LondonLax Posted May 30, 2011 Share Posted May 30, 2011 Nice change of subject there. The Greek government has an obligation to pay back money it owes. There will most likely be a restructuring and bond holders will only get some of the money they are owed back but the idea they should get nothing back is morally wrong. Link to comment Share on other sites More sharing options...
peterms Posted May 30, 2011 Share Posted May 30, 2011 Do you not think that the opening up of markets while not perfect has spread wealth to a degree in the western world. Standards of living have steadily climbed every decade. As a general proposition, trade tends to increase wealth, I agree. The "opening up" of markets, though, can have pretty damaging consequences for some, while making others a lot richer and appearing to show a net gain in wealth which obscures the greater shifts which lie below that. Looking at a couple of specific examples like prawn fishing in Vietnam leading to salinisation of previously fertile farmland, poisoning with uncontrolled fertiliser and antibiotics, resulting in bankrupt farmers and degraded and worthless land; or new technology introduced into coffee production in East Africa to mask the bitter taste of unripe beans previously discarded but now harvested and roasted along with the better ones despite being carcinogenic; or the way that farmers in the UK now get about 10% of the retail price of their produce where they used to get 50%, the rest being extracted by Tesco etc, employing ghost armies of off-the-books casual imported labour living in slum conditions and being "taxed" by criminal gangmasters, I would say that some people's standard of living has increased, others declined. As a general rule, those whose standard of living improved didn't need it to, those whose declined, needed an improvement. So a pretty crap result there, then. We are now experiencing some of the effects of the "opening up" of markets on ourselves, where we are the objects of the opening up rather than the beneficiaries. Many are finding it an unpleasant experience. Link to comment Share on other sites More sharing options...
CVByrne Posted May 30, 2011 Share Posted May 30, 2011 There has been death and poverty everywhere in the world for it's entire history. As flawed as democracy and capitalism are it's the continuity of the system that I see as the way to improve the future. We can't simply tear down the system everytime it fails us or has a crisis. I believe we learn from our mistakes and the way to improve the future lies with inheritance, I do not believe anyone should ever be handed something on a plate. The majority of amassed wealth should pass to the state after your death. Obviously this will never happen. But as a philosophy, that is mine. Link to comment Share on other sites More sharing options...
TheDon Posted May 30, 2011 Share Posted May 30, 2011 Defaulting on loans is theft. But that's how the entire loan industry is built, with the assumption that not all loans will be repaid. The reason loan interest rates vary so much is because of the associated risk with some types of loan. If you start looking at loans as an absolute guarantee the money will be paid back then you'll also have to look at the issuing terms and greatly reduce the interest rates on them in line with the new non-existent risk. Issuing a loan is essentially a gamble, you weigh up the risk of your loan not being paid back and based on that you draw up terms that mean that even if that individual loan is not paid back in the grand scheme of things you won't lose any money. You can't spend your life betting on red and black and then when zero comes in for a few spins cry to the casinos that it shouldn't have happened and force them to pay back your stakes. If people gave out loans that didn't reflect the true risk, and are now getting shafted by that then they shouldn't have issued the loans on those terms in the first place. Link to comment Share on other sites More sharing options...
peterms Posted May 30, 2011 Share Posted May 30, 2011 Nice change of subject there. The Greek government has an obligation to pay back money it owes. There will most likely be a restructuring and bond holders will only get some of the money they are owed back but the idea they should get nothing back is morally wrong. No, it's the same subject, just a different perspective on it. The "debts" of the Greek government and others don't exist in a vacuum removed from the rest of the global markets, and it's entirely reasonable to see these things in context. What does " the Greek government" "owe"? That's not a straightforward question. Dig a little, and you will find purely private debts, mired in dodgy and sometimes illegal deals between banks based in Germany, France, US, UK and all over, moved and shielded and laundered and re-presented as somehow public debt, the result of Greeks "living beyond their means", that argument often being made by the very same tax-dodgers who have created the problem in the first place. Bondholders will get back only a fraction of what they lent. They know that, we all know that. The question is what fraction, and on what terms. The article Levi posted argued for accepting a larger fraction now instead of a smaller fraction later, as a tactical way of minimising losses. That makes perfect sense for the bondholders, though not for the Greek people (and other people). The bondholders knowingly and willingly lent their money (or in the case of banks, didn't actually lend assets at all, just created a line of credit on a computer), like they would place a bet at the bookies. Why should their gambling debt become the moral obligation of a cleaner in Athens or a schoolteacher in Rhodes? Of course, the answer is it shouldn't, and attempts by politicians to foist these private debts on the public is immoral and unsustainable. There's an interesting point about whether it is actually treason. Link to comment Share on other sites More sharing options...
peterms Posted May 30, 2011 Share Posted May 30, 2011 There has been death and poverty everywhere in the world for it's entire history. As flawed as democracy and capitalism are it's the continuity of the system that I see as the way to improve the future. We can't simply tear down the system everytime it fails us or has a crisis. Yes, there has. And no, we can't tear down a whole system because there's a problem. My point is that over and above deaths from natural disasters, crop failures and the like, in recent years we have allowed speculators to gamble on the prices of things like wheat on the stock exchange. Because they make money from creating artificial shortages and price fluctuations, there have been many additional deaths which would not have occurred except as a direct and entirely foreseeable and avoidable consequence of their actions. I can't immediately think of anyone who would publicly defend that as reasonable and justifiable, and I include Keith Joseph in that. And yet that is the position we are in. Link to comment Share on other sites More sharing options...
CVByrne Posted May 30, 2011 Share Posted May 30, 2011 True, but the system can be changed, a ban on shorting stocks. I don't see how speculation via simply purchasing is bad. I also do not think any people should be vilified for speculating, the rules are there it's not a traders fault for playing by them. Especially as to most people a job is a job. I agree it's an undeniable fact that the rules need to be changed. Link to comment Share on other sites More sharing options...
peterms Posted May 30, 2011 Share Posted May 30, 2011 True, but the system can be changed, a ban on shorting stocks. I don't see how speculation via simply purchasing is bad. I also do not think any people should be vilified for speculating, the rules are there it's not a traders fault for playing by them. Especially as to most people a job is a job. I agree it's an undeniable fact that the rules need to be changed. Yes, I agree. There must be a trade in commodities, including food. What I would like to see is screening out the damaging gambling aspect of it, which leads to people manipulating prices. I expect a ban on shorting would do it, though others closer to what traders actually do might tell me otherwise. On the point about whether we should disapprove of people who do unpleasant things as part of their job when it's allowed, that's dangerous territory. We expect (or the law expects) soldiers to refuse orders which are illegal, though they are likely to be given these orders in the field, not having been instructed in international law, faced with both peer pressure and the possibility of being shot. The reason we do that is that we expect people even in the most difficult circumstances to bring to their work a moral bearing; and yet we say that traders are OK to do whatever is not specifically prohibited. I would have hoped traders, or any other group, have a bit more self-respect than that. If they do these trades knowing the outcomes, I will vilify them. If they don't know the outcomes, I will suggest they educate themselves a bit, and take some responsibility for their actions. Link to comment Share on other sites More sharing options...
CVByrne Posted May 30, 2011 Share Posted May 30, 2011 You see the argument for short selling is also a good one. To sell a stock short you have to get someone to load you their stock for which you pay interest. You then go and sell their stock on the market and at a later date need to buy it back. So if there was actual attempts to devalue the stock then they're hardly going to get a loan of enough to short. It really is price testing and many times people who do it get burnt, like the VW Porche incident. And to be fair the majority of traders a normal people with as much morals as the next person. The image of the CDO trader for an investment bank is the image people have, not the simple foreign exchange spot trader working in Treasury. Customers need wholsale treasury. They used to work on comission but the stigma of comission, or bonuses meant that portrayed them as equally evil. Rules need to be changed and people who break them should be properly punished and not let away with it like has been evident everywhere in recent years. Link to comment Share on other sites More sharing options...
TheDon Posted May 30, 2011 Share Posted May 30, 2011 a ban on shorting stocks. What's wrong with shorting stocks? Naked short selling is slightly dodgy ground, but as long as it's properly regulated (with set settlement times) it's fine. There's no reason why you shouldn't be able to make money in a downward market. Link to comment Share on other sites More sharing options...
CVByrne Posted May 30, 2011 Share Posted May 30, 2011 Read first paragraph of my above post Don. Link to comment Share on other sites More sharing options...
TheDon Posted May 30, 2011 Share Posted May 30, 2011 Read first paragraph of my above post Don. Yeah just read it, damn you for posting whilst I'm replying! I still don't get what you want though, as you're saying there should be a ban, then that it's price testing with a good argument for it! Link to comment Share on other sites More sharing options...
CVByrne Posted May 30, 2011 Share Posted May 30, 2011 I have no strong opinion on it. I'd sway towards keeping short selling. Link to comment Share on other sites More sharing options...
peterms Posted May 30, 2011 Share Posted May 30, 2011 a ban on shorting stocks. What's wrong with shorting stocks? Naked short selling is slightly dodgy ground, but as long as it's properly regulated (with set settlement times) it's fine. There's no reason why you shouldn't be able to make money in a downward market. The difference between buying stocks and shorting them is the difference between investment, and speculation. One is necessary for the growth of an economy, one is parasitic and destructive. Link to comment Share on other sites More sharing options...
TheDon Posted May 30, 2011 Share Posted May 30, 2011 All investment is speculation though Link to comment Share on other sites More sharing options...
CVByrne Posted May 30, 2011 Share Posted May 30, 2011 Very simplistic view there peter. Someone needs to loan you the stock that you sell. That's how you short. Link to comment Share on other sites More sharing options...
TheDon Posted May 30, 2011 Share Posted May 30, 2011 Aye I don't really see the argument that it's destructive, parasitic maybe because it's profiting by someone else losing, but that doesn't make it bad. You're simply profiting from a drop in the stock price, you're not causing that drop, and you could argue that by shorting the stock and increasing the demand for it after the fall you're in effect helping abate the fall. Link to comment Share on other sites More sharing options...
peterms Posted May 30, 2011 Share Posted May 30, 2011 All investment is speculation though Yes, I expressed it clumsily. I see good investment as lending money at a non-extortionate rate to an enterprise in the belief that it will generate wealth. I see bad speculation as manipulation of food prices so that a gambler makes money and poor people die. Hope that's clearer. Link to comment Share on other sites More sharing options...
TheDon Posted May 30, 2011 Share Posted May 30, 2011 How is shorting stocks manipulation of anything though? Investing on the stock market is gambling either way. Link to comment Share on other sites More sharing options...
peterms Posted May 30, 2011 Share Posted May 30, 2011 Very simplistic view there peter. Someone needs to loan you the stock that you sell. That's how you short.Yes they do. But I don't see the relevance of that to my post? Link to comment Share on other sites More sharing options...
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