The Economy, stupid

[southsider2k5]

I don't mean that at all, the fact that anyone can be on the field is one thing -- that doesn't mean it's level. What I meant is that when it comes to commodity speculation, the big hedge funds (with billions in their cash coffers) weren't involved until the last few years. I'm not sure when they jumped on board, but I know they did. At one time they capped their involvement in these markets to something like 5% of their total funds, but when they realized what they could do, that number expanded a lot, and then we had them pouring billions into commodity speculation.

 

50 guys playing with 10,000$ that were once unable to get on the field is one thing -- they can now freely trade in a very easy and affordable manner...that's not my point. My point is when one of those 50 comes in and throws 2,000,000,000 on the table, the playing field isn't level. Just because you can play doesn't mean it's balanced. Even rich traders (individuals) don't speculate with billions...whereas hedge funds started to do just that.

 

The playing field is way more balanced today than it was even 20 years ago. For example, do you think a Hunt Brothers situation could happen today?

[Y2HH]

The playing field is way more balanced today than it was even 20 years ago. For example, do you think a Hunt Brothers situation could happen today?

 

The Hunt Brothers came close, but failed even back in that day, and probably taught a lot of people a valuable lesson. It would be impossible today because the amount of money that's out there, and the world economy is involved in the US markets, too, making it even harder. I still don't see the playing field as balanced. I see it as more open in that anyone from any income range can be involved, but balanced...no, still far from balanced.

 

Guys like Warren Buffett (one of many) can strike special deals with companies to buy a %, with downside guarantees...whereas a normal person cannot, that's not balanced as far as I'm concerned.

[southsider2k5]

The Hunt Brothers came close, but failed even back in that day, and probably taught a lot of people a valuable lesson. It would be impossible today because the amount of money that's out there, and the world economy is involved in the US markets, too, making it even harder. I still don't see the playing field as balanced. I see it as more open in that anyone from any income range can be involved, but balanced...no, still far from balanced.

 

Guys like Warren Buffett (one of many) can strike special deals with companies to buy a %, with downside guarantees...whereas a normal person cannot, that's not balanced as far as I'm concerned.

 

Your idea of balanced is impossible. We will never have everyone with an equal amount of money. That is just pie in the sky right there.

[Y2HH]

Your idea of balanced is impossible. We will never have everyone with an equal amount of money. That is just pie in the sky right there.

 

It's also the socialist dream.

 

I'm not asking for it to be balanced like that, I'm asking for proper regulation to make sure those with the means can't abuse the system such as they have and do.

[southsider2k5]

It's also the socialist dream.

 

I'm not asking for it to be balanced like that, I'm asking for proper regulation to make sure those with the means can't abuse the system such as they have and do.

 

You mean like having position limits on commodities, and forcing anyone with concentrated positions to report those to the CFTC on a daily basis? We have tons of regulations, just for these reasons. The idea that people with little amounts of money are going to be equal with people who have tons is impossible still.

[Y2HH]

You mean like having position limits on commodities, and forcing anyone with concentrated positions to report those to the CFTC on a daily basis? We have tons of regulations, just for these reasons. The idea that people with little amounts of money are going to be equal with people who have tons is impossible still.

 

As many regulations as there are, there needs to be more, especially in the commodities market where it comes to food and energy.

 

I'm again, not asking for the playing field to be leveled out or equaled. I think those with more should get more, as they risk mjore. I merely want these the big boys watched as to prevent manipulation, I want the uptick reinstated, etc.

[southsider2k5]

As many regulations as there are, there needs to be more, especially in the commodities market where it comes to food and energy.

 

I'm again, not asking for the playing field to be leveled out or equaled. I think those with more should get more, as they risk mjore. I merely want these the big boys watched as to prevent manipulation, I want the uptick reinstated, etc.

 

Commodities have never had the uptick rule. That is purely an SEC and stock rule. Besides that what else are you talking about that isn't already being done?

[NorthSideSox72]

Commodities have never had the uptick rule. That is purely an SEC and stock rule. Besides that what else are you talking about that isn't already being done?

That's what I am wondering - what other regulations should there be on listed derivatives that would be in any way useful?

 

[Y2HH]

Commodities have never had the uptick rule. That is purely an SEC and stock rule. Besides that what else are you talking about that isn't already being done?

 

Sorry I didn't mean to apply uptick to the commodities discussion (that's a short rule, which is supposedly being reenacted), I mean overall regulations need to be checked/rechecked and adapted to modern times in all markets. If they didn't, they wouldn't be talking about it right now, yet they are...so who knows. Maybe we should just leave it all alone, and let whatever happens happen.

 

I mean, who am I to complain anyway, I've made money in the market -- even in the downturn I made money...so meh.

 

The commodities market needs to be capped, IMO, in how much you can buy/hold if you have no intention of ever taking delivery. I'm also not a commodities expert, I don't trade in that market, actually, I don't trade at all...I invest. I buy and hold...and I make money doing it, slowly, but I'm happy with that.

Edited July 29, 2009 by Y2HH

[southsider2k5]

Sorry I didn't mean to apply uptick to the commodities discussion (that's a short rule, which is supposedly being reenacted), I mean overall regulations need to be checked/rechecked and adapted to modern times in all markets. If they didn't, they wouldn't be talking about it right now, yet they are...so who knows. Maybe we should just leave it all alone, and let whatever happens happen.

 

I mean, who am I to complain anyway, I've made money in the market -- even in the downturn I made money...so meh.

 

The commodities market needs to be capped, IMO, in how much you can buy/hold if you have no intention of ever taking delivery. I'm also not a commodities expert, I don't trade in that market, actually, I don't trade at all...I invest. I buy and hold...and I make money doing it, slowly, but I'm happy with that.

 

Those things exist in pretty much all deliverable commodities. In fact, I am not able to think of one that doesn't off of the top of my head.

[Y2HH]

Those things exist in pretty much all deliverable commodities. In fact, I am not able to think of one that doesn't off of the top of my head.

 

Yet they were still able to manipulate the oil market, despite these rules?

 

Then tighten them down because that should show the rules in place aren't enough.

[Y2HH]

http://online.wsj.com/article_email/SB1248...ODcyNDg1Wj.html

 

I'm sure this has already been posted -- but it shows the rules in place aren't enough.

 

Clip from the story:

 

"The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

 

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday."

[NorthSideSox72]

http://online.wsj.com/article_email/SB1248...ODcyNDg1Wj.html

 

I'm sure this has already been posted -- but it shows the rules in place aren't enough.

 

Clip from the story:

 

"The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

 

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday."

When the report is actually released, we'll see if the rules in place are or aren't enough. If people broke the existing rules, then the rules don't need changing.

 

[Y2HH]

When the report is actually released, we'll see if the rules in place are or aren't enough. If people broke the existing rules, then the rules don't need changing.

 

If that is the case, then they need to enforce the rules better/faster -- having rules with no enforcement is as good as not having any rules. I'm tired of them letting this stuff go on and then 5 years later going after people -- while others suffer in the mean time.

[NorthSideSox72]

If that is the case, then they need to enforce the rules better/faster -- having rules with no enforcement is as good as not having any rules. I'm tired of them letting this stuff go on and then 5 years later going after people -- while others suffer in the mean time.

CFTC has been treated like the SEC's ugly stepchild for years now. BushCo in particular, cut their budget and investigative division big time, while increasing SEC's funding. Hard to enforce when you don't have investigators.

 

[southsider2k5]

http://online.wsj.com/article_email/SB1248...ODcyNDg1Wj.html

 

I'm sure this has already been posted -- but it shows the rules in place aren't enough.

 

Clip from the story:

 

"The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.

 

In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday."

 

If someone wants to break the law, how are more laws going to stop them from breaking the law?

[Y2HH]

If someone wants to break the law, how are more laws going to stop them from breaking the law?

 

This usually applies to people who have nothing to lose, but brokers/traders often have a lot of money and a lot to lose, such as their families, etc. But you're right, more laws won't help if they aren't enforced, which was my earlier point. Taking 5-10 years to enforce these types of laws gives these guys a lot of wiggle room. It's not really that it would stop them from breaking the law, but it'd put a quick end to that person doing it, rather than them getting away with it for a span of years, which affects other peoples lives.

[southsider2k5]

This usually applies to people who have nothing to lose, but brokers/traders often have a lot of money and a lot to lose, such as their families, etc. But you're right, more laws won't help if they aren't enforced, which was my earlier point. Taking 5-10 years to enforce these types of laws gives these guys a lot of wiggle room. It's not really that it would stop them from breaking the law, but it'd put a quick end to that person doing it, rather than them getting away with it for a span of years, which affects other peoples lives.

 

The only thing that is going to fix enforcement is a complete overhaul of the way we regulate the entire financial sector. The way we do it now doesn't work, and is a complete waste of money.

[Balta1701]

The only thing that is going to fix enforcement is a complete overhaul of the way we regulate the entire financial sector. The way we do it now doesn't work, and is a complete waste of money.

But the people who built that system get really, really rich out of it, and that's really all that matters.

[southsider2k5]

But the people who built that system get really, really rich out of it, and that's really all that matters.

 

I guess it is another case of the government saving us all, huh?

[Balta1701]

I guess it is another case of the government saving us all, huh?

If by "Government", you mean Goldman Sachs, since they're basically the same thing after Goldman bought out the treasury department, pretty much yeah.

[southsider2k5]

If by "Government", you mean Goldman Sachs, since they're basically the same thing after Goldman bought out the treasury department, pretty much yeah.

 

Ah yes, more great reasons why we should let the government control our lives...

[Balta1701]

Gotta retain top talent.

Several financial giants that received federal bailout money in the last year paid out bonuses to employees in 2008 that greatly exceeded the amount of profit generated by the banks, according to a study on executive compensation released by New York State Attorney General Andrew Cuomo Thursday.

 

Despite claims by bank executives that bonuses are tied to the company's performance, the report states that "there is no clear rhyme or reason to how the banks compensate or reward their employees."

 

Cuomo's investigation "suggests a disconnect between compensation and bank performance that resulted in a 'heads I win, tails you lose' bonus system."

 

According to the report:

 

• Goldman Sachs, which earned $2.3 billion last year and received $10 billion in TARP funding, paid out $4.8 billion in bonuses in 2008 - more than double their net income.

 

• Morgan Stanley, which earned $1.7 billion last year and received $10 billion in bailout funds, handed out $4.475 billion in bonuses, nearly three times their net income.

 

• JPMorgan Chase, which earned $5.6 billion in 2008 and received $25 billion from the government, paid out $8.69 billion in bonus money.

 

• Citigroup and Merrill Lynch lost a combined $54 billion last year. They received a total of $55 billion in bailouts and paid out $9 billion in combined bonuses. ($5.33 billion for Citigroup; $3.6 billion for Merrill Lynch, which was subsequently acquired by Bank of America.)

[Y2HH]

Gotta retain top talent.

 

Don't you just love reading stuff like this?!

[NorthSideSox72]

Don't you just love reading stuff like this?!

The key factor here is the whole TARP aspect.

 

If GS, ML and others are paying out big stupid bonuses, I have zero issue with that. They want to bury themselves and lose mid-level employees who get frustrated, then fine. But, in this case, WE (the taxpayers) now are key stakeholders in the business. That's where it gets bad, and where they shouldn't be allowed to do this as long as they still have government funds.

 

If they pay it all back with the intended interest, then from their on, they can do what they want. But if it is found that while they were still on the government dole, and were doing this, while laying off thousands, then I hope Congress b****-slaps them and uses the muscle built into TARP to kick out the executives (again) and bring in a new team, rinse and repeat, until some management team finally gets it right.

 

To me, its the equivalent of... I'm on a board of directors of a firm that is in bankruptcy protection. If I find out the high level management gave themselves giant bonuses, when the company is still struggling, I push the board to can their asses.