves playing defense. I have never heard complaints about the hedge funds and the banks, which generally trade with their own exchange memberships, regularly take advantage of individual investors due to superior knowledge of order flows, priority positioning of their trading computers and the ability to trade virtually anywhere at any time, avoiding any market suspensions or circuit breaker provisions.

My personal pet peeve is something called high frequency trading, a principal reason for the huge trading volumes these days. These systems use computers to buy and sell, sometimes holding a stock for only a fraction of a second, based on complex algorithms evaluating stock price, volume and order flow.

None of these technologies add much if anything to the nation’s economy. They consist of the financial insiders trading amongst themselves and increasing their wealth at the expense of those who they catch in the massive price swings they engineer.

They’ll make a lot of noise and probably hold hearings. But I’ll be shocked if the regulators take any meaningful steps to reign in the professional traders. After all, it’s the pros who make campaign contributions. The individual traders do not.

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The Second Trial of Donald Trump

Been there. Done that.

It seems like just yesterday the Senate tried Donald J. Trump for High Crimes and Misdemeanors. It was in January, 2020. He was acquitted.

This time it is different. The House of Representatives sent over only a single charge, accusing Trump of inciting insurrection in a speech to supporters before the deadly attack on the Capitol. They voted for impeachment without hearings or witnesses, using only the former president’s own words against him. And unlike the first time, where the impeachment was passed on a party-line vote, this time ten Republican members of the House stood with their Democratic collogues.

Another difference is that there was little in the way of defense. About the best Trump’s congressional supporters could do was argue that Trump hadn’t actually told people to stage a riot and kill policemen. That is true. But he did say “we’re going to walk down … to the Capitol…. Because you’ll never take back our country with weakness. You have to show strength and you have to be strong.” Death and destruction followed.

The other argument was that with only days left in Trump’s term in office, a proceeding designed to remove him from office was a waste of time. In fact it now appears this will be a principal argument at the Senate trial, defenders saying with Trump now out of office, an impeachment trial doesn’t matter and is therefore unconstitutional. That theory has been pushed with great vigor by Rand Paul, the “other” nutcase foisted upon the Senate by the people of Kentucky.

Why It Matters

The Constitution is a wonderful thing. Written in 1787, it was the first written specification for a representative form of government enacted by the governed themselves. To find even an unwritten representative government you would have to go back to the Roman Republic. But as remarkable as it was then it was not perfect. It contained omissions and ambiguities and made compromises which haunt us to this day.

The authors made it clear they saw the Constitution as a work in progress, allowing for amendments to its text and creating a judiciary to help interpret its meaning. On the procedure for trying an impeached officer of the United States they wrote:

The Senate shall have the sole Power to try all Impeachments. When sitting for that Purpose, they shall be on Oath or Affirmation. When the President of the United States is tried, the Chief Justice shall preside: And no Person shall be convicted without the Concurrence of two thirds of the Members present.

Judgment in Cases of Impeachment shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States: but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment and Punishment, according to Law.

Article I Section 3

There is nothing here that addresses the factual situation we currently face, with a president impeached during his term of office but coming to trial after that term has expired. There is nothing in the scant notes of the debate or in other writings on the Constitution itself that the framers considered this question. But I would argue that common sense alone is sufficient to defeat the notion that a president could commit as heinous a crime as one could imagine in his last few days in office and be immune from prosecution by Congress. That would be one hell of a get out of jail free card.

Obviously one cannot remove from office a president who is no longer in office. And while it is true that the impeachment process is a political function, not as judicial one, judicial bodies are not inclined to render verdicts in cases where the verdict will have no effect. Courts tend to dismiss such cases as “moot”. But that is not the case here. There is a second part to the judgment clause, the disqualification of the convicted from holding federal office in the future. It is doubtful Trump’s accusers are comfortable at the thought that he could seek a second term. For that reason alone, the trial is not without consequence and is clearly Constitutional. Not only that, this situation has been faced as far back as 1797, when the Senate tried one of its own members on an impeachment after he had been expelled.

What’s With John Roberts?

And now, with a great deal of pain, I admit I find myself in some agreement with one of the arguments of Senator Paul and others. It has been announced the John Roberts, the Chief Justice of the United States, will not preside at the second trial of Donald Trump as he did over the first. Senator Patrick Leahy, the president pro tempore of the Senate, will be in the chair.

Why?

Leahy’s office put out a statement indicating this was not Leahy’s choice. Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell apparently made the decision. Leahy would normally preside over the trial of any other federal officer. In an interview with MSNBC’s Rachel Maddow, Schumer said:

The Constitution says the Chief Justice presides for a sitting president. So that is not going to be—so it was up to John Roberts whether he wanted to preside with a president who’s no longer sitting, Trump. And he doesn’t want to do it. So, traditionally, what has happened is then the next in line is the Senate Pro Tem. That’s the most senior Senator on the Majority side and that’s Senator Leahy, who is a very experienced man and a very fair man.

Yes but. In the first place, Schumer is misquoting. the word “sitting” does not appear in the Constitution. It just says, “President of the United States.” Trump is no longer president. But he was president when he was impeached. One of those pesky little ambiguities I mentioned earlier. In the second place, I’m not sure where this situation made it Robert’s choice to preside or not “preside with a president who’s not longer sitting….” I would think that is a decision for the Senate to make.

No matter how experienced and fair a man Leahy is, he is also a juror and it just doesn’t look right for him to be presiding over the trial. This is a most solemn business. The Chief Justice of the United States owes the people the value of his expertise in presiding over the trial. To do any less delegitimizes the proceedings and in so doing Roberts shirks his responsibilities. These are delineated in his own oath to, “faithfully and impartially discharge and perform all the duties incumbent upon me as _ under the Constitution and laws of the United States. So help me God.” (Dec. 1, 1990, 104 Stat. 5124.)

Roberts should be in that chair, like it or not.

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The Liar in Chief departs The Stage

I thought January 20 was Joe Biden’s Day. And then came my need to acknowledge the Bernie Memes which have captivated social media. Besides, I figured we’ve had enough of Donald J. Trump.

But eventually I knew it would come time to note that Trump left the stage exactly where he came in four long, dismal years ago. Lying.

At Joint Base Andrews, about to board Air Force One for the flight out of Washington, Trump took credit as he has many times before, for VA Choice and VA Accountability, two laws first passed in 2014 during the administration of President Barak Obama.

The vets have given us an approval rating like it has never been before. We took care of our vets and our beautiful vets, they were very badly treated before we came along. And as you know, we get them great service and we pick up the bill and they can go out and they can see a doctor if they have to wait long periods of time.

It is not the first time Trump told this lie. Florida Senator Mario Rubio likes to take credit for the legislation too.

Now try if you can to think back to the day after Trump’s inauguration, January 21, 2017. Trump Press Secretary Sean Spicer comes out to brief the White House reporters and tells them with a straight face that the size of the crowd at Trump’s inauguration the day before set a record.

But photos comparing the Trump inauguration with the crowds for President Obama showed clearly that Obama was the bigger draw. Then the White House released obviously doctored pictures faked to make the Trump crowd look larger. This was the opening salvo in what turned out to be four years of lies by the Trump administration. It was like nothing we had ever seen. By the time Trump and his staff were finished with four years of lying with impunity, and falsely accusing responsible fact oriented news media of publishing “fake news,” even seasoned reporters had to wonder what was fact and what was fiction.

There was no better advocate for this systemic lying during the Trump administration than Kellyanne Conway, one of Trump’s senior advisors and a frequent spokesperson. Kellyanne, who resigned in the waning days of the administration and seems to be trying to rehabilitate her record, was an expert at steamrolling right over interviewers, ignoring their questions to practice “whataboutism,” pointing out alleged untruths told by Trump’s political opponents. In a remarkable interview with NBC’s Chuck Todd, she infamously described her obfuscation as the presentation of “alternative facts.”

Keeping track of Trump’s lies became a cottage industry all its own. The Washington Post reported more than thirty thousand in four years.

The biggest lie is the lie that triggered the mob attack on Congress on January 6 in which people died. By 2017 Trump was lying about the 2016 election results, falsely claiming that he not only won the votes in the electoral college but also won the popular vote. Hillary Clinton won the popular vote by nearly three million.

By 2020, long before the balloting began, Trump was unabashedly laying the groundwork to continue that lie, openly proclaiming that if he won the election was valid but if he lost it would be because the election was fixed. The absurdity of the position not withstanding, Trump’s historic lie drew support from the mob and from members of the Senate and House.

So the Trump administration began in a lie and it ended in a lie. And this should not have been any surprise to people who have followed Trump’s career. I began my reporting on The Donald in 1989, when I arrived in New York as the new bureau chief of the public television program Nightly Business Report. I interviewed Trump in the 1990s. I was with him as he took the inaugural flight of the Trump Shuttle, New York to Boston. I was with him as he cut the ribbon on his casino in Atlantic City. And when he dedicated several residential properties in Manhattan.

But I was also there in various courtrooms as his projects went into bankruptcy. I was in the courtroom on more than one occasion when contractors, suppliers, and other service providers sued Trump for breach of contract. Trump never showed up personally for those sessions. But in many an interview and in his ghost written books he readily admitted that he viewed contracts as a starting point, not an obligation. After the poor counter-party had delivered the goods, Trump would refuse to pay and challenge the guy he had stiffed to sue him.

Things got so bad Trump had trouble finding contractors to work on his properties or banks to loan him money. The regular equity and debt markets were closed to him after a series of defaults. Those defaults have continued.

The Donald Trump who America bought, the one who hosted The Apprentice for eleven years, was not the real Donald Trump. It was an fictitious character constructed by producer Mark Burnett and NBC. Did Trump know he was putting one over on gullible Americans and members of the news media? Or did he come to believe the lie? I’ll leave that to the psychiatrists to figure out.

For now I will exhilarate in the presence of a president and presidential staff which can tell the difference between the lie and the truth, and values the later. After President Biden himself, no one demonstrates this quality better than his wonderful press secretary, Jen Psaski.

No nonsense but with a sense of humor, Psaski brings a wealth of experience to the Jim Brady White House Press Room, where she has reinstated the regular press briefings. She treats the journalists with respect and earns their respect in return. She refuses to traffic in lies and innuendo. She is not afraid to say she does not have information on a subject she is asked but will look into the matter and follow-up. In other words, she is doing exactly what a long line of distinguished presidential press secretaries have done over the years to handle the sensitive relationship between government and the news media. It is a breath of fresh air.

The great American historian Michael Beschloss put it best:

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Bernie’s Memes

There appears to be hope for the Internet. Perhaps that means there is hope for us all.

Coming off the challenging year 2020, and considering the crisis of January 6, 2021, it is often hard to find hope anywhere. But take a look at this. The picture above is a picture of Bernie Sanders, the senator from Vermont who runs as an independent but caucuses with the Democrats, ran for president as a Democrat and is one of the leaders of that party’s progressive wing.

Sanders is pictured at the inauguration of Joe Biden as the 46th President of the United States. He is alone in his folding chair, socially distanced due to the Covid pandemic, dressed in a heavy coat and oversized mittens due to the cold of the January day in Washington D.C.

Funny as the picture is by itself, what is amazing is what has been derived from it. For the few readers who might not know, a “meme,” pronounced “MEEM,” is defined by Merriam-Webster as “an idea, behavior, style, or usage that spreads from person to person within a culture.”

Many memes rocket around the world on the Internet in the form of a composite photograph, taking the image of a person or thing and dropping it into another photograph where it is clearly out of place.

And so we arrive at the Bernie meme. Proof that there is hope that our sense of humor has survived the trying times. Even Senator Sanders has noted his approval and plans to make use of the phenomenon to raise funds for charitable causes.

Update– CNBC is reporting that “Sen. Bernie Sanders said sales of merchandise featuring a viral image of the Vermont independent wearing mittens at the inauguration of President Biden raised a whopping $1.8 million for charities in just five days.”

And so, without further ado, a gallery of Bernie Memes, with thanks to the unknown creators.

Have a nice day.

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Joe Biden’s Day

There is much to say about all the players who participated in the Inauguration of Joseph R. Biden as the 46th President of the United States. But we’ll save that for another day. For this was Joe Biden’s Day. And I want to let him speak in his own words.

“This is America’s day,” Biden said. “This is democracy’s day.” What struck me first and foremost was how normal it all seemed. A new President. A new administration. Words meant to soothe a bruised nation. Words meant to call us to arms to face the challenges ahead. And above all, words not about him, but words about us.

Today, we celebrate the triumph not of a candidate, but of a cause, the cause of democracy. The people, the will of the people, has been heard and the will of the people has been heeded. We’ve learned again that democracy is precious. Democracy is fragile. At this hour, my friends, democracy has prevailed.

After four plus years of having every White House utterance a statement of, by, and for Donald Trump, this was a breath of fresh air. Coming two weeks to the day when a mob of insurrectionists stormed the very same platform in front of the Capitol in an attempt to nullify the voters will this was remarkable.

From now, on this hallowed ground, where just a few days ago, violence sought to shake the Capitol’s very foundation, we come together as one nation, under God, indivisible, to carry out the peaceful transfer of power, as we have for more than two centuries.

Biden pulled no punches in listing the challenges; the Covid pandemic, the climate crisis, political extremism, white supremacy and domestic terrorism. And then he hit his main theme, a call for unity.

I know speaking of unity can sound to some like a foolish fantasy these days. I know the forces that divide us are deep and they are real, but I also know they are not new. Our history has been a constant struggle between the American ideal that we’re all created equal and the harsh, ugly reality that racism, nativism, fear, demonization have long torn us apart. The battle is perennial and victory is never assured.

This is our historic moment of crisis and challenge. And unity is the path forward. And we must meet this moment as the United States of America. If we do that, I guarantee you we will not fail. We have never, ever, ever, ever failed in America when we’ve acted together.

As I read those words it is tough to keep the cynic in me down. So many times we have heard these calls for unity and cooperation only to see the hopes dashed on the rocks of bipartisanship. But this is Biden’s Day so let’s give him his due and hope he can pull it off.

We must end this uncivil war that pits red against blue, rural vs. urban, conservative vs. liberal. We can do this if we open our souls instead of hardening our hearts. If we show a little tolerance and humility, and if we’re willing to stand in the other person’s shoes, as my mom would say, just for a moment, stand in their shoes. Because here’s the thing about life: There’s no accounting for what fate will deal you. Some days when you need a hand. There are other days when we’re called to lend a hand. That’s how it has to be. That’s what we do for one another. And if we are this way, our country will be stronger, more prosperous, more ready for the future. And we can still disagree.

I hope the naysayers and obstructionists will take heed and just give it a try. Bipartisanship does not mean you get your way. It means you compromise. You horse-trade. You win some and lose some. But you move forward and get things done. For decades we have for the most part failed to do this. If anyone can get us moving again, it will be Joe Biden, a man of faith, a man with empathy for others, a man who sees the difference between the truth and the lies, a man who has been in the Senate and worked with representatives of both parties for longer than most of us have been alive.

Folks, this is a time of testing. We face an attack on our democracy and on truth, a raging virus, growing inequity, the sting of systemic racism, a climate in crisis, America’s role in the world. Any one of these will be enough to challenge us in profound ways. But the fact is, we face them all at once, presenting this nation with one of the gravest responsibilities we’ve had. Now we’re going to be tested. Are we going to step up? All of us? It’s time for boldness, for there is so much to do. And this is certain, I promise you: We will be judged, you and I, by how we resolve these cascading crises of our era.

Now we all face the test. How will we respond to Biden’s call?

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Twice Impeached

Another record for the man who is everything. Donald Trump is now the only person to have been impeached twice by the House of Representatives. Whether or not he is found guilty when tried by the Senate, he also has the distinction of being a president of the United States accused by a bipartisan coalition. Ten Republican House members voted to impeach the titular head of their party. Four others abstained from the vote.

It is not difficult to see why. The impeachment came one week after a violent mob, encouraged by Trump, came to Washington and attacked Congress in an attempt to keep it from counting the certified election results sent in by all fifty states and the District of Columbia. Trump, leader of the executive branch of government, was demanding the mob stop the legislative branch from performing its constitutional and statutory function and instead disenfranchise millions of voters and install Trump as a literal dictator.

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trump’s attempted coup – THAT WAS the week that was

The Week is Over

The cliché says that journalism is the first draft of history. We shall have to wait the verdict of historians several years down the road to craft a title for the tumultuous events of the last week and put them into perspective. For now it shall suffice to note that the FBI is calling on citizens to help identify members of the violent mob of Donald Trump supporters who attacked the United States Capitol on Wednesday in an attempt to stop Congress from tallying the Electoral College votes declaring Joseph Biden and Kamala Harris the next president and vice-president.

It was the first time since the Constitution was ratified on June 21, 1788, that a President of the United States attempted to overturn the results of an election and remain in office after the election of his successor had been certified by the states and the District of Columbia.

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