Monthly Archives: January 2021

Panglossian:

Dr. Pangloss, professor of “métaphysico-théologo-cosmolonigologie” (English: “metaphysico–theologo-cosmolonigology”) and self-proclaimed optimist, teaches his pupils that they live in the “best of all possible worlds” and that “all is for the best”. [Wikipedia]

Noted in “This year could come to be regarded as a turning point in history,” Graham Lawton, NewScientist (19 December 2020):

As Nobel prizewinning economist Esther Duflo at the Massachusetts Institute of Technology has pointed out, the pandemic is a “dress rehearsal” for the much greater challenge that is climate change. I think the world has performed the dress rehearsal better than expected, and there is now cause for confidence that we can meet other problems ahead.

The defeat and imminent defenestration of that one-man environmental wrecking ball, Donald Trump, also adds to my cautious optimism.

I am no Panglossian – no new dawn is ever as bright as we hope – but my feeling is that 2020-21 will come to be regarded as one of those turning points in history, like 1848, 1918 and 1945, when the old world order was swept away and something new emerged. New doesn’t necessarily mean better. But I believe it is possible. Then I will happily go back to being a dog in a time of tranquillity.

Methinks Mr. Lawton should spent a month in the United States. Reports of vaccination sites being blockaded by anti-vaxxers are vastly disquieting.

Continuing on the coordinated reddit army of investor’s attack on hedge funds shorting Gamestop, Sinan Aral of MIT has some observations on the situation in WaPo that rings bells for me. For example, the fact that a crowd can be heterogenuous:

The Securities and Exchange Commission said Friday it is reviewing the recent volatility in GameStop and other stocks. Good. Not nearly enough is known about the perverse incentives and feedback loops driving these market movements. For example, who is in this “crowd”?

And were the individual investors hapless dups of other corporate entities?

And what role has been played by hedge funds standing to profit from the dizzying price increase? Yes, some hedge funds were short-squeezed and lost a fortune, but other institutions — such as BlackRock, owning 9 million shares of GameStop — likely made more than $1 billion on the madness.

But most importantly is a point I’ve been trying to make:

There are also perverse incentives created by Robinhood and other retail investing sites that purport to give the little guy a seat at the Wall Street table, but that actually earn large swaths of their revenue from institutional investors by processing trades through market makers, including Citadel Securities, that provide the other end to the trade. …

Perhaps most important, if social media can disrupt markets, it creates an incentive for economic terrorism and provides an opening for America’s enemies. If Russia saw an opportunity to disrupt U.S. elections with disinformation on social media, imagine what Moscow must be thinking about the prospects for interfering with the U.S. economy. The results of the SEC’s GameStop review cannot come fast enough.

Much like a discussion about anonymous participants in news and discussions in which we cannot know the true motivations of the participants with any certainty that I had long ago on UMB, the motivations of the players in this game – especially those with greater leverage, whether financial or communications-related – are not certain. Profit without ethics? Damage to institutional entities such as the hedge funds? Maybe the next shot will be to take down an important financial institution, such as Bank of America? Or a defense contractor?

Was this a test run?

But this paragraph reminded me that a lot of pundits are ignoring an important distinction between pump ‘n dumpers and this incident:

But what has transpired lately with the stocks of GameStop, the AMC movie theater chain and the BlackBerry tech company breaks fresh ground. The problem is that the world is witnessing this plane crash in real time: Right now, the plane is still at 30,000 feet, but countless small investors could be wiped out when the inevitable crash comes — when the market tries to find the appropriate prices for stocks that are untethered to companies’ underlying value.

A pump ‘n dump has the same characteristics that Aral & other observers assume they’re seeing here: a sudden and unjustified jump in price motivated by one category of investor, the dishonest pumper, and brought to fruition by the second category of mislead investors who put money into a misperceived opportunity, followed by the perpetrators dumping the stock for profit, and the long ride down to low prices for those who bought at the top.

But in the Gamestop incident we have a third player: the victim hedge fund, Melvin Capital. Because the short squeeze means they are being forced to buy shares of stock at higher and higher prices, far higher than they originally sold their borrowed stock for, this means a vast injection of cash into the financial web surrounding the Gamestop stock^[1] is occurring. This may mean that the small investors are not as vulnerable to being wiped out as they would in a pump ‘n dump situation. I would guess the reddit army will come away with vast profits, derived from Melvin Capital’s requisite buying of shares on the open market. Naive investors who went where the action is may, on the other hand, suffer significant losses when the Gamestop share price settles down to more reasonable levels.

If it does. As I noted in my previous post on this thread, Gamestop’s new board members may be able to convert the company into an online entity that is capable of generating the profits necessary to keep the share price high. That remains to be seen.

Speaking of the naive investor, a reader writes about his naivete:

I played the short game in the past. I think it’s akin to riverboat gambling. A $30,000 one-week loss convinced me that is not a game I will play again. It was an expensive lesson.

I considered playing some shorts. I ran an informal experiment and decided I was not equipped to be successful, and so I never plunged in. However, I did a bit of, oh, month trading for a short while. The first two trades made some money. The third was another story, which, come to think of it, I still own after all these years. I’m surprised the company is even still around. No more of that, I say. Long term investing means not having heart burn, not paying fees like mad, and occasionally getting lovely surprises.

Ya gotta like it.

¹ If Gamestop is holding any of its own stock in its treasury and sells it at this time, it also benefits from an unexpected cash injection. Whether they do, did, or not, I do not know.

Beau speaks as a conduit of understanding, and it’s worth a listen.

For the record, I would at least be interested in his explication of one claim, but I won’t mention it here – no spoilers.

The GOP really should take this as a hint concerning their future if they stick with former President Trump:

Former President Donald Trump’s five impeachment defense attorneys have left a little more than a week before his trial is set to begin, according to people familiar with the case, amid a disagreement over his legal strategy.

It was a dramatic development in the second impeachment trial for Trump, who has struggled to find lawyers willing to take his case. And now, with legal briefs due next week and a trial set to begin only days later, Trump is clinging to his election fraud charade and suddenly finds himself without legal representation.

Butch Bowers and Deborah Barbier, who were expected to be two of the lead attorneys, are no longer on the team. A source familiar with the changes said it was a mutual decision for both to leave the legal team. As the lead attorney, Bowers assembled the team.

Josh Howard, a North Carolina attorney who was recently added to the team, has also left, according to another source familiar with the changes. Johnny Gasser and Greg Harris, from South Carolina, are no longer involved with the case, either.

No other attorneys have announced they are working on Trump’s impeachment defense. [CNN/Politics]

If his lawyers are fleeing, perhaps their really is something to the allegations against him – and being on the wrong side of history will invalidate what passes for Republican ideology this day.

And, I idly think, perhaps the former President should represent himself at the trial. After all, he was an actor on a successful show at one time – perhaps his only successful job, ever. Even if he’s convicted, at least he’d get a smidgeon of attention.

Margaret Sullivan discusses the rights and responsibilities of the free press in WaPo:

Late last week, progressive groups published an open letter asking news organizations to stop amplifying politicians who won’t publicly concede that the 2020 presidential election was legitimate.

“Every American is entitled to freedom of speech, but they are not entitled to appear on prestigious television programs or news outlets to spread demonstrable falsehoods that have already incited a murderous insurrection, and remain at the heart of an ongoing national security threat,” the letter said.

Do these politicians run the risk of being “canceled”? I doubt it. They’ll find a way to get their messages out, just as Hawley is doing with such success.

And those who are not being covered – or at least advocated not to be covered – join a long list of people of extreme views who were also not covered over the decades. This is not a new phenomenon, even if it’s gone out of fashion because the Internet has dramatically dropped the cost of publishing and reaching audiences.

The media has always had a responsibility to ignore extremists, a responsibility that Fox News has demonstrably failed to fulfill.

So don’t be shocked and horrified if Senators Hawley (R-MO) or Cruz (R-TX) howl that they aren’t allowed on Face The Nation or Meet The Press to present their theocratic views. Those views led to violence, they led to death, to the surprise of no one who has read history and thought deeply about the mindset of the fanatic religious. That makes them extremists. And if they hide them behind theories concerning the religion that are based on something other than evidence, they are still extremist.

And then I popped his head like a balloon!

Stripped (2014) is a documentary of the cartoon strip genre of art. It’s a frenetic collage of fragmented interviews and strip clips, which drove my Arts Editor mad as she loves to examine artwork, and there was no time. Interviews range from old-timers bemoaning the loss of the traditional markets to newly minted cartoonists who embrace, if sometimes reluctantly, the entire experience of the professional cartoonist of today, from the actual creative work which is displayed online, to the advertising via fan conferences and other venues, to the public correspondence with fans, skeptics, and the random reader.

It’s fascinating but jarring. I wish they had explored the storytelling aspect in a little more depth, but just getting this peek into cartoon stripping was a gift.

My correspondent from the Gamestop thread had more to say that led me to create a new thread:

Note that some of the hedge funds taking it in the shorts (oo, unintended double entendre pun!) are the same funds that tried to drive Tesla out of business by shorting them as well. There’s a bunch of hatred for those funds out there by people like Elon Musk (he’s the only person I’ve seen named, but article claimed there were others). And Tesla is doing very well at the moment. So one could argue, and I do, that some of these hedge funds really deserve to arrive in bankruptcy. They’ve been a corrosive (at best) effect on the economy, and might well be illegally manipulating the market.

I translate my reader’s comments to be a question about the social utility of hedge funds, or Do hedge funds advance the interests of society as a whole. Much like my frankly skeptical questions about the utility of trading algorithms which depend on speed measured in microseconds or less, and often result in owning stocks for a few seconds. The idea that making money by taking advantage of the gap between prices in a microsecond caused by the advent of news doesn’t seem to be wise investing, but rather an experiment in gaming a system.

It’s legal I presume, but, by not following the rules dictated by the reason the market exists at all, a probability exists that the markets will become contaminated, much like zombies are humans contaminated by a virus. If there were zombies. The market strays further and further from its primary purpose.

While hedge funds may, as a general concept, serve a social function, my reader’s comment to the effect that hedge funds have engaged in activities designed to maximize their profitability has caused the investment of investors in resentment.

And these observations, I think, most investors would characterize as fraudulent. Back when I paid a lot of attention to investing, there were certain firms known to take a short positions in certain companies, and then they’d start spewing out reports that painted the companies in a negative light. Were they truthful? Was it even ethical for them to issue reports that must be characterized as self-interested, whether accurate or not? Individual investors who were positive on those companies were resentful, because they lacked the resources to influence the market as much as the big firms could. That meant the market was being distorted.

And that lead to hatred. It’s one thing to play a game, but when only some of the players have to follow the rules, then there’s suspicion. People may leave the market, to its detriment. And others may profit without justification. Which all leads to Leon Cooperman.

Who is Cooperman? He’s a billionaire hedge fund manager who recently commented on the Gamestop ongoing incident and taxation in general:

“The reason the market is doing what it’s doing is people are sitting at home getting their checks from the government, okay, and this fair share is a bullshit concept,” Cooperman shouted on the business network earlier today. “It’s just a way of attacking wealthy people. It’s inappropriate and we all gotta work together and pull together.”

While Cooperman does not appear to have been affected by the GameStop carnage, at least in a meaningful way, he’s basically the perfect person to show up on TV and scream about how wealthy people are being attacked. If you’re unfamiliar with the guy, he’s long been known for going apeshit when people suggest that the über-wealthy aren’t paying their fair share, or when politicians express anything less than total respect for the “job creators” of the world. During the Obama years, he claimed that the 44th president’s decision to call Wall Street executives “fat cat bankers” right after the financial crisis was encouraging “class warfare” and that Obama’s “tone” was “cleaving a widening gulf…between the downtrodden and those best positioned to help them,” i.e. the benevolent rich. During the 2020 Democratic primary, he sparred with Elizabeth Warren over her supposedly “shitting on” the American dream and for being mean to the 0.000001%. And after the Democratic primary race came down to Joe Biden and Bernie Sanders, he claimed that Sanders was “a bigger threat [to the stock market] than the coronavirus.” Yes, the coronavirus. (Later, he went on CNBC and cried, claiming he’d been so antagonistic about 2020 because he cares so much about America.) [Vanity Fair]

As he’s a hedge fund manager, I just have to wonder what social utility he brought to society that warrants his assumption of such a privileged position – and his violent rejection of the idea that his taxes should be higher than they are, especially in view of the various statistical studies indicating wealth is so deeply concentrated in the upper reaches of society.

I mean, I have no problem with an inventor of a vaccine being accorded a ton of money. The social utility is obvious. But what did a hedge fund manager do that results in a similar position? Financial cleverness, political connections, and depending on the largesse of government to bail you out in case you screw up, none of these are impressive. They’re depressing.

But I’d like to see him address that basic question of social utility, rather than shouting about his taxes going up and how that’s horrible. I feel like his shouting is the distracting hand of the magician, and we need to figure out what that other hand is doing.

Regarding the ongoing tug of war between hedge funds with a negative view of the market caps of Gamestop, AMC, et al, and the reddit-based coordinated army of amateur investors, my reader writes in defense of the Gamestop (GME) valuation:

I think Erickson is right about a lot of things, although clearly not everything. The influence of the Chewy people is what made me comment above about being positioned for success. Not just the co-founder Ryan Cohen, but 2 other execs from Chewy bought up lots of Game Stop stock last year, and then got themselves on the board. These 3 guys built a very successful, online-only business. So the theory among analysts (with which I mostly agree to the extent I care or have looked into it, which isn’t a great deal) is that they are well positioned for a turn-around based on making Game Stop a virtual company, as well as bricks-and-mortar. They may well lose money in the short term, but it sure looks like leadership is intent upon a dramatic change and turn around.

Any change in a business model has to start with top level personnel, either in them learning more and changing plans, or in their replacement. My reader’s information does in fact suggest a change in business model, and while I continue to have trouble seeing how used video games can move to an Internet model, that doesn’t mean they’re retaining the ‘used’ aspect at all.

In other words, the valuation of Gamestop just became a lot fuzzier than it was. Whether a ten-fold jump in value is justified is another question – but, then, when it comes to the events of the last week, the real question isn’t valuation, but the purpose of these maneuvers. While emotionally I sympathize with the coordinated army, and not in the least with the hedge funds, rationally I wonder what malicious damage could be wrought with this new phenomenon – and, if such can be identified, how to regulate the markets to avoid them.

Or is there nothing to worry about? I hope that’s true, as I’d prefer to let investors do their thing without regulating them for their own good. Generally, it’s the corporations that must be regulated in order for the markets to function properly.

Note that some of the hedge funds taking it in the shorts (oo, unintended double entendre pun!) are the same funds that tried to drive Tesla out of business by shorting them as well.

Gotta love the double entendre!

But this does bring to mind a novel investing strategy. Discover which companies are being shorted by hedge funds that have earned some small investor hatred, and then take small positions in some or all of them. You may lose all your money, depending on misplaced patience, but just one success would cover all the failures.

This is a risky approach to investing and I do not suggest it. I am not a licensed investing professional and, in fact, probably do not exist at all.

Regarding the extension of self detected by researchers when driving a car, a reader writes:

I turn the key, the truck starts, and I drive it. It’s as simple as I am. I don’t dwell on my extended self and I have no angst about losing control of who I am. Although I will confess to having driven halfway across the state and realizing I have zero memory of the last many hours behind the wheel.

Yeah, I know the feeling. Especially the time a cop went wailing by me as I drove along. I wonder if the cop had his siren going just to wake me up. They didn’t pull me over.

But I think the extended self is unconscious, the ability to know where the nose of the car extends to in relation to where you sit – learned through experience until it becomes akin to ‘muscle memory.’

The Princess Bride: Home Movie (2020) is a retelling of the beloved classic The Princess Bride (1987) which embraces the constraints of the Covid-19 pandemic and the whimsy of the original to create a slightly slimmed down version of the story, featuring dozens of actors, each working out of their own backyard, and gloriously edited together to tell the story of evil men, swashbuckling, sword fighting, and the drive for revenge.

It’s all very silly and made me laugh way too much. My Arts Editor, recovering from surgery, snorted at me, closed her eyes halfway, and put up with it. In YouTube distribution from Quibi, here it is.

As my Arts Editor will be undergoing surgery, probably within the hour, for a torn rotator cuff, I may have to curtail posting to UMB for an unknown amount of time. Fortunately, I run the blog to vent steam, rather than make money or anything else that requires I keep a schedule.

Or it may not curtail posting.

Jacob Schulz on Lawfare:

“In Washington D.C., ruthless fanatic violence erupted in the halls of Congress,” the news opened.

Extremists had burst into the Capitol. They made a beeline for the chamber, looking for members of Congress. It was “pandemonium.” The anchor declared that the attackers had earned “the evil distinction of having perpetrated a criminal outrage almost unique in America’s history.” He decried the attack as “wanton violence that shocked and stirred the nation” but “only did harm to the cause” the attackers purported to represent.

Sound familiar? It should—except that the attack in question took place on March 1, 1954, at the hands not of #MAGA extremists but of Puerto Rican independence radicals.

I had no idea.

There’s been speculation about Republican tactics at the upcoming Impeachment trial of former President Trump. In case you were wondering if the team tactic of the Republicans – and, remember, they like to do everything as a team, and express outrage when someone goes off and thinks for themselves – is to simply not attend the actual vote, keep this in mind:

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. [Constitution of the United States of America]

Present is the keyword here. I see no mentions of quorums, either. That means if the Republicans decamp en masse, the Democrats have an easy road to conviction, assuming the evidence presented by the House managers is convincing.

So enough Republicans have to be there to make the math work. A likely scenario is 55 votes for conviction, which suggests 84-55=29 Republicans would need to be present and voting nay for Trump to escape further disgrace.

I wonder how they’d go about deciding who doesn’t have to show up and who does? Sounds like quite the little war.

But they don’t want to vote on this, either.

The coordinated Reddit investment army of which I wrote yesterday continues to stir up comment and trouble. First, though, the markets had a mild recovery today, so either they don’t realize there may be a danger here, or have discounted it.

Now, Gamestop (GME) and AMC (AMC) stock prices slid down the greased rope towards their old (that is, of 6 business days ago), and possibly proper, values today during normal trading, but as I type this, it appears that in after hours trading the army is making a play to prop GME back up. After a 44% drop today, it’s back up 49%. Keep in mind those two percentages are off of consecutive baselines, not the same baseline, so look up the numbers for yourself – they’re changing until after hours trading closes up. The AMC share price is exhibiting a similar behavior. There were five stocks listed by news services as being part of the action, and the other three are Bed, Bath, and Beyond (BBBY), Nokia (NOK), and Blackberry (BB), all notable as formerly sexy stocks that have lost their luster. I have not checked their share price behavior today.

The most interesting bit of news to me is the report that Robinhood, the app that permits free buys and sells of stocks and is reportedly the app of choice for the coordinated army, has restricted trading in these stocks:

GameStop traders sent the stock on a wild ride Thursday. The stock plunged more than 40% Thursday after surging nearly 40% at one point earlier in the day. Adding to the drama? Robinhood said it was restricting trading in the red hot stock as well as several others.

“We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only,” Robinhood said in a statement, adding that it was also doing so for AMC (AMC), BlackBerry (BB), Bed Bath & Beyond (BBBY), Nokia (NOK) and three other stocks.

“Amid significant market volatility, it’s important as ever that we help customers stay informed,” Robinhood added.

The backlash was swift, and hours after implementing the restrictions, Robinhood appeared to backtrack, saying it would resume limited buys on those securities starting Friday. [CNN/Business]

I’d be interested in knowing the nature of the backlash. The army threatening to take its 2.2 million members and go somewhere else? Legal action? This latter reason is particularly interesting because I’m a little concerned that Robinhood’s action, while perhaps legal, is probably not ethical in the larger scheme of things. By that I mean the right to shut down trading in a stock without authorization from a higher authority amounts to trading manipulation, an old suspicion among amateur – and perhaps professional – traders towards the big market makers, firms responsible for the implementation of the market..

A reader writes:

From my reading, it appears that Game Stop was actually well positioned for success and growth, but that the short sellers were wrong but then sought to save their positions by further depressing the stock by buying more shorts. Then the long buyers on Reddit pushed it up, making it impossible for the shorts to cover their positions (short positions can be had for more than 100% of the stock available). So in this case, I don’t think the long buyers were artificially inflating Game Stop so much as pushing back against a fake downward pressure. I kind of like that some of the shorts got caught out.

From the above CNN/Business link:

Although the retailer reported decent holiday results and now has the backing of Chewy (CHWY) co-founder Ryan Cohen, GameStop is still losing money as the sales of video games have increasingly shifted from buying a cartridge in a box at a physical store to a download model.

I owned GME years and year ago, did decently, but got out for the same reasons as CNN cites – I didn’t see GME having a future with its then-business model, which I assume hasn’t changed much if they’re closing stores and losing money.

All that said, if the Internet were to suddenly collapse, GME would be an interesting opportunity.

And then there’s Erick Erickson, who sees everything through his far-right vision:

American history is full of stories of small entrepreneurs with good ideas displacing pre-existing giants in the marketplace. Over time, however, that has become less the case. Now, Goliath hires an army of lobbyists who help shape the regulatory code, the tax code, and draft legislation to provide competitive advantages for themselves or disadvantages for would be competitors.

The little guy cannot become the big guy because the big guy has lobbyists. It is no coincidence that Democrats are decrying the wealth gap and the inability of the little guy to become the big guy at a time the big guy is engaged in shaping federal policy and funding the Democrats. The Democrats’ solution is to make the little guy more comfortable, but also punish him if he dares to get too successful. The Republican solution has largely been to prop up the big guys and bail them out when they falter, equally ensuring there can be no competition.

The advent of the Web heralded a brand new wave of creative destruction – it hasn’t slowed it down. There’s a host of dead and dying retailers lying in the wake of Amazon and its competitors – of which there are a few.

And, somehow, the Democrats are the thumb puppets of Big Business.

But Erickson is stuck in his metaphor of David vs Goliath:

CNBC, the stock regulators, the business press, and various state Secretaries of State declare the regular Davids the bad guy for driving Goliath to a bail out. According to all of them, it is bad for David to slay Goliath because David might get hurt in the process. Ironically, these sorts of regular people trading are CNBC’s core audience and CNBC is vilifying them and protecting the hedge fund guys.

These guys on Reddit know that. They do not care. They know, with a subreddit called WallStreetBets that they are gambling on the stock market. They are not using it for a long term growth and income strategy.

But the system favors the existing large institutions. In the name of stability and paternalism, the regular guys driving up the prices are bad because they are destabilizing a system and possibly costing themselves money.

They have every right to do it, but the system is against them, which pushes the financial press against them, which makes me root for them even more.

The market will settle to the fair market value price. GameStop stock will go down. People will lose money. But I’m unsure why any of us should care that a group of multimillionaires or billionaire hedge fund guys lost their shirts to the regular guys when usually it is the regular guys losing their shirts and jobs to the hedge funds.

Or will it? He seems blind to the possibilities of this phenomenon – possibilities that have little to do with traditional stock markets. But I mentioned that in my prior post.

For Erickson it sometimes seems like every post is a chance to slime the Democrats and the left while propagating a political narrative, rather than exploring possibilities.

But readers are used to that.

But there’s even more politics related to this incident!

Democratic Rep. Alexandria Ocasio-Cortez on Thursday accused Republican Sen. Ted Cruz of “trying to get me killed” during the January 6 insurrection at the US Capitol and called for his resignation from the Senate, after the Texas Republican appeared to agree with her on the need for an investigation into Robinhood following chaos on Wall Street.

“I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 weeks ago so you can sit this one out,” the New York congresswoman wrote in a tweet directed at the Texas senator Thursday. “Happy to work w/ almost any other GOP that aren’t trying to get me killed. In the meantime if you want to help, you can resign.”

She continued, “You haven’t even apologized for the serious physical + mental harm you contributed to from Capitol Police & custodial workers to your own fellow members of Congress. In the meantime, you can get off my timeline & stop clout-chasing. Thanks.” [CNN/Politics]

And she’s certainly justified in that comment. Make it clear he’s no longer welcome in polite company, eventually he’ll clear out in shame.

This bit from NewScientist (12 December 2020) caught my attention:

We already know that when we use a tool such as a hammer, our brain’s body map expands to encompass it: the tool temporarily becomes part of an “extended self”. Something similar is true if you are a habitual driver. The vehicle becomes part of you – or perhaps you become part of the vehicle.

With digital devices now constantly in our hands, the extended self could become permanent. “Our identity partly depends on memories,” says philosopher Richard Heersmink at La Trobe University in Melbourne, Australia. Increasingly, we are outsourcing our memories to our smartphones – not just through notifications of what we should do, but through messages and images that recreate what we have done. The result? “A larger part of our narrative self is smeared out over our environment,” says Heersmink. You may extend further than you think.

Except that’s not really true, is it? Take the very example first given: driving cars. Supposedly, within a few years none of us will be driving cars; we’ll instead be chauffeured about by dedicated computing systems, perhaps even AIs – mislabeled or, frighteningly^[1], not. Will our extended self still include the car?

I doubt it. It’s the action of driving that engenders the car’s inclusion into your sense of self, because that’s part of being effective at driving. If it’s not needed, if you just hit the big GREEN start button and speak an address, there’s little reason to include the car into your extended self.

And if you then have to drive the car in an emergency?

I wonder about the unintended consequences of changes to our extended self concept. Are they all positive, or will there be some negatives? For some folks, even books are negatives rather than positives, because, in their minds, our memories have become inferior to those of our ancestors, who could recite, say, The Odyssey from memory. So, to some extent, positive and negative consequences will be a matter of opinion.

¹ Imagine having an entity that has self-agency controlling your vehicle. And it sours on you, or its existence, or …

Today the market indices dropped by more than 2% across the board. Here’s the DJIA for the last year:

I’m not alarmed by this. Market goes up, market goes down. Long term investors shrug and go about their business.

But that fact that Gamestop and AMC, the cinema company, have climbed precipitously recently did catch my attention. How much?

Gamestop (GME) is up nearly 10 fold in the last week.

Same for AMC (AMC).

So what’s going on?

GameStop, hedge funds’ most-hated stock, was targeted by an army of retail investors who marshaled forces against short sellers in online chat rooms. In the Reddit forum “wallstreetbets” with more than 2 million subscribers, rookie investors encouraged each other to pile into GameStop’s shares and call options, creating massive short squeezes in the stock. [CNBC]

And so we see the power of the Internet as a group of individual investors, a coordinated army, have successfully moved to boost the price of a stock in the face of short selling, resulting in a short squeeze^[1]. The shorts, in this case, are hedge funds, immensely large amounts of money that attempt to make lucrative, yet safe, investments through novel strategies not available to smaller investors. And sometimes fail.

This is the first time that I’ve seen retail investors take aim at the hedge fund industry, which, in my limited experience, are generally regarded with some suspicion by the individual investor as being entities which manipulate the market for their own profit, and other investors bedamned. Whether it’s true or not, I don’t know, and as a long-term investor I generally feel I can ignore the question, unlike day traders or short-term (not short position!) or even short position traders, all of whom are far too sensitive – in my opinion – to the eddies in the river of capital.

But the emergence of a coordinated army of individual investors declaring war – and quite successfully, as their target, Melvin Capital, was apparently badly hurt when GME shares took off – on a hedge fund is something new, and thus needs to be considered carefully. Why?

There’s an underlying assumption to the market, and that everyone’s in it for the same reason: to make money. That’s not entirely true, of course, because there’s investors who are investing to promote the social good, and there are some very few who hope to accumulate enough shares to take over a company. But, by and large, the statement is accurate enough.

But what about now? What if this coordinated army is mobilized towards some other end, not having to do with finance? That’s what’s stirring in my mind. How are such maneuvers to be recognized? If the general assumption is suddenly falsified, am I in trouble? is this army regulatable, and should they be?

Or is it really a significant phenomenon?

I can’t help but notice the similarity between this army and a traditional old pump ‘n dumper, a disreputable denizen of the penny stocks who selects one, goes about pumping out good, but false, news about it after investing in it at a low price, and when the pump results in an inflated value, dumps their shares for an ill-gained profit.

For the investors that invested at the top, they lose nearly everything, but so does almost everyone else, especially if they made the mistake of being patient. And how is this different for those who pumped up GME?

There are three classes of investor here: the coordinated army, the investors who don’t know any better and jumped on the rocket – and the targeted hedge fund who owes a hellacious amount of the targeted company’s stock. While the second class of investor will be contributing some of their wealth to the coordinated army, and so will members of the army itself in a case of cannibalism, consisting of those who got in late, the intended, and real victim, will be a hedge fund which eventually ends up buying the shares it owes at vastly inflated prices.

In a sense, this is a Robin Hood scenario in that a vast treasury was just raided by means that are not exactly ethical, but probably not quite illegal. Yet. If you don’t like hedge funds, this sounds like a good thing.

But I do worry that it could be turned against me, or people in some category to which I belong, and could thus negatively impact me some day.

Look, the market is ideally a way for people to lay bets on the future value of public companies. If this coordinated army screws with that purpose, then it’ll make it harder for honest investors to honestly make those bets.

But if the hedge funds do have an unfair advantage, then is this the way to even the board? I doubt it, and I say that as someone who was furious when Long Term Capital Management, an early, huge hedge fund, received a government bailout after making a series of bad investments. That should have never have happened, they should have just failed, and those who felt the pain would have been object lessons for everyone else.

But one must be partially divorced from emotions when evaluating situations like this. Sure, it might be nice to see a manipulative – if they are – hedge fund go down in flames. But is this coordinated army a general menace?

So when I look at that 2% loss in the market indices, I don’t believe that’s a sign of what’s to come in the shadow of the coordinated army of investors. In my experience, the market goes up, the market goes down – but rarely more than it’s gone up.

But I am going to keep this coordinated army incident in the back of my mind. Just in case.

¹ A short position occurs when an investor borrows some set number of shares of a stock from one or more investors, sells them on the market, and then buys them back for return to those who own them. The investor profits when the price drops from his sell point, and loses money when the price is higher and they are forced to buy back. A short squeeze occurs when the price of a stock is forced higher because a large number of shorts are in the market and on the wrong side of trades. They have to scramble to buy and return the shares at a loss – and if demand is high, the price skyrockets. A short’s profit potential is always limited, and loss potential is unlimited.

This Deseret News article on Senator Romney’s (R-UT) rational position on the recent Presidential election caught my eye:

Former President Donald Trump will never admit that he lost a fair election, but every elected Republican ought to be telling voters that as a step toward bringing the country together, Sen. Mitt Romney said Tuesday.

In addition to social media perpetuating the “big lie” that Trump is somehow still president and President Joe Biden stole the election, GOP officials, too, are contributing to that notion, the Utah Republican said.

“You have many of the Trump supporters in elected office, senators, congresspeople, governors, continuing to say the same thing, that the election was stolen,” Romney said.

The phrase was … but every elected Republican ought to be telling voters that as a step toward bringing the country together.

And it suddenly became obvious, at least for GOPers who were both elected in the recent election and continue to perpetuate the big lie.

I suggest that at every public forum at which they appear, a flashmob suddenly appears, and they begin this, ah, chanting dialog with the elected official:

FLASH MOB: You stole your election! You stole your election!

OFFICIAL: I did not!

FM: You stole your election! You stole your election!

OFFICIAL: I did not!

FM: PROVE IT, THEN! PROVE IT, THEN!

OFFICIAL: I don’t have to! You have no proof!

FM: JUST LIKE YOU DON’T ABOUT THE PRESIDENTIAL ELECTION, YOU HYPOCRITICAL, LEG HUMPING, PANTS WETTER! WE DON’T NEED ANY!

OFFICIAL: What?

FM: ELECTION STEALER! ELECTION STEALER! WE DEMAND A RECOUNT OF YOUR ELECTION! AND THEN ANOTHER ONE! AND THEN ANOTHER ONE! AND THEN WE DON’T CARE, YOU STOLE THE ELECTION REGARDLESS!

OFFICIAL: THIS IS CRAZY!

FM: EXACTLY, YOU DUMBSHIT! STOP BEING A DUMBSHIT AND WE’LL STOP DOING THIS!

Because, quite frankly, it sounds exhausting. And it might need some tuning. But it should drive the point home: If one election is illegitimate despite absolutely no proof, then they’re all illegitimate for both sides.

Spread the word, folks. This might work.

A reader writes concerning the Loon balloons:

Maybe they should use hydrogen instead of helium. They’re unmanned, after all.

I suppose it depends which element is more likely to leak from the Loon balloons as biased by the costs of refilling using each element.

Source: Airships.net

Although there is the option of painting the balloons in rocket fuel, as was done by the Germans to the Hindenberg, and when a balloon is to be retired, just hitting it with a flare. In fact, an enterprising outfit might sell the opportunities to blow up such balloons, generating a minor stream of income. “You, too, can pretend to be the finger of the Internet God, destroying a malfunctioning unit just like your own body does with its cells.”

Ahem. That may be a little over the top.

Senator Rand Paul (R-KY) thinks he’s proven himself to the far-right contingent in the Republican Party:

The Senate tabled an effort by Sen. Rand Paul Tuesday to force a vote on the constitutionality of former President Donald Trump’s impeachment trial, but the vote offered an indicator for how Republican senators — who overwhelmingly voted for Paul’s measure — feel about the trial.

Paul’s motion was killed on a 55-45 vote, with five Republicans joining all Democrats, meaning 45 Republicans voted for Paul’s effort. Republican Sens. Mitt Romney of Utah, Ben Sasse of Nebraska, Susan Collins of Maine, Lisa Murkowski of Alaska and Pat Toomey of Pennsylvania crossed party lines to vote with Democrats. [CNN/Politics]

But I’d like to suggest to Corporate America that we now have forty five more candidates for deprivation of corporate funds and support in their reelection campaigns.

And I think Corporate America, which faces an existential crisis if Trump is not forcefully rejected politically, had better take this seriously. The Republicans have only themselves to blame for their crisis in the extreme position of their party. Refusing to deal with it not only damages themselves, but endangers democracy itself – and all those corporate entities which it supports.

Go get ’em, kids!

But let’s extend the theme, eh? I think Corporate America should make a promise, to America as well as itself, not to support far right candidates of any sort, and at any level. They need to show judgment and maturity in their support choices.

Or consumers, in their turn, may have to make those judgments on them.

Returning to this long dormant thread, and reminding readers of my long time opposition to private prisons, I’m immensely comforted that President Biden is taking swift action on this issue:

Executive order to end reliance on private prisons

In an effort to terminate the federal government’s use of privately owned detention facilities, the Attorney General has been directed not to renew Department of Justice contracts with private prisons. [NBC News]

This isn’t a step towards socialism or taking a shot at a business which was founded by a Republican. This is a step towards removing the influence of business on the process of justice.

How does this matter? Ask yourself this: should a business be allowed to attempt to increase its profit by lobbying government to increase the penalties for infractions of the law? Even to create new laws which, by their infractions, will increase its profits?

There is little reason to have confidence that justice, and therefore society, will be served.

The above link lists most, or all, of the Executive Actions taken by President Biden so far.

A reader writes concerning tuition-related debt:

Student debt comes from a couple of sources. One is the plethora of students who go to college for degrees that do not have enough fiscal payback to compensate for the cost of the degree. Another is the inability to delay gratification by failing to spread out the time to degree by adding in work time to earn the cost of said education. But the main one is the federal student loan program itself. When colleges know that students will get loans that guarantee the colleges will get their money, they have no real incentive to be competitive in their student costs. They know they’ll still get students, and that they’ll get their money from the government no matter how badly the student crashes and burns, or how little they make with their “gender studies” degree after graduation. Thus they crank costs for undergrads to pay for grad students, research programs, and other programs that are more related to how they’re viewed from an academic status perspective, rather than how well and efficiently they educate their undergrad populations. IMHO. YMMV.

Regarding the negative impact of scholarships and easily obtainable loans on tuition, I agree and have made that argument in years prior, although probably not on UMB.

I see it as a simple model of financial inflation. Much like the Wiemar Republic’s printing money to satisfy Versailles Treaty requirements and domestic items to buy, the money supply, in this case funneled into the higher ed “financial system” via scholarships and loans, increases at a rate greater than the increase in available positions in higher education, so the suppliers of those positions increase the prices because, well, they can.

This hurts those who cannot win scholarships nor wish to get loans, although they are forced to get them, because generally they haven’t the capacity to increase their incomes at the same rate, and, as students, they rarely have any excess capacity as it is. As my reader notes, there is no squeeze on the sellers; in fact, it’s a seller’s market, and functions like a seller’s market in real estate, when there are many out there looking to buy, but not so many interested in selling. Bidding wars erupt. Well, not in higher ed – they just push tuition higher.

Scholarship money can be considered free money; loans are discounted, as they are paid back over time.

It’s be interesting – fascinating – to ban such scholarships and loans for a decade, just to see what happens to tuition in the absence of all that free and discounted money. My guess is that, after a couple of years, tuitions would drop. There’d be an awful lot of empty slots that would need to be filled – or campuses would be closing, and no educational administrator wants to have that on their c.v., eh? Suddenly, they’d have to compete to put butts in those seats.

Never, ever hire or do business with these people.

Located deep in Canada’s Yukon, the remote community of Beaver Creek is home to only about 100 people, most of them members of the White River First Nation.

So when an unfamiliar couple who claimed to work at a local motel showed up at a mobile clinic to receive coronavirus vaccines, it didn’t take long for locals to become suspicious. Authorities soon found that the couple were actually wealthy Vancouver residents who had chartered a private plane to the isolated outpost so that they could get shots intended to protect vulnerable Indigenous elders. …

Canadian media outlets have identified the couple as casino executive Rodney Baker, 55, and his wife, Ekaterina Baker, a 32-year-old actress whose recent credits include the 2020 films “Fatman” and “Chick Fight.” Each faces fines totaling the equivalent of about $900 for violating quarantine guidelines. Neither could immediately be reached for comment late Monday, and it was not clear whether they have attorneys. [WaPo]

He lost his $10 million/year job. I wonder if the White River First Nation can impose fines.

This NewScientist (12 December 2020) article more or less says it with its title:

Google’s AI can keep Loon balloons flying for over 300 days in a row

Huge stratospheric balloons that act as floating cell towers in remote areas can stay in the air for hundreds of days thanks to an artificially intelligent pilot created by Google and Loon.

Which means Internet coverage.

But does it mean that Elon Musk’s Starlink project can be abandoned? It’ll depend on the cost, bandwidth, latency, coverage, and dependability of Google’s Loon balloons.

The reason I don’t like Starlink is that it pollutes lower Earth orbit with thousands of satellites. These interfere with astronomical projects, and when they burn out, they have to be replaced at a fairly high cost. And I’m assuming that they’ll burn up rather quickly once they become inactive; if they don’t, then they enter the category of space junk, which is a far more important category than most folks realize. Getting and keeping satellites in orbit is already something of a challenge; adding more space junk makes things even more difficult.

Meanwhile, Loon balloons are presumably salvageable. However, they do use helium – a resource that is becoming more and more valuable. That may weigh against them, and I’m not aware of a more economical replacement.

It’s worth noting that right winger Erick Erickson, morally conflicted by his fellows’ recent political activities, aka the January 6 Insurrection, has found it necessary to take to the immoral equivalency argument:

Roe v. Wade is nothing more than a modern retelling of Dred Scot. The abortion movement will scream and complain at the comparison, but not only do they know it is true, but abortion, like slavery, is predatory in black communities across America as rich white people fund the killing of black children.

We should not forget nor should we deny that the arguments of slavery and abortion are only a few words removed from each other. The moral case for abortion is the moral case for slavery.

Remember that.

Yep, abortion is equated to slavery.

I skimmed his arguments, but I wasn’t all that interested and they seemed strained. The fascination, for me, lies in the fact that he felt he had to present this moral condemnation of the left at all. That, no matter what foul political leanings and calculations and corruption and irrationality and, yes, murders his fellow travelers have committed, he can drag the left down to the current level of moral depravity of much of the right through this strained argument.

And, especially, this line is telling: The abortion movement will scream and complain at the comparison, but not only do they know it is true … and so he accuses the pro-choice left of conscious racism, a charge lodged most credibly against the right in view of the many racist symbols observed at the Insurrection, not to mention various other hints from President Trump himself. He cannot deny the charge against the right, but if he can make the charge against the left stick…

And the last sentence, Remember that, serves two purposes. First, that this is a weapon to use in arguments between left and right, as a fine way to outrage the left; and, second, that this is a weapon to use in arguments within the right. That is, those who are thinking that the right has become too shabby, too corrupt to honorably associate with can be faced with accusations that the other side is equally racist and commits abortion/murders. So why leave? It’s an argument of nihilism.

It’s a fascinating exercise in immoral equivalency, isn’t it? Erickson discovers that corruption is rampant, even epidemic, on his side, and, while he creditably rages against it in other posts, he still seeks to paint the left with yet fouler paint, all in order to keep a befouled and hopelessly corrupt right ascendant.

If you buy his anti-abortion arguments, maybe it works. Keep ghastly anti-Americanism and allegiance to irrationality in place, and watch the whole country collapse in ruins, eventually. All while denials echo in our ears that it’s going on. Trumpism and gaslighting are fast becoming synonyms.

If you don’t buy his anti-abortion arguments, or you refuse the separate evil of being a single-issue voter, then there’s a good chance you go independent, or even begin to explore the ideological arguments of the centrist left with a newly open mind.

And Erickson, because he’s trapped in his assertion that abortion isn’t just bad policy or even reprehensible, but a mortal sin, is left to beseech his fellows not to be corrupt, while providing them with an overwhelming excuse to be corrupt, to destroy the American state, to let the forces of chaos and evil destroy another victim, all in the name of anti-abortion and irrationality.

That’s a tough position. It’s the sort of thing that might make you rethink your assumptions.