If Wall Street's going to stick with casino capitalism, maybe it's time to treat it like the casino it actually is.
The report says that "well-known financiers as Warren Buffett and Felix Rohatyn have called derivatives 'financial weapons of mass destruction' and 'financial hydrogen bombs.'" Not surprisingly, industry groups disagree. So expect the right to pull their "worst thing ever" routine again.
If you think about it, investing in general and derivatives in particular have a lot in common with parimutuel betting -- like in horse racing. At the track, the odds aren't set in stone and betting can affect what a winner pays after you've placed your bet -- i.e., if a lot of people bet on the same horse, the odds adjust accordingly. A crooked track could use this to increase their profits -- paying out less by having shills place bets -- but that would be illegal.
Likewise, public opinion plays a part in the market and derivatives dealers can manipulate prices in similar ways. In many cases (e.g., short selling), these manipulations aren't at all illegal, even though they screw people without the money or connections to manipulate prices. You know, people like you.
McClatchy Newspapers:Sen. Maria Cantwell wants to use state gambling laws to regulate parts of Wall Street, saying someone needs to police financial markets where "casino capitalism" involving highly speculative trades she likens to sophisticated betting continue unabated and threaten to create yet another financial crisis.
"She's going for their jugular," Michael Greenberger, a University of Maryland law professor, said of the effort by Cantwell, a Washington state Democrat. Greenberger was a top official at the Commodity Futures Trading Commission during the Clinton administration who unsuccessfully fought to regulate such trading.
Cantwell wants to repeal parts of a 2000 law that barred states from using their gambling laws to help rein in the nearly $600 trillion derivatives market.
The report says that "well-known financiers as Warren Buffett and Felix Rohatyn have called derivatives 'financial weapons of mass destruction' and 'financial hydrogen bombs.'" Not surprisingly, industry groups disagree. So expect the right to pull their "worst thing ever" routine again.
If you think about it, investing in general and derivatives in particular have a lot in common with parimutuel betting -- like in horse racing. At the track, the odds aren't set in stone and betting can affect what a winner pays after you've placed your bet -- i.e., if a lot of people bet on the same horse, the odds adjust accordingly. A crooked track could use this to increase their profits -- paying out less by having shills place bets -- but that would be illegal.
Likewise, public opinion plays a part in the market and derivatives dealers can manipulate prices in similar ways. In many cases (e.g., short selling), these manipulations aren't at all illegal, even though they screw people without the money or connections to manipulate prices. You know, people like you.
