Sabri: How would you answer the argument that most derivatives are used for hedging operations and are therefore a source of stability for the system? I agree with your point about the downside; while all markets are a gamble, a wrong bet on highly leveraged derivatives -- as LTCM showed -- poses a real systemic risk.
Marv Gandall ----- Original Message ----- From: "Sabri Oncu" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Thursday, March 11, 2004 9:42 PM Subject: Re: [PEN-L] An essay on economic basis of bourgeois risk and gambling culture - parasitism as derivatives, options, swaps, hedge funds etc. > Marvin Gandall: > > > Hungarian, but a good essay nonetheless. :) > > No! It is not a good essay. > > It is a wonderful demonstration of lack of > understanding of derivatives, as the following > statement of its author demonstrates: > > > the rate of profit on capital can be significantly > > higher, and the risk much lower, than if you > > invested in any tangible or productive asset - > > derivatives allow many bigger capitalists to make > > more money faster, with less bother and less risk. > > The above is true only if they have the reigns in > their hands. Just as they can make more money faster, > they can lose more money equally faster, if they don't > have the reigns in their hands. > > So Buffet is right: > > > derivatives are "time bombs" and "financial > > weapons of mass destruction" > > And this system, under the domination of strured > finance and derivatives, is heading towards its > "self-destruction", assuming that until that happens > we can avoid an ecological collapse or a nuclear > disaster. > > Watch Fannie-Mae in these days. > > Best, > > Sabri
