Anyone following the markets over the past week will have been gripped by the rise of WallStreetBets and the day traders taking on the hedge funds and traditional financial giants. Chatting mainly on Reddit, bands of day traders have piled into stocks shorted by hedge funds, created an epic squeeze on trading, and sent prices soaring.
Shares in the fairly obscure retailer GameStop went from less than US$20 to US$350 in the space of a few days, sending its market value soaring. AMC, a movie theatre chain headquartered in Kansas, saw its shares triple in a day. Some of the day traders will have made fortunes from that. A few will have just broken even. And plenty of hedge funds that had shorted the stock will have been badly burned, and will be nursing losses for months to come.
The controversy around that is creating some unlikely alliances. As Robinhood, and other popular dealing apps, temporarily stopped trading in the shares most impacted, Alexandria Ocasio-Cortez, a woman so influential in the Democratic Party the Biden administration has to pay attention to her, started arguing both for a ban on short-selling, and for the day traders to be let back into the market.
That was about as surprising as John McDonnell coming out of retirement to take a pop at Goldman Sachs. It was sort of what you might expect. It became a lot more interesting when Elon Musk weighed into the argument. "u can't sell houses u don't own. u can't sell cars u don't own but u can sell stock u don't own!? this is bs - shorting is a scam," he tweeted to his 43 million followers.
Of course, Musk has a few scores to settle here. Tesla has been the victim of some epic short-selling campaigns in the past - the shares halved during one only a year ago - on its way to becoming the biggest auto company in the world by market value. Musk's own position was under constant threat as the hedge funds targeted the stock. He is hardly a neutral observer.
And of course, it is perfectly possible that he is wrong about this particular issue. You need both buyers and sellers to make a market, and shorting is often the only way that CEOs can be provoked into change.
And, as anyone who has read Michael Lewis's brilliant The Big Short on the last financial crisis will recall, you can always short-sell a market one way or another even if it doesn't happen on an official exchange. All a ban might achieve is to make the trades invisible.
There is a bigger point, however. Musk instinctively sides with the outsiders. The web, along with every kind of new technology, was meant to be all about democratising institutions, breaking up old oligopolies, taking down barriers to entrepreneurship, and allowing new voices to be heard.
We saw that in retailing, in finance, in distribution, in music and TV streaming, and perhaps most of all in the media. It championed disruption, wherever it came from. Musk sticks to that philosophy. With his plans for rocket ships, for privately funded colonies on Mars and dozens of other schemes, he remains true to its founding spirit.
Amid an increasingly bland Silicon Valley establishment (Facebook predictably took down stock chat groups) that is worth a lot. In truth, Musk's brand of heroic, disruptive capitalism might at times appear to be ripped straight from the pages of one of Ayn Rand's hymns to the restless power of free market capitalism.
But in a world in the midst of a pandemic, it is precisely what the world needs from the world's richest man. The rest of the tech giants are turning into faceless conglomerates. It will soon be hard to see much difference between Amazon or Apple and Unilever or Coca-Cola.
Musk, as this week's brief alliance with AOC reminds us, remains a defiant outsider. The establishment is going to need lots of shaking up if we are to have any chance of getting out of the mess created by Covid-19 - and at least Musk, despite his vast wealth, still champions that.
