Free Market: greed.../private sector vs public sector

[AtlasShrieked]

Rockefeller founded Standard Oil. During the "guilded age", his monopoly brought down the price of oil quite a bit. And back then, politics were (are?) split into two groups--Rockefeller men (republicans) and JP Morgan men (democrats).



If he made money through government intervention, then that's not exactly a damning example of the evils of the free market, is it?

DAMNING: NO.

what it is is an example of how some free marketeers play hard and fast with then truth. Perot is an example of people who've made it big with lots of help from the public system yet who play the self made man myth for all it's worth. what I object to is how he is sometimes held up as an example of rugged individualism and self made American businessman when to me he is a parasite who forgot where he came from and where he got his start.

 

[sealybobo]

GO AWAY!


there is a whole area for conspiracy theories.


STOP HIJACKING THINGS WITH YOUR MORONIC IDEAS.


call me on what you think is bullshit? be specific.

a guy voting for ron paul opened my eyes to what's really going on. if you don't want to know why you have no money and who's responible, fine.

and what pearls are you shitting to call me on my theories? the truthis, you don't know shit if you think what i'm saying is wrong. or you are one of them. maybe this site is controlled by neo cons too? lol I tell facts. you don't like facts? weird...

 

[sealybobo]

GO AWAY!


there is a whole area for conspiracy theories.


STOP HIJACKING THINGS WITH YOUR MORONIC IDEAS.

sorry my facts scare you. here is more proof. the tele coms just got immunity. who was the leading democrat fighting for that? rockafeller? wake up america. I once was lost but now i'm found. was blind but now I see.

 

[Annie]

my use of Perot was in the context of government contracts and wealth made through contracts that are not so much a free market but a helping hand.

your comment about soros was what? you mentioned markets and then threw in something about greed and profiting and soros. I smell a partisanship thing that smacks of what goes on here all the time.

knocking how Perot made his money is not necessarily knocking the man's ideology. the way you threw in Soros was some silly sort of jab at what...progressives, liberals, democrats? it certainly wasn't a knock against the rich.

the obsession the right has with soros always raises a red flag. it's like when righties mention Clinton ...I hear blow job...which is what the impeachment (failed conviction) was all about.

How exactly do you think Soros 'earned' his money? Making something? He did what you supposedly decry. Speaking of partisan.

 

[editec]

How exactly do you think Soros 'earned' his money? Making something? He did what you supposedly decry. Speaking of partisan.

Soros was a currency speculator. Now I know that many people think speculators are bad people, but essantially it's an honorable trade that provides liquidity to those who want to limit their risks stemming from currency transactions.

Specualtors in markets generally serve a value purpose in the systems we have today.

They take big risks and sometimes they get big rewards and sometimes they get their asses handed to them, folks.

from Wikipedia

On Black Wednesday (September 16, 1992), Soros became immediately famous when he sold short more than $10 billion worth of pounds, profiting from the Bank of England's reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or to float its currency.

Finally, the Bank of England was forced to withdraw the currency out of the European Exchange Rate Mechanism and to devalue the pound sterling, and Soros earned an estimated US$ 1.1 billion in the process. He was dubbed "the man who broke the Bank of England."

The Times October 26, 1992, Monday quoted Soros as saying: "Our total position by Black Wednesday had to be worth almost $10 billion. We planned to sell more than that. In fact, when Norman Lamont said just before the devaluation that he would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell."

According to Steven Drobny,<SUP class=reference id=cite_ref-11>[12]</SUP> Stanley Druckenmiller, who traded under Soros, originally saw the weakness in the pound. "Soros' contribution was pushing him to take a gigantic position," in accord with Druckenmiller's own research and instinctsbefore the devaluation that he would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell."

 

[sealybobo]

whoever said it, don't be naïve to think ruthless business men regulate themselves. they broke up to seem fair, but at the same time lobby congress to give them more and more until they take too much.

and I don't want a rockafeller in the dem party. he just gave telecoms immunity. proof the banks really own america. all we have to do is break em up and split their $. they stole it from us so why not?

 

[Zoomie1980]

Most "market failures" aren't truly failures to begin with, but rather things that people just don't like, but which need to happen to get the least awful results (ie, the price of gas going up).

As far as helping people via charity, the private sector also does a superior job. "Private" doesn't necessarily mean for-profit.



Mandating that honest information be provided isn't the worst thing that government does. Still, I have to point out that providing information and even regulating product quality are things that can be (and are, sometimes) done by the private sector. UL provides a seal of approval for well-engineered electronics. API and ISO inspectors come to my workplace a few times a year to re-certify us.

Markets do not always work. At times, government has to step in to either curb excesses or simply stablize things. The earliest I can think of of a good government act was busting the big Trusts back in the late 19th century. Capitalism and functioning market had ceased to function and it took breaking up the big trusts to finally right things.

The last government action to right a failing market that I was personally involved in was the soybean market of 1990. Speculation ran completely overboard and bean went from the high $4 range to almost $15 overnight because of runaway speculation brought by extreme drought in the US and massive crop failures in the Southern Hemisphere (mostly Argentina and Paraguay). The Gov't stepped in in two ways and pretty much elimiated contract sales and shorts to only those who dealt in the physical crop (producers, mills and shippers) and put a daily 200pt limit in. The did the same thing to Cotton in a runaway speculation in the late 70's and the 200pt limit and contract quantity limits exist in that market to this very day.

Same thing is coming to oil and maybe gold. Of course with gold, you can just buy coins all you want to and don't have use futures.

 

[Zoomie1980]

Soros was a currency speculator. Now I know that many people think speculators are bad people, but essantially it's an honorable trade that provides liquidity to those who want to limit their risks stemming from currency transactions.

Specualtors in markets generally serve a value purpose in the systems we have today.

They take big risks and sometimes they get big rewards and sometimes they get their asses handed to them, folks.

from Wikipedia

Speculators, CONTROLLED BY LIMITS, provide liquidity service for a futures market. Those markets are supposed to exist to provide a means for those who have to actually deal in the commodity to be able to protect their negotiated positions without having to worry about the volatility of daily price fluctuations, as they usually do not move enough during a day of trading to make a big difference while producers, shippers, and consumers establish their positions. Speculators allow those positions to be established in a timely matter.

But when a market, without limits and with so much pressure that legitimate dealers in the physical commodity cannot establish positions to protect themselves, as is the case in oil, the market is OUT OF CONTROL. And the oil market is a prime example of a futures market that is completely and utterly out of control.

The NYCE is an example of a CONTROLLED market. Contracts have a daily 200 point limit and there are only enough contracts offerred to cover actual PHYSICAL supplies plus about 10% or so for LIMITED speculative positioning for liquidity's sake. There are also mechanisms in place to "flush" the speculators from time to time when the regulators deem speculation to be getting out of hand....

 

[Toro]

Same thing is coming to oil and maybe gold. Of course with gold, you can just buy coins all you want to and don't have use futures.

They won't do it with gold. There's no reason to. Incremental demand is coming primarily from ETFs rather than futures.

They might do it with oil, though. The problem with attempting to do so, however, is that it will drive trading off the US markets and may not have the desired effect. They'll just trade oil elsewhere.

You can buy gold proxies elsewhere, for example. I can go to my online broker and buy gold ETFs in Canada, Australia and the UK.

I would expect some limits on institutional investments in commodities.

 

[gonegolfin]

But when a market, without limits and with so much pressure that legitimate dealers in the physical commodity cannot establish positions to protect themselves, as is the case in oil, the market is OUT OF CONTROL. And the oil market is a prime example of a futures market that is completely and utterly out of control.

The part of the oil price runnup that is due to speculation, is not due to the long speculators (Ex. index funds) that certain politicians are whining about (Obama is the perfect example here). It is actually the short speculators that took the other side of some of these trades. Meanwhile, this group is lobbying those in power to get them out from underneath their remaining short positions (the remaining positions they have not covered during the price doubling of the past ten months).

Brian

 

[gonegolfin]

They won't do it with gold. There's no reason to. Incremental demand is coming primarily from ETFs rather than futures.

I would argue that there is an inherent short manipulation bias here, certainly not a long one. The majority of the short position in Gold (as well as Silver) is concentrated among a small number of primary dealers. The long positions are quite diverse.

Brian

 

[gonegolfin]

They won't do it with gold. There's no reason to.
I would expect some limits on institutional investments in commodities.

Without the same rules for the short side, it would not be a level playing field.

Brian

 

[sealybobo]

all I know is exxon just won the irac contract, so why didn't that good news make oil prices go down? don't answer that cause i'll want to punch you in the face. lol the answer is the repubs are letting the oil industry f us. in 02 to 05, the gop congress passed a law that said the oil companies never have to pay more than $53 a barrel. we need to socialize oil, medicine, And take back the federal reserve. who owns th fed res? find out. it wil blow your mind if you get it.

 

[BaronVonBigmeat]

I've gotta disagree. I work in capital markets. I have seen three enormous market failures over the past 10 years.

I generally am a strong proponent of markets. I just don't believe they work all the time.

The most recent failure has been caused by government, and I suspect that the others were too.

First, they push home ownership via Fannie Mae and Freddy Mac. Then they push it further, by forcing banks to extend credit to subprime borrowers, in the name of combating discrimination. Then the federal reserve pushes down interest rates after 9/11 as hard as it can, and the chairman of the fed Alan Greenspan even goes on record saying that ARM loans are a great idea for average homeowners. And of course the federal reserve has for a long time stood by to bail out big banks and other corporations in case they do something stupid--thus creating a moral hazard.

So then banks and homebuyers act stupid, in accordance with a grossly distorted market...and we call this market failure?

The best example is public education. In a completely efficient market, when one is entering school at the age of five, one would do a discounted cash flow of the five year old's earnings over her lifetime. But, that of course, isn't feasible because it is unknowable. If you make it all private, then many people will not be able to afford an education, which diminishes the collective skills of the nation. An educated population is enormously important for economic development.

You know what's even more important than an education? Food. You can go months without education. Not so for food.

Now if you were to say that government should take over food production because it's a really really important commodity, you'd be laughed at and called a crank. Schooling should be paid for by parents (it would be a lot easier once the property taxes currently paying for schools were repealed).

At the very most, government should limit itself to paying for those who can't afford it, like it does for rent and food. Not that that's really necessary; private charities can and did cover the poor. Our adoption of the Prussian public school model had nothing to do with extending school coverage to poor families. (Before public education, Alexis de Tocqueville remarked how well-red and literate americans were. Would he say the same thing today?)

 

[BaronVonBigmeat]

Markets do not always work. At times, government has to step in to either curb excesses or simply stablize things. The earliest I can think of of a good government act was busting the big Trusts back in the late 19th century. Capitalism and functioning market had ceased to function and it took breaking up the big trusts to finally right things.

The trustbusting laws of that era were due to Rockefeller's politicians passing laws aimed at JP Morgan's companies, and visa-versa. Of course the main trustbuster was competition or the threat of competition from smaller companies, and/or members of a cartel looking to weasel their way out of a deal. Trusts rarely work without government muscle to limit competition and keep members in line. That's why firms back then had such a hardon for protectionism. Standard oil had something like 85% of the oil market when the government started it's case against them; by the time it was split up, it had fallen to 60%. Even though they were still the cheapest supplier of oil, and had driven the price down just as Carnegie did with steel.

 

[editec]

Rockefeller ended up richer when they broke of Standard Oil, than he'd been when it was intact.

Turned out that he was still the majority stockholder in most of the seven sisters and those sisters were worth more parced out than run under one company.

Now that we've basically abandoned the antitrust laws (thanks to Regan folks) we've seen its effects most obviously in the media business.

That's why basically the news reporting has gone to crap.

Where there were once thousands of independent media outlets, there are now merely scores of them.