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I'm not against speculators. They are a useful part of the market. But let's not pretend they can't have a negative effect on society. People are anticipating

I'm not against speculators. They are a useful part of the market. But let's not pretend they can't have a negative effect on society. People are anticipating water moving onto the commodities market. If water somehow surges, that's not good for the people at the bottom. Super high oil prices are bad for the world economy. It's advantageous for oil market traders but bad for everyone else.

dantheman 16y ago
Of course if the price surges someone is hurt, but there are 2 outcomes: 1. If the price surges and it's due to improper speculation, then speculators will lose a lot of money - sure, people will be temporarily harmed, but it will be short term. 2. If the price surges and it's due to a good guess, then the surge is actually less than it would be in near future since people were able to increase the available supply, by reducing consumption due to higher price. -- unless I'm missing your point, which I very well may be.
- entangld 16y ago
  What I'm saying is, on top, the speculator is playing with numbers. He wins some and loses some. But at the bottom, very high prices could squeeze workers into homelessness and poverty. Living check to check (business or person) leaves little room for large price swings in necessities.
  - cturner 16y ago
    The initial investors are motivated to invest by the possibility of higher prices later on. If there was no possibility of upside, they would not invest in the first place, meaning that it would be a given that nobody would have access to the resource. If government was to make a decision to intervene and strip away investors' upside just when they get one, investors will remember this, and be less motivated to invest in that market in the future. The uncertainty about it affects other parts of the system - someone who gets burnt on one product is likely to be jaded about investing in unrelated products in the same jurisdiction. It's important to look at the system as a whole. Speculators and short-sellers are net-positive on markets. If you take away their upside you'll remove them from the system entirely and everybody loses. It's important that we set rules for the game, and then honour them, except in situations where individuals do something outside of the principle of the rules, such as market manipulation. Further up, you're repeating a meme seen elsewhere in this thread about oil prices being determined by speculators. I'm not sure how you believe this, because I don't think the evidence leads to that conclusion. The price meanders about but the curve is supported by underlying demand. It's advantageous for oil market traders but bad for everyone else. How is it advantageous for oil market traders for the price to go up? Some will be short just as others are long, and there's no reason to believe there's more long guys than short guys. Higher oil prices are likely to be goood for oil producers, but I don't understand how come to the conclusions you come to about about speculators.

dantheman 16y ago

Of course if the price surges someone is hurt, but there are 2 outcomes: 1. If the price surges and it's due to improper speculation, then speculators will lose a lot of money - sure, people will be temporarily harmed, but it will be short term. 2. If the price surges and it's due to a good guess, then the surge is actually less than it would be in near future since people were able to increase the available supply, by reducing consumption due to higher price. -- unless I'm missing your point, which I very well may be.

entangld 16y ago
What I'm saying is, on top, the speculator is playing with numbers. He wins some and loses some. But at the bottom, very high prices could squeeze workers into homelessness and poverty. Living check to check (business or person) leaves little room for large price swings in necessities.
- cturner 16y ago
  The initial investors are motivated to invest by the possibility of higher prices later on. If there was no possibility of upside, they would not invest in the first place, meaning that it would be a given that nobody would have access to the resource. If government was to make a decision to intervene and strip away investors' upside just when they get one, investors will remember this, and be less motivated to invest in that market in the future. The uncertainty about it affects other parts of the system - someone who gets burnt on one product is likely to be jaded about investing in unrelated products in the same jurisdiction. It's important to look at the system as a whole. Speculators and short-sellers are net-positive on markets. If you take away their upside you'll remove them from the system entirely and everybody loses. It's important that we set rules for the game, and then honour them, except in situations where individuals do something outside of the principle of the rules, such as market manipulation. Further up, you're repeating a meme seen elsewhere in this thread about oil prices being determined by speculators. I'm not sure how you believe this, because I don't think the evidence leads to that conclusion. The price meanders about but the curve is supported by underlying demand. It's advantageous for oil market traders but bad for everyone else. How is it advantageous for oil market traders for the price to go up? Some will be short just as others are long, and there's no reason to believe there's more long guys than short guys. Higher oil prices are likely to be goood for oil producers, but I don't understand how come to the conclusions you come to about about speculators.