Posted on 09/16/2008 7:46:32 AM PDT by TigerLikesRooster
This commodity and derivative game is still opaque to me. If I have a contract to have a commodity delivered to me in the future at a certain price, how is that capitalism rather than planned economy? A truly laissez faire economy would outlaw such nailing down of future prices. Why wouldn’t the market function in a way that more equates to economic reality if you paid for what is available now for a price that is being asked now? Then too you have the derivative markets which trade the contracts rather than the actual commodities. This is an M&M Enterprises (from the book “Catch 22”)insanity based on repackaging rather than wealth production and distribution.
Economies are left to the vagaries of drought, political turmoil or economic sabotage/monopoly manipulation.
Use in a well ventilated area. Intentional concentration and inhalation is against Federal Laws............
My favorite line in that movie is “Margin Call Gentlemen”.
What you say is true enough, though even gold and land have little value for me if I am floating in the middle of the Pacific ocean in a small life raft with three days water left.
However, if you wish to conclude anything from that thin fact (tangibles don't go to zero), such as suggesting that therefore one should always invest in them instead of in something that can evaporate, then I have no use for your investment advice - sorry.
I seek to invest in what is rising, and avoid or short what is falling. Now if only I could find that crystal ball ...
Buyers and sellers freely negotiating a price sounds like capitalism to me. Planned economy? That's funny.
A truly laissez faire economy would outlaw such nailing down of future prices
I get it, this is satire. LOL!
You want to empower government to prevent businesses from identifying risks and preparing for them? You'd deny Southwest Airlines the ability to hedge against rapidly increasing fuel costs thereby costing their shareholders, customers and employees? Nothing like demanding government punish a business for serving their shareholders, employees and customers to prove you're a believer in free market capitalism. Good grief.
Usually the people who ask this question are those who either hate markets, love gambling, or honestly don't know. We'll give you the benefit of the doubt.
Las Vegas customers know that the odds are against them but they vainly hope they'll be exempt from the laws of probability. Market workers have to work hard to measure risks before they buy or sell because they know that probability laws are always enforced over time . If they work hard then they feed their families. If they don't work hard they complain and vote Democrat.
Thank you for educating me. That is why I belong to this forum. I am the third on your list. I don't hate the markets. Retirement would be better off in the market than relying on Social Security (I like the Galveston model). I don't gamble and never have. I actually did not know. I only recall what I've seen on TV or movies or news regarding trading in the stock market. So, I asked out of ignorance.
"Why wouldn't’t the market function in a way that more equates to economic reality ....
Because the 'reality' is in doubt. People disagree, change their mind, fashion, so the future is uncertain. There isn't a reality. A single reality. There are two billion realities, one for every person, and people are all out doing, going, dying.
"...if you paid for what is available now for a price that is being asked now?" Well, you can. But companies want to know what steel is going to cost next month, and energy, plastics and rubber so that they can plan how much steel to use, instead of plastic. So, they go into the future markets to lock up prices.
On the other side, the plastic guys, the steel guys want to know how much to be made, and at what price so that they can plan if they need to buy expensive equipment or put up large amounts of money to just buy oil for the plastic, or dig a expensive hole for minerals.
Both users and makers are trying to go into the future to stabilize their production and costs.
But every thing also has what is called a 'spot' price, and that is the price at that time. Right now the 'spot' price for a barrel of oil is around the low 90 dollars a barrel, but plenty of people are having oil delivered today at 105 dollars a barrel, and they are not liking it, but a deal is a deal. But I bet those people are out in the market and buying a contract for oil in December that is 80. The oil producers aren't liking that, but let them get a better deal, if they can.
Everybody is free to play, or not play. It's a mess, but in it's own way is more organized, smoother, efficient than any other method.
Future markets, speculators provide a critical and irreplaceable function. They make the whole thing go. Yes they seem greedy, and obscenely rich, but usually only a few and for only a few years. Most traders, at great risk, only make profits of a few percentage points. When we read or hear of, say, a Soros, we forget the hundreds of thousands that just get by. It is kind of how the Casinos always like to have a big picture of the guy that won big, but don't show you the five thousand that lost, or just broke even. Popular, MSM is not our friend in helping people get closer to reality. I think it takes people away from the truth even minorly complex events.
You ask good questions, I hope I nudged you a little closer to what is happening, although tomorrows happening will be a little different. By the way, this whole idea of getting to the truth of events, is why historians are still arguing about things that happened a thousand years ago.
Leverage is as old as dirt, and in no way a recent invention of Wall Street. I’m talking Roman Empire, at least.
You don’t believe in regs, are you sure???? First thing I do in a zero reg world is have the Red Chinese manufacture all our weapon systems because they can reduce unit cost with their cheap labor. I would sell nuclear weapons technology to Iran and North Korea because they seem to be willing to outbid everyone by several margins. Come to think about it I would sell guns to felons and people with criminal records because they seem to be very motivated to buy them at inflated prices versus a law abiding citizen who takes his/her time. Got to stop typing, I got a call from some Arab sounding guy who wants four truckload of high grade fertilizer, willing to pay five times above my suggested retail price. Tell ya free market is a beautiful concept and no government regs makes it more profitable.
Next.
Ditto North Korea/Iran. (It's not the physical tools, it's the people. You need tens of thousands, each freely doing their best, and even then it's difficult)
I'm in favor of released felons have guns. I distrust them less, than the government.
You sure it's an Arab, and not some Gulf War One vet with a Ryder truck?
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