Remember Hometown Deli? It’s the squat cinderblock New Jersey sandwich shop that is publicly traded and raised $2.5m on a $100m valuation, based on $35k in annual revenue. It was the source of much puzzlement and mirth last month.
Since then, there’s been a lot of financial sleuthing to figure out what this “company” is — the smart money is that it’s a prepackaged financial vehicle to allow an otherwise unmarketable offshore company to go public, by doing a reverse-acquisition.
A reason for all this attention is that Hometown is a perfect emblem of the casino economy, in which the financial sector makes vast fortunes without producing anything of value, simply by making bets, including bets on other bets (which are sometimes also bets on bets).
The stories about the casino are often about the way that unwise retail investors are wasting their “stimmies” by being the sucker at the poker-table, getting fleeced by the sharp operators who know how the game is really played.
That’s how things played out at the Berkshire Hathaway annual meeting, where Warren Buffett and Charlie Munger (the only billionaire power-couple that isn’t getting a divorce) scolded the Wallstreetbets/Gamestop speculators and their abettors:
But as David Dayen points out, the action from retail investors is just a side-show. Take SPACs — a form of corporation-launder that allows companies with unsound financial to go public without normal scrutiny.
The majority of SPACs did not originate through celebrity endorsers — they were high-flying finance vehicles created by major investment banks and funds.
Even the Gamestop bull run — this year’s poster child for retail investors moving markets —…