Political & Elections

Abyss · Senior Member

RE: Free Markets at Work!?

BigG · Guru

"Derivative financial instruments" are not a consumer product in the same sense as concrete or eggs.

The nature of the collusion among the financial institutions referenced in the article is to bar other institutions from entering the market. If the existing concrete suppliers had been able to bar new firms from entering the market, then the circumstances would be analogous.

-- Edited by BigG on Sunday 12th of December 2010 08:42:51 PM

amazing · Veteran Member

BigG wrote:

You know, I would have no real problem with a shadowy elite manipulating markets if the economy was working well and producing continual improvements in the quality of life for most citizens.

But the economy is failing. The system is failing. We are becoming worse off than we were previously.

"The secrecy surrounding derivatives trading is a key factor enabling banks to make such large profits."

This line from the article just isn't correct.

Its counter-intuitive , you would THINK that transparency is always a good thing but in this case its actually the opposite.

What transparency does is it makes it much harder for firms to cheat on price, and out-compete their competitors. This is because if firms are colluding, and a firm cheats on the deal by offering a lower price, all the other firms will know about it if the prices are transparent. If they are not transparent it is much more tempting for firms to offer a lower price and not follow the collusion deal because other firms don't know if they are cheating. Transparency makes it EASIER for firms to collude, create oligopolies, and screw the customer, not harder.

I know its counter-intuitive, but I'm not making this up. Countries have done similar things in the past and this is how it turns out. For example, in 1993 Denmark implemented a law that said that all concrete had to be sold out in the open and all prices had to be released. Immediately after the law went into effect, concrete prices rose by 15-20%! Source: http://onlinelibrary.wiley.com/doi/10.1111/1467-6451.00057/pdf

BigG · Guru

You know, I would have no real problem with a shadowy elite manipulating markets if the economy was working well and producing continual improvements in the quality of life for most citizens.

But the economy is failing. The system is failing. We are becoming worse off than we were previously.

MomLive · In exile

I think the title of the article should have been "A Secretive Banking Elite Rules Washington" because that's what it basically boils down to. My husband and I recently saw the movie 'Inside Job'. It's chilling to realize how much Wall Street controls our government (at least the part that deals with money) and apparently every POTUS for the last several decades has been in on it. Look at all the top advisers - most of them come from Wall Street...Goldman Sachs, et al, they're all represented. It's amazing how they shuttle between Wall Street, working for the POTUS, the Federal Reserve and as lobbyists. Interestingly, several Ivy League Institution including Harvard and Columbia have strong and apparently unethical ties to Wall Street, also.

They don't call it 'Government Sachs' for nothing.

BigG · Guru

How fair and reasonable is this;
http://www.nytimes.com/2010/12/12/business/12advantage.html?src=busln

What happened to financial system reform? More smoke and mirrors.

It is paradoxical that the "freest" markets are those regulated by the government.

Oligarchy or even monopoly is the "natural" state in the absense of regulation.