Dispatch from The Front Line: We can't wait to see what AOC does with the stock market
On bewildered Canadians colliding with reality, Reddit causing the Second Great Depression, and a CBC show we're actually sad to see axed. Plus, a major milestone for The Line!
Happy Friday — err, Saturday morning — Line readers. We’re very excited to share some terrific news with you — this week, we crossed an important threshold. We now have one thousand paying subscribers (actually, we have more than that by now). We are thrilled and profoundly grateful. But we are also very much aware of the long road ahead.
The Line exists for several reasons, but at the most basic level, we’re here because we were concerned about trends we saw in journalism. We kept waiting for things to get better, for someone else to step up and do what needed doing … and no one did. The economic collapse of the industry was making it increasingly hard to do the job we love doing, and thanks to technological progress and automation, it was possible — just barely possible — to start a new publication without an investor or fairly deep reserves of personal wealth.
So, in the summer of 2020, we figured … why not?
This is truly a bootstraps operation — we can only grow as fast as our subscriber list. We have chosen, to date, to not accept any advertising or investment. Nor are we inclined to sell to a larger company (which just gets us right back into the same mess we’re fleeing!) We truly appreciate the freedom offered to us by the fact that we rely on you — only you, the subscribers — for our survival. We have no ulterior motives or agenda. We just want to keep growing, with your support, so that we can keep doing what we’re doing. We think it’s important.
So thank you, again, for all those subscribed. For those who haven’t yet, please consider signing up today. Crossing the thousand-subscriber milestone was huge for us, but we need many thousands more. Please help us get there. Subscribe today.
The biggest bit of news facing Canadians this week — other than helping The Line continue to grow, of course — is access to vaccines. The trend lines this month have firmed up nicely — the second wave is easing. The worst-case scenarios have been avoided, for now. This isn't a declaration of victory — a too-hasty return to normal, new emerging strains, or just simple stupidity could still screw this up. But we've bought ourselves some time, and the best way to use the time is to vaccinate as many Canadians as possible.
But we don't have vaccines.
The delays from Pfizer have been well documented; we've discussed them here ourselves. Due to problems with their manufacturing supply chain, Moderna is also now advising of delays to shipments to Canada. There are several other vaccines nearing approval (or approved in other jurisdictions), including the Johnson & Johnson vaccine. According to information released by the company, it's not quite as spectacular in its efficacy as Moderna or Pfizer, but is more than good enough to make a huge difference, particularly if used in relatively low-risk populations while the more effective shots are reserved for the elderly and most at-risk.
But we can't make any of these in Canada. Europe has said it intends to impose export restrictions until its own domestic needs are met.
Because, well, of course they are. And we'd do the same.
It has been remarkable to see Canadians slowly and reluctantly come to terms with the fact that national interest is still a thing. Examples abound. Some Canadians are shocked and offended that Europeans would see to Europe first, just as they were shocked and offended during the first wave when the United States put limits on exports of PPE. There's even some discomfort with the fact that the Canadian vaccination plan is dealing with, you know, Canadians, and not diverting some share of our meagre supply to the developing world.
What a remarkable luxury it is to live in a country where so many people can be genuinely stunned to discover that national interest is still a thing, and that governments will always prioritize their own citizens over foreigners, even allies ... and rightly so. Canada is held in high regard globally, and that's lovely when backpacking, but when lives are on the line — like, you know, they are right now — whatever esteem the world may have for us does not exceed their sense of obligation to their own.
This is a lesson for us, both about human nature and the advisability of keeping at least some domestic production capacity for critical goods. This is not a call for protectionism. We are free traders here and are already shuddering in advance of all the opportunists, in the private sector and in politics, who'll see the pandemic as an excuse to rain public money on every sort of business across the land (and if the businesses are in swing ridings, so much the better!) We must be on guard for such opportunists, but that doesn't mean every ask will be unreasonable. This pandemic has shown us where our shortcomings are. It will be a challenge for this government, or future ones, to shore those up without turning the entire project into an exercise in patronage and pork.
Frankly, we doubt they're up to it. But we live in hope.
On a wildly different topic, we've been by turns amused and horrified this week to see the chaos in the stock markets brought about by ... we mean, how do you even describe this? A prank? A viral thread gone wrong? A new phase in anti-Wall Street activism? Vandalism, maybe? Just straight up vandalism?
We're talking about the wild swings in valuation that shares in brick-and-mortar computer-game franchise GameStop (and some other companies) have experienced. Your Line editors get headaches when they think too deeply about the intricacies of stock market trading, but the easy way to describe what's happening goes something like this: big Wall Street hedge funds, with billions of dollars, can bet against companies by “shorting” their stocks — a counter-intuitive transaction where you sell a share you don't actually yet own, because you're confident that by the time you're obligated to provide it to the purchaser, the price will have dropped. You’ll buy it then, at the cheaper price, and pocket the difference. The more the share value drops, the more money you keep.
The danger, of course, is that the price of the stock might rise, in which case, you're obligated to buy it at a higher price than you paid — sometimes massively higher. Since there is no limit on how high a stock can rise, there’s no limit to the risk when shorting a stock. And that’s what happened this week: Internet warriors operating off of Reddit, with an axe to grind with the hedge funds, determined which companies the hedge funds were betting against, and then undertook a massive co-ordinated buying campaign. The stocks soared in price, and the hedge funds were suddenly on the hook for billions in losses. We don't yet even know how many billions, but it was a very real shock to the market.
We are of two very different minds on this: first, we can’t help but laugh — genuine, belly busting giggles — at the hedge funds getting getting so thoroughly poisoned by their very own medicine. Shorting stocks is entirely legal, and even prudent, in some cases. But the scale of the hedge funds allows them to gang up on vulnerable companies, and by betting massively against them, actually cause the very downward price movement they are counting on. It’s predatory and adds no value to the economy, and that’s why it’s delightful to see the very same tactics used against them.
But holy moly, this is not good. The market is becoming increasingly unmoored from sound capitalist principles. The growing use of AI algorithms and aggressively destructive bets by hedge funds are turning what is supposed to be the productive engine of a free-market economy into something much more like a computer game — a game full of buggy code and cheap exploitable hacks. And that’s before we get into a conversation about the fundamentals-distorting effects of government bailouts acquired by politically well-connected corporate sectors.
So yes, the Redditors are serving up some just desserts to the hedges, and it couldn’t happen to a nicer bunch. But it’s only making the problem worse: the market is more and more removed from any economic reality, less able to do what we need it to and increasingly prone to wild, unpredictable swings that can crush not just retirement nest eggs, but whole financial systems. Does suddenly tanking the economy even further in the midst of a pandemic seem like a particularly good idea?
At any rate, this week’s excitement seems to have gotten the attention of the U.S. government before President Biden and his new bicameral Congressional majority have even gotten their new business cards in the mail. We can’t wait to see what solutions AOC has for the market. Nicely done, everybody.
Lastly, at least one of your fair editors at The Line must offer a confession. We like to give the CBC a hard time on Fridays, and generally we feel that the corporation deserves it. Among its many sins, the CBC is bloated and prone to mission creep, which is why it’s hard to admit that, several weeks ago, we downloaded the CBC Gem app on our smart TV thing.
Why did we do this?
We did it to watch Trickster. That’s it. The show seemed interesting and some of us in the Line ranks maintain a particular love of television shows that involve magic and mythology because we are still 13-year-old girls in our Fairuza Balk phase. But here’s the God’s honest truth: Trickster is great. Or, at least, it was great.
Yet on Friday, it was announced that the show would not enjoy a second season amid controversy surrounding the show’s director, Michelle Latimer, who has come under fire for making dubious claims about her Indigenous ancestry.
This is obviously a fraught issue. In a country trying to reconcile its history with First Nations people, it’s perfectly reasonable for our cultural institutions to make a particular point of promoting, celebrating, and supporting artists with an Indigenous background. Given that context, it’s very obviously a problem for a filmmaker to make questionable claims to an Indigenous identity while directing titles like Inconvenient Indian. There are matters of identity and motivation that are worth unpacking here, but for the purposes of a brief dispatch, we’ll only note this.
In a statement to the Globe, Latimer noted that the stepped down from her role as director in the hopes that the show could continue. And we at The Line would have liked that. The controversy around Latimer’s identity claims don’t taint Trickster, its story, or its cast. The CBC noted that it made its decision after holding conversations with the show’s producers, writers, actors, and with the author of the book on which the television show was based. We weren’t privy to those conversations, but we can’t see any good reason why any of these people should find themselves without a job on a hit show that seemed to be one of the rare productions destined to do well both here and abroad.
The CBC noted that it has eight scripted projects devoted to Indigenous stories in development and we at The Line wish all of those shows well. But we finished binge-watching Trickster a few weeks ago, and we haven’t opened up CBC Gem since.
Howard Anglin wrote about the fallout plume wafting out of Rideau Hall and begged the prime minister to give us what our country desperately needs: a competent and incredibly boring governor general to replace Julie Payette. “I don’t expect that Trudeau will re-convene the old vice-regal advisory committee to choose Payette’s replacement or follow the sound advice Harper gave to its members,” he wrote. “But I do hope he will look to Johnston’s example and, even more importantly, to the best and literal role model: the Queen, the very apogee of bland reliability.”
As Ontarians continue to, ahem, enjoy a stay-at-home order brought in to fight the pandemic, Josh Dehaas explained here what your rights to protest are … even under the order. Enforcing the order would require that the “government … satisfy the ‘Oakes test,’ (from the 1986 Oakes decision),” he wrote. “The first step is using evidence to show a pressing and substantial objective. The objective of saving a significant number of lives and preventing the health-care system from becoming overwhelmed would likely qualify. But Ontario would also need to show that the limit is proportionate in three ways. This would be a steeper hill to climb.”
Matthew Alexandris flipped the line in a rebuttal to Rahim Mohamed’s recent essay on why Canada could use a few more Mitch McConnells. Alexandris isn’t buying it: “While McConnell has achieved national fame, he hasn’t exactly been effective in passing legislation that would address the concerns of his Kentucky constituents. McConnell is much more famous for blocking legislation from passing than passing legislation. … In recent years, the Senate has moved slowly and has not passed or even voted upon much of the legislation passed in the House of Representatives.”
Anthony Koch crunched a few numbers and came up with some bad news for Conservatives: they need to trade some of their western votes for a heap of easterners or they’re gonna be in opposition forever: “This is a tough pill to swallow for many Conservatives. … But the arguments and gripes won’t change the fact that given the electoral system we have, and the results at the ballot box that are plain for all to see, Conservatives will continue to lose if we don’t at the very least risk losing some support in the Conservative heartland in order to make gains in the parts of the country that elect prime ministers.”
And Line co-founder Jen Gerson hit one out of the park by calling on Albertans to step into the present — see what we did there? — and recognize that the oil-and-gas sector is going to be a vital part of Alberta’s economic future, but not in the way that many had been counting on. “The world largely accepts the threat posed by climate change,” she noted. “Governments and investors are acting on those threats. We have two choices: We can accept that reality, and take a role in steering the conversation about how to manage the global risks of carbon emissions. Or we can scream and yell and fund war rooms and conspiratorial inquiries — in which case, we will be marginalized, mocked, ignored, and ultimately crushed by that change.”
I mean, when she puts it that way …
Anyway, folks, that’s it for us. Please subscribe to The Line. Our next stop on this crazy train is 2,500 — our next target and milestone. Why not help us get off to a strong start today?
The Line is Canada’s last, best hope for irreverent commentary. We reject bullshit. We love lively writing. Please consider supporting us by subscribing. Follow us on Twitter @the_lineca. Fight with us on Facebook. Pitch us something: email@example.com