Memes

“If you repeat a lie often enough it becomes accepted as truth.” -Dr. Joseph Goebbels, Nazi Propaganda Chief

Merriam-Webster defines “meme” as “an idea, behavior, style, or usage that spreads from person to person within a culture”. Think of a “meme” as a cultural hashtag.

Merriam-Webster defines “ignorance” as 1a: destitute of knowledge or education ignorant society also: lacking knowledge or comprehension of the thing specified; 1b: resulting from or showing lack of knowledge or intelligence 2: unaware,  uninformed.

We can’t seem to escape the overuse of the “Nazi” tag as the evilest label in our lifetimes. Even Russia’s Putin suggested he invaded “Ukraine” to get rid of the Nazis. He used the reference because he knew “Nazi” would trigger average Russians, global journalists, and foreign readers alike. History correctly records the Nazi scourge on Europe as a crime against humanity without a defense. To deny the Holocaust and Hitler’s evil is to be either ignorant or blind to the mountains of facts, eyewitness statements, and the Nazi’s own records.

Adolf Hitler was the leader of the Nazi Party. He was the absolute dictator of Germany from 1934 to 1945. Nazi forces engaged in the systematic murder of as many as 17 million civilians, an estimated six million of whom were Jews.

I find it strange in 21st-century life, that two despotic killers of the last century go largely unpunished by the black “memes” pervading our collective cultural consciousness and Twitter.

Mao Zedong was a Chinese revolutionary, political theorist, and communist leader who led the People’s Republic of China. His policies and political purges from 1949 to 1976 caused the deaths of 49 to 78 million people. He ranks #1 all-time on the list of most effective killers of humanity.

Jozef Stalin was the first Secretary of the Communist Party from 1922 to 1953.  Through his political oppression and purges, he is credited with around 35-40 million deaths making him #2 on the all-time best killers list.

Sharing the same historical frame as Hitler, Mao and Stalin both exceeded Hitler’s body count, but neither appear to share his degree of dark stain on history nor proliferation of black “memes”. Why is that?

Are we ignorant of the facts? Or just uninformed?

Oddly, Russia’s current President openly admires Stalin and very few of our current thinkers and talking heads saw that bit of trivia as relevant? I find Putin’s Stalin worship to be a curious omission from our public discourse. I am guessing if Putin had a thing for Hitler, we would have been bombarded with the Nazi references. Or would we?

Allow me to pose a haunting question. By letting Stalin use a hall pass for his crimes against humanity, did we enable the next dictator de jour in Putin?

Memes are a unit of cultural information spread by imitation (mimicking). The term meme (from the Greek mimema, meaning “imitated”) was introduced in 1976 by British evolutionary biologist Richard Dawkins in his work The Selfish Gene.

As humans, other than our genetic survival hardwiring, we signal, communicate and learn through mimicking, memes, and media. With media, I am referring to the fossil rendering of our collective knowledge and stories in all forms of written, audio and visual records. I am not referring to the current mainstream news media. Mimicking and memes end up in some form of media as a story, because humans think, remember, and converse in story format. The 3 M’s (mimicking, memes & media) signal and structure our reality until tested by said reality.

“Memes are not magical entities or free-floating Platonic ideals but information lodged in specific human memories, actions, and artifacts. Nor are all mental contents memes, because not all of them were copied from someone else. If all your memes were removed, you would still have many perceptions, emotions, imaginings, and learned skills that are yours alone, that you did not acquire from anyone else and that you can never share with another.” Henry Plotkin suggests in “People Do More Than Imitate”.

Agreed. We take the information, signal, or instructions received from the 3M’s to test reality. That feedback is called experience which reshapes our version of reality constructed in our heads.

The latest meme to run amok before hitting the wall of reality is feverish trading of the metal Nickel on the London Metals Exchange. Facing rising energy prices and a global economic slowdown, how is the price of nickel going up ballistically?

Trading glitches plagued the nickel futures market in London, with prices settling down at the exchange-imposed limit for a third straight day. As more details emerge from the disorderly market failure that shuttered trading in nickel for over a week — only to reopen in chaos — industry insiders are crying foul.

The current circus in nickel captured popular attention on March 7th when a giant bearish bet on nickel prices blew up in a spectacular short squeeze that would have rivaled GameStop (GME) or AMC Entertainment (AMC) in early 2021. Nickel futures on the London Metals Exchange (LME) settled at $36,915 per ton Friday — down 63% from the record $100,000 per ton hit briefly during the squeeze.

The meme generating the fever was that a “major nickel player was caught short.” The feeding frenzy, absent any supply & demand fundamentals, was on. Nickel prices exploded. Rising prices validate the rumor mill. Where there is smoke there might be fire. The spark ignited and burned ever so bright.

The man behind what is likely the largest ever short bet on nickel is Xiang Guangda, the chairman of Tsingshan Holding, and colloquially known as “Big Shot.” Xiang built the metal-making empire from scratch, focusing on the opportunity he saw to secure for China a stable nickel supply — necessary for steel and electric batteries. Tentative estimates of Xiang’s trading losses had them around $8 billion.

Nickel’s frenzied run happened amid an explosion of commodities prices in early March that sent crude oil futures to 14-year highs and wheat futures to a record. Nickel outperformed them all — skyrocketing 250% in hours. Consequently, Nickel’s meteoric move and subsequent titanic losses were lost in the news.

The perfect storm was also exacerbated by the fact that although Xiang’s company produces physical nickel, the grade isn’t high enough to deliver to the LME. In other words, he couldn’t offset his large short bet by pledging the underlying commodity to the exchange. He would need a way out.

Shutting down the exchange was the only option given the circumstances, noting the difficulties in offsetting the position. Several large players in the metals market (JPMorgan) were facing billion-dollar losses each. During the week the LME was closed, they negotiated with Xiang to allow him to keep his position. However, many traders were still up in arms over the $3.9 billion in nickel trades canceled by the LME in the wee hours of the Tuesday following the price spike. That was the day trading would eventually be halted.

Goldman Sachs and Tower Research Capital were among those who bet correctly on the price of nickel going up. In an extraordinary move, the LME tore up their winning contracts that would have generated large profits. Those “profits” instead went to benefit Xiang, his counterparties, and others caught the wrong way. While the LME reserves the right to shut down markets under emergency circumstances, lawsuits are likely. Complicating the matter is the fact that the LME is owned by Hong Kong Exchanges and Clearing (HKEX). A very interesting and unprecedented concession to a Chinese businessman with ties to China leadership? Hmm.

No other futures exchange is likely to displace metals trading at the LME any time soon. Shanghai nickel futures in China are largely closed to foreigners. Nickel traders are stuck with the disfunction at the LME.

Remember GameStop (GME) and AMC Entertainment (AMC) in early 2021? Two stocks with bad fundamentals and no prospects were launched into the stratosphere by a Reddit “wallstreetbets” meme igniting a plague of unadulterated speculation. Boasted as a revolution for the little guy in the stock market, the entire affair turned out badly for the speculators. (Below is the AMC then GME chart for the last five years)

“Meme stocks” is an Avante Garde label for the story stocks of the 1980s or the “go-go” stocks of the 1960s. Speculation on hushed rumors or supposed inside information is not new to capital markets or any commodity that trades from one individual to another. Speculation, in general, is always the most apparent at the end of an up stock market cycle. Be warned.

How do you combat memes? Let me quote from earlier in this post. We take the information, signal, or instructions received from the 3M’s (mimicking, memes & media) to test reality. That feedback is called experience which reshapes our version of reality constructed in our heads. The more experience you accumulate the more soundly your worldview is grounded in nuts & bolts reality. Ridiculous memes are no match for deep-dive education and the vicissitudes of trials and errors. Life doesn’t come equipped with shortcuts to doing your own homework and getting experience.

Calling out the insidious nature of “too good to be true” or “profoundly false” memes is a matter of education and experience. If you don’t understand your medium (stocks, Bitcoin, news, etc.) get some experience and perspective on how the sausage is made before you dabble.

The absence of an abundance of memes condemning Mao and Stalin as evildoers speak volumes about Americans’ values and cultural compromise. Our militant minority rips down statues of American leaders frozen in the culture of the past, but can’t find a voice on slaughtering communist despots?

Lastly, like Vladimir Putin’s admiration for Stalin’s tenure of terror in Russia, China’s Xi Jinping has been embracing Mao as he accumulates power. No mention of the two despotic genocides during the “Red Emperor’s” reign. In his time, Mao had prodigious determination and imposed his will on almost every aspect of Chinese society. He dominated the CCP and Chinese politics until his death.  Xi Jinping’s current moves put him on a path to be the pretender to Mao’s throne.

Doug Bandow a senior fellow at the Cato Institute suggests that we should be worried in a 2020 piece. He notes that “Mao’s face decorates Chinese currency.” Adding “his portrait still hangs on the Gate of Heavenly Peace,” the northern border of Tiananmen Square, the scene of the killing of demonstrators in 1989. The former despot’s body, or a wax copy, lies in state in a large mausoleum in the same square drawing a steady stream of visitors and well-wishers who idolize Mao. The net effect is to canonize the Red leader as a Chinese communist saint.

Until next time. Stay frosty my friends.