Trillbilly Worker's Party - Episode 183: Mall Street (w/ special guest Alexandra Scaggs)

Episode Date: January 29, 2021

We enlist Alexandra Scaggs to help us make sense of this Gamestop/Wall Street saga. Alexandra is a writer for Barron's, and can be found on twitter at @alexandrascaggs. Please support us on Patreon: www.patreon.com/trillbillyworkersparty

That's a lot better. Last night, I watched an hour-long documentary about the Costa Concordia sinking. Do you guys remember this? This happened, like, 2012. It was a cruise line. Was it that cruise ship? Yes. I vaguely remember this, but for some reason, I remember it as, like, a lot of a lot of people got botulism at the buffet line or something.

And were lost at sea for several months. But that's just my own brain revising it, I'm sure. That is definitely a Tom Sexton revision. Because what actually happened, and I shouldn't be laughing at this, it's extremely morbid. But what actually happened was it was a cruise line um that was sailing around the mediterranean and the captain was like some italian drunk who went up into like a cove off the coast of italy and just ran into the sea, like the seabed, and it tore a massive hole in the bottom of the ship. And so the captain panicked and fled the ship,

like just got in a lifeboat. I remember that now. That's the one. Because people were like, okay, right? Like 30 people died. It was like, and there's all this harrowing footage of people trying to get on the lifeboats and it reminded me kind of of the covid vaccine rollout because there really is footage of like people lining up to get on the lifeboats and like

middle-aged you know men and women like shoving children aside to get on the lifeboats and people are like there's kids here get them out first you know it was really incredible but the only reason i bring this up is is because i just want to tell everyone out there like if the worst mistake you've ever made like think about the worst mistake you've ever made and how much you've beat yourself up over it. It'll never be as bad as driving a cruise line onto land, sinking it, killing 30 people. And then saving your own skin. Running away. Pretty ridiculous. I thought you were going to say something i watched a documentary about uh johnny agnelli the like the ceo old ceo of fiat the other night

it's like i'm sitting here watching this and it's like you know it's talking about like the like the strikes with the communists that were working in fiat factories versus him and all this stuff and it's like the first like johnny agnelli's character witness in this documentary is henry kiss and i'm like that's not a good start yeah anyway i thought that's the direction you were going i was like hey i'm in me too well there i mean this is a pretty you can it on YouTube, but it is a pretty funny documentary because it was like shot, it was pieced together from cell phone footage. And some of it is like these old British men who like are disgusted by this captain. Like before he wrecks the ship, like the captain goes, you know, like I said, he's like a middle-aged Italian guy, and he was, like, walking around the cafeteria taking photos with, like, hot young American women, and these British guys are just disgusted with this.

They're like, of course, American women would be so taken in by Italian men. They're just completely disgusted. So you think we've unfairly maligned the French over the centuries, and we should have been the Italians we immortalized as cowards on. Yes, I do, yes. Okay. That is what I'm saying. Well, anyways, welcome to the show this week. We have an episode for you planned.

I don't know how it's going to go, but we're going to see. We are, of course, talking about the big news item of the week, GameStop. That's all you have to say. People immediately know what you're talking about. To help us do it, we have Alexandra Skaggs, who is a writer for Barron's. How are you doing, Alex? I am doing pretty well i've had dreams about gamestop every night this week too fucking much interesting um i'm sure if you're out for barons

this is like the high season for you with this kind of stuff going on yeah like shit hitting the fan basically right yeah i would imagine yeah that you don't get a whole lot of news stories that keep you busy from dusk till dawn uh no i mean like when markets in china were blowing up like i think in like 2015 it was like this and also at the beginning of the pandemic it was like this so it's like long periods of boredom and then just like shit hits the fan and everyone's like oh my god what does this mean and then it turns out to be like not as big of a deal as everyone is worried about and then it's

fine so that's pretty much like markets coverage yeah i mean it's kind of been the story of the last year in general really you will have moments of extreme banality and boredom and then things boil over for a few days weeks months um and then they go back to boredom and this one doesn't seem to be wanting to go away though no it's persisted for a few days yeah so like i mean i feel like what basically this kind of happened a little bit last year like do you guys remember when hertz filed for bankruptcy a little bit like the transportation like the car yeah yeah everyone was everyone was worried that well everyone was worried that like no one was going to buy cars no one was going to drive anywhere and like you know of course these places have these big um like offices offices and stuff

at airports so her like well shit so they had to restructure but like a bunch of a bunch of like reddit traders basically like bought up a ton of hertz stock while it was in bankruptcy and people were like that that's weird like usually when a company files for bankruptcy you like if you own stock you just like lose everything yeah like your money just disappears but these guys were like could be fun let's do it so they like bought a ton of hurt stock and like then the company was like well i guess we better sell share like we're trying to raise money so why not yeah but the thing is like you can't really do that like in bankruptcy court like you're basically saying like can you just like give us money so we can like take it and give it to other people like our lawyers so sec was like okay don't do that um but like there have been like these little weird things

like every few months and then just like last week it totally blew up and i think basically just because like redditors figured out that they could brigade the stock market right yeah yeah it makes me um if only like coal companies had known this trick throughout 2008, 2014, when every single coal company went bankrupt. One simple trick to save the coal industry. AstroTurf, baby. That's right. It's kind of funny because I know the AMC stock is the other thing. I don't know why they're not in bankruptcy.

Nobody's really going to the movies right now. like how tootsie roll stock too apparently like why it's just it's like there's like a name there's like like a name for this it's like nostalgia trading or like meme stocks is that what they call this yeah they're calling it the meme stocks now. But, like, I think it's just everything that was in the mall in 2002. Redditors are like, let's fucking go. Hot topic. Spencer's Gifts. Oh, my God. Absolutely.

I don't even know if those are publicly traded. I think those might have, like, failed or gotten bought out or something. I've always thought about this because particularly when you hear people like Mark Zuckerberg selling your data and all this kind of stuff, this sort of immaterial stuff, it's kind of interesting that there like a school of investing from these online guys that's just based totally in their like childhood experience and nothing really like no market trends no like what's buying selling or anything like that just like what makes me feel warm and fuzzy when i think about when i was nine you know yeah well because like they'll like make some argument there are like a couple guys on there that are like no listen man like gamestop is like legit now and i think it's because like one guy joined the board and like you know they're trying to turn it around or whatever but like nokia like express like do you like this express even still a thing

it is i apparently it still exists i haven't seen an express store in years. Also, nobody goes to the mall anymore, really. Not at all. Malls are dying. The only reason malls exist now is for the Apple store. Right. And everyone says that. But now it's funny because malls are so dead that legit investors are like, okay, maybe not every single mall is going to die.

So like now they're going in because they're like, okay, well every mall with an Apple store is going to survive. But that's like, you know, 50 of them, you know, it's not like, it's not like we're going to be like going back to hang out and, you know, look at the models at Abercrombie & Fitch or anything. Did you see those, like, I forget what they call it, but it's, like, some kind of, like, Zoomer, like, internet music genre of, like, mall wave? It's, like, these kids, I guess probably the thing that it's probably most analogous to is like how, you know, there's like a sort of a vogue for like 80s nostalgia. Like, you know, when Stranger Things came on and like that sort of like synthy kind of thing. I guess it's probably like the Zoomer equivalent. Like they probably feel the same way about like the Clinton 90s as we did about the, you know, the 80s.

Like we didn't really like you know live it like that but they have all these things but anyway there was this like essay that this kid wrote or it's not that the kid wrote that this guy wrote about this kid that lived somewhere i think in california or something like that and he had made this song and it was based on the fayette mall in lexington kentucky which is where like we would just would just drive three hours to go school shopping and stuff. I want to say to that kid, it wasn't that great, man. In fact, last February, just right before the pandemic really kicked off, I had to go to the Apple store in the mall down here and get my phone fixed.

And it was like immediately like just like take me back to like 2009 being in college at UK. And nothing has like really meaningfully changed. It's like almost exactly the same. And I was like, ah, this feels weird. It's a very weird experience. And like now you see the stores that are like closed and shit. And it's like yeah it's weird stuff well well let's start the um let's establish some of the main characters

in this story okay so we have on one hand we have wall street what is wall street and why does it exist can you answer yeah where is it well wall street used to be in new york city and now it's buried underground in secaucus new jersey all of the tech is like all in one place now it's it's funny because like nobody like trades on the floor anymore like if you go it's like all gone i mean it's like guys who like go on tv and like that's their main job yeah it's theater basically right yeah yeah it's really funny and like i don't know i think so so there's wall street wall street But really, on one side of this is a lot of hedge fund guys who are basically trying to make money saying, okay, Express probably not a good stock to buy. Um, and they do that by selling the stock short, which is basically, or like, I mean, they have like insanely complicated versions of this. Um, but it's just like borrowing a stock and selling it to someone before you actually like,

you know, without buying it yourself in the first place, uh, with the hope of like buying back that stock that you've borrowed later at a lower price. Yeah. So it's essentially the basic concept of it, if I understand it correctly is basically gambling, right? Yeah, no, yeah. It's totally just, you're saying like, okay, I think that thing's going to go down. So I'm going to put money on that. Right. So you had these hedge funds doing this, betting that GameStop would go down. And so then, you know, the other characters in this story are the Redditors, the Wall

Street bets people. Or the shit posters. The shit posters, yes yes and they said no line must go up and so they bought a lot of the shares in the game and they bought a lot of options too so like you had them like enough people i guess like getting together in one place and like buying a bunch of shares of like one company and that forced a lot of the people who like bought the share or who sold the shares without like owning them yet um to like have to buy back their stock early basically because they were like well shit

this is going against me and like i'm gonna lose a you can like basically lose unlimited money if you short a stock because like you eventually have to buy it back right so like what if it's like quadrupled and all of a sudden you have to pay like four times more than you originally got to like get it back right so yeah so like before it goes that bad like a lot of funds are just like fuck it i fold and um i start buying the stock back and like that pushes the stock higher and like that's what they mean when they say like oh it's a short squeeze like you're basically like putting a lot of pressure on these guys and making them like fuck i fold right so this so there's like a few i read, like, Eric Levitz had a write-up about this in able to, you know, buy large amounts of shares, I suppose. You know, and then there's like that pandemic thing, which is interesting.

He said the pandemic briefly made sports betting impossible last spring, causing a large population of gambling addicts to develop day trading habits. Tom, is this true? Can you verify this with anecdotal evidence that's that's that's absolutely true man like the the guy the bookmaker that i bet would like call me and try to get me to bed on like snooker and formula one and darts and like just these arcane European sports that were still going on. I'm like, I'm good, man. Maybe not. So day trading is probably a better, well, not a better alternative, but certainly better than betting on professional billiards. At least you've heard of the things that you're betting on, right?

Right. Like GameStop. They sell games, right? I went there when I was 14. Yeah. Of course. Yeah. Well, that's definitely a part of it, too. What's that, Alex?

Oh, it's definitely, it's like boredom. It's like, I don't know. What was the other thing that he was talking i actually read that piece too and i thought it was pretty nice yeah he said i think one of the things oh go ahead sorry well it's also like really cheap to bet on options and like options are like kind of like short selling and that like you put down a little bit of money and you get like a lot of exposure to the market because like you're buying like exposure to like hundreds of shares or more with just like one trade so like that's a lot cheaper than it used to be like I think that

you know people compare it a lot to like the dot-com bubble and stuff because like back then apparently i mean i wasn't like old enough to be participating but like there were a ton of people on message boards and stuff like doing the same stuff but it was a lot more expensive and difficult to trade options and now it's like really easy and robin hood's like hey here you go man right so robin hood is another character in this story they're like a basically like a silicon valley startup right who allows you to do uh retail trading i suppose on your on your cell phone yeah and they're like hey why don't you trade options?

Which is like, I don't know, guys. Let me ask this question. What's the benefit of, because, like, I mean, I have a brokerage account with Fidelity, for example, just for my retirement. And, like, what's the difference in, like, trading on an app like Robinhood versus, like, I can just trade with

well i can't trade with fidelity coincidentally when the market opened today they were having technical issues so yeah i'm sure it's just just one of those things you know yeah so the difference is that robin hood is a lot cheaper and like fidelity the way it like markets itself it's like hey we're kind of boring right like this isn't gonna be like you know it's like a platform thing almost like the way that they manage it is just like they're not pushing options on you like it's sort of a it's a less like social media kind of experience. Right. So like,

you don't have the like, Oh my God, I want to like click the button to like get the dopamine hit kind of deal. It is boring and passive. It's just like, I just put like a certain amount in my Roth and then like my 401k and then just whatever, you know,

it's not like day trading or anything like that. So it's like the Robin hood and those types of, you're saying is like more conducive to that kind of like sports book type feel okay yeah i think that's that's one of the big differences too a word that people keep using is like the gamification of trading and stuff i mean yeah it's which is kind of funny because like especially trading in the stock market i mean it's it's like it's always a game right like people are i don't know like trading stocks is like always seems like gambling to me i don't know i'm like a child of the recession i graduated in 09 and was like, oh shit, that can happen.

Like, you know, the stock market can just fall off a cliff and take a really long time to come back. And like your money can just disappear. So like it's, yeah. So it's like definitely gambling no matter what. I think the interesting thing is like all of these guys like figured out that they can brigade it, you know, it's like a bunch of like wall street bets dudes who like, you know, I'm not going to be like, Oh yeah, they're working class people. Like they're all kinds of people, you know? Um, like I have a friend who I went to college with who like just

got on last week and she's like a mom of three who's just like really bored because she's been stuck at home with her kids all year. Um, but like they just kind of have all figured out like shit. Like if we all do this, we can like actually make money or like help ourselves with collective action, which is kind of crazy. But like, again, I'm'm not like this is a revolution because i think there's a little much well it's kind of tied to this like it like that whole idea

is kind of tied even like back to like the capital seizure whatever everybody's like trying to like meticulously figure out the class composition of anything that looks like an uprising you know what i mean i mean go ahead though? I mean, go ahead, Tom. No, no, no, no, go ahead. I was going to say, yeah, I mean, you're absolutely right. This is going to sound really controversial, and, you know, it's going to piss some people off. But I promise, just please entertain me here for a second. If you look at the past year, there have been moments like this that i think that you can draw a through line through they're obviously all very different and i'm not equating them on a like substantive level but on a conceptual level they are the same so there's this

and there's the storming of the capitol the burning of a police precinct in Minneapolis. I mean, you've got these events that have a sort of symbolic resonance to them. I mean, like, it's very symbolically powerful to see a police station burn. I think it's very symbolically resonant to watch people storm the Capitol. And it's also, like, Jon Stewart had a tweet, like, tweet like i guess he like got on twitter or something and he had a tweet last night about like these people are are just taking back what you know from they're just participating in a system that has always kept them out of it it's like yeah i mean that is true i mean i don't think this is a revolution but there is a sort of symbolic aspect of it where like wall street has been for one type of person and then these intruders bust in and they say well we want to we want to be a part of it and it's the same thing at the capital

siege i mean it's just like you know like and i know that like leftists you know you we look at these things and we may not like the way that they appear you know and be like oh these people are right-wingers they're in-sale redditors in their basements or whatever but it does speak to some larger crisis that's going on that these like symbols that we all take for granted are being violated in a way and uh i don't know i just for me it's just another example that the contradictions are very heightened in my opinion oh yeah i mean the most one of the most entertaining things about this whole week has been watching guys like leon cooperman get on tv and just like lose their shit literally crying they're turning wall street into a whorehouse. And it's just like, that guy, I think that guy, like, got in trouble for, like, actual securities fraud.

But then, yeah, they get on there in Grandstown, like, there are these paragons of morality and, like, you know, like, following the rules and everything. And everybody else are these, yeah, these reprobates. Like, you know, like, following the rules and everything. And everybody else are these, yeah, these reprobates. They're just pissed that, like, they realize they can lose money because, like, a bunch of guys, like, got together and, like, did something together. Right? Like, it's just the fear of the collective. Like, pure fear.

And, like, I mean, it's been rewarding in a lot of ways because it's like, I mean, I feel like so much right now is really like atomized and like isolating that like, you know, if people get together on the internet and are like, fuck, let's work together and like do something that's going to help ourselves. Like, why not? Yeah. Yeah. Go ahead. It's interesting to help ourselves like why not yeah yeah go ahead it's interesting to me i i it kind of reminds me of um in some ways like the current moment kind of reminds me of like the reformation in the sense that like you had this larger historical crisis playing out but you had people entering into conflicts who weren't necessarily like peasants or like lower class people there were people with means who were you know fighting back against like whatever the catholic church or or monarchy or whatever

and that creates a space into which larger social movements can operate and put pressure on things. So it's like, yeah, I mean, I'm not a retail investor. And I would imagine you have to have some spare capital to be able to do that. But it does hint, in my opinion, at a larger kind of disruption in the social fabric. I mean, yeah yeah that this is happening now and it i mean like all the all the things have been in front of us for years now for something like this to happen it's very interesting that it happens now of all times rather than like five years ago then again i don't really know how long robin hood has been around

so i i don't know but yeah it's been I mean it's been around a while but I feel I feel like just every like you said like everyone being stuck at home and not being able to gamble they're like you know stumbling into some sort of like collective action benefit you're exactly right because like in every group chat I'm in with my like shithead buddies from college that like you know live in the suburbs and play fan duel and stuff like that all of them are into this and we're like up on this like even like months ago you know like yeah this is like the big payoff the big moment we've been waiting for and all this kind of stuff and maybe this time i

was foolish not to not to get in when it was $2 a share with them back around Christmas. But I think just to that class composition thing, one thing that I've been thinking about, and I'm not sure it's right, but I feel like you can draw a through line to the sort of primordial ooze of occupy and how that like out of that came all these sort of disparate groups that kind of went off and did their own sort of like you know like uh so we something we talked about in the show was like how like politics is almost like the movie the warriors now like everybody joins these like gangs or whatever that have certain aesthetic qualities that have certain like sort of cultural affectations and everything like that and like everybody that has participated i feel like in anything from the capital siege to like this stuff or anything like that to even like our sort of nascent left dsa movement like i think is all

influenced by occupying the failures of it and and like you look at it it's just like you look at like the capital siege people look at what it's like this big tent made up of like you know of course you got like the q anon conspiracy mongers and that kind of stuff but you also have like recycled tea partiers who like are probably pissed off rand paul was just easily absorbed into the mainstream Republican Party. You know what I mean? They're still trying to hold on to the scraps of what Occupy has wrought in society. Have you all ever seen that show Mr. Robot?

Yes. It feels a lot like that. There's not really any sort of larger there's not really any sort of like leftist ideology behind it a lot of bernie had this kind of idea too it was like vaguely anti-corporate vaguely anti-wall street and like vaguely anti-establishment and if you look at the last 10 years there's just been sort of bubbles of that that have come up to the surface, whether it was Occupy or Anonymous itself. It's like Tom and I were joking. Tanya has always joked for years, like, where are the hackers?

Like, where are they going to come through with this? And we were joking, like, they finally came through. Yeah, I guess this is it, man. Yeah, i guess this is it man yeah i guess this is it but it's like it just feels like there's just been and i and i put this under the same you're right tom i put this under the same umbrella as the capital c's it's another example of people entering a space that normally aren't allowed into that space and. And some of those people might be working class. Some of them might be middle class or whatever. But it doesn't change the fact that our institutions exist for a certain reason and for a certain people.

And they're kind of being violated and fucked with. And that's just historically very interesting. I mean, very interesting, maybe good, maybe bad things could come out of that. Well, the funny thing is that, like, I think, I mean, so, like, for the most part, like, Wall Street people, like, fucking love it when individual people trade options because it's what they call uninformed flow so like they just kill them on the fees yeah you kill them on the fees it's like the way that like the math of market making works like they like having people just like doing random stuff because

it helps them make more money and like helps them like make markets easier um but it's funny because like that all depends on the individuals not being organized and doing all the same thing. Right. So like, I think why they're so pissed off is not just that it's like, you know, regular people just like doing stuff in markets. Cause they love that. Right. It's because it's that like regular people are doing stuff in an organized way that, like, sort of actively is, like, oh, like, you guys have all these values and, like, the way that you make judgments about stocks. Like, oh, fuck that. We're just going to do what we want. So, like, it kind of violates that whole thing, too.

And, like, it is, I mean, it's funny talking about it because again it's like all like a joke it's like mall stocks right but like it really is like they just chose like the least popular ones and the most shorted ones and they're like you know what we're actually going to take advantage of this like technical uh technical quirk in the market to like make all of your sort of like value-driven bets blow up in your face yeah which is entertaining which is fun yeah fun to watch yeah very fun to watch so like if we know i mean just based on i mean we were talking i was saying we're all around the same age i assume this it's like you know we watched the 2008 crisis and we're all around the same age, I assume it's like we watched the 2008 crisis and we watched obviously no prosecutions or anything from the Obama administration in the wake of all that.

So we know that this country, above anything, will continue to pump money into our sort of imperial adventures and will do anything to save Wall Street. So what happens here? Do they correct course and outlaw? streets so what happens here do they correct course and like outlaw like what what like what what do you think like congress is going to do to like you know protect the fundamentals of the economy or whatever so i think i think the funny thing is that like it's probably going to get more expensive to trade options which like i mean traditionally, like, if you're a normal person going into the options market to trade, you're just, like, asking to get, like, your shirt, you know, you're asking to, like, give them your shirt, basically, just because, like, it's really easy to lose a lot of money. It's probably going to get more expensive to trade because they're now realizing, like, shit, people can, but like the funny thing is that like i mean the house always wins right like that's

again like you said this is america right um but the ways that the house is winning is like not the most obvious one you know the the robin hood and all the like brokerage shutdowns yesterday like i think part of that was because the guys had been so successful that like and since so much of it had been done like partially at least on leverage like they actually could have like wrecked robin hood's credit and like had it get liquidated like had it gone far enough, had like people gotten caught on the wrong side of trades enough. Like the,

the sort of like clearing house guy, it's gets really boring and into like plumbing stuff. But like the way that that works, like made me think a little less conspiracy and more like, shit, we don't want to go bankrupt. Especially cause they like took out like a billion dollar line of credit with their banks yesterday because they're like, oh, we need more money to be able to cover all this.

But the way that some private equity funds have been taking advantage has been really good for the private equity funds have been taking advantage has been really good for the private equity funds. So like one fund that owned a lot of AMC, I guess like convert. So God, I mean, talking about it sounds really complicated because basically again, these like really sophisticated investors are setting up the system.

So like they're going to benefit. And like one of the really big private equity funds that invested in AMC made like a ton of money because of this week. Yeah. I read Alexis Goldstein's thing that she put out about like it's not like David versus Goliath. It's Goliath versus Goliath and David's the fig leaf, which is a good way to sort of put that it's just like if if if you know a couple of you know upper middle class people or whoever you know whoever whatever the class composition is i don't presume to know that exactly but like whoever it is are making you know tens of thousands of dollars then yeah you're you might be fucking up this hedge fund but some

other rich guy somewhere that's you know just as nefarious as making a ton of money off this too so it's not super effective as it's entertaining as it is it's not super effective as this like sort of like working class movement that some people are framing it today yeah yeah it's like uh i mean like ken griffin the guy who runs citadel is like has been the target of a lot of the ire of the Reddit guys. But just the existence of volatility in markets helps Ken Griffin. Yeah. So his trading firm makes a lot more money when things are going haywire like they are now.

So having markets as a playing field means that it's like trying to take down a casino casino by gambling. All right. I don't know, guys. I was a bookie in college and I've been betting sports for a long time and I had eventually had to say, OK, like I have to treat this as just like a hobby that I can afford to lose a certain amount of money on because I made way more money taking bets than I made by a mile. It's not even close. Yeah, exactly. Um, and I, yeah, I think that's kind of ultimately the way it's going to work. Like the, like some of the interesting things, like, cause I've been trying to figure out like, you know, like bringing it down to like brass tacks or whatever, like, okay, what does this mean for the actual like companies? Like you were talking about the um actually you guys were talking about the coal companies

and i read speaking of just like vultures and stuff i read the most amazing story um it must have been last year in the rockbridge advocate from rockbridge virginia rockbridge county virginia which is where i went to school and my whole family is around there but like they this guy god I can't even remember his name but there is this guy who basically has made an entire like like living just like borrowing money to buy bankrupt coal mines yes and it's his whole deal so he he'll buy the bankrupt coal mine and just sell it for pieces, but then also do a bad job doing that. So he's gotten in a lot of trouble over the years. I wrote something about this guy when I worked at this nonprofit called App Voices. His name is Tom something.

I can't remember his last name. Tom something, right? Yes, I think it's Tom Clark. Tom Clark. Yeah, that's it's Tom Clark. Tom Clark. Yeah, that's it. Tom Clark. Yeah, exactly. Tom Clark had an amazing scheme when the Obama administration passed the Clean Power Plan.

He submitted this, because every state had to submit their own climate plan after that, and he submitted this program where he was going to like plant the same number of trees uh in like south america or something like that that would like pull carbon out of the air to like help virginia meet its like carbon like targets it was very bizarre well doesn't he didn't he own natural bridge for a while he did yeah yeah he did own natural bridge and i think he had to sell it because you're you're right he did a terrible job of like reclaiming all of these yeah yeah it was reclamation that yeah that's a that's a better way to put it uh i forgot all about tom clark man like all the like i worked for sierra club and all the like the sort of great ngos were like do we trust tom clark do we not trust tom clark and i'm like man i smell a scheme i know i know a scheme when i see

that that's very insightful yeah that's amazing i'm reading something a blog post i wrote in august 2015 it's so funny how you just don't remember any of the things he did. But he wanted to bundle, let's see. He wanted to bundle coal with carbon offsets accrued from planting trees and then selling those bundled products to electric utilities. Because trees absorb atmospheric carbon, Clark believes credits created through reforestation will help states meet carbon emission targets um so basically like for as much for uh this for the amount of coal that you mine and the mountains that you destroy in the process you then like through some algorithm you decide how much coal that puts in the atmosphere and then you plant the appropriate amount of trees to pull it out of the atmosphere. Yeah, that's right.

And it's just math, guys. I don't know. I'm just kidding. It's interesting because that was sort of like the liberal version of trying to do something with the carcass of the coal industry. And then the Trump stuff kind of had their own scheme where you had a lot of these guys buying up these defunct mines because with Trump's like tax benefits for coal companies, they could make more money running coal at a loss. The bosses could, then they could, you know what I'm saying?

Then they could like trying to like make it at a profit. So it's like, it's kind of, you know, like when we're back home and it's like a lot of, a lot of these, a lot of guys that work in the mines. And of course, you know, I guess, you know,

if you're, you're an industry butters, your bread, you're going to have some, some loyalties to that and sort of adopt sort of the cultural traits of it. But yeah, like a lot of guys that were like, you know,

like Trump's brought the coal industry back and it's not that he just made it to where you can like make money running coal at a loss. It made me wonder for the longest time if a lot of these coal companies weren't just like money laundering operations. Like seriously, like if you can't mine coal profitably, then how the fuck are they staying? How the fuck are they doing this? I don't know. I mean, it's like Mark. I mean, so this is where it comes back to

markets right like my i've talked to like other folks about this but i i feel like my sort of like mental model for the way that markets work now is just like rich people giving each other their money right and like using it sometimes to like make more money for like real reasons other times just doing it with like financial stuff but they're it's basically just like a closed little loop and like the coal companies have somehow hung on in that little loop yeah so they're like hey we can raise money right for sure but the funny thing is like same with fucking express and blackberry and um god what was one it was like a bunch of swimsuit brands i had never even heard of it's called like naked brand group and i'm like oh i wonder why they're having a hard time like they they just sold a hundred million dollars of stock into this yeah and the thing is they're doing it in a

way that's like not even like an ipo or like getting like big pension funds involved they're just like selling it to the punters yeah like oh you want more here you go well i mean this is an interesting distinction because you have some corporations, which are retail outlets or maybe they're, I don't know, textile operations, I guess. And so, like, you buy shares in that, and then I guess you get a return on your investment. That seems like a pretty straightforward thing. But then the hedge fund thing is basically making money from yeah betting and i mean i guess i guess i can't like really stress this enough but we did an episode almost a year ago on um giovanni arighi's The Long 20th Century and about financial expansion in civilizations, I guess, economies. But I guess the larger point I'm trying to make here

is that a lot of money in the economy these days is just made off of financial transactions, right? Just financial commodities. Yeah, I mean, look at market makers, right? It's funny because everyone gets really mad at high-frequency trading firms. And I can get it because, again, it's like they're just making a ton of money

by processing trades, basically. They're just a middleman and everyone hates middlemen. But the funny thing is that like the people who were before them they're like specialists on the floor and stuff were like doing exactly the same stuff but like a little worse because it was instead of a computer it was just like a guy being like oh i just like want to go to a nice lunch after this so i'll like take a little bit extra out of the middle here right now like but yeah i mean but the funny thing is of course that like as you automate everything a lot of the only jobs that still exist are automated middlemen like basically running the automated middlemen right so i mean basically you have an economy at this point that is uh a great deal of the money comes from financial transactions

and a great deal of the money comes from service industry hardly any of it comes from manufacturing or extraction anymore i mean it was quite literally i know it's cliche but it is quite literally that scene in wolf of wall street where matthew mcconaughey's like we don't make shit like this isn't real like yeah uh yeah i mean and it's funny because like one of my one of my pet theories is that like the reason the redditors are like so mad and they're like we're gonna take down the hedge funds man is because like they're the guys who like would have been on the floor of the cme and like making good money for like doing math in their head pretty fast but like now they're like they don't have that job opportunity anymore so they're like that's fascinating gonna burn it down yeah it's it's

funny because i saw um matt jones a of ours who's been on the show before, he kind of got in on this back around Christmas as kind of a jokey thing, and then he sold yesterday. And all these people in his comments on Twitter are like, weak, weak, weak, hold the line, weak, weak. I knew you were a bitch, man, and all that kind of stuff. And it's funny. It's like just like any true revolution at a certain point like you got

people splintering away and not you know so it's it's important to i guess if that's your uh theory of change to hold the line this is going to be a really dumb question but what benefit do they get from holding now you know collectively not selling what is the benefit there uh they don't all lose money i see it's like you know enough people sell the price goes down and then all of a sudden the price starts going down kind of fast so you don't want to be the last person holding the bag basically exactly right i see so and like that's i think when everyone is getting all pissed off and is like oh this is going to be a scam like the question is really like are these guys on the So, and like, that's, I think when everyone is getting all pissed off and is like, oh, this is going to be a scam.

Like the question is really like, are these guys on the message boards who are saying like, hold the line? Like, are they holding? Right. They are like, I mean, you're allowed to go and say, Hey, like I own this thing and you should too. But if you're like, you better keep owning this and you're like sell sell that's a great that's a very fascinating point because earlier you said that

like these financial market makers or whatever the financial markets expect people to be sort of individual uh operators basically and not work collectively and it freaks them out when people do work collectively but paradoxically the very nature of the very competitive nature of markets means that collective action can never really happen because as you just said it actually works in your interest to make others believe that you're holding the line when in all reality you've already sold. Is that correct? Yeah. Yep.

Yeah. That's why so many people got in trouble after the dot-com bubble. Because they were like saying like, you better hold the line, man. And then they were selling. Yeah. Fascinating. And now we have Mark Cuban, the billionaire owner of the Dallas Mavericks. Oh my god. Oh, my God. That has been driving, like, the funniest fucking thing was Elon Musk saying, like,

how can you short sell as if the man has not sold things that don't exist? Not just things that he doesn't have, but things that may never exist. Oh, my God. It's, it's, it's, if y'all watch this documentary the creation of dr nakamatsu he's like this like sort of eccentric like japanese engineer that like makes all these like he's got like a brain reading helmet like just all this like just like sort of like junk inventions that like and he makes these grandiose claims about it and all this kind of stuff and he's like you get to watch the documentary and you see that he's this sort of narcissist

and all this sort of pretty insidious character. And it's like, Elon Musk reminds me of that so much. But this guy had commendations from George H.W. Bush. He was really celebrated for his inventions, which were like, bullshit. All of them are just bullshit. He had the same sort of cult following and everything. So I think of Elon Musk in kind of that same vein as this weird narcissist. People forget he's not a scientist.

He's just like this rich kid that his family owned an emerald mine in South Africa or something. And then he got lucky with PayPal and now he's fancied himself as this kind of idiosyncratic billionaire or whatever. And he's just a rich kid. It's insane to me how rapidly we've forgotten. Weren't Tesla's just blowing up

spontaneously and just baking people alive inside of them. Like, this guy's a fucking con man. Yeah, I mean, well, the funny thing is Tesla stock is also another example of this crazy market stuff. Because, like, what did he do? So, they sold shares one day. And, like, that's bad, right? If you, like, already own shares, you have, like, a a certain ownership stake and people selling more means that you own less relatively he sold shares like a

bunch and the stock went up and i was like what but why like it just doesn't make any sense but it's the story right like it's the story and it's the ability for like him or like this other guy on reddit to like you know get followers and be like let's go is is the cult around him sort of a currency in a way like as far as like the stock goes like if like all these like elon musk stands just kind of went away all at once would tesla stock just yeah is it like that that artificial like confidence that they like oh yeah create like like factor into this i mean like the stock is trading like so stocks are technically and this is going to be really boring so i'm sorry but like they technically are supposed to be like related to something right they're supposed to trade at

like some premium to like the future earnings of a company right so you're supposed to trade at like some premium to like the future earnings of a company right so you're supposed to have like a real world kind of like this is the thing this is how you value it but like tesla is like trading it like i mean i don't know about right now but it has been like trading it like a thousand times earnings for not just next year, but also several hundred times earnings for 2027. These are the kind of crazy things that people are doing because he just has the narrative. He just has this army of fanboys that are like,

they'll just keep buying. They get nasty, too, man. If you question Elon Musk, like, they, like, really go in on you. It's weird. It's like the, like, the K-Hive or the B-Hive or something. I mean, this is kind of how, like, bubbles get created, right? I mean, you've got this narrative. It drives up speculation, but it's not based on anything in reality yeah yeah yeah and the funny thing is like to a certain extent right like everything is kind of like based on narrative and like collective story but like things can get like

pretty far and pretty far divorced from reality especially in like markets and stuff like i forget i remember like one time my first actual real life conversation with a guy who was really big into tesla and it was like five years ago or something and even then he was like rabid like you're just a journalist you don't trade you don't know anything and i was like i don't know anything like i will admit that but like also like you okay man you have an inflated sense of what you think you believe i was like yeah i definitely would know it way more if I put my money in Tesla. Right. It was really funny.

It's kind of concerning that we've built the entire economy off of this. I mean, this thing that isn't really real. Immaterial. Immaterial. Yeah. And the thing is, like, more and more of it is, right? I mean, corporate valuations now, even in the legally approved accounting sense, now have as high of a measure of intangible assets, quote unquote, as they ever have in history, as far as I can tell or have seen.

Just like, I mean, it's no coincidence. It's like, you you know everything is like apps and cloud and you know it's just like you know like post-world war ii everything was like manufacturing everything like stuff you could touch and right feel and whatever and now it's true that's uh that doesn't inspire confidence friends yeah like on one hand uh maybe things are just different now on the other like all of the like stuff that we can touch seems to be like getting worse pretty fast like infrastructure um yeah stuff like that it gets rickety and then the stuff you can make money on like your

clout and instagram followers it's like it's like podcasts they're not really oh yeah yeah yeah i'm throwing stones living in a glass house over here i mean as a content creator i like to call it content mining now like just another day it makes it sound yes it makes it sound more dignified and noble oh lord um yeah no it's uh it is really weird um and it is weird to like watch it happen like as you know things are like better than ever um and yet like you know the elevator in my building is like a piece of crap and like the like, the MTA is, like, really, I mean, I think they're in better shape now. But, like, they were really rough shape for a while.

Well, this is why it's so, I mean, I don't know about you guys, but, like, watching these, you know, these, I don't know who they are. You named one of them, I leon cooperman but like watching these guys get on tv and like cry about this stuff and get so frustrated and angry and it's like i have no reference for that like i don't even have you know what i mean like the things that bother me in life and that get me emotional and like, you know, uh, cause pain, deep emotional pain are like based in real tangible shit. Like, you know what I mean?

Like it's just, it's just very bizarre to watch that and to sort of measure the distance between my life, a person like me and a person like that, you know, certainly surreal. And that's why like that you know certainly surreal and that's why like you know i i have i have a really hard time getting like too worked up about the redditors making money because i'm like you know like i mean a lot of them are like bullshitting i know but like

at least a couple of guys seem to genuinely be, like, oh, hey, now I can pay my healthcare bills, you know, like, and, you know, no matter, like, again, not to get into, like, class competition or whatever, but, like, they're definitely not Leon Cooperman. Right. And, you know, so, again, it's, like, some people are getting some of, like, So again, it's like some people are getting some of the punditry or getting really mad about this. And I'm like, listen, man. A bunch of guys figuring out that they can make money by organizing and cooperating with each other. Could be.

I mean, I don't know. Again, I'm not like a... I'm not... I can't make any like grand pronouncements about it, but it's just really hard for me to get that upset about it. Yeah. Yeah. And it is amazing to see Leon Cooperman cry about it. I mean, I think that the sort of just taking the kind of historical view from it and saying like anything. I mean, it may not be resistance or collective action in the way that we would approve of or go about ourselves.

is noteworthy in the sort of stream of history of the last year or so as being another example of like i said a sort of violation of a kind of idea or club or um exclusive uh part of society i guess and um and and i think that that's interesting you know i I don't know what happens as a result, but I do think that you can lump it up there with a few other things that have happened in the last year or so that have indicated that things may not be very stable. Like, there's unrest. There is civil unrest. Like, there's all there is to it.

I think, you know, when we started this podcast one thing we did was this like and and and i've since repented of this but we did this sort of gatekeeperism where we were like just all the time bagging on journalists for coming here and doing these like sorts of stories which you know in our estimation i think our take on those kinds of stories was correct but like now I think all those coal miners we were trying to protect from the sort of twisting

that these big city journalists were doing, all this kind of stuff, this paternalistic attitude we took toward it. I think they really enjoyed being part of that story, being included in that story. I don't think a lot of people ever thought the coal industry was just going to come roaring back. Some some did obviously but like i don't think that was ever the case but i think they liked being a part of that story so much and i think

that's what you're seeing with a lot of this stuff it's like it's not i and i you know i don't have any sympathy for like you know proud boys and boogaloos and whoever else you know was involved in like capital c stuff but i think they they thought that they wanted to count on that. And I think the same thing with all these people that are doing this. It's like, let's find a way that we can get in here and trip them up. And if we can make some money for whatever, all the better. So I think it's just, yeah, I think it's, you know. I think you're right.

Capitalism has stripped meaning out of our lives, basically. And so we look for some kind of story to impart a kind of meaning to what we do and why we do it. And yeah, I mean, obviously there are material interests that factor into it. that factor into it like if i guess if you're like a upper middle class seadoo dealership owner then yes storming the capital is probably in your interest but i also think that um i don't know there there is just a lot going on people want to feel involved they want to be a part of the story they want to feel like the system works for them They want to be a part of the story. They want to feel like the system works for them, too.

And I think that that creates a dynamic that social movements can exploit and use to further their own agenda or cause. And I mean that in an optimistic sense. I don't mean that in a doomer pessimistic sense. Yeah. Yeah. pessimistic sense. Yeah. Yeah. I mean, people learning to organize, I mean, that's hopefully can be

used for good things. Yeah. It doesn't have to be, but ideally, that can be directed in good directions. Yeah. I mean, you know, I can think of worse things to do than fucking around with hedge funds

I mean what got me was the name of the hedge fund they were going after is Melvin yeah I'm not you know not gonna like feel protective of any hedge fund but like the name Melvin just makes you, like, aw. Right.

Aw, Melvin. Aw, Melvin. Oh, man. Really, really fantastic. But, yeah, and I think a lot of this stuff and, like, I mean, not to, like, not to, like, be totally blackmailed on my entire job, but, like, a lot of this stuff is not, like, the important implications of this are, like, not going to play out in markets. You know, like, that's, like, a thing for, like, actual, like, political organization and activity to do. and activity to do um and i don't think that markets are a good venue for political activity which i think is the reason i'm like uh revolution i don't know guys yeah i mean you know the middle men still still keep collecting that collecting their cut and um you know i i think you know it's definitely fun to watch god knows um

but even in the like you know companies having money to hire people like that's still kind of up in the air so we don't know what what the ultimate consequence is going to be yeah well i think you put it best it's like like, I mean, when we started the episode, I was going to ask you, like, can markets be vehicles for radical action? But it's kind of like you said, it's like gambling to take the casino down. You know, it just, it doesn't really make sense once you kind of step back and really investigate it. back and really investigate it yeah yeah but again you know the the energy i mean if anything it's the energy is there yeah right like it's it is there and now apparently happening on the stock market showing up in the stock market right maybe to put a bow on this like what do y'all think is the next sacred institution that uh you know john q reddit has gone to uh target next after the capitol and now wall street that's a good question um i guess that all that's really left is the church so everybody's gonna get into satanic black metal and start burning down church i guess so

i think it'll be the church of q anon yeah ah you're right oh no you're absolutely right yeah let's not speak that it took yeah i could take it back uh my real answer is the mall. Hanging on by a thread. Big mall needs its hegemonic... Well, that was like a big plot vehicle in zombie movies, right? Like, you go take the mall, so if you take the mall, maybe you got your little fortresses for something bigger. It's true. It is more real life than the stock market right yeah yeah they're walls ceiling um well alexandra thank you so much

for coming on the show we uh really appreciate having you on. It was fun. Thanks for having me. Thank you. Outro Music