Surveillance: Reddit Revolt Upends Conventional Trading

I would respectfully suggest you've seen this before. What is different this time with Robin Hood versus the other short squeezes you and I have enjoyed well. I Um, I think that a couple of things Tom hit me. One. One is I think it's another illustration of the impact that technology is having, the the power that technology can

deliver to a small quadre of people. Were certainly seeing that in companies like Facebook or Twitter or even people on those platforms on the influence they can have, and now we're seeing it in the financial markets. UM. I think I think that's sort of interesting. The social movement

aspect is of course unique. Uh, this is less a uh short squeeze and there is an angry crowd in some regard and UM, I think more to the point, it just it seems like it's a destabilizing force, more so than in past short squeezes where there's this just seems like you you can colude with a with a with the redding UH platform UH and and act in unison UH to target a specific security and move its price wherever you want to with just a little bit

of leverage. UM. I think that's a destabilizing force. I think it's UH to me, sounds a lot like market manipulation and probably needs to be regulated. The last point I'd say about it is, you know, like the other ones, this is going to end badly and probably um eventually greed is going to set in, and even among the young um robin hood traders, they're going to start to take some profits. And when that happens, the thing's gonna conravel like they have in the past and probably heard

a lot of the same investors. We'll let the lawyers deal with the legal issues, Jim, I do want to get your view on whether we're discussing this the right way. We often have this conversation. Everyone is over the last week because them versus them, the institutions versus reads out Jim, don't you think that's kind of naive to believe that there are institutional traders on the Reddit boats doing exactly the same thing, squeezing out the big shorts. I totally agree.

I totally agree that is it's probably happening. More is the price of moves. I come back to John that whoever is doing it, I think this is market manipulation. I think it's a destabilizing force. And you know, think about the Federal Reserve. The Federal Reserve in this country spent most of last year, a great bulk of the year re establishing functionality and liquidity UH and stabilization to the financial markets. That was a big part of what

they did all year long. And now we're we're allowing something that's destabilizing the financial markets and setting up the situation to harm a number of of of investors, whether they're big or small UH down the road. And I think it's it's sort of hypocritical to do what we did last year to try to stabilize the financial markets to save the economy and assistant and allowing this to go on unless That's where I'm at. I don't I'm still understanding a lot of this do to play Devil's advocate.

People would say, Federal Reserve perhaps stabilize the market for the people in the market, which includes the big Wall Street players and the wealthiest individuals. And that seems to be the tone that the tone the trope among a lot of these Robin Hood investors. I mean, what do you say to people who say that Wall Street has lost the moral high ground here based on the idea that there has been a sort of rejiggering in terms of the fundamentals and the price action based on what

policy has done. Well, I'm not sure Wall Streets ever had the high moral ground, you know, if it starts the imagination. But I gotta tell you, if if we uh you go back to any crisis we've had, and if you don't re establish uh functioning Wall Street and stability, it's disasters for the economy. And and so you know the result of that is if you if you don't do that, I think the Federal Reserve would say that

too at LESA. Then if if you don't re establish a functioning Wall Street, it will be disastrous for the economy, which means it will be disasters for everyone. So when you say Wall Street, you save the economy there, they're not a separate deal, and I think that's important to understand.

I think one great thing that's coming out of the Redding situation here, which is a wonderful thing for the future, is that we're in enticing more and more young investors at a younger age millennials rather than waiting to four or fifty to start to learn to invest in the markets and getting involved in the marketplace. I think that's

a huge success. It will be very beneficial down the road in terms of general wealth creation, in terms of greater liquid markets over time and greater participation by more. But I'll tell you what if we damage everybody uh while they're just starting to get involved with this, that will set that trend back. Jim, it's kind an ups Jim Poston. At least wait and always take shot it with Jim. Jim, thank you say thanks for having right

now from the International Monetary Phone. It was my great honor to speak to the managing director, Krystelina georg gave a few days ago. She stops and she listens to Vitr Gaspar He is the I m F Director of Fiscal Affairs, always an important position, and evermore so in the tumult of this pandemic. Vitor Carmen Reinhardt wrote a paper this summer, my paper of the summer with a

foreign affairs magazine on the pandemic depression. How is your fiscal world given the attempt to get through this pandemic right now? So a pandemic by nature, uh tom is a health crisis at this point in time. The chief economist of the I m F as emphasized that we face a tremendous amount of uncertainty. That it is a race between a mutating virus and the vaccines. The virus got a headstart and in the North Atlantic area the cases have been very strong in this period of fall winter.

It is crucial that the rollout of vaccines takes place very quickly, and that's a global process. I like to say that the virus is not defeated anywhere before it is defeated everywhere, and so ensuring global access to vaccines at low cost is crucial to be the pandemic. Dr Gorey gave us spoke of the new inequality from this natural disaster. Tell us what you and your team have learned about the new inequality and the distribution of stimulus.

Are we still are we providing fiscal stimulus to too many of the halves and not enough of the have nots. There are two very important dimensions of that inequality that I would like to stress. One is uh divergencies across countries in terms of economic prospects, in terms of supporting

the economy. At one extreme, you have a country like the US that has ample fiscal space that can provide relief to the economy, that has been providing relief and more is in the pipeline, and looking forward, the United States by twenty two will be very close to its pre COVID nineteen growth path, in particular if something like the Biden relief plan gets through the political process in Congress.

At the other extreme, we have low income countries that basically had to tackle the emergency of COVID nineteen by tax by changing the composition of public spending so that urgent needs in health could be tackled. Support to business and firms could be given, but the financial envelope was constrained by the financial capacity of the countries. We have also very important aspects of inequality across people, and you

have divergencies in terms of education. People that have more than a college degree have been much less affected than people that lacked. This pandemic as affected women and young workers UH much more than other segments. I worry very much about the children from favored families who are suffering in their education prospects given the restrictions imposed by social

distancing so many people shadows concerns. I just want to finish on one brief question, if I may, do you think that to GDP right shows is still useful, that to GDP ratios are useful. They're an indicator that we do look at. It's one of the many indicators that one needs to follow, UH in order to assess public

finance sustainability. It's very important that fiscal policy is able to act forcefully in case of need, and we have seen how powerful fiscal policy can be in the context of COVID nineteen, and in order to have room to maneuver to respond so forcefully as has been the case in twenty twenty in the face of COVID nineteen, fiscal

buffers will eventually have to be reconstituted. But at this point in time, the priority is to UH spend on vaccines, testing and healthcare support resources, to help schools and college to reopen safely, helping the poor and most vulnerable families, help the unemployment and UH the unemployed, and make sure that there are no bottlenecks on crucial services that people need in these very un certain times of pandemic. They took right to catch up in times valuable. We appreciate it.

Thank you for spending some of it on this program. Video Gasba that of the International Monetary Fund right now, not in the vaccine, but the mystery of what to do with the vaccine in vaccinations Having Tourism joins us from Duke Margolis at Duke University. Having I'm I'm absolute lutely stunned, and I went through it myself. I had the vaccine of what a manufacturing processes is. You are

expert at the vaccine the virus. At the state level, why did West Virginia, why did the Dakotas succeed and others have struggled? Yeah, great to be here with you, Tom So, there's a lot of different reasons why you see a couple of states at the head of the list, and it's not predictable based on any common theme, you know, size, you know, um, political attributes, etcetera. So there's a couple of things I think that led to the early success

for some states. And really I will caveat I think we're going to see a lot of moving around with the figures as things move along. But some states were just faster out of the gate. Um. You know, in West Virginia, for example, they chose to do their own thing with long term care pharmacies. So the long term care facilities that you know, most states partner with CBS and Walgreens UM, and those pharmacies were responsible for getting the vaccine into the arms of you know, residents and

staff at long term care facilities. In West Virginia, CBS and Walgreens does not have a big footprint, so they decided, you know, um, we know there's not a lot of staff of those pharmacies. Now, given how quickly we need to get the vaccines into the arms of people, we're going to take control of that and we're going to partner with our community pharmacies and community partners and get it done. And and they do credit that initial, you know, quick,

quick speed to that. That's the smartest thing I've heard today, Honey. What's so important is Marianna Masacata was on three hours earlier. Were there a great new book, and she said exactly the same thing. There's a point where government has to step in. Is that's what's needed in February is more government action. Well, I just also want to say there were some states where CBS and Walgreen's had a great footprint and they were very effective in getting people vaccinated. Now,

so there really is this is this is um. You know, I've done state work for a long time. There's variations across the states, and it matters. You have to look at what that state um, how it operates, you know, what it's UM staffing looks like, and how you know the people are are going to be willing to get the back feet Now on federal governments stepping in, I think, you know, we do need some national leadership on this, and I think states will want national realship on this.

Funding is going to be really helpful thinking about a coordinated plan across the states. But I caveat that to say, UM also recognizing and I know the Biden Harris administrations is very in tune with this looking at what each state needs. Because in one state, you know, you're gonna need some National Guard, UM, you know, some federal sites to be set up in rural areas and really help

the state supplement what they're already doing. While other states have enough vaccinators and they don't need that, they need other kinds of support. So you know, it's really important to look at how each state is operating and what it really needs. Hey me, you're talking about financing this effort, and that's one bipartist an agreement in Washington, d C. That financing of the vaccination schedule will be very good

for the nation. Can you give us a sense just to get a greater appreciation of the complication of the rollout where the money is most heavily needed going forward in order to facilitate this. Yeah, So a number of states, in order to start speeding up the process UM have started setting up mass vaccination sites, which requires a lot of different types of partnership. So that's one area I

think continued resources will be needed. I also think we can't forget about populations that are harder to reach and that are in like places like rural areas where mobile sites um, you know, or community sites which will be smaller but still will need to be set up also

need also will be needed. I also think, you know, this is a this is a complicated effort that's at the federal level, the state level, and the local level, and the local level really matters, so making sure states have funding to then partner with local endies, local government, community groups, etcetera. I think it's also important because we have to get people to not only trust and believe in the vaccine, but also the process by which to

get access to it. Meanwhile, just today, hey man, I'd love to just wrap up with the news of the day, which is that J and J came out with the data for the single dose vaccine. It was not as stunning as some of the other mRNA vaccinations, however, still very positive. How much does this accelerate the timeline for vaccinating I think, um, we are all hopeful across the country that they're going to be more options for vaccines.

We have to get three million people vaccinated and we are not on pace for that, um and the states don't have the supply for that. So we absolutely need new candidates to come in the door. UM. I do think there are concerns UM in the public and it will I think will continue be more widespread about the strains in the UK and South Africa. I think we've seen initial evidence that for the South African strains these

vaccines are are not quite as effective. I think more evidence is needed, UM, but we still need more options for people to get vaccinated. Amy, thank you so much, greatly appreciated. Hammy Charson with Duke my goals today their Center for Health Policy. The state issue here going forward

is going to be extraordinary. We get lucky. It's okay three months out, six months out to book Marianna Masaicado to beat up on our new book Mission Economy, but it's far more important to speak with u CEL professor about the moment in hand as well, because the moment in hand is in the Mission Economy. It's about the new rules and the myths of capitalism. Professor Mascato, you were my book of the Year a couple of years ago. I haven't really looked at Mission Economy yet, but thrilled

you've got a new book out. I want you to sit in London wherever you are and comment on how you observed game stop comment on this clash of technology with a traditional process of capital is um Well, I mean, you know, let's broaden the gaze of it. Right. We've got tech, we have the digital platforms that we're talking about, we have climate change, we have the health pandemic. What they all have in common is that we need to

govern the process in the common interest. And what's you know, the common theme in my different books would you always get me on for which is wonderful is that unless we actually know how to shape markets as opposed to constantly just fixed market failures in any of these areas, we get it wrong. And I do think the COVID moment, where we have the digital divide, where we have the health pandemic, where this particular crisis is sitting on top of a climate crisis, we just have to go back

to first principles. And that's really what the book is about. What I want to get to that in one moment, I want to talk about something in your book, serendipity and collaboration. We're seeing serendipity. We're seeing collaboration now by smart young people sitting on couches saying to hedge funds

forget about it. We make the rules. How laborative is this new technology, whether it's a crisis like game stop, or it's to the broader world economy that you look at well, I mean, you know, when I say go back to first principles, we should also ask where does this technology even come from in the first place. And that was kind of two books ago in The Entrepreneurial State, where I talked about how everything that makes our iPhone smart and not stupid, from the Internet, GPS, touch screen,

syrian I could go on, was all actually government financed. Right, So you know what happens then when this technology and the algorithms underlying them are actually increasingly also about extracting value and not creating value. But even more so, what does it mean to truly have a public private partnership, a symbiotic mutualistic partnership and not a parasitic partnership in these different spaces? And that's why the moon landing is

so amazing. There is huge amounts of private sector innovation and investment from companies like Honeywell, General Electric, Motor Role up course, large state funding from NASA and other public entities, but they were going after a common project. So the real question is what is the common project underlying you know today's news. Yeah, so what is that common project? Mariana?

I mean, we're fighting climate change where you know everything we're doing, right, but what should it be because everything we're doing is also under the president, you know, the presence of the capitalism that we know. Well, first of all, let's not forget there's different ways of doing capitalism. I gave a talk this past Monday at the World Economic Forum where you and I last year were together physically in Switzerland. This year we're all zooming in and you

know all the talk again it is about stakeholder capitalism. Now, if we properly had stakeholder capitalism and not just capitalism maximizing shareholder value and kind of gaming the system, then that would be a very different conversation, whether we're talking about digital platforms, health or climate. So we need to remember first of all that there's different experiences in the world. Stakeholder capitalism is practice, has been practiced in certain companies

in certain parts of the world. So we need to actually learn from those experiences and walk the talk. And there's no better place, I think right now than the vaccine to talk about that, because it's not enough to have you know, Fiser, the National Institutes of Health, which is public money moderna Oxford University, you know, investing in something. The question is how do we then govern it for purpose?

And that's really what the moon Shop book is about, which is what is the common purpose with the vaccine? It's not just to get a vaccine, it's to make sure everyone gets vaccinated. Right, Marianna has okay, But if you look at the Commission, they can't even have access to the vaccines because you know, they started too late.

So where do you started actually changing so that you create the system that you're seeing, which is you know, mission critical, you achieve the goal that you set out right, So you know, I think we're bringing in different issues here which are all related. So it's a good thing. But one issue is also the capacity and the capability on the ground organizationally, and whether we're talking about the European Commission or the UK government, which is where I'm

sitting here. In the UK has outsourced its capability and its capacity so much to the private sector that a couple of weeks ago, a Tory Lord Agnew said that the government had become infantilized. It's such an interesting word. I started to use that. Uh. You know, by outsourcing your brain, you get infantilized. You lose your capability and

capacity to manage anything, whether it's Brexit or COVID. So instead of just kind of taking the status quo, so say the European Commission getting in there too late, the question is going forwards. How can we actually govern and shape and co create markets and such a way to achieve the goals we need, which is inclusive growth, sustainable growth. And I do think at the center of the COVID recovery scheme, and you know we all are talking about

building back better has to be green growth. And this is where the European Commission has gotten it right, more so I think than the US, even more so than China. Which is the current European recovery scheme, which is close to a trillion is conditional. No longer on austerity, which is the conditions that we set in the financial crisis for the recovery scheme, but on investment, investment around digital

and climate. And then there's a separate pot for help. Marianna, you have a phrase that is absolutely spectacular in folks if I was sitting in a happy valley right now on the deck with friends seeing this would be my title for this year's Davos. It is a shaping, not fixing Davos. Marianna. That is absolutely brilliant. This describes so much of what I and you know, Marianna hate the phrase thought leaders and all that other malarkey. This is so so so true. They're trying to shape the message

and not fix it. Discuss that well in some ways, I guess, I'm so. I'm not sure what you've just said, but what I usually say is that we should stop just fixing market failures, you know, actually waiting for the martin the market to mess up before policy comes in. We need a different type of policy, and we need a different type of public private partnership that co creates and shapes markets to deliver the outcomes we actually need.

And that requires fundamentally different partnership. Literally a new contract, and I do you know, I'm not a big fan of getting lawyers involved, but I really want to starting of contracts, the procurement contracts, the grants and the loans, if we could embed within them a common purpose like had because that was embedded within the structure of how NASA collaborated with the different companies, we would have a very different outcome today in health and also around um Yeah, sorry, Marianna,

take it narrow. Should Gary Gensler with the Biden administration be more proactive about fixing and not shaping Wall Street given the crisis it's in this Friday morning? Well, I mean the big you know, the big issue there is what is the relationship between finance and the real economy. You know, most of the global finance actually ends up back in the financial sector in the UK, something like

only twenty of finance even goes into the real economy. Now, once it goes into the real economy, how can we make sure it actually helps to steer our system in fundamentally different ways. Everyone talks about the green transition, Bidence talking again about the Green Deal, But finance has to be part of that solution, and unfortunately we have lots of short term finance. We have speculative finance, even venture capital, which in theory is like the better form of finance,

is very exit driven. That actually ended up really hurting the biotechnology industry, which ended up with lots of product less I p O. S. We have to avoid that currently with all the uh you know, innovation happening again in space with you on Musk and clean tech, we cannot have exit driven finance just trying to get a return and really creating a max that we have to

then pick up. But it is a wonderful book on the mission economy, where Marianna Masicado straps a great triumph of the Apollo program over to the challenges of capitalism moving forward. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio.