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The GameStop Moment: Wall Street's Emperors Have No Clothes

One month after the insurrection on Capitol Hill, here are the rebels of Wall Street, a place of power no less symbolic.

A GameStop shop in Switzerland
A GameStop shop in Switzerland
Elsa Conesa

-OpEd-

PARIS — One month after the uprising on Capitol Hill, behold the rebels of Wall Street, a place of power no less symbolic. This latest attack was led by an army of anonymous shareholders, driven by their desire for revenge against big business. Their main targets are hedge funds, especially those who make a profit by predicting downturns. But they are also trying to bring down the trading platforms that try to derail them. And banks — central banks, even — in the context of conspiracy. In the forums where the self-proclaimed "degenerates' or "retards' meet, their anti-establishment rhetoric is barely concealed.

Faced with the magnitude of the GameStop phenomenon, stock market professionals did not know how to respond. But the world's astonishment quickly turned into contempt for these egotistical stockbrokers, who have transformed the stock market into a gigantic video game. Without a doubt, they will be the ones who lose the game of their own making.

On high alert, elected officials have promised to investigate. Regulators have promised to act. But, in reality, everyone is at a loss.

Wall Street's "Fearless Girl" statue and graffiti of AMC and GameStop stocks — Photo: Bryan Smith/ZUMA Wire

The anonymous amateurs, for whom boredom is not likely to be their only motivation, are doing nothing different from what the market professionals do when they share their opinion on stock market securities, whether or not they are even shareholders.

Like the latter, they are having fun with "free" money – money from the Treasury, paid by cheque in one case, printed by central banks in another. Like the latter, they are using financial derivatives – options that increase profits and allow them to place multiple bets on the same stock. Both benefit from very loose regulations that permit creative investors and bankers to invent sophisticated products and investment strategies, always to their advantage.

When a group of amateurs attacks a hedge fund, they act as a mirror for how the professionals behave on a daily basis without the regulator getting upset. Hence, 10 years ago, the American stock market surveillance gave up on its attempts to prosecute hedge fund managers who regularly met for dinner to exchange "ideas." Why did they give up? Because it's pretty much impossible to pinpoint market manipulation.

The irony of this current scandal is that the mission of these market watchdogs is precisely to protect small investors. It will be difficult for them to now prosecute some while claiming to protect others.

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Geopolitics

The Trumpian Virus Undermining Democracy Is Now Spreading Through South America

Taking inspiration from events in the United States over the past four years, rejection of election results and established state institutions is on the rise in Latin America.

Two supporters of far-right Brazilian President Jair Bolsonaro dressed in Brazilian flags during a demonstration in Belo Horizonte, Brazil.

Bolsonaro supporters dressed in national colours with flags in a demonstration in Belo Horizonte, Brazil, on November 4, 2022.

Ivan Abreu / ZUMA
Carlos Ruckauf*

-Analysis-

BUENOS AIRES — South Africa's Nelson Mandela used to say it was "so easy to break down and destroy. The heroes are those who make peace and build."

Intolerance toward those who think differently, even inside the same political space, is corroding the bases of representative democracy, which is the only system we know that allows us to live and grow in freedom, in spite of its flaws.

Recent events in South America and elsewhere are precisely alerting us to that danger. The most explosive example was in Brazil, where a crowd of thousands managed to storm key institutional premises like the presidential palace, parliament and the Supreme Court.

In Peru, the country's Marxist (now former) president, Pedro Castillo, sought to use the armed and security forces to shut down parliament and halt the Supreme Court and state prosecutors from investigating corruption allegations against him.

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