Quotulatiousness

March 17, 2021

The long-gone economic framework of print newspapers

Filed under: Business, Cancon, Media — Tags: , , , — Nicholas @ 03:00

In The Line, Peter Menzies explains the economic underpinnings of the newspaper world back in the “good old days” before first radio, then TV, and finally the internet took all the profits out of their model:

“Newspaper Boxes” by Randy Landicho is licensed under CC BY 2.0

We will hear a lot in the months ahead about who’s making money from news, so let’s get something straight: Even in the profit-soaked heyday of Canadian newspapers, no one made money from news.

That all ended about 100 years ago when radio — and then television — began delivering it for free.

Oh sure, the occasional ongoing news story would inspire people to buy more newspapers. But in my 30 years in that business the only event that did so in any significant way was the death and funeral of Princess Diana. Even then, after the extra cost of newsprint and distribution, the financial return was insignificant.

But mythologies die hard. People in newsrooms believed news made money — and apparently some still do — even when year after year, surveys of readers showed that there were lots of other things that sold and sustained newspapers.

Some people bought them because they were looking for a job. For others, it was a house, a plumber, a companion, a pet, a car or, really, almost anything else you can think of that might be needed. Classified pages were every town and city’s marketplace. That’s where you found stuff you had to get and bought an ad when you had something to sell or tell people about. It was where you announced the births of your babies, the graduations, engagements and weddings of your children and the deaths of your parents. The lives of communities were recorded in the classified pages of their newspapers.

After a glance at the headlines, many other readers’ first and sometimes only stops were the horoscope, comics, crossword (an error there generated far more calls than a rogue columnist ever could) and other pleasant distractions. For still more, it was the stocks listings, sports scores or recipes to which they were primarily drawn.

There were movie and entertainment listings — even a TV guide so you’d know where and when to find Seinfeld. On Thursdays, you might buy a paper just for the Canadian Tire flyer. On weekends, specialty sections discussed books and told tales of travel adventures well-supported by the latest deals advertised by travel agencies. Housing developers pitched their latest home designs in special real estate sections. And there were magazines. Honestly, there were.

It’s been literal decades since we last subscribed to a print newspaper, and nearly as long since I picked one up from a news stand. My mother is the last person I recall still depending on buying a physical newspaper — she only stopped buying a Saturday Toronto Star in the last year or so — but that was mainly for the TV listings. Back when I still occasionally travelled on business (also more than a decade ago, now), it was a nostalgic treat to find a copy of USA Today at the door of my hotel room in the morning.

March 15, 2021

Target is careful to only cite economic reasons for abandoning their downtown Minneapolis headquarters

Filed under: Business, Economics, USA — Tags: , , , — Nicholas @ 03:00

Jon Miltimore explains why the Target corporate headquarters in Minneapolis will be given up — for reasons that go beyond the claimed success of the telecommuting encouraged by the 2020 pandemic lockdowns:

A building burning in Minneapolis following the death of George Floyd.
Photo by Hungryogrephotos via Wikipedia.

Target Corporation, the eighth largest retailer in the United States, announced in an email to employees on Thursday that it will be leaving the City Center, its primary downtown Minneapolis location.

Company officials cited improved remote work opportunities and less need for space as the drivers for the decision.

“In just one year we’ve proven that we can drive incredible results, together, from our kitchens and basements and living rooms,” said Melissa Kremer, executive vice president and leader of Target’s human resources operations.

Target, the largest employer in Minneapolis with some 8,500 corporate workers, says the 3,500 employees who work at the City Center will still have a “home base,” but it will be at another Minneapolis location or in the nearby suburb of Brooklyn Park.

A Story of Capital Flight?

On one hand, there is little reason to doubt Target’s explanation for abandoning its headquarters. Many anticipated that the pandemic would lead to a normalization of remote work.

“The future of work will be distributed,” Erica Brescia, the chief operating officer of Github, told the BBC last fall. “We’re going to see a big shift from office by default to remote by default.”

Part of that shift, it’s reasonable to assume, would be corporations moving away from high-end corporate real estate. Yet it also shouldn’t be forgotten (or ignored) that Target’s decision comes less than a year after Minneapolis suffered some of the worst riots in US history, prompted by the May 25 death of George Floyd.

The riots — which broke out after a video went viral showing police pinning Floyd, a 46-year-old black man, to the ground for nearly nine minutes before he died — caused an estimated $2 billion in damage.

Though Target made no mention of the riots in its announcement, last summer I noted that an abundance of evidence suggested that the economic damage of the riots would persist long after the wreckage had cleared.

March 11, 2021

Substack is “‘incredibly dangerous and damaging’ to ‘one of the few failsafes against anti-democratic maneuvers'”

Filed under: Business, Media — Tags: , , , — Nicholas @ 03:00

At The Line, Matt Gurney discusses Substack in the light of extreme criticism by, among others, UCLA professor of information studies Dr. Sarah T. Roberts:

It wasn’t long ago that Jen Gerson and I wrote damn similar columns within days of each other. She was writing here, at The Line, and I was writing at my personal blog, Code 47. We both discussed Substack, the digital publishing company you’re reading at this very moment — The Line is currently hosted on Substack.

Or, if you prefer, Substack is a “a dangerous direct threat to traditional news media” and “a threat to journalism.”

That is the view of Dr. Sarah T. Roberts, a professor of information studies at UCLA, who unloaded on Substack (and some of those who use it) in a recent Twitter thread. You can read it here, and should, but for our purposes, Roberts argues that Substack is bad because it lets journalists who have come up through the traditional newsroom system bail on it, stop bothering with the trouble of an editor, “cash out” on the reputation they earned in newsrooms, and transform themselves from a “journalist” to that vastly lower order of life, “an opinion writer, at best.” Ouch!

Roberts makes an explicit appeal to her Twitter followers: do not pay for Substack content. Do not write for Substack. (She does carve out exceptions for purely personal blogs on trivial topics.) But Substack as a journalism venture is, in her view, “incredibly dangerous and damaging” to “one of the few failsafes against anti-democratic maneuvers … We really can’t afford to lose [journalism] right now.”

This is my summary of what she said — perhaps she’d quibble with it, which is why I’m encouraging you, all of you, to go read her original thread. Get it in her own words and judge for yourself if I’ve been fair.

Assuming I’ve passed your muster, like, yikes. Where to start?

Roberts is, of course, as entitled to her views as any one, and if she hates Substack with a fiery passion, that’s totally fine. And I think there is some truth to her argument, as Jen and I both noted in our earlier pieces: there no doubt are some people with big profiles, who built those profiles working for traditional newsrooms, who will bail on that job to go make money — maybe lots of money! — on Substack. This is a threat to legacy media organizations, who are more reliant than ever on a few key contributors, who serve not only as click magnets, but also human avatars of an outlet’s brand. Roberts’ argument is on the money here.

But the sum of what she left out of her argument is so gigantic that it practically warrants a Substack of its own.

March 8, 2021

Despite the rhetoric, judging by their actions the Democrats really hate the “gig economy”

Filed under: Business, Government, Politics, USA — Tags: , , , , — Nicholas @ 03:00

Along with all the giveaways to favoured groups in the US government’s huge “relief” bill, there was a late change that will take the gig economy into a back alley and rough it up to the tune of about $1 billion in new taxes:

UBER 4U by afagen is licensed under CC BY-NC-SA 2.0

When the economy is struggling to recover from a pandemic and crushing government lockdowns, that’s probably the worst time to impose $1 billion in new annual taxes on the working class. But that’s exactly what a new provision quietly slipped into the Democrats’ sweeping $1.9 trillion COVID legislation would do.

“A last-minute insert by Democrats looking to offset the cost of their coronavirus aid package would send tax collectors into the gig economy, eventually costing Uber and DoorDash drivers, Airbnb hosts and others about $1 billion annually,” Roll Call reports.

Under current tax law, earnings data for gig economy workers only needs to be reported to the IRS once it reaches $20,000. This means that small earners pursuing gig work to supplement their income aren’t hit by crushing federal taxes. However, the Democrats’ provision would nearly eliminate this benchmark, and instead require all income above $600 to be reported to the IRS.

“The stiffer tax burden would be imposed while 10 million Americans are unemployed and more and more have turned to freelance and gig economy work to make ends meet,” Roll Call notes.

Indeed it would, and this would be disastrous for both workers and the economy.

This tax hike “adds a significant burden to gig economy and small business workers at the worst possible time,” according to TechNet spokesman Steve Kidera. One tax expert warned Roll Call that many struggling gig economy workers won’t be able to pay the higher taxes, and that IRS penalties “can destroy a person’s life.”

QotD: Wall Street

Filed under: Business, Humour, Quotations, USA — Nicholas @ 01:00

Wall Street is a street with a river at one end and a graveyard at the other. This is striking, but incomplete. It omits the kindergarten in the middle.

Fred Sched, Where Are the Customers’ Yachts?, 1940.

February 23, 2021

The Corgi Toys Story

Filed under: Britain, Business, History — Tags: , , , , , , — Nicholas @ 02:00

Little Car
Published 4 Feb 2020

Corgi Toys is the name of a range of die-cast toy vehicles produced by Mettoy Playcraft Ltd. in the United Kingdom.

The script for this video comes from Wikipedia: https://en.wikipedia.org/wiki/Corgi_Toys

If you find issues with the content, I encourage you to update the Wikipedia article, so everyone can benefit from your knowledge.

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February 19, 2021

QotD: The disillusionment of working in a bookshop

Filed under: Books, Britain, Business, Quotations — Tags: , , , — Nicholas @ 01:00

For the better part of 2006, while studying for a master’s degree, I worked part-time in a branch of Waterstone’s, in *REDACTED*, the county capital of *REDACTED*.

I got the interview by stating openly in my covering letter that I was 24, still living with my mum, and asking her for train-fare had become a bit undignified. This seemed encouraging. But then the panel (2 pax.) asked what I was reading currently, and I said Sam Harris’s The End of Faith, and there was awkward silence. This set the tone for almost every “literary” chat thereafter.

Call me an idiot, but I was genuinely stunned to find we weren’t allowed to read on the job. Instead, booksellers had to devote any time not spent actually dealing with customers (which on a rainy weekend, in the wrong bit of the shop, could be a lot) with often-fruitless searches for books which had been lost, mis-shelved, or maybe stolen, or because they had to be returned to publishers (another surprise), and at the publisher’s expense.

I also quickly realised that the layout of the shop was not an accident (even in the jury-rigged “commercial” buildings of many an English town centre), and that the unadvertised steering of a customer around a bookshop was near-identical to how the algorithms work in the online equivalents (or vice versa, probably). If you like Poetry, you’re more likely to also like Philosophy, (right here on the next set of shelves), or Music (by the window), or History books (just across the room there), than if you came in looking for the latest Jeffrey Archer novel (downstairs, on the pile-’em-high islands).

Most of the time, I was just moving “stock” about, taking maddening credit card orders over the phone, or walking people literally to alphabetised mass-market fiction. All of which required no interest in, let alone knowledge of, literature. To a middle-class nerd such as myself, discovering that working in a bookshop [cue poetic images of James Frain, or similar] was fundamentally no different from working in a Sports Direct or Tesco was about the most depressing thing imaginable. That, and waiting for the Sunday trains in winter.

A.S.H. Smyth, “Seven kinds of people you find in bookshops”, The Critic, 2020-11-14.

February 15, 2021

The current (and future) rash of newsroom purges

Filed under: Business, Media, Politics — Tags: , , , , — Nicholas @ 03:00

Some thoughts from The Line on why people like former New York Times science reporter Donald McNeil are being given the show trial treatment and why it’s not going to stop quickly:

The New York Times Building in New York City, 1 January, 2008.
Photo by Frieder Blickle via Wikimedia Commons.

The first issue, of course, is a steady weaponization of HR processes and unions. Vehicles intended to fix problems like unfair pay structures, workplace misconduct and lack of due process are being re-deployed as tools of ideological conformity — fuelled by healthy doses of personal dislike and professional resentment.

Make no mistake: there are bad people in journalism, as there are in any profession. Abusers should be rooted out, and there should always be clear processes in place to handle toxic personalities fairly, decisively and effectively. (“Fairly” isn’t a buzzword here — the accused must have rights, too.)

But there has also been a steady lowering of the bar as to what evils warrant an HR intervention. Every newsroom should be a safe place from abuse, harassment and violence — but not from ideas that are offensive. We recognize the entirely legitimate concerns of employees who are from marginalized groups about historic injustices, microaggressions and systemic power imbalances. But being in the world sometimes involves working with people who are simply insensitive assholes. Drawing the line between the merely difficult and the truly dysfunctional isn’t always easy.

Further, many of the complaints now being bandied about are strategic. They are being used to pummel terrified HR staffs and weak, ineffectual managers into compliance with ideological agendas. A staff at war with itself and ever-fearful of the axe is easier to silence and control. Owners have long understood this; it’s a grim irony that our peers have now decided to take up the hood and the blade.

These workplace revolts always boil down to an internal struggle for control. The very concept of where power rests is being challenged by those who think the traditional way of running newsrooms is as obsolete as a classifieds page. Uprisings are about who decides institutional values, and who gets to enforce those values. An entire class of leaders needs to wake up to the fact that they’re three campaigns deep into a battle for their own legitimacy. And they’re losing.

That brings us to the third issue: management. We’ve said this before, but managers need to show some spine. The most consistent theme in all these newsroom eruptions is management either lacking the confidence to assert its authority, or hesitating to do so just long enough to make things worse. Too many leaders have been selected for their affability rather than their toughness. We at The Line suspect this is no accident. Powerful editors, necessary for effective management of staff, are inconvenient for owners intent on slashing said newsrooms. The kind of people who’d be most effective at crushing the odd staff rebellion also annoy the suits. So instead, we get nice people — truly nice people — who know the right folks and subscribe to the right politics, and shy away from embarrassment, conflict, and loss of status. They’re marks.

February 11, 2021

Tom Brady’s Super Bowl success has outlasted many titans of corporate America

Filed under: Business, Economics, Football, History, USA — Tags: , , , , , — Nicholas @ 05:00

Despite the headline, this isn’t really about the NFL, Tom Brady or the S*per B*wl, it’s about a key factor in free market economies: creative destruction.

“Blockbuster store closing sale” by Consumerist Dot Com is licensed under CC BY 2.0

Consider some of the names that bought Super Bowl airtime during Brady’s first rodeo in January 2002: AOL, Blockbuster, Radio Shack, Circuit City, CompUSA, Sears, Yahoo, VoiceStream Wireless, and Gateway Computers.

The Titans of Yesterday

Notice a theme? That list features some companies we saw in Captain Marvel, the 2019 hit movie that nailed 90s nostalgia and reminded us how fast the world had changed. Like when Blockbuster Video stores were still a thing.

For those who may not recall, when Brady was winning his first Super Bowl, Blockbuster was approaching its peak. In 2004, it operated 9,094 stores and employed some 84,300 people. The company was pulling in $6 billion in revenue annually and looked invincible. Today, a single Blockbuster store remains open — in the world.

Remember RadioShack? Once upon a time, it seemed as if you could find one of their brick-and-mortar stores in every corner of the USA. Not anymore. In 2015, RadioShack filed for Chapter 11 bankruptcy, in large part because of those many store locations, which cannibalized revenues.

Sears, one of the historic giants of retail, managed to make it to 2018 before announcing its bankruptcy. Its stores continue to close so fast, it’s hard to tell how many remain in operation. (The best guess is about 60.)

It’s sometimes difficult to remember that the titans of industry aren’t always the same companies from year to year, and the sector-dominating company today might well be begging for a bailout (or demanding protection from uppity new competitors) only a few years down the way.

Some might see the collapse of Blockbuster, Sears and company as a sign of something terribly wrong with our economic system. After all, Blockbuster alone paid rent at tens of thousands of properties and employed tens of thousands of workers. Sears was the largest American retailer (by far) for decades.

Watching the companies we once shopped at flounder and fail can be surprising, jarring even. But a closer look shows this cycle is not unusual and is actually the sign of a healthy market economy, not a dysfunctional one. What may seem like pure destruction actually clears the way for economic innovation and renewal. “Creative destruction” is how the economist Joseph Schumpeter (1880-1950) characterized business failure in a free market.

As economist Mark Perry points out, companies on top have a very hard time staying on top. Perry, a scholar at the American Enterprise institute and a professor of economics at the University of Michigan’s Flint campus, compared the 1955 Fortune 500 companies to the 2019 Fortune 500. He found that just 52 were still on the list six decades later.

I spent most of my working career in the software business, and many of the companies I’ve worked for over the years aren’t in business any more (my first job out of school was with Northern Telecom … remember them?). Software is a particularly fast-cycling industry, but it’s true of the economy as a whole at a slightly more sedate pace.

February 3, 2021

QotD: The “Parkerization” of wine

Filed under: Business, Economics, Quotations, Wine — Tags: , , , , — Nicholas @ 01:00

… mega-star wine critic Robert Parker Jr., a man who has more influence on the taste and price of wine than anyone else has, or ever had had. Now in his seventies, Parker is retired. But back in 1975, the former lawyer, taking his lead from former presidential candidate, Ralph Nader — a consumer rights advocate — began to publish The Wine Advocate, a kind of consumer guide to fancy wine.

The world of wine had never seen anything like it. Parker was on a mission to demythologise all the snobby and obscure terminology under which fine wine was clouded and developed a simple 100 point scale on which wines could be judged.

As his influence grew, a Parker wine score in the 90s would pretty much guarantee considerable financial success to a vineyard. Inevitably, so the argument goes, those who made wine started to adjust the taste of their product so that it would suit the arbiter’s palate.

Parker generally likes big, dark, gutsy, jammy, tannic wines that can, his critics say, be engineered to taste that way in post-production, often by use of imported yeasts or through the use of young oak barrels. It’s more about clever chemistry than the particular charisma of the local terroir. Parker’s taste favours the muscular Californian Cabernet wines and the great Château wines of Bordeaux, yet has little appreciation for the lighter, less tannic, more subtle Pinot Noirs from Burgundy or Gamays from the Loire Valley. “Bad critics look at Pinot through Cabernet-tinted spectacles and so criticise it for being something it never set out to be,” writes Clive Coates, in a not so subtle dig at Parker, in his encyclopaedic The Wines of Burgundy.

Those who bewail Parker’s phenomenal influence speak of “parkerisation” as the wine equivalent of globalisation. The New York Times wine critic Alice Feiring writes that this is how “Rioja loses its Spanish accent”: parkerisation leads to an increasingly homogenised style of wine in which the diversity of grapes and wine tastes come to be submerged under the over powerful influence of Parker’s very particular palate. Those, like her, who prefer subtlety in their wine speak dismissively of Parker’s love for “jam bombs”.

Those who defend Parker, argue that his 100 point scale works as a kind of bullshit detector. It’s cutting through all the fancy talk and obscure (often) French classifications, to focus on the taste and the taste alone.

Giles Fraser, “Is wine starting to taste the same?”, UnHerd, 2020-10-14.

February 2, 2021

The History of Hollywood

Filed under: Business, History, Media, USA — Tags: , , , , , , , — Nicholas @ 04:00

The Cynical Historian
Published 3 Sep 2020

This episode is about the history of Hollywood, and it’s quite a long one. This is part 9 in a long running series about California history.

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references:
Bernard F. Dick, Engulfed: The Death of Paramount Pictures and the Birth of Corporate Hollywood (Lexington: The University Press of Kentucky, 2001). https://amzn.to/3f2Yb0S​

Hollywood’s America: United States History Through its Films, eds. Mintz, Steven and Randy Roberts (St. James, N.York: Brandywine Press, 1993). https://amzn.to/2tZIoJT​

Richard Slotkin, Gunfighter Nation: The Myth of the Frontier in Twentieth-Century America (New York: Atheneum Books, 1992). https://amzn.to/2KX0jI2​

Kevin Starr, Inventing the Dream: California through the Progressive Era, (Oxford, U.K.: Oxford University Press, 1985). https://amzn.to/2VPTbVX​

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Support the channel through PATREON: https://www.patreon.com/CynicalHistorian​
or by purchasing MERCH: teespring.com/stores/the-cynical-hist…​

LET’S CONNECT:
Twitch: https://www.twitch.tv/cynicalhistorian​
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Subreddit: https://www.reddit.com/r/CynicalHistory/​

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Wiki: By 1912, major motion-picture companies had set up production near or in Los Angeles. In the early 1900s, most motion picture patents were held by Thomas Edison’s Motion Picture Patents Company in New Jersey, and filmmakers were often sued to stop their productions. To escape this, filmmakers began moving out west to Los Angeles, where attempts to enforce Edison’s patents were easier to evade. Also, the weather was ideal and there was quick access to various settings. Los Angeles became the capital of the film industry in the United States. The mountains, plains and low land prices made Hollywood a good place to establish film studios.

Director D. W. Griffith was the first to make a motion picture in Hollywood. His 17-minute short film In Old California (1910) was filmed for the Biograph Company. Although Hollywood banned movie theaters — of which it had none — before annexation that year, Los Angeles had no such restriction. The first film by a Hollywood studio, Nestor Motion Picture Company, was shot on October 26, 1911. The H. J. Whitley home was used as its set, and the unnamed movie was filmed in the middle of their groves at the corner of Whitley Avenue and Hollywood Boulevard.

The first studio in Hollywood, the Nestor Company, was established by the New Jersey–based Centaur Company in a roadhouse at 6121 Sunset Boulevard (the corner of Gower), in October 1911. Four major film companies – Paramount, Warner Bros., RKO, and Columbia – had studios in Hollywood, as did several minor companies and rental studios. In the 1920s, Hollywood was the fifth-largest industry in the nation. By the 1930s, Hollywood studios became fully vertically integrated, as production, distribution and exhibition was controlled by these companies, enabling Hollywood to produce 600 films per year.

Hollywood became known as Tinseltown and the “dream factory” because of the glittering image of the movie industry. Hollywood has since become a major center for film study in the United States.
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Hashtags: #history​ #Hollywood​ #California

February 1, 2021

In the wake of l’affaire GameStop, frantic regulators call for more power to intervene in the market

Filed under: Business, Government, Politics, USA — Tags: , , , , , — Nicholas @ 03:00

“Regulatory capture” is the term for situations where the regulators and the regulated begin to get too close and the regulated industries or organizations begin to indirectly control the actions of the regulator for their own benefit. A topical example would be the sudden, agonized cries of politicians and market regulators for new powers to clamp down on disruptive players like the Redditors or other small investors who triggered the rise in GameStop share prices causing potentially ruinous financial losses for regulated hedge funds.

“GameStop” by JeepersMedia is licensed under CC BY 2.0

Although the story has garnered the attention of regulators and even the White House, the wrong takeaway is to suggest options for retail investors should be restricted more than they already are. Yet this is precisely what William Gavin, Secretary of the Commonwealth of Massachusetts, has called for. Gavin argued that there should be a 30-day trading suspension on GameStop to protect “small and unsophisticated investors.”

Gavin’s suggestion would have serious extended consequences. First, consider the knowledge problem that is involved in constructing such a restrictive regulation. When exactly would a rally become unacceptable? Despite years of decline, Kodak experienced a rally after its announcement that it would move into pharmaceuticals. Would this be permissible? If so, one could simply point to GameStop’s decision to appoint three new directors in an effort to turn the company around. If this is not enough, regulators must clearly state what identified the investments as unacceptable.

It is unclear if there is a perfect benchmark to distinguish rallies. But without such a measure, the suspension proposal would put every rally at risk of wrongful closure — potentially halting the growth of companies and industries, alike. Worse yet, the fear of missing out on a rising stock may push some investors to rush in with less information than they would otherwise acquire. Even if it is in a traditional rally, an uninformed decision could cause more harm than good.

Yet suppose the knowledge problem is solved and there is a perfect measure in place. Should other protections be put in place? One could make the case for a law against allowing “unsophisticated” gamblers from going to Las Vegas and losing money. And although this may seem like a leap, Gavin himself told Reuters, “This isn’t investing, this is gambling,” when he spoke of the GameStop rally.

The rally has attracted the world’s attention, but it does not require it. Rallies are a normal part of financial market activity. The only difference here is that it was Main Street that pulled one over on Wall Street.

January 30, 2021

“The only thing ‘dangerous’ about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter”

Filed under: Business, Economics, Government, USA — Tags: , , , , , , — Nicholas @ 03:00

Matt Taibbi says “Suck it, Wall Street!”

Meme stolen from Ace of Spades H.Q.

The press conveyed panic and moral disgust. “I didn’t realize it was this cultlike,” said short-seller Andrew Left of Citron Research, without irony denouncing the campaign against firms like his as “just a get rich quick scheme.” Massachusetts Secretary of State Bill Galvin said the Redditor campaign had “no basis in reality,” while Dr. Michael Burry, the hedge funder whose bets against subprime mortgages were lionized in The Big Short, called the amateur squeeze “unnatural, insane, and dangerous.”

The episode prompted calls to regulate Reddit and, finally, halt action on the disputed stocks. As I write this, word has come out that platforms like Robinhood and TD Ameritrade are curbing trading in GameStop and several other companies, including Nokia and AMC Entertainment holdings.

Meaning: just like 2008, trading was shut down to save the hides of erstwhile high priests of “creative destruction.” Also just like 2008, there are calls for the government to investigate the people deemed responsible for unapproved market losses.

The acting head of the SEC said the agency was “monitoring” the situation, while the former head of its office of Internet enforcement, John Stark, said, “I can’t imagine there isn’t an open investigation and probably a formal order to find out who’s on these message boards.” Georgetown finance professor James Angel lamented, “it’s going to be hard for the SEC to find blatant manipulation,” but they “owe it to look.” The Washington Post elaborated:

    To establish manipulation that runs afoul of securities laws, Angel said regulators would need to prove traders engaged in “an intentional act to push a price away from its fundamental value to seek a profit.” In market parlance, this is typically known as a pump-and-dump scheme …

Even Nancy Pelosi, when asked about “manipulation” and “what’s going on on Wall Street right now,” said “we’ll all be reviewing it,” as if it were the business of congress to worry about a bunch of day traders cashing in for once.

The only thing “dangerous” about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter. That bit about investigating this as a “pump and dump scheme” to push prices away from their “fundamental value” is particularly hilarious. What does the Washington Post think the entire stock market is, in the bailout age?

H/T to Larry Correia for the link.

Toyota’s Invincible Truck

Filed under: Business, History, Japan — Tags: , — Nicholas @ 02:00

Big Car
Published 1 Nov 2020

Toyota’s best-selling vehicle is the long-running Toyota Corolla, but second is Toyota’s resilient pickup the Hilux that’s been sold for over 50 years. No matter where you are in the world, you’ll likely find one moving up to a ton of cargo down a dusty lane. In the process it’s turned into a bit of a Jekyll and Hyde vehicle. On the one hand it’s the basic indestructible commercial vehicle that thousands of businesses rely on every day. On the other it’s become a well-specced weekend leisure vehicle. And in some cases it’s a bit of both! So why did this unassuming vehicle get a place of honour at the Top Gear studio, and what other successful vehicles have been born out of this long-running pickup?

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January 28, 2021

GameStop in a very different kind of game

Filed under: Business, Gaming, USA — Tags: , , , , , — Nicholas @ 05:00

In the NP Platformed newsletter, Colby Cosh looks at the fascinating gyrations of GameStop’s share price in the grip of an unexpected group of players in the market:

“GameStop” by JeepersMedia is licensed under CC BY 2.0

GameStop has long been seen by institutional investors as following down the road of Blockbuster Video: it’s a bricks-and-mortar retailer whose main product is downloadable from your sofa. For that reason, it is heavily shorted by professional funds who normally eschew short-selling, which does have the risky feature of potentially infinite negative downside.

Enter Reddit, the website for special-interest user forums of all kinds. A Reddit “Wall Street bets” board uncovered evidence in regulatory filings that some hedge funds had legitimately dangerous large short positions representing bets against GameStop’s flaccid share price. A few hobby investors began to buy GameStop out of a sense of adventure and perhaps nostalgic loyalty. More importantly, they began to preach the gospel to others.

This is explicit “market manipulation,” but done in the open; it is surely as legal as any other conversation. GameStop’s price (NYSE symbol: GME) surged upward as word spread amongst day traders and other amateur investors. And as the random-looking rise in price got noticed, the whole scheme, itself rather reminiscent of a video game, went viral.

As of Jan. 12, GME was below $20, which is about where most analysts thought it belonged on merit, or lack thereof. The price as I type this particular sentence is $328.81. The backs of some funds with heavy short positions have been broken.

High finance seems somewhat terrified, as amateur investing websites — ones pioneered by the financial industry itself — begin to throw roadblocks in front of late-arriving GME buyers. For itself, Wall Street will invest billions replacing copper wire with fiber optics to gain microsecond arbitrage advantages in the market; for you and I, the good old portfolio can get conveniently 404ed for an afternoon.

This suggests that Wall Street may not have reckoned with the full possibilities of a world of proletarian shareholders. The stock market has proverbially been a playground of “animal spirits” since long before John Maynard Keynes used that phrase in 1936. What happens to an ecosystem when new animals show up? One can surely count on at least a minimum of chaos; maybe the surprise is that it took so long to take this game-like, combative form.

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