How The Financial Crisis Of 2008 Appeared In The GameStop Trading Frenzy
ARI SHAPIRO, HOST:
Anger from the Great Recession is still very raw for a lot of people. One place that is wildly apparent - the Reddit community that spawned the GameStop trading frenzy. Many feel that how it all unfolded is just the latest example of the deck being stacked against them. And this is a chance to fight back. NPR's Kat Lonsdorf has more.
KAT LONSDORF, BYLINE: James McCombs was 13 in 2008.
JAMES MCCOMBS: I was old enough to know what was going on and old enough to hear my parents' conversations, old enough for them to tell me that, you know, the college fund was gone.
LONSDORF: That college fund had been tied up in the stock market. And, well, McCombs got into an expensive college in New York but couldn't afford it, so he ended up taking out loans to attend his state school in Nebraska. But he dropped out, overwhelmed by the cost. He's still paying off those loans. And like a lot of people who lived through the financial crisis, he resents how it threw his life off track.
MCCOMBS: Basically, my future got mortgaged. It got put on hold. And that happened all over the country.
LONSDORF: McCombs invested a small amount in some of the popular Reddit stocks weeks ago, hoping for quick profit. But when individual investors like him managed to inflict some serious pain on hedge funds, it wasn't about the money anymore.
MCCOMBS: Now we have an opportunity to take it back if we all make the conscious choice to be a part of fixing it and changing it.
LONSDORF: He's holding on to his stock even as the price plummets. The subreddit WallStreetBets, where this all began, has ballooned in the past few weeks to nearly 9 million subscribers. And while it started as an investment forum, it's recently also morphed into a movement, riding a giant wave of unresolved anger from the Great Recession. There are thousands of posts from users saying that this is their chance to hurt the system with its own game, even if it didn't start that way.
ERIN CAPARELLI: It looked like an opportunity, you know, to maybe double your money.
LONSDORF: Erin Caparelli is a delivery driver in Central Florida. She follows WallStreetBets on Reddit and threw a couple hundred dollars into GameStop last month. It was her first investment ever. But then the frenzy took over, and investing apps like Robinhood suspended trading.
CAPARELLI: As soon as that happened, it really - the whole sentiment changed to where, like, this is messed up. Like, the game is rigged. It's against us.
LONSDORF: It brought back a lot of raw emotion from a decade ago, and Caparelli's investment became a protest.
CAPARELLI: It always falls back onto the little guy. We're not too big to fail. We can easily fail.
LONSDORF: She's not selling either. If this all feels vaguely familiar, it kind of is.
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LONSDORF: A lot of the same rhetoric was used by the Occupy Wall Street movement in 2011.
NELINI STAMP: It's obviously different tactics, but I think it comes from a same head (ph) sentiment of, like, enough is enough.
LONSDORF: Nelini Stamp camped out with Occupy in New York's Zuccotti Park from Day 1 and stayed all three months until protesters were cleared by police. She says, sure, this is very capitalist, while Occupy was anything but. Still, though, she respects the problems it's shining a light on.
STAMP: It just kind of shows that, like, not only have we not solved for all of the issues that came out of the 2007, 2008 financial crisis, but we're building upon them now.
LONSDORF: She points to all the ways the pandemic has exacerbated inequality - the loss of jobs, housing, income - while Wall Street has hit record highs.
Laurel Weldon wrote the book "When Protest Makes Policy: How Social Movements Represent Disadvantaged Groups."
LAUREL WELDON: Often, a kind of social protest is aimed at disruption alone. It's aimed at expressing a grievance. And in doing so, I mean, you have to think that in some senses, this has been a successful protest.
LONSDORF: There's definitely been disruption, and it's getting attention from both the left and the right. Weldon says that's probably because more and more people feel like wealth is out of reach.
WELDON: It's really picking up on this anti-financial elite, stick-it-to-the-man ethos that is, I think, quite a powerful current in contemporary American society.
LONSDORF: A current that's now found its way into the very financial systems it's been fighting against.
Kat Lonsdorf, NPR News.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.