01/29/2021
01m20s A morality play in high finance. (David 1, Goliath 0.)
05m32s Two cheers for the Little Guy. (What about the fundamentals?)
11m46s So you want to work on Wall Street … (A useful primer.)
15m38s A clarification on Taiwan. (America’s Suez coming up.)
23m32s Lock-down, Chinese style. (How they beat the virus.)
27m55s White cop shoots black man. (Same old story, but …)
33m48s Fighting racism with sport. (Some bad thoughts.)
37m11s Down to the nitty-gritty. (News from the Cultural Revolution.)
39m21s Election irregularities. (It’s not just us.)
41m27s Signoff. (A sad truth from history.)
01 — Intro. And Radio Derb is on the air! Welcome, listeners, from your grittily genial host John Derbyshire, bringing you VDARE.com’s roundup of the week’s news.
High Finance captured the news headlines this week. I don’t actually know that much about high finance — certainly not as much as Peter Brimelow, who used to make a living writing about it. At present, though, anything’s more fun than talking about politics, and news about Armie Hammer’s cannibalistic fantasies seems to have quiesced, so I'll give the high-finance news my best shot.
Just be forewarned, please, that if I should yield to the temptation to slip a stock tip into what follows, ignore it. I’m a lousy stock picker.
02 — A morality play in high finance. A big hedge fund had short positions on some stocks of companies whose prospects aren’t bright. Just a word about short positions.
The golden rule of investing is of course: Buy low, sell high. The enemy of success is the clock, or more likely the calendar. If you buy low expecting that at some future date you'll be able to sell high, but when that future date arrives the stock has gone even lower — sorry, pal, you lose.
Short selling is when the "sell high" precedes the "buy low." So it’s sell high, buy low. How d'you do that? You borrow the securities and immediately sell them at high.
Whoa! — But then, when the date arrives at which you've contracted to return those securities to the lender, you no longer have them, right? Right, but no sweat: You go to the market, buy them at low, and hand them back to the lender with a thank-you note.
Again, for success, you need to have made the right call. If, at return date, the price has actually gone up instead of down — sorry, pal.
There are other ways to bet on a security falling in value, but I'll leave you to look them up in your own time. Start by googling the phrase "put option."
None of this is illegal, nor should it be. That’s not to say that naughty stuff doesn’t happen. It does, and it did in this case.
The big hedge fund here was, for example, doing naked shorts. That’s nothing to do with your erotic fantasies, you filthy dog, you. It’s when, by clever manipulation of the trading systems, you short sell securities without first having gone through the formality of borrowing them. You may have shorted securities that don’t even exist! Naked shorts are illegal, though, and they should be.
OK, so this naughty hedge fund had some big short positions on the stock of companies whose prospects aren’t bright. A lot of day traders — guys, and I’m sure some gals too, working alone in their basements via online brokerage apps — united to buy up those companies' stock, big quantities of it.
When a lot of people are buying, a stock goes up. That big hedge fund’s bet was on the stock going down. The hedge fund lost the bet, and had to go begging for a bail-out.
This is being presented in a lot of the commentary, especially the commentary from populist sources like the Tucker Carlson show, as a morality play: victory for the little guy over the big guy. Is that right? What’s Radio Derb’s view? Next segment.
03 — Two cheers for the Little Guy. I see this episode from my customary perspective of turbulence. Quote from my original 2012 column on this, quote:
Democratic government’s plodding regularities are certainly superior to despotism or prolonged anarchy, but one can’t help feeling it would be character-building for our political classes if a mob were to come around and break their windows now and then. The Duke of Wellington had "about thirty" of his broken in 1831. (His servant [inner quote from a historian] "fired two blunderbusses in the air from the top of the house, and [the mob] went off." [End inner quote.])
End quote.
As I noted at the time, that comes with a lot of qualifications. Turbulence can lurch over into revolution, and you really don’t want that.
Also, breaking windows is illegal — well, except when Antifa and BLM are doing the breaking. Was what these day traders were doing illegal?
It may have been. Collusion between informed parties to manipulate the market is illegal. Do a bunch of people online who don’t actually know each other come under the scope of that? I don’t know, although I have a feeling that if they currently don’t, they soon will.
How about the online brokerage they were using suddenly restricting their trading in the companies whose stock they were buying? That doesn’t look illegal to me; but again, perhaps it should be. We'll find out, anyway: lawsuits have already been filed.
So, bottom line: I don’t much mind seeing ruling-class windows being broken, and I don’t much mind seeing big fat hedge funds humiliated. At the same time, I’m frowning a bit at the moral drama presentation from the media, good little guys versus bad big guys.
There’s something personal here. I worked for fifteen years on Wall Street. I wasn’t a player, only a back-office worker bee; but I learned enough about what goes on in trading firms to know that the players there are not bad people — well, no worse than the average.
I also learned that they are smart and highly-skilled. Yes, that can give them somewhat of an attitude. The little guy? How many times did I hear: "When the little guy gets in, it’s time to get out"?
That kind of mild arrogance, though, is common to people with any kind of expertise. Probably airline pilots have some similar catch-phrase. And yes: If I’m on a transcontinental flight and a bunch of little guys break into the cockpit and take over the controls, I’m not happy about it.
Am I shilling for Wall Street professionals here? Yes, I guess I am. OK: but how does that square with immigration skepticism, which is the main theme here at VDARE.com?
Isn’t the whole point of Wall Street to encourage the profitability of our companies? And don’t our companies jack up their profitability by replacing American workers with cheaper foreign ones, or by just exporting their factories wholesale to cheap-labor countries?
Yes they do; but they do those things because they are legal. If we vote for the right legislators and executive, Congress will pass appropriate laws and the Executive will enforce them. As the great Calvin Coolidge used to say: The remedy is in the ballot box.
At last, while I'll flick a smile at a few broken windows, my vote is always for reason and order over madness and anarchy.
In the context of financial markets, reason and order means proper laws and rules, firmly and fairly enforced. It means keeping markets focused on what those professionals call the fundamentals: fair valuation of stocks, with promising and well-managed companies priced up, troubled and ill-managed companies priced down.
Looking at the recent price surge of GameStop, and putting it against what I know about the company and its prospects, "fair valuation" is not the phrase that comes to mind.
04 — So you want to work on Wall Street …. As a postscript to that, I should give a tip of the hat here to my old friend Tom Costello.
The view I just stated is mine; Tom is not responsible for it. He did, though, add some helpful details and explanations from the point of view of a guy — that’s Tom — who has spent thirty years in finance, most of it with hedge funds.
This acknowledgment comes with a promotion, which I am glad to offer.
Preface to the promotion: There is a question-and-answer website called Quora.com. The questions they publish come in mostly from high school and college kids, covering all sorts of topics, with a slant towards seeking advice on lifestyle and career choices. The answers come from credentialed experts in the appropriate field.
One of the topic categories at Quora.com is hedge funds. It carries a lot of questions about how to break into the hedge fund industry, what goes on there, how program trading systems work, and related stuff.
If you go to Quora.com and look up their list of experts advising on hedge funds, Tom Costello ranks number six out of fifty in their list of most-viewed writers.
Quora also has a category headed "Finance, Wall Street, & Trading" to which Tom used to contribute answers when he had more time. Quote from Tom:
For six months I was their most read responder in Finance, Wall Street, and Trading, and I've gotten 3.2 million views in total so far. For a year and a half I hardly posted any answers to the site — too busy with a major work project — yet I was still getting well over 10,000 views a month …Basically every STEM kid in the country (plus another 30 Million or so in India and China) is thinking about whether he should work in a startup or a hedge fund … After interviewing and hiring countless young analysts over the years, I have a very strong feeling that I can tell them what they need to hear.
End quote.
And so … here comes the promotion.
Promotion: Tom has written a book of the kind of advice he was giving on Quora. Title: The Front Office: A Hedge Fund Guide for Retail, Day Traders, and Aspiring Quants. Tom thinks the book should be available for pre-order on Amazon next week. He’s been posting on Quora again in anticipation of the book coming out.
If you are thinking of getting a job in high finance, or know a smart youngster who might be interested, I urge you to buy the book. This is a guy who really knows the territory he’s writing about.
05 — A clarification on Taiwan. Here is something from my email bag. This followed me posting the transcript of my January 15th podcast, in which I predicted a clash with China over Taiwan. A reader commented, quote:
I've long been curious about your feelings regarding Taiwan’s independence, so I was eager to read this week’s podcast transcription … but once again I ended up confused.• You'll regard it as a bad thing if the Chicoms invade and annex Taiwan, correct?
• Assuming we sit watching impotently from the sidelines, this will be, you feel, proof of our national decline, correct?
• And yet you'd advise us not to lift a finger to help (aside from perhaps selling Taiwan more weaponry)?
End quote.
On the first point there: Yes, I will regard it as a bad thing if the ChiComs invade and annex Taiwan. The people of Taiwan are living peacefully and productively under a form of government they have chosen for themselves, with equality under fair laws and respect for basic freedoms.
It’s not Utopia. I passed some mild criticisms when reporting on my visit there in 2016. Still, the people there overwhelmingly prefer not to be ruled by the Chinese Communist Party. If they were forced to be so ruled, that would be a loss for law, liberty, and self-determination. Definitely a bad thing.
My reader’s second question is, to repeat it: "Assuming we sit watching impotently from the sidelines, this will be, you feel, proof of our national decline, correct?"
The premise there is false. I did not, and do not assume the U.S.A. will sit watching impotently from the sidelines. My strong belief is that we shall react with some kind of exercise of force. Commenting in the December issue of Chronicles magazine, I predicted that, edited quote:
For the United States, China’s re-taking of Taiwan will be a Suez moment: the psychological equivalent of the 1956 humiliation of Britain and France by Egypt and the Americans …America’s role as the world’s policeman will end similarly: not with the bang of a nation-shattering military defeat, but with the whimper of an embarrassing setback.
End quote.
If you look up what happened over the Suez Canal in 1956, you will see that the Brits did not "sit watching impotently from the sidelines" when Nasser seized the canal. They sent armed forces: My brother was in one of the advance parties. It ended, though, with that embarrassing setback for Britain.
The act of force that, I predict, we shall make against China’s move on Taiwan will likewise end in a humiliating fiasco for us. And that’s if everybody keeps their heads. It could end with much worse, which God forbid.
My calculation there is simply that the ChiComs are willing to go to major, all-out force to take Taiwan, while we are not willing to make a similar level of commitment. I believe we are not and I hope we are not.
To my reader’s third question: Would I advise my government not to lift a finger to help? Not exactly.
While I predict we will react with force to a ChiCom assault on Taiwan, I don’t believe it will end well for us or for Taiwan. I think I've made that sufficiently clear.
Believing that, it follows that if I were advising the U.S. government, I would advise them not to react with force. There are plenty of other things we could do: sanctions, embargos, visa bans, and so on. So "not lift a finger" isn’t exactly right. Lift a finger or two, sure; but lift a fist? No.
We can’t save Taiwan, except at a cost the American people will not — and should not — accept. That’s a grim truth that I say with no pleasure at all.
My own acquaintance with Taiwan goes back nearly 50 years — to July 23rd 1971, according to the entry visa stamped in my passport. I love the place; I have fond memories of it; in a just world Taiwan would be an independent country; I shall weep to see them fall under the horrible lawless ChiCom tyranny. I just don’t believe we can stop it; and if we try, the best outcome will be a humiliation for us. The worst doesn’t bear thinking about.
And, looking on the bright side, the humiliation may be salutary for Americans. It may end our fantasies of imperial power and our futile missionary wars.
It may also prompt us to reform our military, from a colossally-expensive stage for the acting-out of social-justice and world-policeman fantasies to a real, meritocratic fighting force concentrated on homeland defense.
Perhaps we shall return to being what the Founders intended us to be: a busy commercial republic, minding our own business and leaving other countries to mind theirs, equipped with a modest but fearsome and well-trained military to protect our territory and sea lanes.
06 — Lock-down, Chinese style. Here is some news from the Chinese mainland — coronavirus news.
My wife’s family comes from Northeast China — what we used to call "Manchuria." That’s where we met, when I was teaching college up there forty years ago.
A hundred and twenty miles southeast of the college, in the same province, is the town of Tonghua, population around half a million. Some of my students were from Tonghua. My wife still hears from them.
Tonghua is a steel town. In fact it was last in the news in 2009 when the steelworkers rioted over an attempted takeover of the state firm by a private one, with major layoffs. The CEO of the private firm was beaten to death by workers. The workers won, though: the takeover was abandoned.
On a word-association test with "Tonghua," I come up with Tonghua wine: a sticky sweet concoction that, while it offered no pleasure to the palate, was very cheap and gave you a nice buzz after half a bottle or so.
Well, here’s some current news from Tonghua. Mid-January, which is the coldest time of year there — and believe me: in Manchuria it gets really cold — there was a spike in cases of Covid-19. Last week the city authorities banned unauthorized travel into or out of the town. Then they locked down the townspeople.
And I mean locked down. In a Chinese town well-nigh everybody lives in apartment blocks. The townspeople were forbidden to leave their apartments for any reason. That included food shopping.
Report from one resident, a student, quote:
Some workers sealed my door with paper strips at around one o'clock in the morning. I had some instant noodles and several potatoes at home. There was no time or notice to allow me to buy food in advance.
End quote.
To prevent mass starvation the municipal authorities permitted food-delivery services to operate. These services, however, were overwhelmed. There are eyewitness accounts of food-delivery workers collapsing in the street from exhaustion. Townspeople on social-media apps were saying they hadn’t had food delivery for three or four days.
Just something to remember when you hear about how well China’s controlled the virus.
In fairness I should add that on Saturday the local Communist Party dismissed three officials and reprimanded eleven others for "poor performance." The following day, city officials apologized to the townsfolk for "general inconveniences."
Whether, at week’s end, the people of Tonghua are still taped up in their apartments, I have no news.
07 — White cop shoots black man. Here’s a story from the recent news.
A 27-year-old black man, first name George — yes, really — was in a supermarket early one Wednesday afternoon. The date was actually December 30th, four weeks ago.
George got into a confrontation with the store manager, I don’t know why. He punched the manager in the face, causing serious facial injuries. Then he pulled a kitchen knife from his pocket.
Police had been called, but when they arrived George threatened them. Then he took off walking through the neighboring streets to his home 15 minutes away, the police — all of whom were white — following close behind, trying to get him to co-operate so they could arrest him for assaulting the store manager.
When George arrived home, the cops close behind, he knocked on the door. It was opened by his sister. She told the cops George had mental health issues and they should leave him alone. The cops of course wanted to make the arrest. They also feared that if George went in he would take hostages in the house. So they told the sister to go back inside and shut the door.
We learned later that, one, this wasn’t George’s permanent home, he had several addresses; and two, family members living there had orders of protection against him. Whether the cops on the scene knew this, is not clear.
So there was George in front of the house, brandishing this kitchen knife at the cops and declining to be arrested. The cops pepper-sprayed and tased him, but he wouldn’t drop the knife. One cop then, presumably after George had tried to lunge at him, fired five shots. At least three shots hit George, and he died.
Protests followed of course. There was a big one at the local police station, and another at the supermarket where George had assaulted the manager — the store had to be closed for a while.
The media lamented this killing of a young black man by cops. They wondered if the cops were racist. Progressive commentators lectured their readers about systemic racism. Newspapers published photographs of George as a winsome child. A GoFundMe page to cover George’s funeral costs brought in over twenty thousand Euros in just five days.
That’s right, Euros. Oh, did I forget to mention? This all happened in Dublin, Ireland. George Nkencho’s family are immigrants from Nigeria.
What’s that — you didn’t know Ireland has a race problem? Well, they never used to have.
Like their neighbors in Britain, the Irish imported an American-style race problem and imposed it on themselves. There was no need to do so; wise men argued against their doing so; their descendants will curse them for it; historians of the future will shake their heads in wonder at the stupendous folly of it; but they did it anyway.
In my monthly diary last May I quoted at length from a friend native to the Balkans who had moved to live in Ireland. His report made plain what an astonishing transformation Ireland has undergone in just fifty years: from a conservative, religious, monoracial, nationalist place to the Heart of Wokeness.
I suppose there have been upsides to set against the downsides. I suppose a majority of ordinary Irish citizens think the upsides more than make up for the downsides. I suppose it’s none of my business. Still it makes me sad to see it.
08 — Miscellany. And now, our closing miscellany of brief items.
Imprimis: A footnote to that last story. Warning: This footnote contains some very bad thoughts.
Reading around for background to the George Nkencho shooting, I turned up a story in the Irish Times, January 9th, under the heading Racial tensions in Dublin’s suburbs.
It’s about Insaka Football Club for black schoolboys in Dublin, to which the younger George Nkencho belonged. "Football" here means soccer, of course. Insaka was the brainchild of Ken McCue of the group Sports Against Racism Ireland, SARI. Quote from the story:
Insaka means "a place to gather" in Bemba, a language spoken in Zambia. The purpose of the team was to give black youths in west Dublin a safe place to gather, work on their football skills and possibly eventually get picked up by top-tier clubs.
End quote.
Insaka has been very successful. Further quotes:
In 2010, Insaka Football Club was all but unbeatable in the North Dublin Schoolboy League. In its first year of operation, it won the under-18s league. The next year it won both the league and the cup …[Inner quote from Mr McCue] "We couldn’t lose a game. We would be beating teams six and seven-nil regularly." [End inner quote.]
End quotes.
Here come the bad thoughts. A current talking point is boys declaring themselves to be girls so they can enter girls' athletic teams, where of course they win all the prizes. This is creating a lot of resentment among girls who now have no hope of athletic success.
It looks as though these immigrant African boys are way better at soccer than the native Irish lads. Isn’t this going to generate similar resentments? How exactly are Mr McCue and SARI helping the cause of anti-racism?
Item: A note from our ongoing cultural revolution. Over in Britain, a political editor at the BBC (the British Broadcasting Corporation), name of Laura Kuenssberg, has been in trouble for using the the phrase "nitty gritty" while speaking on a radio talk show.
What’s wrong with "nitty gritty"? Well, anti-racism campaigners say that it originates from the Atlantic slave trade. They claim, apparently on no evidence at all, that "nitty gritty" refers to the debris, such as lice and grit, left in the bottom of slave ships once the slaves have been removed from the hold after a long voyage. Wouldn’t that be "licey-gritty," though? Oh, never mind.
Following repeated demands from the anti-racists, the charge against Ms Kuenssberg was winched all the way up the BBC bureaucracy to the Executive Complaints Unit. I’m glad to report that after thorough deliberation, they rejected it. Ms Kuenssberg’s job is safe.
A feature of the story that snagged my attention was how very well-paid that job is. Ms Kuenssberg is paid a quarter million pounds a year for her services. That’s $340,000. Say what you like about the Beeb, but when it comes to employee compensation, they are not niggardly.
Item: Finally, I note that we are not the only nation to have had a hotly contested election recently. Over in the Central African Republic, President Faustin Archange Touadéra was re-elected December 27th.
However, the runner-up, former Prime Minister Anicet Georges Dologuélé, who won 21 percent of the vote to President Touadéra’s 54 percent, said the vote was a, quote, "farce," and told Agence France-Presse news service that, quote: "There were many irregularities and instances of fraud." End quote.
He’s probably right. President Touadéra’s government controlled only about one-third of the country at election time. The rest was run by militia groups still mad at the overthrow of President François Bozizé in 2013. There was no voting at all in 29 of the country’s 71 precincts.
Update on that: The BBC tells us that ex-President Bozizé has stirred up his militias to such a pitch that they now control two-thirds of the country, and have the capital city surrounded.
Plainly there’s a failure of civics education in the Central African Republic. My suggestion: Let’s send Robin DiAngelo and Ibram X. Kendi over there to teach them about the horrors of systemic racism.
09 — Signoff. That’s all I have, ladies and gents. Thank you for listening; and those of you boasting Scottish origins, I hope you enjoyed your Burns Night supper on Monday: haggis, of course, with neeps, tatties, and a dram or two of the good stuff.
Some Scots music is appropriate. Here’s an old favorite: "Will Ye No Come Back Again?" The subject of the apostrophe there is Charles Stuart, the Young Pretender — pretender, that is, to the British throne back in the 18th century.
The Stuarts were of Scottish origin, but they'd given England an entire dynasty of monarchs, starting in 1603 when Elizabeth the First of the Tudor dynasty had died without issue. The Stuart dynasty in England lasted a hundred years and change, ending in 1714 when Queen Anne died without issue — although, unlike Elizabeth, she had at least tried.
The Brits could have continued with Stuarts after Anne died; descendants of the earlier Stuart kings were still around. They were all Roman Catholics, though, and Parliament had ruled that the monarch had to be a Protestant, so the Stuarts were ruled out. The Brits brought over George of Hanover from Germany to be their king, starting a new dynasty, the Hanoverians.
While the Hanoverians were settling in, young Charles Stuart, living in exile over in Europe, dreamed of restoring his family to the throne. He landed in Scotland and raised an army. Unfortunately he was a lousy general, and lost to the Brits at the Battle of Culloden in 1746. He had to flee back into exile, where he died forty years later.
That’s what the song is about. It’s a call by supporters of the Stuart cause after Culloden for "Bonnie Charlie" to come back and try again. There were other songs on the same theme. "Bonnie Prince Charlie" became a figure of romance and legend.
To judge from the chroniclers, Charles was in fact a mediocrity even by the not-very-high standards of British royalty. I doubt he ever gave a moment’s thought to the brave men who died fighting for him at Culloden. One of the sadder lessons of history is that leaders who inspire the most passionate devotion from their followers often don’t deserve it.
As it happens, tomorrow, January 30th, is the 233rd anniversary of Bonnie Prince Charlie’s death: oddly, the same day of the year that his great-grandfather Charles the First had his head chopped off.
Some British history there. I tell you, you get an education here at Radio Derb.
From whence there will of course be more next week.
[Music clip: Ewan MacColl, "Will Ye No Come Back Again?"]
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