The whole "money market" is now a shambles. The standard arguments on all complex money are rot. What's needed, as in health services, is a level of insurance that allows us to go about doing the real things of life and protection from exploitation by those offering services through 'guild mechanisms'. The big claim in derivatives and other complex money is that they are a means of laying off the bets made in efficient fashion. I regularly set questions based on anonymised accounts asking students (including some complex bankers) to find the healthy companies and predict future earnings. Did similar blind questions myself. None of us were any good. The bad companies often looked as good on paper as the good. I know of many companies that would have failed had their accounts really been transparent, most going to to later success. The basic idea is to develop capital for use, the problem being we don't have a decent (non-money) definition of capital. Pat's right it's gambling. In derivatives the basic idea is like betting on all horses running. With ideal odds and no admin costs one could keep breaking even. Then one might find a group of horses that could be eliminated as losers, or another exchange offering different prices to allow bets against lay-offs in the original exchange. Feeble stuff, not rocket science. I could demonstrate a system that would work, but this would evaporate as an advantage once the market knew. My guess is all this stuff is a form of Ponzi scheme working through asset inflation - the real losers are those who work for salaries less than the annual equity they own goes up. Lawrence once said all this financial floss was based on deep toil underground and the metaphor holds true. We get no vote on money, and it is really only discussed in the vapid terms of communism and capitalism, idiocies that can only exist by maintaining their opposition. Complex money is now the 'State' that needs to wither away to background routines.
On 28 Apr, 12:50, Pat <[email protected]> wrote: > On 24 Apr, 06:58, Slip Disc <[email protected]> wrote: > > > > > > > We know that some people have made fortunes but is there really any > > social value to what seems to be just gambling. Have we really gained > > anything as a society or has it caused more ruin? > > > Almost a year ago US Treasury Secretary Tim Geithner wants to regulate > > the derivative > > market.http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/53212... > > > The wiki definition;http://en.wikipedia.org/wiki/Derivative_%28finance%29 > > > Criticisms of the Derivative > > Markethttp://en.wikipedia.org/wiki/Derivative_%28finance%29#Criticisms > > > Below that the benefits which are clearly outnumbered by the > > criticisms > > > NPR discussion on the Diane Rehm show which you can listen to > > here:http://thedianerehmshow.org/shows/2010-04-23/news-roundup-hour-1 > > AUDIO:http://thedianerehmshow.org/audio-player?nid=12352 > > > JeffreyC wrote: > > > Diane, > > > I am a dedicated listener and I love your show. However, today I was > > very upset that none of your guests new anything about derivatives. > > Their inability to describe how derivatives increase social welfare > > demonstrates what little they know of finance and economics. More > > upsetting is how they pretended to know and still commented, spreading > > misconception and falsehoods. > > > DERIVATIVES allow institutions to hedge against uncertainties, > > effectively reducing risk and volatility in earnings and investment. > > This is good for business as more predictable cash flows allow for > > better planning and increased investment. This has a direct positive > > effect on the welfare of an economy. Also, speculators are necessary > > to ensure that all hedgers are able to place their hedges. The > > speculator thus provides needed liquidity since all transactions need > > two participants. > > > THAT being said, the real topic is whether or not derivatives > > transactions should only take place on a transparent exchange. > > > PLEASE try to have someone trained in economics or finance on your > > show when discussing matters of this type. Thank you. > > > -- > > You received this message because you are subscribed to the Google Groups > > ""Minds Eye"" group. > > To post to this group, send email to [email protected]. > > To unsubscribe from this group, send email to > > [email protected]. > > For more options, visit this group > > athttp://groups.google.com/group/minds-eye?hl=en. > > It has caused much ruin. The amount of losses in the trading of > derivitives is huge in comparison to other aspects of the market. On > the order of 2-3 orders of magnitude. And it's not discussed as > much. Of course, like all other aspects of the market, it's gambling, > pure and simple. Although, unlike some markets, like commodities, > it's as airy-fairy as it gets. Weather derivitives, for example. The > social value is the same social value as gambling offers. Risk. > Potential gain for no real effort (if you do well) or loss of all > effort (if you don't). It's that 'chance' that you might undeservedly > get that ever-so-elusive 'something for nothing'. Is it worth it? > That would be a personal choice (yes, I use the word loosely). Social > value? Well, again, the answer you would get from a winner on the > derivitives market would differ from the answer you would get from a > loser on the same market. Like all gambling, it's safer to just avoid > it.
