Commodities traders caused starvation and malnutrition for 200 million people
- Thread starter JimW
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hammerntongues
Well-Known Member
So what would you call it then , how would you describe it ? its a combination of greed and fear and I would suggest that most of us in many circumstances are guilty of both .
littlebabyjesus
one of Maxwell's demons
With regards to the 'human nature' aspect of this, it is easy to see how the tendency towards herd mentality - to subsume your personal judgment to what appears to be the collective wisdom - could have been selected evolutionarily in highly social animals like humans. Where the wellbeing of the individual is dependent on the wellbeing of the group, such heuristics for decision-making are entirely sensible.
We didn't evolve to be commodity traders, and we're not very well equipped psychologically to do such jobs that require emotional detachment. We have evolved in such a way that it is through emotional attachment that we make decisions.
We didn't evolve to be commodity traders, and we're not very well equipped psychologically to do such jobs that require emotional detachment. We have evolved in such a way that it is through emotional attachment that we make decisions.
Blagsta
Minimum cage, maximum cage
What circumstances?
littlebabyjesus
one of Maxwell's demons
Nobody knows that it is the top of the market. You can only tell retrospectively. And if everyone else is buying, it seems like a good idea for you to. That's how we are set up, generally, to be inclined to follow the wisdom of the group. Without wishing to indulge in just-so tales of evolutionary psychology, it is easy to see how we have evolved to be like that - it maintains group cohesion.
A Dashing Blade
Takes horses to water but can't make donkeys drink
Then please be more precise with your questions next time.
I don't believe that the realtionship between commodity futures and the price of the underlying is as positively correlated as most people appear to on this thread. Other macro-factors (weather/economics and political decisions) occurred at the same time as the growth in commodity index funds. My somewhat "holistic" opinion is that a "Perfect Storm" rather than a "Black Swan" has and is occurring.
A Dashing Blade
Takes horses to water but can't make donkeys drink
By the way, your 2nd sentence is kind of my point.
I know, I wasn't arguing your point, merely point out the impossibilty of proving or disproving it.
Blagsta
Minimum cage, maximum cage
Hence me loling
littlebabyjesus
one of Maxwell's demons
Is it positively correlated at all, then? Just a bit? 20% maybe? Or 50%, or 90%. What do you base this belief on? Has it been studied?
A Dashing Blade
Takes horses to water but can't make donkeys drink
Speak for yourself. Personally I regard one of the leading indicators pouinting to the top of a bubble is when it's splashed on the Evening Standard bill boards on my way home.
Yuwipi Woman
Whack-A-Mole Queen
Um, no one has actually argued that there's only one cause. They're saying that you need to get a hook on one aspect to start solving the problem of 200 million people going hungry. Or, did you miss that number?
littlebabyjesus
one of Maxwell's demons
In 2002, many leading commentators stated that the property bubble had reached its peak. They were wrong.
Not that I have any money to invest, but I would never accept investment advice from you. You appear to be in denial about the factors that influence your judgement.
hammerntongues
Well-Known Member
Its hard to eradicate the herd mentality entirely but in most cases it is those who blindly follow the herd that get caught , as I quoted earlier , " if you can still see the bandwagon it`s already too late "
BTW Only a tiny fraction of commodity traders are the ones that most people think of when they try and conjure up an image , its not yelling and shouting and buying and selling with arms flailing with red braces and don`t give a shit attitude . The vast majority of us are physical traders , myself included , we move product from a to b , obviously we try to make a margin or we wouldn`t be doing it . When you drink your coffee or buy your loaf or light a cigarette its all about trading , there isn`t an alternative as far as I can see . there are rogue traders but no more than rogue plumbers .
BTW Only a tiny fraction of commodity traders are the ones that most people think of when they try and conjure up an image , its not yelling and shouting and buying and selling with arms flailing with red braces and don`t give a shit attitude . The vast majority of us are physical traders , myself included , we move product from a to b , obviously we try to make a margin or we wouldn`t be doing it . When you drink your coffee or buy your loaf or light a cigarette its all about trading , there isn`t an alternative as far as I can see . there are rogue traders but no more than rogue plumbers .
A Dashing Blade
Takes horses to water but can't make donkeys drink
Or someone who's worked in the City (equity, equity derive, futures, fx, bonds and ir) since 1985 and seen it happen time and time again since the crash in '87.
littlebabyjesus
one of Maxwell's demons
But you're different, right?
A Dashing Blade
Takes horses to water but can't make donkeys drink
The people to watch were the guys at the center of it. The bloke who sold Foxtons (to some private equity idiots) got his timing exactly right.
In the final and most dangerous phase of a bubble, prices become exponential and can quite easily jump another (final) 30%.
hammerntongues
Well-Known Member
doesnt totally encapsulate human nature ?
A Dashing Blade
Takes horses to water but can't make donkeys drink
A Dashing Blade
Takes horses to water but can't make donkeys drink
Fair enough. Many views make a market.
littlebabyjesus
one of Maxwell's demons
Of course it doesn't. Things are far more complex than that. But the fact remains that we are emotional beings and we base our decision-making on our emotions. It is our emotions that give us the capacity to make decisions in the first place according to many neuroscientists, such as Antonio Damasio, and our emotional states are intimately linked to those of the people around us.
Yuwipi Woman
Whack-A-Mole Queen
littlebabyjesus
one of Maxwell's demons
Thing is, I don't doubt that you genuinely don't think you're one of the muppets. I bet nobody does! It's a bit like the situation where 80 per cent of respondents think of themselves as above-average drivers.
A Dashing Blade
Takes horses to water but can't make donkeys drink
My "muppet" comment was in response to your question "Do you have an opinion on the evident, persistent irrational behaviour of investors as they half-blindly follow what their neighbour is doing out of fear of being left out? " asked in the context of a thread about bubble markets.
I don't take positions in such markets. I learnt that the hard way in '87.
ymu
Niall Ferguson's deep-cover sock-puppet
Yeah. Drug companies present theories backed up with data too. I get to check some of it for the NHS. Never had an in-depth look without uncovering serious flaws, many clearly or probably fraudulent, some pure incompetence.
Last one knocked out 20% of sales of a drug with a billion dollar turnover the year after we published.
Sadly, we don't get 10% bonuses annually from the grateful healthcare payers of this planet.
And the facile nature of your post is how I know you were taught by charlatans and their second-rate front men, piss easy to spot after 20 years chasing ignorant, mudering, scumbag thieves.
Try harder banker boy. You have no credibility left to lose.
free spirit
more tea vicar?
The evidence presented in that doesn't support the argument being made. At best it could be taken both ways, at worst the author is clearly taking what they want to see from the evidence, and ignoring the inconvenient parts of it.
I'm a bit of a layman in terms of the markets, but when discussing the impact of the futures market, why would someone use graphs showing the spot price vs the level of investment in the futures market (exhibit C) and then try to directly correlate the two, demonstrate there's no correlation, then use this as evidence to refute the hypothesis regarding the impact of the futures market if they weren't deliberately setting out to mislead?
As I understand it, in general terms the futures market wouldn't be expected to have much impact on the immediate spot price of a commodity, if there were an effect on the spot price it would be on the price of the commodity at the point when those futures trades were set to mature, so for arguments sake 6 months to a year after the initial investment. In order to view whether there is a correlation or not I'd think that it would therefore be necessary to do the correlation calculations on the value of futures vs the spot price 6 months to 1 year later (or whatever the average length of the futures trade was).
If you look at the figures this way, there seems to be a fairly clear correlation between the level of investment / gambling, and the level of the commodity price swings a year later (over the last few years when investment levels have been highest anyway.). I don't have the software to perform such analysis (and couldn't remember how to do it anyway), but maybe YMU would fancy doing the honours to see if such a correlation does exist - although I'd think the actual data period if we only took the last few years would be too short to make it possible to demonstrate a correlation to a high level of certainty.
The author makes some other blatantly misleading comments that aren't backed up by the data they provide, including:
Exhibit A - commodity price rise vs levels of investment, the author argues that the increase in the value of investment is caused by the increase in the commodity value... according to the graph supplied, the commodity price has increased by roughly 400% since 2000, while the value of the 'long commodity assets' have increased by over 5000%.
That argument is obviously and demonstrably false then, with under 10% of the increase in the size of the market being down to the commodity price rise, and over 90% being down to an actual influx of new money into the marketplace.
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The author tries to show that the volume of trade is too small relative to the overall size of the market to influence prices significantly, but negates to mention the simple fact that these markets operate with small percentages of surplus production, and that swings in the supply or demand of these products of only a few percent are capable of leading to dramatic increases or decreases in the price of those products of 10x or more the actual swing in production / consumption levels. 2010 positions of 7% of the global wheat market, or 6% of the global gas market then are more than big enough to drastically impact on the price of those commodities, particularly if there are other factors also in play at the time.
For example, the supply interuptions from 1972-74 due to reductions in output from the middle east amounted to a 7% reduction in global output, but led to a 400% spike in the oil price, and for comparison purposes, the global spare oil production capacity used to attempt to smooth out the oil price is approx 1% of production. Futures trade running at anything above the level of the spare capacity blatantly must have the ability to dramatically influence the oil price. According to this article (exhibit G) it's currently running at 4% of world production value, and therefore fully capable of significantly influencing the price level.
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basically this seems to be disingenuous bullshit served up by someone with a vast personal and professional interest in maintaining the status quo - I don't believe for a second that the author didn't know exactly what they were doing by presenting the data in the way they did.
littlebabyjesus
one of Maxwell's demons
Good job, fs! 
The thing that worries me is that I don't doubt Dashing Blade's sincerity on this. He really has fallen for the self-serving justifications of his 'profession'. He doesn't see the damage his pay cheques and bonuses represent.
The thing that worries me is that I don't doubt Dashing Blade's sincerity on this. He really has fallen for the self-serving justifications of his 'profession'. He doesn't see the damage his pay cheques and bonuses represent.
ymu
Niall Ferguson's deep-cover sock-puppet
Good job, fs!
The thing that worries me is that I don't doubt Dashing Blade's sincerity on this. He really has fallen for the self-serving justifications of his 'profession'. He doesn't see the damage his pay cheques and bonuses represent.
Not seeing the damage is a moral dimension. He couldn't do what he does if he cared enough to do his homework properly.
The nail is the first part. Fallen for. Second rate minds self-selecting for idle greed and moral blindness, to be groomed as abusers-by-proxy for the psychopaths in charge,
And yeah. Top stuff fs. Thanks for going to the effort.
The thing is that all this money-juggling shit, ALL of it, can only ever be chasing a thinner and thinner slice of the pie.
That is the nature of GROWTH on a finite planet - and it is growth which drives the markets, the financial system and the world economy.
Growth used to be the way that businesses made "an honest living" before the limits to growth were surpassed.
Now, prospects for growth through "honest" trade are evaporating as the growth-addicted world economy implodes. Money-juggling and speculation / hoarding are the only ways to keep making money - aka increasing holdings of beer-tokens.
Too bad that - like this year - the barley harvest will be a woefully insufficient to produce enough beer to meet demand.
The whole system is about to fall on its arse, as the blah-blah of the money jugglers meets the fundamental reality of resource depletion. No amount of blah-blah can change reality, or create resources.
Die-off starts here.
That is the nature of GROWTH on a finite planet - and it is growth which drives the markets, the financial system and the world economy.
Growth used to be the way that businesses made "an honest living" before the limits to growth were surpassed.
Now, prospects for growth through "honest" trade are evaporating as the growth-addicted world economy implodes. Money-juggling and speculation / hoarding are the only ways to keep making money - aka increasing holdings of beer-tokens.
Too bad that - like this year - the barley harvest will be a woefully insufficient to produce enough beer to meet demand.
The whole system is about to fall on its arse, as the blah-blah of the money jugglers meets the fundamental reality of resource depletion. No amount of blah-blah can change reality, or create resources.
Die-off starts here.
littlebabyjesus
one of Maxwell's demons
The 'growth -addicted world economy' is still growing. Very quickly in many parts of the world.
But where growth stops, the last thing you want to be caught with is beer-tokens. You want to own real things during a recession, not money. Of course, the money-jugglers do well enough in a recession as they take the real things off the people they loaned to during the boom who cannot now keep up the repayments.
But where growth stops, the last thing you want to be caught with is beer-tokens. You want to own real things during a recession, not money. Of course, the money-jugglers do well enough in a recession as they take the real things off the people they loaned to during the boom who cannot now keep up the repayments.
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