How Civil War History Explains Memestocks
Stock prices crashed and the biggest fanatics moved from r/WallStreetBets to a new subreddit, r/Superstonk, and started posting multi-thousand word essays they called “dds”, short for “due diligence”, to explain what had happened. come.
They were apparently research reports, modeled, perhaps, on the publications of professional financial analysts. They baselessly claimed that securities regulators, brokerage houses and people in charge of the day-to-day running of the market got together and agreed to create fake shares of stocks, which they secretly passed on to hedge funds preparing to short sell them again.
To combat this alleged scheme, Redditors pledged to buy as many shares of GameStop and AMC as possible to cause the “mother of all short cuts,” or MOASS for short, when short sellers would have to pay anything. price the Redditors have asked for — possibly even $1 million per share — to hedge their bets.
Back to reality: there is no giant conspiracy, there are no false actions; there will be no MOASS. The short January 2021 squeeze caused stock market breakdowns, the most dramatic of which occurred at brokerage firms that eventually halted trading in these stocks, not on the basis of moral authority, but because that they were about to run out of money to cover failed transactions.
But the Redditors have achieved something real. Like Jay Cooke, who pointed out how difficult it was for most people to access investment products in 1861, the Reddit crowd pointed to structural problems in the stock market and pushed regulators to try to solve them. The Securities and Exchange Commission has since proposed several changes to stock trading that would make them more visible and easier to understand and faster.
People’s War Effort
Wall Street has long boasted that its great-great-great-grandfathers saved the Union during the darkest period of the Civil War by generously lending money to the Lincoln administration. This claim, which financial titans repeat to imply that their work is morally good and descended from opponents of slavery, is now getting a facelift.
In “Bonds of War,” Mr. Thomson describes how, after securing an initial loan of $50 million in early 1861, elite financiers in New York, Boston and Philadelphia essentially told Lincoln’s Secretary of the Treasury , an Ohioan named Salmon P. Chase, that they wished him good luck. They felt it was too risky to continue buying US debt, especially since individual states had regularly defaulted on their debt during the pre-war period.