By Raman Jokhakar, Tarunkumar Singhal, Chartered Accountants
fiogf49gjkf0d
New Page 1
34 Are speculative traders parasites or making gold from
dross ?
The global financial market has become ‘a monster,’
responsible for ‘massive destruction of assets,’ according to the President of
Germany and former head of the IMF, Horst Kohler. It ‘grotesquely’ remunerates
its executives, he added.
According to Kenneth Griffin, founder and head of the $ 20
billion Citadel Investment Group — one of the biggest and most successful
American hedge fund companies — international finance has been functioning on
the judgment of ’29-year-old kids’ who ‘control the capital markets of
America . . . young guys right out of business school.’
As a general rule, the margin required to buy an oil futures
contract is 10%. Pledge $ 10,000 and buy $ 100,000 worth of oil. Or why be a
piker ? Put up $ 100,000 and buy a million-dollar contract. The price goes up
one dollar five minutes later and you’ve made a million.
These are not transactions between producers and consumers,
when the classical economic rules would function. These trades, unregulated,
have virtually no useful economic role. They have become a form of parasitical
professional gambling that distorts the transactions between producers and
buyers.
Kohler compared the speculative bankers with alchemists, who
purported to make gold from dross. It is not a bad comparison, and our
contemporaries have, thus far, done better than their medieval counterparts, who
often ended burned at the stake.
(Source : Daily News & Analysis, 25-5-2008)
