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Yep, that's a great story too. It's so ridiculous that this is still in force: > The Onion Futures Act is a United States law banning the trading of futures co
by H8crilA 7y ago
Yep, that's a great story too. It's so ridiculous that this is still in force:
> The Onion Futures Act is a United States law banning the trading of futures contracts on onions as well as "motion picture box office receipts".
> In 1955, two onion traders, Sam Siegel and Vincent Kosuga, cornered the onion futures market on the Chicago Mercantile Exchange. The resulting regulatory actions led to the passing of the act on August 28, 1958. As of January 2020, it remains in effect.
https://en.wikipedia.org/wiki/Onion_Futures_Act https://en.wikipedia.org/wiki/Onion_Futures_Act
> The president of the Chicago Mercantile Exchange, E.B. Harris, lobbied hard against the bill. Harris described it as "Burning down the barn to find a suspected rat". The measure was passed, however, and President Dwight D. Eisenhower signed the bill in August 1958. Thus, onions were excluded from the definition of "commodity" in the Commodity Exchange Act.
- Lazare 7y agoThis is touched on in the Wikipedia article, but it's interesting that the onion market is well known for being significantly more volatile (and thus, bad for farmers) than other normal markets for vegetables. It is a literally textbook example in why banning derivatives is unlikely to be the easy fix some imagine for market failures.
- eru 7y agoAnd gives you a hint for why banning 'price gouging' doesn't help either. (Despite the overall strong sentiment in favour of such silly laws in the discussion on this article. Economics can be a bit counter-intuitive for humans.)
- deleted 7y ago[deleted]
- Lazare 7y agoAgreed 100%. Also, here's an interesting story: https://www.ft.com/content/6a09e4a6-655a-11ea-b3f3-fe4680ea68b5 https://www.ft.com/content/6a09e4a6-655a-11ea-b3f3-fe4680ea6... > French industrials group Air Liquide is selling its Schülke unit, whose products range from the alcohol-based hand rubs that have become a hot commodity since the outbreak started, to hospital disinfectants and industrial cleaning products. > > It is asking would-be buyers to offer a higher sum than it first envisaged when the sale process began last year, according to people familiar with the situation, reflecting what one person called the “coronavirus effect”. Of course, the reason the business might be worth more is because it's going to make higher profits. In theory Air Liquide could cut prices to ensure its profits stayed the same. In fact, not doing so means they're profiting off Covid-19, right? Which I guess suggests the real problem with what this guy did is scale; he only had a few thousand bottles. If he'd only realised he should have been buying a factory!
- eru 7y agoOr building one!
- smnrchrds 7y agoI am curious, why were onions specifically banned? I imagine they had some reason to believe onions were uniquely susceptible to this kind of marker manipulation in a way that potatoes, garlic, cucumber, etc. aren't. But I cannot think of how onions are unique in this respect.
- H8crilA 7y agoMass outrage. Kind of what happens to the guy from OP (I'm not saying he's a good guy, he clearly isn't). Never underestimate the madness of the crowds.
- eru 7y agoBecause the guy specifically tried to corner the onion market and the response was a re-action, not a pro-active one.
- smnrchrds 7y agoWeren't they afraid he or a copycat would corner potato market the next year, green pepper the next, cotton the next, etc.?
- megablast 7y agoBecause it happened to onions.