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LITVINJENKO: Up against the ropes, Wall Street does what it does best: cheat

If the takedown of Melvin Capital was the destruction of the Death Star, then Wall Street’s underhanded response was the Empire Strikes Back.

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Yesterday, I wrote about the ongoing David versus Goliath battle taking place between small retail investors and the financial institution’s (Money Managers or “MMs”). Led by the Reddit “wallstreetbets” (WSB) community, retail was throttling the MMs for two weeks leading into Thursday morning. They were losing billions.

I made clear that the MMs were getting desperate and that they were going to use every lever, relationship, or advantage to retake control and abort this financial revolution. So, up against the ropes, Wall Street did the only thing it knows how to do when it’s not getting its way: cheat.

Seeing no way out of their reckless short positions in GameStop (GME) and other stocks, and absolutely hemorrhaging money, they simply changed the rules mid-fight. They blocked or manipulated peoples’ ability to buy any stock in any of the companies they had made bad bets on, including Canada’s BlackBerry (BB). Between Wednesday night and early Thursday morning, they exerted pressure on major trading platforms like Robinhood and even TD Ameritrade to remove customers’ option to buy, only leaving the option to sell.

Canadian trading platforms, like Wealthsimple – a bit farther from the gravity of Wall Street’s corruption – only manipulated users by pushing warning notifications whenever someone would try and purchase these specific stocks. That kind of tactic does not work on everyone, but it will deter many risk-adverse buyers. And that’s the point.

Think of stock prices like the housing market. The more people you have bidding on a house, the more it will sell for. So, if you artificially reduce the number of buyers or offers, you will also put significant downward pressure on the stock or house and it will sell for far less.

Fox News Anchor Charles Payne

The news spread around the world like wildfire. Understanding that buying pressure was crippled, many investors, retail and institutional alike, began selling. GME plummeted from ~$480 to $112.25 USD. AMC more than halved from ~$20 to 6.51. BB, Palantir (PLTR), Nokia (NOK), and others all dropped significantly.

This is stock market manipulation, plain and simple, and it is illegal. No volatility or risk determination was made by the US Securities and Exchange Commission (SEC) regulator. Again, they only blocked your ability to buy, they only restricted the stocks they were losing money on, and they only put these restrictions on platforms primarily used by small retail investors. The MM’s are free to continue trading as they see fit.

The backlash was instantaneous and bi-partisan, with even Republican Ted Cruz and Democrat Alexandria Ocasio-Cortez agreeing that an investigation was necessary. Elon Musk, Mark Cuban, and many others jumped in to condemn the MM’s clear attempts to manipulate the market for their exclusive benefit. The hypocrisy, foul play, and potential illegality had been laid bare.

Robinhood, in particular, attracted universal condemnation, if not only because of their stated goals of “democratizing finance” and “giving more people access to the financial system”. Multiple class action lawsuits have already been filed against it in several states.

Those defending Robinhood’s actions point to its user agreement and that they reserve broad discretion to block or restrict trades. Others point out that that discretion is intended to be used in response to technical issues or market volatility (prices going up or down too fast). It is exceptionally rare for MMs to cut off trading in just a few stocks, and particularly just one direction, without any official determination or guidance from the SEC.

The fact that all of the restricted stocks just happen to be those where the MMs are the only ones losing is just a coincidence… Robinhood needs to protect you against the real risk… of hedge fund owners only buying just one new yacht this year. (Fun fact: Robinhood was actually created by hedge fund operators and financed by them to boot).

Gamestop subtweet of Robinhood

While GME and other stocks were plummeting, and retail investors were drowning Robinhood with 1-star reviews, the WSB forums exploded with messages of support from across the world. “CANADIANS COMING TO HELP – ALL CANADIANS BUY!”. People from China to Norway began sharing screenshots of their trading accounts to show they were “doing their part” to buy and keep the prices up. American retail investors scrambled throughout the day to open trading accounts on any new platform that would let them buy, including Chinese platforms.

By the end of the trading day, GME and others recovered substantially. Like I said before, the MMs are terrified and they are desperate. Such blatant market manipulation is not a move you make if you have other options on the table. In trying to save a few billion dollars – which to them is drops in the bucket – the MMs have jeopardized their entire control over the gates to the financial system. They chose to have this fight when hundreds of millions of people are locked down and have nothing to do but be on their computers and smart phones all day long. At a time when many have lost their jobs, again, and are likely still resentful over 2007. Pride and greed cometh before the fall.

The past two weeks were “A New Hope”, and in tanking Melvin Capital, regular folk celebrated in blowing up the first Death Star. Yesterday, however, was the beginning of “The Empire Strikes Back” and we all saw to what brutal lengths the MMs will go to. But people from all across the world and political spectrum are uniting, and if they can remain so, we are heading for the next big showdown.

At the time of writing, GME is back to $400.

Andrej Litvinjenko is the Financial Columnist for the Western Standard and a lawyer specializing in corporate and commercial law.

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1 Comment

  1. Watch-out for the Greener's

    January 29, 2021 at 3:13 pm

    Canada’s security regulator appears to be asleep 💤 as usual to the matter. At ‘downdetector.ca” most if not all 🇨🇦 Banks had the same problems. I know, I was frozen 🥶 out of my trading account on Wed & Thursday and I had no plan to purchase any of the stocks in play.

    Hedge fund & Money Managers are getting a spanking. A legal spanking ! If it is true these players have gamed the system to block small investors then the banks and trading names need to be held accountable with not only a financial penalty, but some jail time as well for the players whom participated in blocking out the small investors.

    Updated: Actually, does Canada have a national security regulator or just provincial security regulators? I think this fight is still going on.

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Opinion

WAGNER: Hydrocarbon based fuels are here to stay

“Think of it as telling people to step out of a perfectly serviceable airplane without a parachute, with assurances that politicians will work out alternatives on the way down.”

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Alberta’s future is threatened by a national campaign to dramatically reduce the production of hydrocarbons.

The political and media elite repeatedly assure everyone that such fuels can be replaced by new “green” energy sources such as wind and solar power. People currently employed in the oil and gas industry will supposedly transition into green energy production and life will continue on as before, except with fewer greenhouse gas (GHG) emissions. Indeed, Justin Trudeau’s federal government has committed to transitioning Canada’s economy to producing net-zero GHG emissions by 2050.

Trudeau’s scheme is a fairy tale. Hydrocarbons are going to be required for a very long time because current green energy technology is nowhere near where it needs to be to replace them. Currently, there are no realistic alternatives to oil and gas, so reducing their production will only lead to energy shortages.

As Dr. Henry Geraedts put it recently in the Financial Post, “The ultimate goal of net-zero politics is to impose a radical energy transition that demands a top-to-bottom physical and social-economic restructuring of society, with no credible road map in sight. Think of it as telling people to step out of a perfectly serviceable airplane without a parachute, with assurances that politicians will work out alternatives on the way down.”

Geraedts’ Financial Post column is a brief description of a policy report he produced in June 2021, and how it was ignored because its conclusions contradict the ideological perspective that university professors are expected to support. He didn’t toe the party line, in other words, and therefore got the cold shoulder.

Geraedts’ report, Net Zero 2050: Rhetoric and Realities, is available online at the website of the Johnson Shoyama Graduate School of Public Policy which is affiliated with both the University of Saskatchewan and University of Regina. It’s a very credible piece of work.

Fossil fuels are hydrocarbons and Geraedts points out “hydrocarbons are nature’s most efficient embodiment of primary energy: the combination of high energy density, abundance, stability, safety, portability and affordability is unmatched by any other source of energy.”

Currently, hydrocarbons comprise about 80% of global primary energy. This is essentially the same percentage as 30 years ago, when the global warming craze began. Despite years of favourable government policies and billions of dollars in government subsidies, green technology such as wind and solar energy remain relatively small contributors to the world’s energy supply.

Geraedts also describes the negative environmental impacts caused by so-called green energy technology. Among the most interesting details he mentions is: “Neither turbine blades nor solar panels nor lithium-ion batteries are physically or economically recyclable. They are instead, at an alarming rate, ending up in landfills leaching toxic chemicals — an estimated 10 million tons/year of batteries by 2030 alone.” So much for protecting the environment.

Geraedts is not a so-called “denier.” He points to data from reliable sources indicating global temperatures have increased by one degree Celsius since 1900. But he also explains “the projections used to justify net zero policies and the Paris Accord, are based on fundamentally flawed computer climate models that overstate warming by some 200%.”

Not only that, but “observational, empirical evidence remains agnostic as to what, with requisite confidence levels, is attributable to anthropogenic influences vs. natural variability.” In other words, it cannot be determined with certainty to what degree the gradual temperature increase is the result of human activities.

But climate change worries aside, there is still a fatal lack of realistic alternatives to hydrocarbons. The International Energy Agency forecasts that even if all countries fulfill their Paris Accord commitments — an unlikely prospect — hydrocarbons will still account for 60% of primary energy in 2040. With accelerating energy demand in Africa and Asia, Geraedts expects hydrocarbons will remain the dominant energy source for decades to come.

This is what it all means: If we put progressive ideology aside and take a hard, honest look at the energy situation, hydrocarbons are here to stay for quite a while. Knowing the ingenuity of human beings in a free society, the discovery of new energy sources is likely at some point in the future. For now, though, we need oil and gas, and Alberta has lots of both.

With strong international demand for hydrocarbons forecast to last for decades, there is no reason why these resources cannot continue to provide the foundation of economic prosperity for the province. The biggest obstacle to such prosperity, of course, is the federal government. Due to its determination to prevent the development of hydrocarbons, independence may be the only way to maintain and increase the resource-based wealth that is Alberta’s birthright.

An independent Alberta could implement policies maximizing economic growth and avoid the suffocating policies of Canada’s central government. A free Alberta would be a prosperous Alberta.

Michael Wagner is a columnist for the Western Standard

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Opinion

Stirling: Suzuki is a superspreader of alarmism

By actively denigrating people who hold rational, dissenting views on climate change, Suzuki and his fellow travelers have created a very dangerous situation today.

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Guest Column by Michelle Stirling, Communications Manager for Friends of Science Society

In 2015, Reader’s Digest counted David Suzuki as the number one most trusted influencer in Canada. He had already lost his shine with the oil patch working people of the West thanks to his performance in the appalling 2011 CBC co-production shlockumentary, “The Tipping Point: Age of the Oil Sands.” Others recoiled at the equally dreadful, “Where Will Santa Live?” fundraiser which suggested to kids Santa will drown unless your parents send cash. Yet for many, he still resonates as a kind of wise elder.

People of influence should be very careful about what they say.

For decades, Suzuki has been calling scientists and scholars who challenge his climate catastrophe narrative ‘deniers.’ He’s called for them to be silenced and censored, despite the fact when interviewed in Australia on television, the self-styled king of climate change was unable to understand a question from the audience that referred to the commonly known temperature data sets used in climate science. It seems he’d never heard of them.

By actively denigrating people who hold rational, dissenting views on climate change, Suzuki and his fellow travelers created a very dangerous situation today. There are many people who are genuinely frightened there might be only “10 years left” as Suzuki claims and they are like a tinderbox looking for a flame. Suzuki lit a spark for them a couple of weeks ago with his irresponsible musing about pipelines being blown up. His tepid apology will not put that genie back in the bottle.

Imagine if we had had open, civil debate on climate change in the media for the past 20 years. Imagine if, when Suzuki claimed there was a climate crisis, an atmospheric scientist like Dr. Richard Lindzen could show him why this is imaginary and how claims of a climate emergency are just a means for renewables promoters to push their wares.

Imagine if when Suzuki claimed Santa would drown and take the polar bears with him, an expert like geoscientist Dr. Ian Clark, who actually hikes the Arctic for his research, could show him that during the Holocene Hypsithermal of about 8,000 years ago, the Arctic was ice-free, rather balmy, and the polar bears were all fine.

Imagine if when Suzuki invokes “consensus,” (which forms the basis of the Toronto Star’s refusal to run any report that conflicts with the alleged 97% consensus), if someone like astrophysicist Dr. Nir Shaviv could have been invited to explain that science is not a democracy, it’s about evidence. While all scientists agree climate does change, they disagree on what ratio is human-caused versus natural influences like the sun and oceans. Scientists don’t all agree that taxing people will stop climate change, and most scientists are not convinced anymore that carbon dioxide is the control knob on climate.

This kind of open, civil debate, based on facts and evidence rather than emotional hyperbole would take society a long way toward more rational responses on climate and energy policies.

Unfortunately, it looks like things will get much worse as “The Climate Coverage in Canada Report” has run a consensus survey of its own, and Canadian journalists concluded that “large majorities … somewhat or strongly agree there is a climate crisis and the news media should report on it that way.”

In the most recent Intergovernmental Panel on Climate Change report (AR6), the word “crisis” is only used once, and only in reference to media coverage on climate. Otherwise, there’s no crisis stated in that 4,000-page science report.

The mainstream media in Canada has been parroting Suzuki’s hyperbolic words, republishing his op-eds posted by the David Suzuki Foundation and obligingly blocking any dissenting views for decades.

Canadian media have made his incendiary words go viral — making him a super spreader of a contagious social disease called anarchy. Suzuki began this soft incitement years ago asking people if they were “radically Canadian” or not.

It’s time the media and Suzuki stopped the spread of alarmism and incitement and asked people to be rational instead.

Guest Column by Michelle Stirling is Communications Manager for Friends of Science Society. This op-ed expresses her personal opinion.

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Opinion

MAKICHUK: Fear, loathing and the desolation of late night TV

My generation is fading fast, and soon, it will be gone — but at least we had the best of late night television. It was great, while it lasted.

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I miss David Letterman.

I really, really miss him and his Late Night television show.

I even miss Jay Leno’s Tonight Show, for God sakes.

They were great entertaining programs and Dave had the best band going, led by Canada’s own Paul Shaffer.

It never got better than that, in my humble opinion.

And it was just about a window on the world, not only politics.

Conan is OK, he can be funny, especially when he goes abroad and I think he got screwed over. Fallon, the young gun, and making $12 million a year … I just want to punch in the face.

Cordon, he’s always shouting and I think he’s over-rated as a celeb although his bit with Paul McCartney in Liverpool was epic.

Colbert, I fear, has jumped the shark and Meyers is a lightweight. Don’t even know why that guy has a show.

I also didn’t mind Craig Ferguson, the Scottish comedian, I thought he was good. But then, he too got shown the door.

The greatest of them all, of course, was Johnny Carson. The king of late night television.

During his three-decade tenure, virtually every North American with a television set saw and heard a Carson monologue at some point. At his height, between 10 million and 15 million viewers slept better weeknights because of him.

I actually got the chance to see his show live, in the summer of 1976, in L.A. My buddy Whitey and I waited all night at the door in Burbank for tickets.

It was well worth it — we got to see the entire show, which was during the Montreal Olympics. No big stars but it was great just to see Johnny do his thing and admonish us for not laughing at his terrible opening monologue.

Legendary Carson sets made the careers of people like Woody Allen, Joan Rivers, Jerry Seinfeld, Drew Carey, Garry Shandling, Steve Martin and many more.

On any given night, comedian Don Rickles (“Mr. Warmth”), Frank Sinatra, Dean Martin or Bob Hope could show up. Mayhem would ensue and Johnny just rolled with it.

“Anyone looking at the show 100 years from now,” said Tom Shales, The Washington Post television critic, at the time of Mr. Carson’s retirement from “Tonight” in 1992, “will probably have no trouble understanding what made Carson so widely popular and permitted him such longevity. 

“He was affable, accessible, charming and amusing, not just a very funny comedian but the kind of guy you would gladly welcome into your home.”

But then I go back to another late night show, which was just as good as Johnny, the Steve Allen show.

Despite all these attempts to re-invent late night television, Allen always said that it basically came down to a desk and some chairs, nothing more.

But then he had brilliant comedians such as Don Knotts, Louis Nye and Tom Poston to call on. The crazy man on the street stunts were hilarious, and no doubt influenced Carson.

And even before that, I remember the brilliance of Jack Paar. Check out some of his interviews on YouTube, you will be amazed by the people who appeared on his show.

Cuban revolutionary Fidel Castro, himself, Senator John F. Kennedy, William F. Buckley Jr., Nobel laureate Albert Schweitzer and Richard M. Nixon, among others.

“Anyone who saw him when he was in his prime knew he was a great television original,” Ron Simon, a television curator at the Museum of Television and Radio in New York, told The Washington Post. 

“You never knew what was going to happen . . . He was the catalyst for ways the talk shows would go.

“The whole idea of intermingling politics with entertainment on a talk show really began with Jack Paar,” Simon said.

Now, it’s just a parade of beautiful people, musicians and singers. The problem with late night TV these days is that it has no soul. 

It lacks the interpersonal humanity of a Jack Paar, a Steve Allen or a Johnny Carson.

These guys could make you laugh. It made your life a little better. 

Aside from Jimmy Kimmel, who’s actually not a bad guy and the only late night guy I PVR, it’s a late night wasteland.

As for Dave, The Atlantic reported he might have been the last true innovator in late-night comedy and I totally agree with that.

In his interview with The New York Times, Letterman says his disorderly streak was honed early on by NBC’s strictures.

“[The network] came to us and he said: ‘You can’t have a band. You can have a combo. You can’t do a monologue. You can’t do, like, Aunt Blabby. You can’t do Tea Time Movie Matinee.’ There were so many restrictions. So that was the framework we were handed, which was fine because then they gave us an excuse not to think of that thing to do.”

Letterman came across as someone who had stolen a camera crew and broken into an empty studio, The Atlantic reported. 

“Stupid Pet Tricks,” for example, became an audience favourite and reflected his unique brand of caustic humour. 

Chris Elliott’s “Guy under the stairs” skits also added to the fresh approach to comedy. His spearing of an aging Marlon Brando remains a comedic classic. 

And again, Paul Shaffer and his fabulous band, along with numerous musical guests, many of which can still be seen on YouTube. 

As Christmas approaches, I will definitely miss hanging with Dave, hearing that great story of the Lone Ranger (Google it) as told by Jay Thomas, and of course, the spectacular Darlene Love belting out Christmas (Baby Please Come Home).

My generation is fading fast, and soon, it will be gone — but at least we had the best of late night television.

It was great while it lasted.

Dave Makichuk is a Western Standard contributor
He has worked in the media for decades, including as an editor for the Calgary Herald. He is also the Calgary correspondent for ChinaFactor.news
makichukd@gmail.com

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