4 ms·

Why accept gaming markets for profit, instead of honest work for profit, at all?

rayiner 14y ago
Traders don't "game markets" for profit. They're part of the infrastructure that makes markets work. It's like saying E-Bay "games markets for profit" because they take a piece of every transaction. Being an intermediary != gaming the market.
- mfringel 14y ago
  Being an intermediary does not necessarily mean you're gaming the market, but it does mean that you're in an optimal position to do so.
  - vecter 14y ago
    And therefore ...
- PavlovsCat 14y ago
  Oh? How can something like this happen then? Did some people just loose track of the mission of helping everybody out and whatnot? http://www.eurolabour.org.uk/Call_for_EU_action_to_stop_financial_speculation_linked_to_African_famine http://www.eurolabour.org.uk/Call_for_EU_action_to_stop_fina... 2011-09-15 The European Parliament has called for changes to EU law to stop food price speculation that has been linked to the famine that has claimed tens of thousands of lives in East Africa. A hard-hitting resolution adopted by Euro-MPs on Thursday 15 September calls for changes to EU directives on market abuse and financial trading to stop "abusive speculation" which has been identified as a contributing factor to the current famine in the Horn of Africa. While it is widely accepted that the humanitarian emergency in the region was triggered by drought, a recent World Bank report identified high food prices as a key contributing factor. Academics and international development charities working in the sector believe that food price volatility caused by speculation in agricultural derivatives on the financial markets are exacerbating the situation.
  - rayiner 14y ago
    How does what happen? A drought led to reduced supply and higher food prices. That's exactly what you'd expect in an efficient market. People blame the traders because they're the mechanism through which the market incorporates the fact of the drought. You see the same crap-throwing with traders in oil. People blame the traders for "bidding up" oil prices. The traders are just helping the markets reach a price--it's the market that's bidding up oil prices. And that's exactly what you'd expect when India and China are guzzling up the stuff but production has been flat since 2005 (and we hit peak discovery in 1965...)
    - PavlovsCat 14y ago
      sources please.
    - dochtman 14y ago
      Also, ethanol.
  - stickfigure 14y ago
    How can something like this happen then? See Planet Money's fascinating deconstruction of the rice "shortage" from a couple years ago: http://www.npr.org/blogs/money/2011/11/04/142016962/the-friday-podcast-how-fear-turned-a-surplus-into-scarcity http://www.npr.org/blogs/money/2011/11/04/142016962/the-frid... I know nobody wants to pause their high-speed HN binge for the seeming eternity it takes to listen to a podcast, but I promise you will not regret this one.

Traders don't "game markets" for profit. They're part of the infrastructure that makes markets work. It's like saying E-Bay "games markets for profit" because they take a piece of every transaction. Being an intermediary != gaming the market.

mfringel 14y ago
Being an intermediary does not necessarily mean you're gaming the market, but it does mean that you're in an optimal position to do so.
- vecter 14y ago
  And therefore ...
PavlovsCat 14y ago
Oh? How can something like this happen then? Did some people just loose track of the mission of helping everybody out and whatnot? http://www.eurolabour.org.uk/Call_for_EU_action_to_stop_financial_speculation_linked_to_African_famine http://www.eurolabour.org.uk/Call_for_EU_action_to_stop_fina... 2011-09-15 The European Parliament has called for changes to EU law to stop food price speculation that has been linked to the famine that has claimed tens of thousands of lives in East Africa. A hard-hitting resolution adopted by Euro-MPs on Thursday 15 September calls for changes to EU directives on market abuse and financial trading to stop "abusive speculation" which has been identified as a contributing factor to the current famine in the Horn of Africa. While it is widely accepted that the humanitarian emergency in the region was triggered by drought, a recent World Bank report identified high food prices as a key contributing factor. Academics and international development charities working in the sector believe that food price volatility caused by speculation in agricultural derivatives on the financial markets are exacerbating the situation.
- rayiner 14y ago
  How does what happen? A drought led to reduced supply and higher food prices. That's exactly what you'd expect in an efficient market. People blame the traders because they're the mechanism through which the market incorporates the fact of the drought. You see the same crap-throwing with traders in oil. People blame the traders for "bidding up" oil prices. The traders are just helping the markets reach a price--it's the market that's bidding up oil prices. And that's exactly what you'd expect when India and China are guzzling up the stuff but production has been flat since 2005 (and we hit peak discovery in 1965...)
  - PavlovsCat 14y ago
    sources please.
  - dochtman 14y ago
    Also, ethanol.
- stickfigure 14y ago
  How can something like this happen then? See Planet Money's fascinating deconstruction of the rice "shortage" from a couple years ago: http://www.npr.org/blogs/money/2011/11/04/142016962/the-friday-podcast-how-fear-turned-a-surplus-into-scarcity http://www.npr.org/blogs/money/2011/11/04/142016962/the-frid... I know nobody wants to pause their high-speed HN binge for the seeming eternity it takes to listen to a podcast, but I promise you will not regret this one.