Seems fair

Image thanks to Politico

A system seems fair when you win. We can’t help it. When the system works for you, you are very unlikely to want to change it. 

If you are in the Premier League, it doesn’t matter to you that the enormous amounts of money involved are having a markedly negative effect upon the rest of the beautiful game. When you are making billions from online shopping, it doesn’t matter to you the effect your business is having on high streets across the land. When you have an eighty seat majority it doesn’t matter to you that the government doesn’t represent that majority of the electorate and that most votes are wasted.

Turkeys don’t vote for Christmas but sometimes the little guy flights back and turkeys fight for a new way of life.

It is against this background that I have been interested in what is going with the share price of GameStop, the world’s largest video store. The market, if such a thing exists, had rumoured that the price of GameStop’s shares were overpriced and a large amount of shares were shorted. This is a strange process where shares are borrowed on the expectation that the price will drop, at which point you can buy the shares at the lower price and give them back to the person who leant them to you in the first place. The borrower trousers the money. I assume that the lender gets a cut as well otherwise I can’t understand why they would get involved.

Basically it’s a bet and huge hedge funds are using their enormous clout to attempt to manipulate the market.

This time though the little guy fought back. Through social media the ruse was blown and thousands of small investors jumped in to buy the shares, pushing the price up and leaving the shorters in trouble. Indeed the price went up so high that the particular hedge fund didn’t have enough money to buy the shares it had borrowed and declared bankruptcy. We are talking billions of dollars.

Of course the establishment is crying foul, claiming collusion amongst buyers and accusing them of doing exactly what it has been doing for years.

A system seems fair until you lose.

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