Currency Speculation - Worthy Of Being Made Illegal?

imme

Should we make Currency Speculation illegal?

What value does it serve, other than making billions and billions for people who bet on the collapse or otherwise of a currency.
George Soros recently said that he believed that the Euro will 'fail'. The Euro is the continuing target of speculators.

In the past we've seen the Pound being withdrawn from the ERM due to speculation, heavy speculation dramatically affecting the Malaysian and Mexican currencies and economies among others.

Is it time to make currency speculation illegal?

silverharp

No. its a useful mechanism for the market to "vote" on how an economy is run. Plus is sounds unworkable, Its legitimate for companies and individuals to hedge currency risks and in the absence of currency controls money will move in and out of countries in any event. It says more about politicians who want to push blame away from themselves for mis-managing their economies.

However I would be in favour of preventing banks from currency trading using their own capital if they have taxpayer backing.

ei.sdraob

ok lets say its made illegal in Ireland (not sure that would fly well with EU)

whats there to stop someone speculating in other countries (or over the internet) ??

gandalf

Actually the Euro isn't the only currency at risk Sterling is looking very dodgy at the moment as well. That would be bad news for us with regards to exports to the UK.

http://www.spiegel.de/international/europe/0,1518,681597,00.html

imme

Silverharp2 wrote: »

No. its a useful mechanism for the market to "vote" on how an economy is run. Plus is sounds unworkable, Its legitimate for companies and individuals to hedge currency risks and in the absence of currency controls money will move in and out of countries in any event. It says more about politicians who want to push blame away from themselves for mis-managing their economies.

However I would be in favour of preventing banks from currency trading using their own capital if they have taxpayer backing.

So, the market should dictate all. Do you believe it's ok for a foreign currency speculator to make billions while impoverishing a country. Who benefits?

So, you're against state-owned/backed banks partaking in currency speculation, would his mean that all Irish banks availing of the guarantee scheme should be blocked from speculation.

ei.sdraob

imme wrote: »

So, the market should dictate all.

the market does "dictate" all whether you like it or not, trying to go against the market or trying to ignore the market is futile and doesn't end well

imme wrote: »

Do you believe it's ok for a foreign currency speculator to make billions while impoverishing a country. Who benefits?

why the speculator benefits of course and the country gets punished for having its finances in such a bad shape that there's money to be made betting against the currency, and where does the speculator spends/invests his money? yep right back down into the economy, the money doesn't disappear it just moves from one place to another like and will have to be spend eventually

think of it currency speculation is a form of "redistribution of wealth", dont you "socialistas" love that word

imme

ei.sdraob wrote: »

the market does "dictate" all whether you like it or not, trying to go against the market or trying to ignore the market is futile and doesn't end well


why the speculator benefits of course and the country gets punished for having its finances in such a bad shape that there's money to be made betting against the currency, and where does the speculator spends/invests his money? yep right back down into the economy, the money doesn't disappear it just moves from one place to another like and will have to be spend eventually

think of it currency speculation is a form of "redistribution of wealth", dont you "socialistas" love that word

I'm worried that people like to see countries fail, to see populations punished. That's quite sad:(.

The taxation of speculation has been proposed but never adopted. That would be state interference with market as you see it.

ei.sdraob

imme wrote: »

I'm worried that people like to see countries fail, to see populations punished. That's quite sad:(.

The taxation of speculation has been proposed but never adopted. That would be state interference with market as you see it.

actually i have no problems with some levels of taxation or regulation

like anything in life its just a matter of balance and moderation

as for countries "failing", well that happened all the time in history, populations that get "punished" in return do their best to ensure that it doesn't happen again such as putting in laws like the Glass–Steagall Act to ensure banks dont grow too big, only for these laws to be removed once people forget, and the same mistakes are made yet again

the repealing of the above act is seen as the trigger for current world crisis

imme

ei.sdraob wrote: »

actually i have no problems with some levels of taxation or regulation

like anything in life its just a matter of balance and moderation

as for countries "failing", well that happened all the time in history, populations that get "punished" in return do their best to ensure that it doesn't happen again such as putting in laws like the Glass–Steagall Act to ensure banks dont grow too big, only for these laws to be removed once people forget, and the same mistakes are made yet again

the repealing of the above act is seen as the trigger for current world crisis

you're in favour of market interference? I'm shocked.:eek:
If the market is unfettered it's allowed grow or contract. Where do balance and moderation come into it. Either you have a free market or not.
Could you be a sometime socialist ei.sdraob:D

ei.sdraob

imme wrote: »

you're in favour of market interference? I'm shocked.:eek:

im not a complete free market nut-case

i do understand the need and arguments for some "light" regulation to prevent really stupid events from happening (for example being able to spot criminal pyramid schemes such as Bernard Madoff)

yes its a fine balance

imme wrote: »

Could you be a sometime socialist ei.sdraob:D

oh my :eek:

im fairly centrist my main beef is with authoritarianism

alejandro1977

imme wrote: »

Should we make Currency Speculation illegal?

What value does it serve, other than making billions and billions for people who bet on the collapse or otherwise of a currency.
George Soros recently said that he believed that the Euro will 'fail'. The Euro is the continuing target of speculators.

In the past we've seen the Pound being withdrawn from the ERM due to speculation, heavy speculation dramatically affecting the Malaysian and Mexican currencies and economies among others.

Is it time to make currency speculation illegal?

This is the same argument trotted out when financial firms wanted to ban short selling.

Did it ever occur to you that George Soros sold sterling because he saw (in fact knew) that it was over valued?
he didn't cause the overvaluation, he did however exploit it and help accelerate the inevitable. Politicians are so macho about the "strength" of their currencies and can't accept the realities until some evil 'speculator' comes along.

How would you propose to ban it? What about industrial companies hedging their imports/exports?

So, the market should dictate all. Do you believe it's ok for a foreign currency speculator to make billions while impoverishing a country. Who benefits?

Care to cite one example of a foreign currency speculator "impoverishing a country"?
Wait, Mugabe blames the hyperinflation on outside colonial influences...

MaceFace

OP: No in every way possible

imme

alejandro1977 wrote: »

This is the same argument trotted out when financial firms wanted to ban short selling.

Did it ever occur to you that George Soros sold sterling because he saw (in fact knew) that it was over valued?
he didn't cause the overvaluation, he did however exploit it and help accelerate the inevitable. Politicians are so macho about the "strength" of their currencies and can't accept the realities until some evil 'speculator' comes along.

How would you propose to ban it? What about industrial companies hedging their imports/exports?




Care to cite one example of a foreign currency speculator "impoverishing a country"?
Wait, Mugabe blames the hyperinflation on outside colonial influences...

The taxation of currency speculation would be one way to affect it effects.

I already cited the impoverishment of Mexico and Malaysia in relation to currency speculation in post No. 1.

Why do you raise the issue of Zimbabwe?

SLUSK

When was the last time a sound currency was destroyed by so called speculators?

zootroid

imme wrote: »

you're in favour of market interference? I'm shocked.:eek:
If the market is unfettered it's allowed grow or contract. Where do balance and moderation come into it. Either you have a free market or not.
Could you be a sometime socialist ei.sdraob:D

There has to be some laws and regulation within a market, otherwise a market wouldn't work, for example property rights. It's the degree of laws and regulation that get people debating.

It would be impossible to make currency speculation illegal in any case.

When was the last time a sound currency was destroyed by so called speculators?

The one that stands out in my mind is the Asian crisis of the late 90's

Sand

The one that stands out in my mind is the Asian crisis of the late 90's

That crisis was a result of many Asian states piling on foreign debt in the years immediately preceeding that crisis. Crony capitalism was rife. Thailand, "Ground Zero" of the crisis, had developed into a bubble economy, fuelled by capital inflows attracted by high interest rates.

Investors simply profited on bad governance and poor economic policy. They bet that the Asian states policy of pegging to the US dollar wasnt credible, and they were right. The real damage was done by governments who pursued non-credible policies, allowed bubbles to develop without addressing real productivity gains and practised crony capitalism.

Sound familiar?

Governments ought to be punished for doing a bad job with their economic policies, and people ought to be punished for electing bad governments. Else how will we ever improve either our economic policy or our governance?

alejandro1977

imme wrote: »

The taxation of currency speculation would be one way to affect it effects.

I already cited the impoverishment of Mexico and Malaysia in relation to currency speculation in post No. 1.

Why do you raise the issue of Zimbabwe?

Mexico was impoverished because it borrowed too much and had a corrupt, inefficient government - with a populist almost one party state. (Sound familiar?)

Malaysia is known for crony capitalism and like the other Asian countries grew too quickly and built up too much debt. (Sound familiar?)

The Malaysian Prime Minister blames the Jews/Soros/West/Usual Suspects for his country's economic woes, in a similar way to Mr. Mugabe.

Seriously, do you think speculators pick a "strong/healthy" economy at random and decide to speculate against its currency?

Do you realise it's not a one way bet and Soros could easily have lost billions if the rest of the world (i.e. the Market) decided that he was too pessimistic on the UK Economy/currency?

DERICKOO

The Death of Money that paper money has become a twisted abstraction when President Nixon removed the gold backing to the US dollar.

imme

SLUSK wrote: »

When was the last time a sound currency was destroyed by so called speculators?

I don't think speculators should be allowed act against a country in this way, by destabilising a country and/or impoverishing a nation.
For speculators to act in this way could be argued as an act terrorism.

I think it's just wrong and immoral.

imme

Meanwhile the Greek govt has said President Obama is approving of their suggestions that market speculation should be "clamped down" on.

http://news.bbc.co.uk/2/hi/business/8558233.stm

silverharp

imme wrote: »

Meanwhile the Greek govt has said President Obama is approving of their suggestions that market speculation should be "clamped down" on.

http://news.bbc.co.uk/2/hi/business/8558233.stm

honestly, I dont think the Greeks should be lecturing anyone on manipulating markets.

Dirk Gently

ei.sdraob wrote: »

my main beef is with authoritarianism

but yet you have no problem with a market dictatorship or a tiny number of unaccountable wealthy speculators "voting" to destroy a democratic country and ruin the lives of millions of people. strange.