Posted on 05/23/2008 9:32:18 PM PDT by gleeaikin
Masters is exactly right, you know. Notice the effect today's CFTC proposals had -- immediately! -- on the mkts that have been overextended by investment banks and the infamous ''swaps exemption''?
Won’t happen until it is illegal for them to do it... and don’t hold your breath on that happening. Too much kick backs to DC for any sort of realistic analysis to occur.
The difference is this time they are manipulating a pretty inelastic good, so short of the regulations changing around their ability to trade in the first place, until that happens, don’t expect it to change much.
Frankly, the futures market for oil is the stupidest ploy the bankers have conned on america since the Federal Reserve Act.
The "fundamental theorem" of welfare economics [no, for the unwashed, not that kind of welfare], i.e. that competitive markets provide the most efficient allocation of resources rests on three conditions:
1.No information asymmetry
2. No monopoly power
3. No externalities (i.e. 3rd party effects)
Each of these conditions are violated under this arrangement with certain banks to avoid trading limits.
In other words, to oversimplify for those to whom these words are unfamiliar, in those futures markets where these kinds of arrangements exist, the market is no longer what the economics profession would regard as a free competitive market.
Today's CFTC proposal **would** level the information playing field considerably, though. If implemented. If implemented competently. If implemented competently and speedily.
That's a lot of IFs...
What they never do is just release the latest data, plotted on a graph, as a raw time series so that you can see the trend and yourself eyeball out all of the seasonal noise over the past few years.
have you ever noticed how frequently goobermint revises the stats it releases?
I love reading how this month something got better because of a downward revision of last month's figure. So, last month is even worse than originally reported, but that is now last month's news and the trend appears to be reversing, as if you can even discern a genuine trend on a month to month basis out of noisy data.
“Second is the utter lack of education about economics and the workings of markets, aided and abetted to an appalling degree by the education ‘’system’’ in this nation.”
Yesterday I was listening to radio a meeting of governors regarding the current housing and other crises. The governor of Pennsylvania, I think, brought up this very point, and said something really needs to be done with education in this country to create a more economically literate population. I have thought this for years, and as I have gradually learned a little about real estate, and schedules C and E, have tried to transfer this information to my children. Never was taught anything about these things although I went to good high schools.
No need necessarily to teach HS students about IRS policy, which is arbitrary and politically-driven in most cases, but there is a crying need to teach them about economic fundamentals and the practical workings of mkts.
I should be VERY leery of Fast Eddie Rendell, the current governor of PA, and a corrupt SOB right down to his fingertips, teaching **ANYONE** about economics or mkts. Given his public statements, he seems to be an advocate of the Capone School of Economics.
In my not particularly humble opinion, we already have quite enough, too many by half, politicians who appear to be members of that ''school''.
Of both parties.
FReegards to you both~
will read later..bkmk
Odds are that if the purchaser is a speculator, the seller isn't.
In all the discussion and handwringing over futures options, I haven't seen one person show any knowledge about why one would actually indulge in futures trading...and what happens when one does.
Thank you!!!
Having traded futures for 36 years, and futures options since they became legal again in 1984, ... what would you like to know?
And if Marx had called a spotted tick a "spotted tick", would he have been wrong?
I hope you will take SAJ up on his offer, I don’t know if you read all the comments on this thread, but he and several others offered very interesting details.
Many who have been offering "solutions" for our current problem have displayed little knowledge of the issues. That's what I was whining about.
I'm a little bit beyond patient with "parachute" experts, those who knew nothing about financial markets, for example, yesterday. They read an article and suddenly they're an expert. Or those who are suddenly experts in energy, a field I've followed for the past 30 years and still learn about.
SAJ knows his stuff.
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