Thanks. This is more what I was looking for. I wouldn't discount efforts
towards some form of self-regulation in the overall self-interest of
investors, however, and especiially by the big banks who are forced to take
a bath to take when heavily leveraged big players like LTCM bet wrong and
can't cover their trades. The systemic risk resulting from LTCM situations
is a real concern. But I think the real question is whether this huge
shadowy market can be effectively regulated.
Marv Gandall
----- Original Message -----
From: "Devine, James" <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>
Sent: Sunday, March 14, 2004 12:00 PM
Subject: Re: [PEN-L] Derivatives
> 1) If he were advising the government of Cuba would he immediately
recommend
> it drop its sugar derivatives program -- and, by extension, advise other
> poor countries to do the same in relation to their own resources?
I, for one, see nothing wrong with hedging on the futures market to try to
"lock in" a price on some -- but not all -- of a country's crop. ("Not all"
because it makes sense to diversify.) This kind of "derivative" is what
farmers have been doing for quite awhile. It's basically the same thing as
taking out insurance.
> 2) ... What can be done about what the bourgeoisie itself, notably
> Warren Buffet, describes as a ticking time bomb? Anything? --
> a) prohibit the $130 trillion trade in derivatives altogether (fat
> chance), b) endorse efforts to regulate the the more exotic opaque
instruments by
> requiring greater transparency and mark-to-market accounting standards,
> or c) wait for the whole house of cards to collapse so we can say "told
you so".
It seems to me that (b) is the obvious solution for the bourgeoisie. Not
that they'll do it in the near future, because given the current balance of
power (the lack of a serious labor or social-democratic movement) the
short-term and particularistic thinkers and their neo-liberalism will
dominate regulation.
Jim Devine
