On Sat, 28 Jun 2008 18:40:34 +0200, Mxsmanic
wrote in :

Robert M. Gary writes:

Its wonderful to hear the opinion of people who have no idea how
economics and market financing works. Futures are key to the financial
stability of the industry. If you can't sell futures you don't know
what price you are guaranteed and you can't finance anything. Futures
contracts are somethin you can take to the bank.

Futures, like virtually all speculation based on worthless paper, are a form
of legalized gambling.


Of course, there is an element of gaming in equities, bonds, and
futures, but they do have a fundamental purpose:


http://www.pbs.org/newshour/bb/busin...ces_06-24.html
PETER BEUTEL: Well, Stephen is absolutely correct, but I'll tell
you the genesis of all commodities. It started with a farmer going
to a banker and saying, "Look, I need money to buy seeds and to
have somebody that will water my crops." The banker says, "Fine,
how do I know what price you're going to have in September when
you actually bring this corn to harvest?" The farmer says, "Well,
I don't know."

So the farmer then went to a futures market. And the futures
markets were created.

In March, the farmer goes and says, "I need to get a price for
corn in September." The speculator was born. The speculator says,
"I will give you $3 a bushel come September for your corn." The
farmer sells it to that speculator. The speculator now takes the
risk that the price will go lower, but also takes the potential
reward that maybe it will go higher.

But the farmer is happy, because he can now go to the banker and
say, "I will sell my corn for $3 a bushel in September. Please
loan me the money." The banker gives him the money. He plants the
corn.

This simple idea has been extended to a number, a plethora of
different commodities, and it's the same concept, but without the
speculator, this poor farmer could never get his bank loan.

What has happened now that is different than, say, what had been
going on for 100 years is that now we have some traders that
really don't know what they're doing. A lot of them are union
pension funds, college foundations, people we normally think of as
good guys.

They have been buying and holding commodities, unlike most
speculators, who buy, then sell, then sell, then buy, who are
equally as comfortable selling things they don't have as they are
buying things they don't want.

These guys, the new investors, have been buying and holding. And
this has created a different signal. The market interprets it as
long-term end users. These people are really speculators, only I'd
be willing to bet many of them don't even know it.

And I'd be willing to bet that, if you went and told some of these
people, one, that they're helping to push the price higher and,
two, what incredible risks that they're taking on that they'd be
mortified that they were actually doing this.