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We could be into the last 10 days of the Euro according to the Financial Times...
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Liam Byrne wrote: »Interesting that you've picked that up, Scofflaw, because I've repeatedly and clearly stated that anyone who adds value is entitled to a profit, reserving my venom for those who simply hoard to force prices and exchange rates and the like upwards due to scarcity.
And yet Permabear still objects to my views.
Maybe that's what you mean by the second part of your sentence ?
Pretty much - Permabear's defence is one of someone who undertakes speculative investment - that is, high-risk investment where the chances of profit seem relatively slight. It's still investment, though, if you're providing the capital wherewithal to allow his 19-year old to get started on the next DOS. You may not be adding value directly, but that value (DOS!!) would not have been added to the economy without you choosing to take that risk.
cordially,
Scofflaw0 -
Pretty much - Permabear's defence is one of someone who undertakes speculative investment - that is, high-risk investment where the chances of profit seem relatively slight. It's still investment, though, if you're providing the capital wherewithal to allow his 19-year old to get started on the next DOS. You may not be adding value directly, but that value (DOS!!) would not have been added to the economy without you choosing to take that risk.
cordially,
Scofflaw
Again, no major issues with that.
It's the "buying up the commodities that people need" (houses, oil, currency, etc) in order to make a CONTRIVED demand and profit that wrecks my head.
Not to mention the vultures who have no issues destroying a currency through predatory actions, giving no thought whatsoever to those whose lives depend on it.0 -
The thing is though, that's only looking at it from the perspective of the grain company.
If you look at it from the grain consumers perspective (i.e. the ordinary citizens), the speculator buying up surplus in a 'boom crop' and selling it during scarcity results in prices actually falling during scarcity. In other words, the supposed 'negative' speculators have actually provided a benefit to the ordinary people.
This is precisely why assuming that speculation is automatically bad is ludicrous.
But that's why all morality ought to be left out of it. Morality. Right and wrong. This has nothing to do with the issue. Investors, of all sorts, seek to profit for their investors, indeed are obliged by law to seek such returns on their investments.
Their actions may be beneficial or detrimental to society as a whole when viewed in the longer term, but they too are complying with laws and rules which require them to maximise the returns for their investors who are likely to include pension funds, and health insurance providers and the banks we expect to keep our current accounts safe. They are obliged, by law, to generate returns in the shorter term.
So, leaving moral judgement aside and dealing with logic alone we should seek to regulate them to mitigate the negative longer term consequences for society (acknowledging that most institutional investors' mandate requires short term, rather than longer term consequences be taken into account, and also acknowledging that absent global agreement we cannot regulate the mandate under which they work)
Not knee jerk regulation like banning shorting of banking stocks during a banking crisis which can make matters worse. But general, well thought out, principles based regulation capable of achieving the desired consequences.
But I must agree with both Scofflaw and View. For either side, governmental or speculator, to claim a moral high ground, to fail to acknowledge that a compromise must be reached, to fail to acknowledge that the other side's arguments are not without merit, is risible.0 -
Liam Byrne wrote: »It's the "buying up the commodities that people need" (houses, oil, currency, etc) in order to make a CONTRIVED demand and profit that wrecks my head.
If they're buying them up because there's a need i.e. scarcity they are moving scarce goods from a place of less demand to a place of more demand (and creating incentive for people to expand the supply of a scarce good) so that is not necessarily a bad thing - perhaps not at all in that it serves a discernible function.
Your problem is with manipulation of the market.0 -
There are obviously borderline cases, and indeed there are relatively few clear-cut ones, but in general buying up things and selling them on at higher prices simply by taking them out of circulation until prices rise through no effort of the speculator is generally considered a bad thing. That the price increases through no effort of the speculator is important - if you make the effort to take the goods somewhere they're valued more highly you're not 'speculating' in the pejorative sense.
cordially,
Scofflaw
So in your view someone who buys grain in a city where there is abundance and sells in a city where there is scarcity is an investor and is providing a service. And in the context of a single city, someone who buys up grain in a time of abundance and sells in a time of scarcity is a speculator and provides no service?
The investor takes grain out of circulation in one city and releases it in another. The speculator takes grain out of circulation in one city and releases it in the same city. Both are taking grain from where it is abundant to where it is scarce, so both provide the same service, but the speculator is doing so across time. So calling the investor good and speculator bad here for providing the same service is wrong.0 -
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Chuck Stone wrote: »If they're buying them up because there's a need i.e. scarcity they are moving scarce goods from a place of less demand to a place of more demand (and creating incentive for people to expand the supply of a scarce good) so that is not necessarily a bad thing - perhaps not at all in that it serves a discernible function.
Your problem is with manipulation of the market.
Indeed. The Nymex is a pretty good example of that. People expect oil to be high because, well, oil is high. But I think the price of oil should be about $70 (the CEO of Exxon himself said that) and it's $100.
If you look you can see things like 300 mbbls for Jan delivery to Cushing (which can handle 40 mbbls/month). They then cancel or roll the contracts over and then deliver 20mbbls of oil. This fakes high demand and low supply. The big guys actually have tankers overshore to take oil and fake scarcity. They then go on TV and shout about $200 oil to fan the flames. This is common behaviour in commodities and it has really has to be stopped.
Some guy on a blog somewhere (forget where) suggested the US President should screw these guys over. He happens to have 700 Million barrels of oil in the Strategic Petroleum Reserve. These guys want 300 milllion barrels of oil for January? No problem. And no you can't cancel the contracts. Bye bye Goldman Sachs!
The point of all that waffle is that the government sets the stage, sets the limits and the rules. When the government opts out with "light touch regulation" you get anything goes type behaviour which takes out the world. Has happened before...beeftotheheels wrote:Not knee jerk regulation like banning shorting of banking stocks during a banking crisis which can make matters worse. But general, well thought out, principles based regulation capable of achieving the desired consequences
Couldn't agree more. People forget that banning shorting has undesirable consequences - ie: the inability to take a leveraged short side in order to reduce risk. If you cannot reduce your exposure, especially in a completely bananas market like the current one, then you might opt out of taking the long side too. Which seems to be the case...0 -
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So in your view someone who buys grain in a city where there is abundance and sells in a city where there is scarcity is an investor and is providing a service. And in the context of a single city, someone who buys up grain in a time of abundance and sells in a time of scarcity is a speculator and provides no service?
The investor takes grain out of circulation in one city and releases it in another. The speculator takes grain out of circulation in one city and releases it in the same city. Both are taking grain from where it is abundant to where it is scarce, so both provide the same service, but the speculator is doing so across time. So calling the investor good and speculator bad here for providing the same service is wrong.
The distinction, as far as I can see, is based on the effort put in by the speculator/investor. Real effort is required to identify somewhere where grain is cheap and bring it to where it is scarce. Buying during a glut and waiting for a scarcity requires no real effort, and in an era of regular scarcities, involves little risk.
So in the one case people accept the merchant's profit as a reward for their effort - in the other case, not. It's not about whether they're performing a service.
And human beings make this kind of distinction all the time. Say we have a situation where a guy is being held hostage. Somehow he manages to escape. There's a van, which contains, as it happens, a couple of children who have just been taken hostage - and some other vans.
Now, if our guy deliberately takes the van containing the children because it contains the children and successfully escapes with it, he's a hero. If he grabs the van because it's the easiest van to take, without realising it has children in it, he's not. The more effort/risk involved in deliberately picking the van with the children over other vans, the greater the heroism. In both cases, the children are rescued - so as far as you're concerned the cases are equivalent. Most people would disagree.
cordially,
Scofflaw0 -
The distinction, as far as I can see, is based on the effort put in by the speculator/investor. Real effort is required to identify somewhere where grain is cheap and bring it to where it is scarce. Buying during a glut and waiting for a scarcity requires no real effort, and in an era of regular scarcities, involves little risk.
Sorry but the effort required is not much different in this case. The speculator/investor has to identify whether there actually is a glut now, and if there actually will be scarcity in the future, and the investor/speculator runs the risk of being wrong. This form of speculating/investing is far from the low risk, no effort form, you are proclaiming.0 -
Sorry but the effort required is not much different in this case. The speculator/investor has to identify whether there actually is a glut now, and if there actually will be scarcity in the future, and the investor/speculator runs the risk of being wrong. This form of speculating/investing is far from the low risk, no effort form, you are proclaiming.
Again, you're applying modern rationales. I deliberately picked the medieval city example because it helps illustrate the point. The merchant lives in the city, he knows when there's a glut in the city, he knows that there will be scarcity because it was an era of regular scarcity. The likelihood of a relative scarcity during the storage period of the grain would be very high - the main risk is of expropriation.
You also seem to be assuming I'm trying to ascribe some kind of specific blame to this specific set of circumstances, which is completely wrong - as if I have some major issue with hypothetical medieval grain merchants. I'm trying to describe what makes the essential difference between being perceived as a speculator or being perceived as an investor, so there's no real point in you trying to defend the putative merchant in the example.
On the other hand, I'm glad you've taken it up wrong, because your defence, if you look at it, revolves around exactly the distinction I'm trying to highlight. You're defending the behaviour of our notional grain speculator by saying that there is a real effort, and a real risk, and on that basis he's not a "speculator" in the pejorative sense.
So, while you appear to be taking me up entirely wrong, you're helping me make my point.
cordially,
Scofflaw0 -
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[MOD]Video only post deleted. Also, this isn't AH.[/MOD]0
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On the other hand, I'm glad you've taken it up wrong, because your defence, if you look at it, revolves around exactly the distinction I'm trying to highlight. You're defending the behaviour of our notional grain speculator by saying that there is a real effort, and a real risk, and on that basis he's not a "speculator" in the pejorative sense.
So, while you appear to be taking me up entirely wrong, you're helping me make my point.
cordially,
Scofflaw
While i did defend the notional grain speculator based on effort and risk, if the speculator had the wonderful ability to forecast the future with great accuracy and performed the exact same task with little to no effort or risk, he should not be considered a "speculator" in the pejorative sense. The results of the grain speculation are beneficial regardless of peoples estimates of the efforts and risks undertaken by the speculator. Although i do see your distinction as reasonably accurate as to how a lot of people currently view it.0 -
While i did defend the notional grain speculator based on effort and risk, if the speculator had the wonderful ability to forecast the future with great accuracy and performed the exact same task with little to no effort or risk, he should not be considered a "speculator" in the pejorative sense. The results of the grain speculation are beneficial regardless of peoples estimates of the efforts and risks undertaken by the speculator. Although i do see your distinction as reasonably accurate as to how a lot of people currently view it.
Have always viewed it, I think. And I think people do factor in risk - if there had never been a scarcity, and someone laid in a stock of grain, people would view their "fair profit" as being higher than if the scarcity were entirely predictable.
I also feel that, as per the above, people do acknowledge that a service is provided. Essentially, there seems to me to be a "fair profit" which people are OK with - the determination of what is fair depends on a number of factors such as effort, risk, ingenuity. Take more than that fair profit and people consider it "speculation" (negatively) - take a fair profit and they don't.
Obviously, people will also vary in their estimation of a fair profit - there are people who will consider almost anything fair, there are people who will consider almost anything unfair. Most people will fall somewhere in the middle. In turn, if the authorities expropriate the grain (or whatever) at a reduced price people will see that as more or less fair depending on the reduction, the need, the effort and risk borne by the expropriated merchant. Even if people are starving, the total expropriation of a merchant who risked his life to bring grain at great effort to the city is going to be seen as an unfair act - whereas breaking open the stores of someone who did no more than buy up local surplus last year won't be to anywhere near the same extent.
cordially,
Scofflaw0 -
Have always viewed it, I think. And I think people do factor in risk - if there had never been a scarcity, and someone laid in a stock of grain, people would view their "fair profit" as being higher than if the scarcity were entirely predictable.
I also feel that, as per the above, people do acknowledge that a service is provided. Essentially, there seems to me to be a "fair profit" which people are OK with - the determination of what is fair depends on a number of factors such as effort, risk, ingenuity. Take more than that fair profit and people consider it "speculation" (negatively) - take a fair profit and they don't.
The negative view based on the amount of profit made by the speculator is because of a poor understanding of profit and what the speculator does. The speculator that makes the greatest profit possible is one who buys at a time of highest abundance and sells at a time of the highest scarcity. So having grievances with the amount of profit made is having a grievance with a speculator performing his task as best possible.0 -
The negative view based on the amount of profit made by the speculator is because of a poor understanding of profit and what the speculator does. The speculator that makes the greatest profit possible is one who buys at a time of highest abundance and sells at a time of the highest scarcity. So having grievances with the amount of profit made is having a grievance with a speculator performing his task as best possible.
That's as maybe, but it doesn't change people's views, I think. And again, I'm making observations here, not laying down what should be.
cordially,
Scofflaw0 -
Have always viewed it, I think. And I think people do factor in risk - if there had never been a scarcity, and someone laid in a stock of grain, people would view their "fair profit" as being higher than if the scarcity were entirely predictable.
I also feel that, as per the above, people do acknowledge that a service is provided. Essentially, there seems to me to be a "fair profit" which people are OK with - the determination of what is fair depends on a number of factors such as effort, risk, ingenuity. Take more than that fair profit and people consider it "speculation" (negatively) - take a fair profit and they don't.
The negative view based on the amount of profit made by the speculator is because of a poor understanding of profit and what the speculator does. The speculator that makes the greatest profit possible is one who buys at a time of highest abundance and sells at a time of the highest scarcity. So having grievances with the amount of profit made is having a grievance with a speculator performing his task as best possible.
You could possibly argue that point if the resulting profit didn't involve screwing the people who have to pay for it.
If you were a taxi driver making a decent wages of 200 a day, and then you are called out to someone who is desperately stuck, do you double your rate ?
Now imagine that they're badly stuck because you manipulated the availability by some means - say buying up every taxi licence.
Do you think that's appropriate business, or despicable ?
I'd charge the standard rate that I had already determined was a fair price / wage.
But that's why I'm not involved in this ethically-challenged area or business.0 -
6 days since this article, whats the verdict lads and lassies buy a tonne of tinned beans or not?0
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Liam Byrne wrote: »You could possibly argue that point if the resulting profit didn't involve screwing the people who have to pay for
In our example, on the surface the grain speculator might be viewed as screwing people as he will be selling grain at a high price, but this is again forgetting that without the speculation, grain would have been more scarce, and the price even higher.If you were a taxi driver making a decent wages of 200 a day, and then you are called out to someone who is desperately stuck, do you double your rate ?
No i wouldn't double my price if i was a taxi driver in that situation, but if i as a taxi driver could only offer my services to 20 customers on average per day, and 50 people wanted my service i would raise the price. Lots of people vying for an inadequate supply of taxis, would mean my profits would soar, large increases in profits usually don't go unnoticed for long and this attracts more people into that line of work. Prices will fall again and more customers can gain the services of a taxi again. Without my increase in price, i could have only serve 20 customers, 30 would be left without a taxi. With the increase in price and profits i made, that incentivised more people to become taxi drivers, it became possible for all 50 customers to have access to a taxi again.Now imagine that they're badly stuck because you manipulated the availability by some means - say buying up every taxi licence.
Taxi Licenses are not very free market and have the effect of restricting supply, to different degrees depending on stringency of gaining a license. I don't want to open that can of worms though.0 -
In that case, the cause of the issue is the regulation that limits the amount of licenses issued as this allows people to manipulate the market by buying up the licenses. If licenses were deregulated, the market couldn't be manipulated in that fashion.Liam Byrne wrote: »Now imagine that they're badly stuck because you manipulated the availability by some means - say buying up every taxi licence.0 -
blahfckingblah wrote: »6 days since this article, whats the verdict lads and lassies buy a tonne of tinned beans or not?
would like to know the answer to this too, but the experts here are too busy arguing over their analogies.. we may as well be in the European Parliament itself0 -
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Depends on how much you like beans I guess. Stock up on beans and the shít hits the fan then you're prepared... in the likely alternative that nothing happens to the Euro and it all gets sorted out then hey; you have a lot of beans!North_West_Art wrote: »would like to know the answer to this too, but the experts here are too busy arguing over their analogies.. we may as well be in the European Parliament itself0 -
Liam Byrne wrote: »You could possibly argue that point if the resulting profit didn't involve screwing the people who have to pay for
In our example, on the surface the grain speculator might be viewed as screwing people as he will be selling grain at a high price, but this is again forgetting that without the speculation, grain would have been more scarce, and the price even higher.If you were a taxi driver making a decent wages of 200 a day, and then you are called out to someone who is desperately stuck, do you double your rate ?
No i wouldn't double my price if i was a taxi driver in that situation, but if i as a taxi driver could only offer my services to 20 customers on average per day, and 50 people wanted my service i would raise the price. Lots of people vying for an inadequate supply of taxis, would mean my profits would soar, large increases in profits usually don't go unnoticed for long and this attracts more people into that line of work. Prices will fall again and more customers can gain the services of a taxi again. Without my increase in price, i could have only serve 20 customers, 30 would be left without a taxi. With the increase in price and profits i made, that incentivised more people to become taxi drivers, it became possible for all 50 customers to have access to a taxi again.Now imagine that they're badly stuck because you manipulated the availability by some means - say buying up every taxi licence.
Taxi Licenses are not very free market and have the effect of restricting supply, to different degrees depending on stringency of gaining a license. I don't want to open that can of worms though.
Yes, I'm aware that regulation exists in this country, and that one of the things it would do is prevent the abuse that I mentioned, but nice way of avoiding the question, especially since the thread already referred to medieval grain merchants in completely unknown cities or even countries.
So forget the dodge which conveniently "opens cans of worms" and answer what your view would be if the profit was based on that type of manipulation - good business move, in your eyes, or completely unacceptable ?0 -
I already gave my opinion on your hypothetical situation if you read my post. The thread has already gone on a tangent regarding what is viewed as speculation versus investing, i commented on it because i found it interesting and have not had a discussion on the topic before. I don't want go on another tangent regarding regulation.0
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I already gave my opinion on your hypothetical situation if you read my post. The thread has already gone on a tangent regarding what is viewed as speculation versus investing, i commented on it because i found it interesting and have not had a discussion on the topic before. I don't want go on another tangent regarding regulation.
You have to admit it's convenient.
And it is related to the topic - if someone manipulates the market by buying up all the supply and then charges whatever the hell they like, it's detrimental.
That type of greed is precisely why regulation exists, and the lack of regulation in banking by FF (and other countries) is precisely why we're in this mess.
But if that mindset didn't exist, there would be no need for regulation.
So the question is - why can only some people be trusted to be ethical and fair, and why is it that those who aren't are the ones who get into positions of power ?0 -
I expect this is what Useless Enda's speech is about tonight - he wants to have people psyched up for when the banks open on monday morning.0
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