Twenty years ago, the author tried to “interpret Wall Street” through an interview in the United States. Now I look back suddenly and sighed that “30 years in Hedong, 30 years in Hexi”. The aura of Wall Street is fading away.
Last week, the news that American “tail investors” united to beat financial giants all over the ground became a hot topic of discussion, which seemed to make many “grassroots” angry. But there are different opinions on the truth.
At least from the 20 years of changes on Wall Street, we have seen the long back of the decline of the United States.
Accelerated decline, because of the “Economic 9/11” in the United States
“First-class talents go to Wall Street, second-class talents go to big companies, and third-class talents go to government departments.”
Although this statement is too extreme, it more or less reflects the employment tendency, talent flow gradient structure and overall pattern of American college graduates in the 1990s.
It is no exaggeration to say that Wall Street recruited the smartest people in the world. They got the best salary and sense of achievement in the world, so everyone wanted to squeeze into Wall Street.
Financial companies, accounting firms and lawyers form a trinity of Wall Street ecology and food chain.
They are interdependent, grouped together to warm up and strive to earn every piece of copper in the world.
In an era of relatively scarce financial resources, Wall Street is at the top of the food chain, and also pushed American financial hegemony to the peak.
Chinese companies are proud of listing on Wall Street. PetroChina giants, telecom giants, Sina, NetEase, Sohu and other portals competed to appear in New York.
On September 11, 2001, bin Laden’s terrorist attack destroyed the twin towers of the world trade center symbol of the financial empire, and the U.S. subprime crisis that broke out in the second half of 2007 and peaked in 2008 hurt the financial empire.
Finance is the blood of the modern economy. In this sense, the financial crisis in the United States shows that it is “leukemia”.
The “9/11” incident is undoubtedly an important watershed in American history, and has been regarded by many scholars as a landmark event in the United States from peak to decline. And the four years of Trump’s administration since 2017, accelerated the United States into the “post-truth era”, so that “fact-checking” became a new profession, and the United States fell far faster than it declined.
In the first 20 years of the 20th century, Wall Street began to move from the “golden age” to the “silver age”. Now that Silicon Valley has surpassed Wall Street, if we had changed jobs from Silicon Valley to Wall Street 20 years ago, employees’ salaries would have increased by 30% immediately, but now the opposite is true.
The Fourth Industrial Revolution is in the ascendant, and scientific and technological innovation has become the trend of the times. In an era of relatively abundant funds, financial companies began to chase start-ups, and innovation replaced capital as the most scarce resource. Wall Street’s relationship with Silicon Valley is led by this force to achieve a position change.
The IPO (IPO) of high-tech companies is relatively easy, which can make many people rich overnight. The yearning for financial freedom attracts a large number of excellent young people to join us – Wall Street is no longer their first choice.
A veteran who has worked for the top financial companies in the United States for a long time tells the author with emotion that after the bursting of the Internet bubble in 2000, it ushered in a golden age of less regulation in the Wall Street financial industry.
However, since the outbreak of the subprime mortgage crisis in 2007, the U.S. government has come forward to rescue, so a series of regulatory measures have been introduced. Wall Street has been exchanged for a shackle, and business development is often blamed, and its status is getting lower and lower.
It can be seen that it is not an excessive to regard the financial crisis as the “Economic 9/11” of the United States, and Wall Street is also accelerating its decline under the impact of the crisis.
A scholar’s summary: “Wall Street does not have long memory”
An era has an era legend, and an era has an imprint of the era. After all, those who can see the development direction of the era are a minority, and most people still drift with the tide.
After attending the Beijing Olympic Games in 2008, then-President George W. Bush sighed: I didn’t expect China to develop so fast! The so-called “China steals American lunch” has spread widely in the United States.
In the face of the distressed subprime mortgage crisis, he was very clear that China was becoming a real “strategic competitor” (the definition of China in the 2000 Bush election).
History will always remember 2001. This year, two major events happened in history: first, September 11th, and second, China’s accession to the WTO, and hundreds of millions of labor torrents into the globalized world division of labor system.
One concentrates on construction, concentrates on development, and quickly turns China into a “factory of the world”, while the other is busy launching wars with the focus of anti-terrorism. Meanwhile, Wall Street bosses are busy creating another financial bubble, pushing the real estate industry to the edge of the cliff.” Wall Street has no memory.
This is a characterization given by Schiller, a professor of finance at Yale University (author of Irrational Prosperity). In 2000, the Internet bubble in the United States burst and many companies were destroyed. Wall Street’s greedy nature has not been corrected in mistakes.
The 2011 Occupy Wall Street movement was a manifestation of the general outbreak of social contradictions in the United States.” The mistakes made by greedy 1% are borne by 99% of ordinary people,” is the slogan and core appeal of the movement.
After that, the social contradictions in the United States further precipitated, so that Trump, a political ordinary man, became president in 2016 – it was tantamount to the American version of “Political September 11”. Last week’s “Retail Bloodwashing Wall Street” drama became a catharsis of populism in the financial field.
Many experts regard this “retail uprising” as an event of the same nature as Trump’s rise to power. The whole world is laughing at Wall Street’s elites to take off their minimum camouflage and break the most basic trading rules. However, Robinhood, a commission-free trading platform, explained that pulling out the network cable and deleting the trading code are exaggerated propaganda.
The fundamental reason is that the transaction volume was too large and the transaction price was too volatile that the customer could not meet the requirements of additional margin. The Wall Street Journal also published an editorial specifically defending these brokers, saying that “there is no sinner or saint on either side of these transactions…”
Wall Street has come to this day and has been sniped by retail investors, which is not only a grassroots challenge to the U.S. financial system, but also an all-round embodiment of the inner volume and counter-eating of the entire American society.
Over the years, the United States has relied on the international reserve currency status of the dollar, desperately printed money, made the world pay for it, and even directly started the “infinite cup renewal” policy in the Trump era. Policymakers try to convince the world that the currency leader will not be easily closed. The policy of zero interest rates or even negative real interest rates has led to the flooding of the dollar and the prevalence of monetary universalism.
It is commonplace for some large company stocks to rise 10% a day, and the U.S. stock market has hit new highs, completely out of touch with fundamentals. Finance, which was originally the accommodation of funds, has now become a “barbarian”. It’s like having a wolf dog at home. You train it to bite people every day, and finally bites its owner. A person who has been working on Wall Street for a long time told the author.
From retail investors pulling up the stock price of Game Post (GME) to the ups and downs of American Theaters (AMC), from the escort of Nokia’s stock to this week’s attack on silver, the guerrilla war between American retail investors and institutions began in an all-round way and formed a demonstration effect around the world.
However, only a few financial mobs really benefit from this game, and most of them are still victims. In an institution-led society, retail investors can only splash a few small waves, and it is difficult to set off stormy waves. In the end, it is a high probability that the organization laughs. The game of “playing drums and passing flowers” played by retail investors in this incident will eventually be a chicken feather.
Going towards “politicization”, an ominous omen
This time, American retail investors made a scene on Wall Street and once won it, which was actually a reflection of the “Trump phenomenon” in the financial field. Without the Internet and social media, there will be no Trump-style characters in the United States. Without the forum of “Talking about Stocks and Gold”, retail investors could not have such a great force to fight against institutional investors.
Melvin and others were halved, and many hedge funds suffered heavy losses. The profound lesson learned from hedge funds is that excessive shorting is also at great risk, and greed also needs to stop.
Some financial experts believe that the role of retail investors is exaggerated, and behind it is the confrontation between institutions. However, more experts believe that the power of the Internet must not be underestimated in the Internet era.
Since the outbreak of COVID-19, the U.S. stock market has shown the characteristics of “de-institutionalization”, in sharp contrast to the “de-indiversalization” of A-shares in the past two years. In the past few decades, retail investors in the United States have been basically eliminated by institutions due to their natural disadvantages in information acquisition, financial leverage, etc. However, the epidemic has led to many people to work from home.
Some people have begun to speculate in stocks online, retail investors have increased significantly, and social media has become a virtual discussion platform for retail investors. If the power of doing long is concentrated on staring at one or two stocks and working in one direction, they can be completely successful and extremely destructive.”
The players of the game post are highly educated young people who do not have intersection with Trump’s supporters. These people have witnessed the scene of their parents being slaughtered by Wall Street and hate financial capitalists to the bone.
On the other hand, they lamented that the American class had solidified, could not find a way out, and had a strong mentality of revenge against society.
These people don’t study fundamentals at all, but follow their emotions. As a physical store that sells game CDs for a living, the game post station carries the childhood memories of this generation.
Due to the accelerated development of the Internet, the operation of physical stores is deteriorating, and it is reasonable for the game post stations to be shorted. They challenged Wall Street short-selling forces with the mentality of “fighting to the death”, showing their instinct to fight against the U.S. financial system. Skepticism and cynism are the main value orientations of this group. They destroy one or two hedge fund companies in their own unique ways and “heroize” their actions.
It is worth noting that the “de-institutionalization” of the U.S. stock market and the “de-tailization” of the Chinese stock market are both stages of financial development, but the same problem behind it, that is, “group heating” that violates the law and economic fundamentals is essentially market manipulation. If the regulation is not in place, it will inevitably have a domino effect on the market.
Billionaire Musk recently tweeted, this time on the side of doing long. He said, “It’s not your car, you can’t borrow and sell it; it’s not your house, you can’t borrow and sell it; why can’t you borrow and sell it if it’s not your stock?” Indeed, rule makers are usually the biggest beneficiaries.
When hedging has been alienated into gambling tools, where are the responsibilities and boundaries of regulators? During the 2008 financial crisis, many U.S. companies were banned from short selling shares. In the current epidemic, the difficulties of some enterprises may be temporary, but if left to the invisible hands of the market, especially allowing short-selling forces to rampantly, I’m afraid it will accelerate the death of some companies.
The GDP of the United States in 2020 is -3.5 percent, while the stock market has risen sharply. This “buffalo market” supported by excessive currency issuance can’t go far after all.
Deutsche Bank’s recent survey of 627 experts shows that 90% think the U.S. financial market is in a bubble. In January this year, the word “bubble” appeared at an all-time high in Google search. At present, the price-earnings ratio of S&P in the United States is 22 times, not far from 25 times before the bubble burst in 2000.
The market is looking for excuses for index adjustment. There are growing signs that the Biden administration will come up with new energy policies, which are likely to squeeze out the industrial bubbles of shale oil and shale gas. Fossil energy is not a real modern high-tech, but under the packaging of Wall Street, the industry is packaged into various high-tech products and issued a large number of financial bonds, somewhat similar to subprime loans in 2007.
How to present the next “perfect storm” in U.S. financial markets is a matter of fear all over the world. History has repeatedly proved that no stock market can escape from the “gravitational attraction of the earth”.
Worryingly, due to Trump’s launch of a new cold war against China, Wall Street has been included in the chariot to contain China. The politicization of Wall Street is also eroding and disintegrating America’s capital and political credit.
Some Chinese companies listed in the United States have been forced to be delisted by the New York Stock Exchange, which objectively reduces Wall Street’s attraction to Chinese enterprises and deprives Wall Street of a lot of opportunities to make money, which makes them reluctant. This is probably one of the reasons why Wall Street joined hands with the American establishment to eliminate Trump.
Next, it remains to be seen how much Wall Street can play in the American political balance. But one thing is certain: U.S. treasury bonds need to be bought, U.S. infrastructure bonds need to be bid, and the new energy industry in the United States needs to be paid for.
Where is the United States at a crossroads? Wall Street’s capital power needs to play a fate-related game with American politicians.