On Thu, 27 Mar 2008 16:19:27 GMT, "JoeSpareBedroom"
wrote:

"Short Wave Sportfishing" wrote in message
.. .
On Thu, 27 Mar 2008 11:21:55 -0400, "
wrote:

Shamelessly stolen from another newsgroup
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From the OPINION section of today's Wall Street Journal


Regulatory Overkill
By ALLAN H. MELTZER
March 27, 2008; Page A14

The claim that deregulation went too far is coming from many sides.
snip most of the article

The financial system cannot survive
if the bankers make the profits and the taxpayers take the losses.

I think the above sentences sum up where we are heading. The same people
who whine about oil company profits will soon notice that the banks are
quite profitable, and the government has relieved them of the risk. At
that
time there will be calls for banking to be taken over by the government.
The current call for more regulation is just the first step down that
road.

I agree being a free market type.

Having said that, there is room for regulation in terms of margins on
hedge funding (which is the real problem). Currently, $1 million will
buy you $10 million call on commodity markets - that is what is
driving up prices so dramatically. You layout $1 million on, say an
oil contract, for $10 million, then sell that $10 million contract for
$11 million, you haven't risked very much for a $1 million dollar
payday effectively doubling your money.

That's gotta be fixed.


Good luck fixing it. The trading fees are a cash cow for the financial
services industry, which donates heavily to all the candidates.

You guys work on getting laws that favor you passed.
Others will work on laws that favor THEM.
The above is mixed up, and I can't figure out if Tom is talking about
options or contracts. But I know nothing of hedge funds.
In any case there is risk taken by taken by the
speculator/hedger/spreader/producer/consumer.
Options have premiums that are paid up front.
On a futures contract there is initial margin and maintenance margin.
Go below maintenance and you have a margin call that has to be paid.
I've had a few of those.
They'll come after your house if you don't.
In that oil example if the market goes against you, you can lose the
million. Two sides, finding a price.
Keep that in mind. For every long trying to goose prices up, there's
a short trying to drive them down.
That's not to say "unethical" forces can't move commodity prices.
But all in all much cleaner and more real than the current Wall Street
stock bull****, where P/E and dividends have become meaningless.
That'll change as the dollar continues to lose value.

--Vic

DISCLAIMER
The views expressed above are not intended as advice, or represent
claims of financial expertise. They are purely personal meanderings
of the author.