Shane Mage wrote: >>> If speculators, not "fundamentals," are driving up prices then these >>> speculators must be hoarding >>> actual cacao beans.
me >> can't someone just "buy cacao beans long"?... Shane: > Only from someone just "selling cacao beans short." Both trades will have > to be unwound within the speculators' short time horizon. One side, in a > very volatile market, will make big profits, the other side will suffer > somewhat bigger losses, the difference going to intermediaries. But whether > the price soars or plummets, it can only stay there if the supply or demand > side fundamentals justify it. It is "fundamentals" that speculators > speculate about, to the extent that they aren't merely speculating about > other speculators' speculative intentions. thanks for the clarification. Of course, it depends on what we mean by "speculators." Just a few months ago, a lot of homeowners (or a least a significant percentage of them) and almost all of the rest of the housing/finance sector seemed to think that there was no place for house prices to go but up. That would count as speculation -- and went way beyond what was justified by the fundamentals -- though it doesn't count following the usual Wall Street concept of speculation (which I think involves selling short or buying long). BTW, the persistent rightward tilting of the income distribution has put dollars in the hands of the upper-middle and upper classes, who are more likely to engage in speculative financial investment. The rich, of course, are able to balance the speculation by holding large sums of safe assets, but there are some UMC speculators with the day-trader frame of mind. This spilled over to housing speculation. me: >> more importantly, wouldn't the rising [$] price of these beans to some >> extent reflect speculation that the dollar is going to continue to >> fall? Shane: > But to that extent the price (in gold or euros) could just as easily fall on > speculation that euros and gold are going to go on rising. that seems simply to be a mirror-image of the dollar falling. (It should continue with the Euro banks refusing to cut rates.) can't there be interacting speculations, sort of a price/wage spiral in financial markets, where speculation that dollars are going to fall interacts with -- and thus reinforces -- the speculation that the dollar price of cacao beans (and, more importantly, the US$ price of oil) are to rise? -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
