The intellectual indolence of those who attack speculators

Table Of Wisdom ^ | 7/28/09 | MrArbitrage

[publius321]

The big story this week: regulators considering setting limits on Wall Street speculators

Forget additional position limits. Ceding that kind of authority to elected imbeciles is probably just as bad if not worse than the actual disease. It is a slippery slope, like allowing these buffoons to determine salaries. I think I would prefer to see the leverage abated. I have heard compelling arguments on the “pro” side of changing margin requirements but not too many “cons”. I don’t think that controlling copious quantities of commodities which are essential to human sustenance -with 10 cents on the dollar- is some kind of inherent right derived from natural law.

As I wrote back on June 20th 2008 in my piece called “Speculation: Good for America but Manipulative Analysis = Crime against Humanity”(at http://tableofwisdom.com/MrArbitrage_on_Market_.html ) – the problem is fallaciously being attributed to “speculators” by intellectually lazy people like Bill O’Reilly. The demonization of “speculators” in the generic sense is quite dangerous to our free markets. If the mere presence of speculators CAUSED the vexing bubble in oil that we recently experienced, how do you explain...

[EagleUSA]

– the problem is fallaciously being attributed to “speculators” by intellectually lazy people like Bill O’Reilly.

::::::::

This is ONE of the reasons I gave up on BO quite a while back. He is weak, he panders to Obama and his ilk, and in many respects just does not have his facts right at all. Only Hannity and Beck are holding up Fox from a patriotic viewpoint. The rest are in a fog.

[muir_redwoods]

I have never heard the intellectual argument that would limit a free person's right to contract for futures or any sort of speculative investment.

Bill O'Reilly and those who agree with him simply don't or cannot understand how economics work and have little regard for economic freedom.

Plus, BOR is a moron.

[publius321]

Amen to that. I wish Beck was in O’Reilly’s spot. I can’t believe I’m writing this but I would actually prefer to watch GRETA over O’Reilly. She seems like she is changing. Maybe Palin influenced her. They were hanging out a good deal over the past year. O’Reilly is indeed a panderer.

[Ghost of Philip Marlowe]

As I wrote here just a couple of weeks ago, this is the Statists intentionally confusing terms in order to lay the blame on a scapegoat and give their cronies an advantage.

When smaller traders speculate, they are gambling that a stock value will go up or down. It's a gamble, like betting on the point spread of a football game. Betting on the point spread does not cause the final score. Some bet the price will go up, others down.

That's what speculating used to mean.

But what is happening now is that the mega-firms (using taxpayer money a la Stimulus and TARP) are purchasing not only the ETFs, but actual crude inventories, storing them offshore until the prices go up, so that they can unload them and sell them at a profit.

This is not speculating. It is monopoly and tacit price-fixing since Government Sacks and JPMorgan and all the rest of the Statist Banksters are working together on this scheme.

So what does government propose? Shutting down speculating by the smaller traders but allowing it through the mega-firms.

They condemned Bush and Cheney of being the puppets of big oil, easily disproved by the wild price swings and losses.

But Obammie the Commie and his DNC cronies are firmly tucked away in the ass pocket of the Banksters.

ALL of these economic decisions are destroying the value of the assets of you and me while making the Banksters richer. It is no different than any other government/central-bank collusion.

On a side note, one aspect that is astounding in all this is how many “journalists” are actually referring to the Federal Reserve as a “central bank.” Since their founding, they have done everything they can to trick the American people into thinking they are a branch of the federal government, which they are not. They are a cartel of international banksters and they own our government.

[dirtboy]

This begs the question -WHY- was there stability during most of those years despite the presence of speculators?

Because in 2006, the Bush Admin, in response to the CFMA, decided that trading on ICE terminals would not be subject to federal regulation. So trading activity that would have gotten folks booted off NYMEX was just hunky-dory on ICE.

For a guy professing to be a fount of wisdom, this guy sure as heck ain't up on current events regarding commodities trading.

[oldvike]

Very interesting post. Thanks for breaking it down into terms a dumbarse like myself can understand.

[ding_dong_daddy_from_dumas]

Would you say that speculators contribute to both sharp rises and sharp falls in oil prices? Most of us don't complain abut the latter.

[Ghost of Philip Marlowe]

I know what you're saying, and I've argued in the past against those who condemn speculators (the smaller, day-trader type) that they must have lost when the price bottomed out. But this is a very complicated issue.

Which type of speculator?
The mega-firm speculators/monopolists do contribute to the cost at the pump, but they profit at the spikes and the valleys because they are able to cover all their bets.

The smaller traders far less so (not enough to matter at the pump).

Also, when the price of crude drops, is it more closely related to supply/demand or fluctuations in the dollar?

I don't pretend to be able to answer all of these questions. I'm just learning this subject and don't have nearly enough information.

[ding_dong_daddy_from_dumas]

Thanks. I agree that economics is diabolically difficult, at least as far as making exact predictions about markets. I believe one reason for that is that buying and selling depends on investors’ emotions. But I am trying to understand it, because I believe that something sinister is going on.

[Ghost of Philip Marlowe]

Oh, something sinister is definitely going on.

Here's one idea I just posted:
http://www.freerepublic.com/focus/f-news/2304957/posts

I believe that the central bank (Federal Reserve) is working with the Treasury and some choice mega-firms (Goldman Sachs, JPM, etc.), printing money, and diverting it through foreign swaps to these firms to invest in the market to prop them up long enough to socialize as much of America's major private industries as possible.

At the same time, they are destroying the US dollar so that, once we are dependent on the government, when the dollar becomes worthless, the American people will demand that we give up the US dollar and sign on to a global currency controlled through a globalized central bank, which will also oversee these industries that are being taken over (medicine, currency, manufacturing, energy).

My prediction? Food shortages are coming (crops in the midwest and in the western provinces of Canada have been destroyed by alarming COLD and wet weather...the opposite of global warming) and THAT will be the final and most critical instrument of controlling the masses that these global powers will wield.