The Reddit short squeeze

[philip964]

https://www.cnbc.com/2021/02/02/the-oth ... -hits.html

All the Reddit stocks were lower today. In case you haven't been following it, Gamestop went from $2.50 a share to $450 as share in about 3 months. Then it went back down as profit taking took hold. It closed around $90 today. A lot of hedge funds who like to short stocks had to be bailed out. A stock exchange company callled RobinHood where you pay no trading costs that focuses on young investors, blocked Gamestop buying so hedge funds could close out their shorts. Supposedly hedge funds lost 19 billion while young Reddit traders made that much. Many stories on Reddit of young kids making a lot of real money (if they sold).

https://www.reddit.com/r/wallstreetbets/

This is where the Reddit stock action is with Gamestop and others.

[J.R.@A&M]

https://www.cnbc.com/2021/02/02/the-oth ... -hits.html

All the Reddit stocks were lower today. In case you haven't been following it, Gamestop went from $2.50 a share to $450 as share in about 3 months. Then it went back down as profit taking took hold. It closed around $90 today. A lot of hedge funds who like to short stocks had to be bailed out. A stock exchange company callled RobinHood where you pay no trading costs that focuses on young investors, blocked Gamestop buying so hedge funds could close out their shorts. Supposedly hedge funds lost 19 billion while young Reddit traders made that much. Many stories on Reddit of young kids making a lot of real money (if they sold).

https://www.reddit.com/r/wallstreetbets/

This is where the Reddit stock action is with Gamestop and others.

"...hedge funds... had to be bailed out." What bailout? I think the hedge fund shorts had to buy their way out, and lost lots of money.

[MaduroBU]

I disagree with nearly everything that I have seen written about this story. I follow the idiots on r/WSB, and need to stress that there is a mix of reasonable and savvy young investors, people there for the entertainment, and complete fools. It is not some kind of collective; there is no cohesive ethos, and most of the serious posts involve the people with brains telling the fools not to leverage student loan money to buy meme stock options that expire in under 24 hours. Their ability to stage ANYTHING, much less a Big Short-style "People's Revolt Against Wall Street", is questionable at best and more likely ludicrous. Further, the people shorting GME are the value investors. Folks who try to value invest are usually looking to go long on companies whose value exceeds their price: the old Warren Buffet saying "Price is what you pay, value is what you get." If you find companies whose value misjudged by the market, you make a profit if you act before the market does. In a drastically overvalued market, shorts are sometimes the best plays. Gamestop is where Blockbuster was right before it died, and by any measure the stock price is headed to zero.

I was actively short on GME through all of this, and lost almost zero money (down like 10% at the worst on those positions). This is because I avoid the risks of short selling by using Put contracts to bet on downside for a company. That is to say that I pay a fee for the right to sell a 100 shares of GME at some price X on or before some day in the future. If the price of GME remains above price X, the party that sold me the contract keeps my money in exchange for nothing. But if the price dips low enough, I can exercise the contract and sell the GME shares for far more than they are worth on the market. For example, a $300 PUT expiring in 2 weeks was selling for around $100 on Friday. If someone bought that contract, they'd pay $100 up front and have the right to sell the shares at $300 at any time during the next 2 weeks. Today, they'd be able to buy GME shares for $95 and sell them for $300, which after the $100 premium is $105 in their pocket. That's what I am doing, and the prices of those contracts in the >6 month time frame barely budged.

The people who got crucified did something different. They sold short, which means that they paid a very small fee to borrow shares of GME (or likely synthetic versions of the same, since there are still more shares held short than exist....I don't understand that part of it) with the hope of returning those shares later. You immediately sell them and collect the price, but you still owe the shares back. You are then betting that when it comes time to return them, the share price will be much lower, such that it costs you very little to repay the lender. I.e. you borrow 100 shares of GME at $30, hoping to repay them in the future for something close to $0. The issue arises if the price goes up, since the lender wants to be sure that he's going to get paid. All he has is your promise, but generally he also wants collateral. In the case of GME, the price went from $35 (which is highly overvalued) to $381 (which is unhinged from reality). People who (correctly) bet that Gamestop is going to die soon still had to put up collateral against the potential of having to pay back the shares they had borrowed at the market rate of $381. They can post more collateral or they can just give the shares back. But the only way to get shares TO return to the lender is buying the shares off of the open market. This is a problem if more people own borrowed shares held short than real shares....some people are going to be forced to post collateral even if they cannot afford it. That produces a self-reinforcing cycle in which desperate buyers (people who are scared that the price will spiral too high for them to even be able to post collateral and thus must buy shares at nearly any price) bid the price ever higher.

Now, the overwhelming likelihood is that hedge funds did this to other hedge funds with the merry band of idiots at WSB along for the ride. However, the last thing to understand is that no entity on earth is more ill-named than the "hedge fund". They are notorious for poorly hedging, and the rules around investing in them stipulate a minimum net worth because losses are so likely....sort of the opposite of what happens in a properly hedged fund. The short sellers could've easily covered themselves by either using PUT options (what I do in order to avoid the EXACT fiasco detailed above) or by purchasing a different kind of option as a hedge. Had the short sellers sold short AND bought CALL contracts, they'd have paid a fee for the right to buy GME shares at a particular price. A call option hedge works like this: Say you borrow shares at $30 to sell short. You hope to return them when the stock is worth $5. But you know that if the price spikes, you could be ruined EVEN IF your guess proves correct. So you also purchase a Call option at $40 with the same expiration as your borrowed shares. This means that in the worst case, you have to pay $40/share to return the borrowed shares that you've already sold at $30. That's a 33% loss and it'll sting, but you'll survive. Further, if the price spikes like that it'll mean that you'll have a great opportunity to short at the peak (which people are absolutely doing right now....shorting at $380 while the price falls to $30 is about a 1250% return minus taxes and fees). So the final moral is that the only hedge funds that got wiped out are the ones that got greedy and failed to adequately hedge for tail risk (tail as in the long "Tails on a Bell curve...highly unlikely but potentially disastrous events).

[srothstein]

My son and nephew were talking about getting in on the Gamestop or similar stocks. I gave them my favorite two pieces of advice for the stock market:

1. Never ever invest any money you cannot afford to lose. The only way to make money in stocks is for someone else to lose and there is no guarantee which side of that coin you will be on.

2. When someone is deliberately trying to run up the stock price for any reason, stay out of it. The stock trading price is based on market demand. It goes up while that person is buying but crashes quickly when he changes to selling. Since you do not know when that will be, you are very likely to get caught in the crash and lose money.

I do not know about my nephew, but my son actually got saved by Robinhood's freeze. He moved about $500 that he could afford to lose (he did listen to that part before apparently) and they put a hold on new accounts that opened during this. He could not buy anything at all until yesterday.

[mrvmax]

I disagree with nearly everything that I have seen written about this story. I follow the idiots on r/WSB, and need to stress that there is a mix of reasonable and savvy young investors, people there for the entertainment, and complete fools. It is not some kind of collective; there is no cohesive ethos, and most of the serious posts involve the people with brains telling the fools not to leverage student loan money to buy meme stock options that expire in under 24 hours. Their ability to stage ANYTHING, much less a Big Short-style "People's Revolt Against Wall Street", is questionable at best and more likely ludicrous. Further, the people shorting GME are the value investors. Folks who try to value invest are usually looking to go long on companies whose value exceeds their price: the old Warren Buffet saying "Price is what you pay, value is what you get." If you find companies whose value misjudged by the market, you make a profit if you act before the market does. In a drastically overvalued market, shorts are sometimes the best plays. Gamestop is where Blockbuster was right before it died, and by any measure the stock price is headed to zero.

I was actively short on GME through all of this, and lost almost zero money (down like 10% at the worst on those positions). This is because I avoid the risks of short selling by using Put contracts to bet on downside for a company. That is to say that I pay a fee for the right to sell a 100 shares of GME at some price X on or before some day in the future. If the price of GME remains above price X, the party that sold me the contract keeps my money in exchange for nothing. But if the price dips low enough, I can exercise the contract and sell the GME shares for far more than they are worth on the market. For example, a $300 PUT expiring in 2 weeks was selling for around $100 on Friday. If someone bought that contract, they'd pay $100 up front and have the right to sell the shares at $300 at any time during the next 2 weeks. Today, they'd be able to buy GME shares for $95 and sell them for $300, which after the $100 premium is $105 in their pocket. That's what I am doing, and the prices of those contracts in the >6 month time frame barely budged.

The people who got crucified did something different. They sold short, which means that they paid a very small fee to borrow shares of GME (or likely synthetic versions of the same, since there are still more shares held short than exist....I don't understand that part of it) with the hope of returning those shares later. You immediately sell them and collect the price, but you still owe the shares back. You are then betting that when it comes time to return them, the share price will be much lower, such that it costs you very little to repay the lender. I.e. you borrow 100 shares of GME at $30, hoping to repay them in the future for something close to $0. The issue arises if the price goes up, since the lender wants to be sure that he's going to get paid. All he has is your promise, but generally he also wants collateral. In the case of GME, the price went from $35 (which is highly overvalued) to $381 (which is unhinged from reality). People who (correctly) bet that Gamestop is going to die soon still had to put up collateral against the potential of having to pay back the shares they had borrowed at the market rate of $381. They can post more collateral or they can just give the shares back. But the only way to get shares TO return to the lender is buying the shares off of the open market. This is a problem if more people own borrowed shares held short than real shares....some people are going to be forced to post collateral even if they cannot afford it. That produces a self-reinforcing cycle in which desperate buyers (people who are scared that the price will spiral too high for them to even be able to post collateral and thus must buy shares at nearly any price) bid the price ever higher.

Now, the overwhelming likelihood is that hedge funds did this to other hedge funds with the merry band of idiots at WSB along for the ride. However, the last thing to understand is that no entity on earth is more ill-named than the "hedge fund". They are notorious for poorly hedging, and the rules around investing in them stipulate a minimum net worth because losses are so likely....sort of the opposite of what happens in a properly hedged fund. The short sellers could've easily covered themselves by either using PUT options (what I do in order to avoid the EXACT fiasco detailed above) or by purchasing a different kind of option as a hedge. Had the short sellers sold short AND bought CALL contracts, they'd have paid a fee for the right to buy GME shares at a particular price. A call option hedge works like this: Say you borrow shares at $30 to sell short. You hope to return them when the stock is worth $5. But you know that if the price spikes, you could be ruined EVEN IF your guess proves correct. So you also purchase a Call option at $40 with the same expiration as your borrowed shares. This means that in the worst case, you have to pay $40/share to return the borrowed shares that you've already sold at $30. That's a 33% loss and it'll sting, but you'll survive. Further, if the price spikes like that it'll mean that you'll have a great opportunity to short at the peak (which people are absolutely doing right now....shorting at $380 while the price falls to $30 is about a 1250% return minus taxes and fees). So the final moral is that the only hedge funds that got wiped out are the ones that got greedy and failed to adequately hedge for tail risk (tail as in the long "Tails on a Bell curve...highly unlikely but potentially disastrous events).

Great post, thanks for taking the time to explain. Most on Reddit are fools and will lose everything by holding in hopes it hits 1000. I read of one guy who was up in the 40 million mark but was not going to sell so he could stick it to Wall Street. Even Portnoy already got out with a loss of 700k.

[crazy2medic]

I don't completely understand all this, I get the jest of it, I will say this my son who turned 30 yesterday, invested $1000 and then sold and walked away with $9000,

[philip964]

I disagree with nearly everything that I have seen written about this story. I follow the idiots on r/WSB, and need to stress that there is a mix of reasonable and savvy young investors, people there for the entertainment, and complete fools. It is not some kind of collective; there is no cohesive ethos, and most of the serious posts involve the people with brains telling the fools not to leverage student loan money to buy meme stock options that expire in under 24 hours. Their ability to stage ANYTHING, much less a Big Short-style "People's Revolt Against Wall Street", is questionable at best and more likely ludicrous. Further, the people shorting GME are the value investors. Folks who try to value invest are usually looking to go long on companies whose value exceeds their price: the old Warren Buffet saying "Price is what you pay, value is what you get." If you find companies whose value misjudged by the market, you make a profit if you act before the market does. In a drastically overvalued market, shorts are sometimes the best plays. Gamestop is where Blockbuster was right before it died, and by any measure the stock price is headed to zero.

I was actively short on GME through all of this, and lost almost zero money (down like 10% at the worst on those positions). This is because I avoid the risks of short selling by using Put contracts to bet on downside for a company. That is to say that I pay a fee for the right to sell a 100 shares of GME at some price X on or before some day in the future. If the price of GME remains above price X, the party that sold me the contract keeps my money in exchange for nothing. But if the price dips low enough, I can exercise the contract and sell the GME shares for far more than they are worth on the market. For example, a $300 PUT expiring in 2 weeks was selling for around $100 on Friday. If someone bought that contract, they'd pay $100 up front and have the right to sell the shares at $300 at any time during the next 2 weeks. Today, they'd be able to buy GME shares for $95 and sell them for $300, which after the $100 premium is $105 in their pocket. That's what I am doing, and the prices of those contracts in the >6 month time frame barely budged.

The people who got crucified did something different. They sold short, which means that they paid a very small fee to borrow shares of GME (or likely synthetic versions of the same, since there are still more shares held short than exist....I don't understand that part of it) with the hope of returning those shares later. You immediately sell them and collect the price, but you still owe the shares back. You are then betting that when it comes time to return them, the share price will be much lower, such that it costs you very little to repay the lender. I.e. you borrow 100 shares of GME at $30, hoping to repay them in the future for something close to $0. The issue arises if the price goes up, since the lender wants to be sure that he's going to get paid. All he has is your promise, but generally he also wants collateral. In the case of GME, the price went from $35 (which is highly overvalued) to $381 (which is unhinged from reality). People who (correctly) bet that Gamestop is going to die soon still had to put up collateral against the potential of having to pay back the shares they had borrowed at the market rate of $381. They can post more collateral or they can just give the shares back. But the only way to get shares TO return to the lender is buying the shares off of the open market. This is a problem if more people own borrowed shares held short than real shares....some people are going to be forced to post collateral even if they cannot afford it. That produces a self-reinforcing cycle in which desperate buyers (people who are scared that the price will spiral too high for them to even be able to post collateral and thus must buy shares at nearly any price) bid the price ever higher.

Now, the overwhelming likelihood is that hedge funds did this to other hedge funds with the merry band of idiots at WSB along for the ride. However, the last thing to understand is that no entity on earth is more ill-named than the "hedge fund". They are notorious for poorly hedging, and the rules around investing in them stipulate a minimum net worth because losses are so likely....sort of the opposite of what happens in a properly hedged fund. The short sellers could've easily covered themselves by either using PUT options (what I do in order to avoid the EXACT fiasco detailed above) or by purchasing a different kind of option as a hedge. Had the short sellers sold short AND bought CALL contracts, they'd have paid a fee for the right to buy GME shares at a particular price. A call option hedge works like this: Say you borrow shares at $30 to sell short. You hope to return them when the stock is worth $5. But you know that if the price spikes, you could be ruined EVEN IF your guess proves correct. So you also purchase a Call option at $40 with the same expiration as your borrowed shares. This means that in the worst case, you have to pay $40/share to return the borrowed shares that you've already sold at $30. That's a 33% loss and it'll sting, but you'll survive. Further, if the price spikes like that it'll mean that you'll have a great opportunity to short at the peak (which people are absolutely doing right now....shorting at $380 while the price falls to $30 is about a 1250% return minus taxes and fees). So the final moral is that the only hedge funds that got wiped out are the ones that got greedy and failed to adequately hedge for tail risk (tail as in the long "Tails on a Bell curve...highly unlikely but potentially disastrous events).

I continue to be impressed at the level of expertise in this forum.

Thanks for posting.

[Soccerdad1995]

I disagree with nearly everything that I have seen written about this story. I follow the idiots on r/WSB, and need to stress that there is a mix of reasonable and savvy young investors, people there for the entertainment, and complete fools. It is not some kind of collective; there is no cohesive ethos, and most of the serious posts involve the people with brains telling the fools not to leverage student loan money to buy meme stock options that expire in under 24 hours. Their ability to stage ANYTHING, much less a Big Short-style "People's Revolt Against Wall Street", is questionable at best and more likely ludicrous. Further, the people shorting GME are the value investors. Folks who try to value invest are usually looking to go long on companies whose value exceeds their price: the old Warren Buffet saying "Price is what you pay, value is what you get." If you find companies whose value misjudged by the market, you make a profit if you act before the market does. In a drastically overvalued market, shorts are sometimes the best plays. Gamestop is where Blockbuster was right before it died, and by any measure the stock price is headed to zero.

I was actively short on GME through all of this, and lost almost zero money (down like 10% at the worst on those positions). This is because I avoid the risks of short selling by using Put contracts to bet on downside for a company. That is to say that I pay a fee for the right to sell a 100 shares of GME at some price X on or before some day in the future. If the price of GME remains above price X, the party that sold me the contract keeps my money in exchange for nothing. But if the price dips low enough, I can exercise the contract and sell the GME shares for far more than they are worth on the market. For example, a $300 PUT expiring in 2 weeks was selling for around $100 on Friday. If someone bought that contract, they'd pay $100 up front and have the right to sell the shares at $300 at any time during the next 2 weeks. Today, they'd be able to buy GME shares for $95 and sell them for $300, which after the $100 premium is $105 in their pocket. That's what I am doing, and the prices of those contracts in the >6 month time frame barely budged.

The people who got crucified did something different. They sold short, which means that they paid a very small fee to borrow shares of GME (or likely synthetic versions of the same, since there are still more shares held short than exist....I don't understand that part of it) with the hope of returning those shares later. You immediately sell them and collect the price, but you still owe the shares back. You are then betting that when it comes time to return them, the share price will be much lower, such that it costs you very little to repay the lender. I.e. you borrow 100 shares of GME at $30, hoping to repay them in the future for something close to $0. The issue arises if the price goes up, since the lender wants to be sure that he's going to get paid. All he has is your promise, but generally he also wants collateral. In the case of GME, the price went from $35 (which is highly overvalued) to $381 (which is unhinged from reality). People who (correctly) bet that Gamestop is going to die soon still had to put up collateral against the potential of having to pay back the shares they had borrowed at the market rate of $381. They can post more collateral or they can just give the shares back. But the only way to get shares TO return to the lender is buying the shares off of the open market. This is a problem if more people own borrowed shares held short than real shares....some people are going to be forced to post collateral even if they cannot afford it. That produces a self-reinforcing cycle in which desperate buyers (people who are scared that the price will spiral too high for them to even be able to post collateral and thus must buy shares at nearly any price) bid the price ever higher.

Now, the overwhelming likelihood is that hedge funds did this to other hedge funds with the merry band of idiots at WSB along for the ride. However, the last thing to understand is that no entity on earth is more ill-named than the "hedge fund". They are notorious for poorly hedging, and the rules around investing in them stipulate a minimum net worth because losses are so likely....sort of the opposite of what happens in a properly hedged fund. The short sellers could've easily covered themselves by either using PUT options (what I do in order to avoid the EXACT fiasco detailed above) or by purchasing a different kind of option as a hedge. Had the short sellers sold short AND bought CALL contracts, they'd have paid a fee for the right to buy GME shares at a particular price. A call option hedge works like this: Say you borrow shares at $30 to sell short. You hope to return them when the stock is worth $5. But you know that if the price spikes, you could be ruined EVEN IF your guess proves correct. So you also purchase a Call option at $40 with the same expiration as your borrowed shares. This means that in the worst case, you have to pay $40/share to return the borrowed shares that you've already sold at $30. That's a 33% loss and it'll sting, but you'll survive. Further, if the price spikes like that it'll mean that you'll have a great opportunity to short at the peak (which people are absolutely doing right now....shorting at $380 while the price falls to $30 is about a 1250% return minus taxes and fees). So the final moral is that the only hedge funds that got wiped out are the ones that got greedy and failed to adequately hedge for tail risk (tail as in the long "Tails on a Bell curve...highly unlikely but potentially disastrous events).

This is a really good primer on the mechanics of taking a short position on a stock. Thank you for that. Personally, I like to take long positions, so my option activity is usually limited to either buying straight calls or selling covered calls.

But I'm not sure that what you've written contradicts the substance of what is being reported on the Gamestop situation. Unless you mean that hedge funds also participated along with Reddit and other retail investors on moving the price up.

[MaduroBU]

This is a really good primer on the mechanics of taking a short position on a stock. Thank you for that. Personally, I like to take long positions, so my option activity is usually limited to either buying straight calls or selling covered calls.

But I'm not sure that what you've written contradicts the substance of what is being reported on the Gamestop situation. Unless you mean that hedge funds also participated along with Reddit and other retail investors on moving the price up.

My "disagreement" stems from the idea that I've seen repeated, in my view far too often, that a rogue group of traders somehow exploited arcane market conditions in a nefarious or illegal way. Setting aside the argument over whether r/WSB has the capital to actually pull that off (see their active failure to budge the price of silver), the real problem was that the "professionals" willingly took on stupid risks and got burned. If you've seen Chernobyl, the analogy is blaming the reactor explosion solely on the guy who pushed the AZ-5 or SCRAM button, in that years of stupidity led to a circumstance wherein some rube could accidentally threaten all life on the Eurasian continent. There are a lot of analogies to the Global Financial Crisis: people who were supposed to know better refused to hedge against risks because they got greedy.

Also, I'll stress that I look for long positions. Michael Burry is famous for being one of the last people who still believes in applying Graham's "Security Analysis" and investing on fundamentals, but that "antiquated" mindset is what leads him to call out grossly overpriced companies.

[OneGun]

There are two similar but entirely different concepts here:

1) Put options give the investor the right, but not the obligation to sell a stock at a strike price of X. The investor buys the option for a premium and pays nothing more. If the stock price drops below X, the option is in the money and the investor makes a profit. Otherwise, the investor only loses their premium.

2) Short selling is much riskier. The investor borrows shares of stock from a stock lender, sells the stock, and pockets the proceeds. At some point, the investor needs to repurchase the shares of the stock and repay the stock lender. If the stock price rises, the investor buys back the shares at a higher price than purchased and takes a loss on the investment. This is the investment play that caught the hedge-funds by the short hairs.

[Soccerdad1995]

There are two similar but entirely different concepts here:

1) Put options give the investor the right, but not the obligation to sell a stock at a strike price of X. The investor buys the option for a premium and pays nothing more. If the stock price drops below X, the option is in the money and the investor makes a profit. Otherwise, the investor only loses their premium.

2) Short selling is much riskier. The investor borrows shares of stock from a stock lender, sells the stock, and pockets the proceeds. At some point, the investor needs to repurchase the shares of the stock and repay the stock lender. If the stock price rises, the investor buys back the shares at a higher price than purchased and takes a loss on the investment. This is the investment play that caught the hedge-funds by the short hairs.

These are both methods of betting that the stock price will fall, so they share the investment objective, just two different ways of getting there. And the riskier one is less expensive than the one with limited risk (as should always be the case).

And for the record I have bought put options on a couple occasions. One was a naked put on Facebook because I thought is was over valued. The other a put to effectively act as a stop loss on a long position I had on RIG. I would never even think of doing a short sale. That's much more risk than I'm comfortable with (and one of my favorite pastimes is playing poker, to put my risk tolerance in perspective, lol).

A bit of an aside, but I think one fundamental problem here is the traditional fee structure for Hedge funds where they get a percentage of gains but do not share in a percentage of any losses. That is just begging for them to take insane risks, IMHO.

[The Annoyed Man]

Some REAL shady trading practices going on now:

https://www.reddit.com/r/amcstock/comme ... ame=iossmf

[MaduroBU]

I don't mind shady actors being shady....there isn't really a way to prevent it. What I cannot stand is the government stepping in to put us on the hook for their losses when the tide goes out. Clinton, Bush 2, Obama, Trump: their policies were indistinguishable. Put the taxpayer on the hook for stupid decisions made by the insanely rich and then pretend like they're doing us a favor.

When Bush and Obama told us that they had to bail GM out, who stood to lose? Bankruptcy courts weren't going to firebomb GM's assembly plants and murder their employees. But the Unions were going to lose their sweetheart pension plans and the bond holders were going to get annihilated. Puerto Rican bonds: same deal. People lent Puerto Rico a ton of money for the tax incentives, ignoring the fact that the Puerto Rican government has the financial acumen of a developmentally delayed 12 year old boy on 3 day cocaine binge. They deserved to get wiped out like all of the fools who loan money to idiots. But....they were rich, so McKinsey got PAID to divvy up Puerto Rican assets to save the ROI for greedy idiots. Maiden Lane I-III (e.g. giant payouts from the NY Fed to AIG, which then sent the money directly to Goldman). Would I not be whole as an American citizen if I didn't have the option of getting paid a negative real yield on Marcus branded Goldman CDs? Apparently not, because Obama called upon us to send them our money to keep them in the business of making America Great.....or something. Do you think that Ted Cruz is standing up to Goldman Sachs, where his wife is a managing director? I voted for the guy and gave money to his campaign, but I don't delude myself into thinking that he is somehow the solution to the problem or that he cares about my interests at all.

[The Annoyed Man]

I don't mind shady actors being shady....there isn't really a way to prevent it. What I cannot stand is the government stepping in to put us on the hook for their losses when the tide goes out. Clinton, Bush 2, Obama, Trump: their policies were indistinguishable. Put the taxpayer on the hook for stupid decisions made by the insanely rich and then pretend like they're doing us a favor.

When Bush and Obama told us that they had to bail GM out, who stood to lose? Bankruptcy courts weren't going to firebomb GM's assembly plants and murder their employees. But the Unions were going to lose their sweetheart pension plans and the bond holders were going to get annihilated. Puerto Rican bonds: same deal. People lent Puerto Rico a ton of money for the tax incentives, ignoring the fact that the Puerto Rican government has the financial acumen of a developmentally delayed 12 year old boy on 3 day cocaine binge. They deserved to get wiped out like all of the fools who loan money to idiots. But....they were rich, so McKinsey got PAID to divvy up Puerto Rican assets to save the ROI for greedy idiots. Maiden Lane I-III (e.g. giant payouts from the NY Fed to AIG, which then sent the money directly to Goldman). Would I not be whole as an American citizen if I didn't have the option of getting paid a negative real yield on Marcus branded Goldman CDs? Apparently not, because Obama called upon us to send them our money to keep them in the business of making America Great.....or something. Do you think that Ted Cruz is standing up to Goldman Sachs, where his wife is a managing director? I voted for the guy and gave money to his campaign, but I don't delude myself into thinking that he is somehow the solution to the problem or that he cares about my interests at all.

And with the country’s largest congressional delegation, California is going to eventually hose the rest of us over their debt too. I've been predicting for years now that they’ll eventually threaten to derail any and all congressional business unless and until they can force the fedgov’t (i.e. the taxpayers) to buckle under and bail them out and pay off California’s debts.

[MaduroBU]

I don't mind shady actors being shady....there isn't really a way to prevent it. What I cannot stand is the government stepping in to put us on the hook for their losses when the tide goes out. Clinton, Bush 2, Obama, Trump: their policies were indistinguishable. Put the taxpayer on the hook for stupid decisions made by the insanely rich and then pretend like they're doing us a favor.

When Bush and Obama told us that they had to bail GM out, who stood to lose? Bankruptcy courts weren't going to firebomb GM's assembly plants and murder their employees. But the Unions were going to lose their sweetheart pension plans and the bond holders were going to get annihilated. Puerto Rican bonds: same deal. People lent Puerto Rico a ton of money for the tax incentives, ignoring the fact that the Puerto Rican government has the financial acumen of a developmentally delayed 12 year old boy on 3 day cocaine binge. They deserved to get wiped out like all of the fools who loan money to idiots. But....they were rich, so McKinsey got PAID to divvy up Puerto Rican assets to save the ROI for greedy idiots. Maiden Lane I-III (e.g. giant payouts from the NY Fed to AIG, which then sent the money directly to Goldman). Would I not be whole as an American citizen if I didn't have the option of getting paid a negative real yield on Marcus branded Goldman CDs? Apparently not, because Obama called upon us to send them our money to keep them in the business of making America Great.....or something. Do you think that Ted Cruz is standing up to Goldman Sachs, where his wife is a managing director? I voted for the guy and gave money to his campaign, but I don't delude myself into thinking that he is somehow the solution to the problem or that he cares about my interests at all.

And with the country’s largest congressional delegation, California is going to eventually hose the rest of us over their debt too. I've been predicting for years now that they’ll eventually threaten to derail any and all congressional business unless and until they can force the fedgov’t (i.e. the taxpayers) to buckle under and bail them out and pay off California’s debts.

Sadly, that's exactly what all of the COVID relief bills have done.