Re: An essay on economic basis of bourgeois risk and gambling culture - parasitism as derivatives, options, swaps, hedge funds etc.

[Sabri Oncu <soncu@xxxxxxxxxxx>]

Marvin:

> Sabri: How would you answer the argument that most
> derivatives are used for hedging operations and are
> therefore a source of stability for the system?

Dear Marvin,

I was tempted to open up with the following:

"Are they? I did not know this!"

But if I do that you may get the impression that I am
attacking you. But no! Even if I opened up like that,
my intention wouldn't have been to attack you. It
would have been to attack the standard finance text
books which claim the above.

Those books are not only based on unreasonable
"rationality" assumptions but also they ignore the
effects of size. Soros was able to attack the UK
government and beat it when he bet against the pound
but I don't think even he has the ability to bet
against the US market. The US financial market is a
monster against which no one has the ability to bet.

And that is the problem. Controlled chaos is fine as
long as those who are at the reigns have the ability
to pull them. But if the horses go crazy, it does not
matter how good a rider you are. They decide where
they want to go and they may even choose to jump of a
cliff.

There are trillions of dollars worth of derivatives
out there with no connection to neither the real
economy nor the "money supply". Anyone create money in
these markets by signing derivatives contracts, as
long as they have the credibility to sell them.

This global gambling casino grew so big that none of
the "owners", including the US Treasury and the FED,
really own this casino anymore.

It became uncontrollably chaotic despite denials of
the alleged owners.

And the casino always wins, and if nobody owns the
casino, everybody loses, sooner or later.

Best,

Sabri