Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: IronJack
Speculation in any commodity, especially one as volatile as crude and refined fuels, can't HELP but have an impact on price.

As the brilliant Michael Lewis wrote once, everyone who is in a market is trying to manipulate the price. That is the whole point of being in the market.

The reason speculators can make a profit is because the price that sellars can sell for, today, is lower than the price that buyers can be forced to pay in the future. If there were no arbitrage opportunity there could be no speculation.

Of course they have an impact on prices. That is how speculators (anyone who is not, simplistically, a producer or consumer of the commodity) make money. That is the point of the game. The reason why they are allowed in the game is that they provide some value in providing liquidity and making it possible for producers and consumers to hedge risk.

22 posted on 05/24/2008 10:55:44 AM PDT by AndyJackson
[ Post Reply | Private Reply | To 20 | View Replies ]


To: AndyJackson
everyone who is in a market is trying to manipulate the price.

Agreed, but consumers are trying to manipulate the price downward, while speculators and profiteers are trying to drive it upward. The gasoline we buy today is no better as a fuel than the gasoline we bought for a third the price 5 years ago. So we're getting nothing more for our money at all. Speculators add nothing to that product. They simply make phone calls, ride the market up, then sell when it approaches its peak, collect the money and wait for the next opportunity to profit by doing nothing. They CREATE a "demand" that exists only on paper, and not even a demand for the commodity per se but for the profits inherent in an upturn of the commodity's price.

They are the ultimate in parasites, and their profits always come at someone else's expense. They are the bane of capitalism, the deadbeat fat-cat the socialists always point to when they need to indict the free-market system.

28 posted on 05/24/2008 1:45:26 PM PDT by IronJack (=)
[ Post Reply | Private Reply | To 22 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson