Capitalism For Thee, But Not For Me: Hedge Funds Whine As Their Bets Go Wrong

Funny how many big institutions absolutely love capitalism when they are profiting, yet demand ‘socialism for the rich’ the second things go wrong.

Many hedge funds make people rich by betting that companies will decline and fall.

Short sellers bet that a company is going down, and make tons of money on that bet.

Those hedge funds are glad to benefit from the fact that capitalism gives people the right to make many different kinds of trades and bets.

And yet, now that retail investors are making profits by mass investments into Gamestop, many of the hedge funds are desperate for bailouts, and the institutions of Wall Street are all of a sudden ‘shocked’ that bets can go wrong.

Hilariously, these retail investors are doing what many hedge funds do, but just in reverse.

When a company is struggling, hedge funds with immense resources can short the stock, finishing the company off. By contrast, retail investors are driving up the price of a stock – Gamestop.

Many hedge funds borrow money to increase their short positions, meaning they face being wiped out at this point.

And guess what?

That’s capitalism.

You make a bet, and that bet goes wrong, and you lose it all.

Nobody made those hedge funds borrow money.

Nobody made those hedge funds short specific stocks.

They made those choices, and now, the choices of others are resulting in those hedge funds being at risk.

But instead of acknowledging that the same system of capitalism that let them get rich is now also working freely when it might make them lose it all, they are complaining.

Even analysts on CNBC are all of a sudden worried about the ‘integrity’ of the system:

This is just like the 2008 financial crisis, and the Wuhan Virus crisis. Governments extend massive lines of credits and immense bailouts almost instantly to the biggest companies, while everyone else has to wait – and in many cases – get almost nothing. Consider that most big businesses have been open this entire time, while small businesses got crushed by politicians.

Big corporations, hedge funds, and other elites are allowed to succeed, but never allowed to fail. Yet, the minute regular people start to succeed, the system steps in and seeks to further rig the game.

Of course, none of this would be happening if central banks – spurred on by endless deficit spending – hadn’t been printing and creating money out of thin air in never-before seen numbers.

While all true wealth is based on real productivity, there is so much excess money in the system, and such a suppression of interest rates, that true price signals and true value is being obscured.

Until we have a return to reality, we can expect to see more crazy things taking place, and all the while the elites will be desperate to continue rigging the game.

Spencer Fernando

 

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