Re: UNITED AIR LINES TO LAY OFF 950 PILOTS

On Sat, 28 Jun 2008 18:40:34 +0200, Mxsmanic <mxsmanic@[EMAIL PROTECTED]
>
wrote in <dbqc64lgm0jjef8okun3i4hc84u4k50554@[EMAIL PROTECTED]
>:

>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/business/jan-june08/oilprices_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.