Speculators: A bigger world threat than terrorists?

[Gromit]

They are making billion pound profits and the havoc they cause around the world is catastrophic. Yet in a free world, their is nothing that can be done about their damaging behaviour.

Speculators are responsible for the high prices of food and oil on world markets. This has resulted in the current recession.

They are now responsible for bringing down banks and even currencies and governments.

http://www.guardian.co.uk/business/2008/apr/20 /globaleconomy.food

http://www.thisislondon.co.uk/standard/article -23555978-details/New+bank+crisis+at+troubled+ HBOS/article.do

http://norris.blogs.nytimes.com/2008/06/19/bla me-the-speculators/

Do you agree, and can anything be done?

[vehelpfulguy]

I have felt for a while that these people are legalised criminals.

They dont actually "produce" anything but use their knowledge of the world money markets to buy and sell things that they dont even own (or want) to make money.

You hear of people "earning" millions a year but all they are doing is stealing it from the "man in the street" who goes out to work everyday to make things.

As you say, they buy things like oil, with money they have not got, but they never get to see or touch the oil, then drive up the price, and sell it at a profit.

I do not know enough about the worlds money markets to know how to stop it, hopefully the worlds banks and goverments will get together to stop these parasites stealing from us all.

And about time to.

The awful side of capitalism.

[eltelioni]

Even more immoral is short-selling. They sell shares they don't own, then push the price down, then buy the shares at a lower price. So they make a profit on something they never even had!

[Kromovaracun]

It's far too simplistic to blame speculators - I think you've vastly over-estimated their influence. The price rise in oil is causing speculative interest, not the other way around.

Your argument doesn't work when you compare other commodities. Take Nickel, for instance, which has had a flow of investment over past year comparable to that of oil - and the price has dropped.

You could also compare Cadmium, which has grown even faster than oil over the past few years with relatively little investment or speculation.

Ergo, there isn't actually a consistent and clear correlation between speculation and commodity price.You have to remember that speculators essentially bet on how prices are going to go - in the case of oil, they were allready going up.

buy and sell things that they dont even own (or want) to make money.

Futures are essentially just contracts promising future delivery, so in fact they're just bascially trading (or, rather, promising to) but hoping to secure a contract at today's rates which hopefully (certainly in the case of oil) in the future will save money because the price is going up. I don't see that anyone's being robbed.

Also, I can't see any concrete evidence in your first link that speculators are causing the food price increases so much as just betting on them.

[helpmetoo]

a left wing view,

ordinary people buy shares hoping for a rise,

informed and numerically articulate people do exactly that sometimes depending on their view ahead, but are astute enough to realise when to contract to sell ahead if a fall is obvious,

your ultimate best answer is to scrap shares and derivitives totally?

that was called communism i believe and an abject failure,

[Gromit]

You may have seen the open letter from 12 Airline CEOs
http://www.law.indiana.edu/people/henderson/sh are/Delta.pdf

We need your help. Get more information and contact Congress by visiting
http://www.stopoilspeculationnow.com/

"Every time you buy products such as food or gas, you are impacted by unregulated, secretive and often foreign commodities futures markets. Speculators in these markets are increasingly buying and selling commodities such as oil to sell again, rather than to use. As largely unregulated speculators pocket billions of dollars at your expense, the price of commodities has increased out of proportion to marketplace demands."

[Gromit]

The British regulator, the Financial Services Authority has tonight banned short selling with immediate effect.