This is Occupy Wall Street, the sequel. These are elements of the Tea Party again. These are Bernie brittle and MAGA maniacs.
The hordes of young retailers that fueled a spectacular increase in the value of video game retailer GameStop this week may have a unified political ideology. But they forced a showdown on Wall Street and drew the attention of leaders in Washington who recognize a populist uprising when they see one.
Wall Street has long been an easy villain on Capitol Hill. But the rush to the side of speculative traders by both Democrats and Republicans reflects the broad recognition of the impulses that have driven U.S. politics in recent years, fueling the rise of President Donald J. Trump and a Liberal wing of the Democratic Party. has become stronger in opposition.
The decision by the online brokerage app Robinhood to set up trade restrictions, as hedge funds were hammered by the wild market turmoil, resulted in the rarest of all political events – a two-way deal. Lawmakers from across the political spectrum condemned the move and called for hearings on the decision, including Texas Sen. Ted Cruz, a Republican and staunch Conservative, and New York-based representative Alexandria Ocasio-Cortez, a left-winger. The Conservative Attorney General of Texas and his progressive counterpart in New York both launched investigations into Robinhood.
“The stock market has for years been less and less about the value of business and more and more like casino gambling,” said Senator Elizabeth Warren, a Massachusetts Democrat who called for Wall Street regulation shortly after the madness over the market. GameStop started this week.
“GameStop is just the latest and most visible example,” she said in an interview Friday. “We should not see it as a one-time issue, but as a systemic issue that requires systemic regulation and enforcement.”
While President Biden Mr. Defeating Trump with a centrist message to restore political norms, the trade frenzy this week gave a powerful reminder of the strong undercurrent of grievances and institutional mistrust in the country. Many believe it will only increase as the country grapples with the economic consequences of a devastating pandemic.
As Wall Street celebrates high tide, unemployment has peaked with nearly 10 million fewer people having jobs than at the beginning of last year – a situation that reminds some former officials of the 2008 economic crisis that led to the Occupy Wall Street and the Tea Party movements.
“It’s not about Republicans and Democrats,” said Newt Gingrich, the former speaker of the Republican House and an ally of Mr. Trump, said. “These are very normal, everyday people who are starting to realize that they have really been ripped off in the last year, just as they were ripped off in 2008 and 2009.” He added: “What you see is an almost spontaneous cultural reaction in which little boys and girls get together and go after the big ones, so that the big ones have to get the game ready in order to survive.”
The reality is more complicated. There is little sign of any central political mission being shared by the millions of amateur traders who have teamed up to squeeze out at least two hedge funds that have settled against the shares of companies like GameStop and the film chain AMC. One of the makers of the scheme is far from being a ‘little guy’, with the financial means to allegedly convert an initial investment of $ 53,000 into $ 48 million. In general, only about half of the country owns any stock.
On Reddit, the online site that sparked the boom, few of the mostly young participants put their flood of investments in clearly biased terms. Yet many write that they are driven by anger over the financial bailout in 2008 that kept the big banks going while 10 million Americans lost their homes.
“When the crisis hit our family, we were able to keep our house, but we lived for a year on pancake mix and powdered milk and beans and rice,” one person identified as ssauronn posted on Reddit. “You have been saved and rewarded for terrible and illegal financial decisions that have negatively changed the lives of millions.”
Other posters responded with their own stories of economic strife and political anger.
“Forget Republican / Democrat, left / right … the bankers play both sides and almost always come out on top,” identified a poster as ChrisFrettJunior wrote after recounting how he struggled his parents through the 2008 recession.
The decision to bail out the biggest banks and not to prosecute any of their top executives has led to much of the populist zeal that has driven American politics over the past decade. The Tea Party rose to political prominence in the wake of the $ 700 billion financial bailout package passed in 2008, eventually becoming a force that defeated both moderate Republicans and Democrats.
After Republicans seized control of the House in 2010, Democrats began to face their own setback, starting with Occupy Wall Street – a loose coalition of largely liberal protesters that sparked a national debate on economic inequality.
Political strategists warn these days that hedge funds, private equity investors and bankers are unlikely to find the same kind of deep support in Washington. Anger over the lifeline fueled the campaigns of political outsiders, which created a congress that is less receptive to Wall Street’s pleas and much more eager to use the revolution to advance their agenda.
“There are a lot of political coins to hold the feet of hedge funds for the fire of Democrats and Republicans,” said Josh Holmes, a Republican strategist and longtime adviser to Senator Mitch McConnell. “If you sit here on Wall Street and dismiss people as people who do not understand the way the markets work, I think you’re going to be very difficult.”
For Republicans, the market revolution was a referendum on elitism. Democrats saw pure corporate greed and the need for greater regulation.
“Big Hedge, with outposts in South Hedge-i-stan (Wall Street) and North Hedge-i-stan (Greenwich, CT), has curtailed trillions of large U.S. companies facing it,” said Jeff Fortenberry, a Republican, representative said. of Nebraska. “Now they get an income from flash mobs from day traders and pay them dearly.”
Most of the anger this week was directed at Robinhood, a brokerage app for younger investors, which suddenly restricted trading in GameStop, AMC and other stocks. Lawmakers have argued that the app protects hedge funds and other large investors from retail investors. Robinhood said the additional restrictions are necessary to meet the government’s financial requirements.
However, even centralists like Senator Pat Toomey of Pennsylvania, who plans to become the leading Republican on the Senate Banking Committee, have expressed concern about the lack of transparency in the online company’s decision-making.
“I find it disturbing when retail investors who simply want to buy a stock are frozen out of the market,” he said. Toomey said in a statement. “Small investors should be free to buy even very speculative shares, just as hedge funds should be free to shorten them.”
Although politicians from both sides joined a call for greater investigation, it was hardly a kumbaya moment for the two parties.
After Cruz tweeted that he agreed with the call from Mrs. Ocasio-Cortez for an investigation into Robinhood’s actions, she quickly denied the support of the Republican of Texas, who was a prominent supporter of Trump’s unfounded allegations of election fraud.
“I’m glad to work with Republicans on this issue where there is a common issue, but you had me killed almost 3 weeks ago so you can evict this one,” she answers. ‘Happy to work with almost any other GOP who’s not trying to kill me. If you want to help in the meantime, thank you. ‘
Mr. Cruz condemns her response as ‘partisan anger’ that is ‘not healthy for our country’, and draws another response from me. Ocasio-Cortez, while apologizing to his allies in the House.
The uproar over GameStop and Robinhood comes at a challenging time for the Biden government, which has accepted office and promised to restore a sense of calm in the country. The Banking Committee of the Senate must plan another trial for Gary Gensler, Mr. Biden’s choice to lead the Securities and Exchange Commission is confirmed, leaving the agency with an acting chairman for an indefinite future. On Friday, White House Press Secretary Jen Psaki postponed questions on the issue.
“However, it’s a good reminder that the stock market is not the only measure of the health of our economy,” she said, a clear reference to Trump’s continued fixing of share prices during his tenure. Mr. Biden has not yet commented on the issue.
Representative Ro Khanna of California, a forerunner representing a district that includes Silicon Valley, said the events this week should alert lawmakers to the need to tighten financial regulations and increase transparency and equity.
He said the wide range of Republicans and Democrats they spoke out was a reflection of a true populist rage in this country. ‘
“Some people get a flashy degree, know the right people and bring short sales all day in front of their computers,” he said. Khanna said. “And it’s a form of manipulation that has hurt our country. This has enriched the couple at the expense of many Americans. ”
Although many Americans do not own stocks at all, the feeling that Wall Street has a rigid system cuts through demographic barriers.
“I think it’s been bubbling up since the Wall Street crash in 2008,” he said. Khanna said. “And it’s coming to a boil.”