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3 February 2021

First thoughts: The GameStop frenzy, Kate Bingham’s nous, and why the PM needs an atlas

Financial markets aren't democratic, and the GameStop affair cannot be seen as another example of “the excluded” destabilising the metropolitan elite.

By Peter Wilby

There’s a story, probably apocryphal, that in 1929 a shoeshine boy offered Joseph Kennedy, the father of John F Kennedy, tips about shares to buy. Kennedy decided that the 1920s bull market had become a bubble about to burst. He sold his shares days before the Wall Street crash that led values to fall 23 per cent in two days and to the 1930s depression.

Shoeshine boys are extinct but millions of people of modest means, mostly American, now buy and sell shares online, sometimes borrowing money to do so. Many invest through Robinhood, a share broking platform, which claims to be “democratising finance”. In reality, it offers another form of gambling that can be as addictive as betting on horses or casino wheels.

Last week, “day traders” (as they are called) on Wallstreetbets, an online forum, decided to teach hedge funds a lesson. Hedge funds place bets on a company’s share price falling. GameStop, a video games retailer with more than 5,500 stores across the world – old-style stores made of bricks and mortar – was an obvious target for such bets. But day traders bought its shares in huge numbers. In two days at the end of last month, the shares rose 408 per cent. Hedge funds lost heavily. Now day traders have started buying silver, which big investors expected to fall in price.

Some commentators see all this as another example, comparable to Brexit and Donald Trump’s election in 2016, of “the excluded” destabilising the metropolitan elite. Financial markets, they say, are being disrupted just as politics was. The analogy is flawed. Brexit and Trump won through elections in which each person had one vote. Financial markets don’t operate on democratic lines; some players have far more money than others and always win in the end. Joe Kennedy cashed in before the 1929 crash. The shoeshine boy, if he existed, almost certainly didn’t.

[see also: The Big Squeeze: How financial populism sent the stock market on a wild ride]

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An injection of expertise

The UK vaccines programme has succeeded because, for once, Boris Johnson put an expert in charge. Kate Bingham, chair of the vaccines taskforce, is usually described as “a venture capitalist”. But she studied biochemistry at Oxford, worked for Vertex, an American company that has produced drugs for viral infections, and served on many other pharmaceutical company boards. Contrast that with Dido Harding, head of the struggling test-and-trace programme. She is a PPE (philosophy, politics and economics) graduate who worked for companies such as McKinsey, Tesco and TalkTalk.

Like Harding, Bingham is married to a Tory MP, probably the main qualification in Johnson’s mind. That he asked her to work in an area she knew something about was, I suspect, a happy accident.

Where’s China?

Did they teach Johnson geography at Eton? Quite possibly not. In 1976, just before Johnson started there, the Geographical Association president complained that many public schools treated geography as “an inferior academic subject” offered only as an alternative to classics. This may explain why the Prime Minister, having severed us from Continental Europe, wants to forge links with countries up to 9,000 miles away. It is strange enough that he wants to join a trans-Pacific trade partnership with countries such as Japan, Vietnam and Malaysia. Even stranger is his ambition to join an informal “Asian Nato” with the US, Japan, India and Australia. It’s intended to curb Chinese expansion. Does Johnson really think we can deploy warships, aircraft and troops against China? Has anybody told him where China is?

The need for baseless

It is all very well for Prince Harry to sue the Mail on Sunday and win damages over “baseless, false and defamatory” allegations. But could tabloids fill their pages at all without baseless, if not always defamatory, stories about the royals? Venomous spiders lurking under Windsor Castle; the Queen’s consumption of four cocktails daily; the seven boiled eggs from which Prince Charles chooses one at breakfast. Such tales entertained readers and kept up circulation even though none was true. Harry’s thoughtless action threatens the future of an entire industry. 

[see also: After 26 years editing the Daily Mail, Paul Dacre will be bored to tears by Ofcom red tape]

This article appears in the 03 Feb 2021 issue of the New Statesman, Europe’s tragedy