An astonishing story is unfolding, with this aspect of the story getting astonishingly blasé coverage: it seems a vigilante movement developed on Reddit to revenge itself on “Wall Street” for their role in melting down the global economy in 2008 (which went unpunished, criminally). In short: the company GameStop was shorted by hedge funds, positioned to “bust it out”. Redditors sabotaged the “squeeze,” inflated the company stock value, and wreaked havoc on the short positions. Incidentally, Matt Taibbi is one of the few journalists who is accurately covering the story.

Of course, this all needs to be ironed out in court, and this post makes no pretext to know what that outcome will be (it will probably take a century). A colleague of mine was involved. I asked him what percentage of the move was motivated by pure revenge, and he said “probably 40%.” Why would people risk their own money to damage a private company (or a whole industry)?

Because people, including this scribbler, have confidence that if there is fraud at the highest level, the perpetrators will be brought to any kind of justice (and not just because they weren’t in 2008). Why? Because of “Regulatory Capture”: government officials know government. That is their area of expertise. Most of our permanently incumbent politicians have expertise only in getting and staying elected. For a complex subject like finance, they must rely on people in finance, and those chosen are chosen mainly for political reasons. Worse, they are biased not only to their approach to finance, to the exclusion of others, they are also biased to the institutions they were in (because they are people).

That is bad enough. Much worse: those institutions being regulated co-opt the regulators with campaign contributions. The very first thing I noticed about the financial cascade of 2008 was that Lehman Brothers was allowed to fail: “Fourth ranking in bribes, er, I mean campaign contributions, not sufficient” was my gut reaction. Goldman Sachs was much “better;” the firm was President Obama’s primary donor. Hilary Clinton made vast lucre in “speaking fees,” from Goldman Sachs, and she is no Mark Twain-level raconteur (more Mars Attacks).

In this latest, we find out Janet Yellen, Joe Biden’s new Treasury Secretary, was similarly engaged for her speech-stylings. Financial speeches so riveting, they can blow up YouTube. Just kidding; her most popular speech has 5k views (compared to a Tekashi69 video at over 100 million). Now, we have to depend on her to sort out the frauds, which means we have to depend on her to go against her “audience.”

This is the kind of insiderism that had a lot to do with bringing about the Donald Trump phenomenon. Reforming the system is a typical dilemma of the way our system works (and doesn’t): the winner who profits by the advantage has no incentive to reform, and the loser has no power to.

Which brings us back to why private citizens will pay their own money to revenge themselves on Wall Street: If we were talking about a movie Western, where the cattlemen coopted the sheriff, and the “sod-buster” farmers organize to fight the conspiracy to revenge and deter what had been done, that would be familiar territory. Switch the nouns to “hedge fund bosses,” “regulators” and “the unconnected investor” (those who neglected to pay their “speaking fees”) and that makes the principals easier to see.

In fact, one of the very first pieces I wrote on this blog was how I worked as a paramedic during the blackout of 2003. Of how after many, many hot calls, we had to bring a critical asthmatic down seven flights of stairs, with two police officers battling with us. When we were down on the street, we almost collapsed on the stoop from exhaustion. The Bodega-man saw this, and proudly presented us with the very last cold can of Coke left in the city. My partner and I passed it between us like lifeboat survivors, but the police wouldn’t touch it. “The appearance of corruption is more important than actual corruption.” One of them said, while I watched his face for a long time to figure if he was pulling my leg, with his Lil Abner quaintness. They were both dead-serious, and took no Coke (and right-as-can-be).

Contrast this ethic (of people risking their lives for 60,000) with the most-high fuckery of John Corzine, former Governor of New Jersey: MF Global lost over a billion dollars in client money, and he testified publicly that he “really has no idea where the money went” (Dave Chapelle has an indispensable sketch on this). The Corzine case is both sides of the corruption coin that is the intersection of Wall Street and our political class: he advised his own regulators and his bribes were paid in full. The wreckage became one of the biggest bankruptcies in American history. He was investigated, not by any of the scores of alphabets of law enforcement agencies we have to push Americans into the Big Hole for ever-expanding complexities of reasons, but by …wait for it:

The U.S. Department of Agriculture. Here is my shocked Pikachu face.

I’ve written here many times: we have the developed world’s highest incarceration rate, but that is only for the low. At a high enough level, the laws apparently switch off. At what level? Campaign donations to regulators clearly moves the switch, by a lot. The appearance of justice (and mercy) only for the insiders is creating vigilantes to fill the void.

Eugene Darden Nicholas

About Eugene Darden Nicholas

Eugene Darden (Ed) Nicholas is from Flushing Queens, where he grew up sheltered from the hard world, learning the true things after graduating college and becoming a paramedic in Harlem. School continues to inform and entertain in all its true, Shakespearean glory. It's a lot of fun, really. In that career, dozens of people walk the earth now who would not be otherwise. (The number depends on how literally or figuratively you choose to add). He added a beloved wife to his little family, which is healthy. He is also well blessed in friends and colleagues.


Like this post?