Comments on: Nonsense on Speculation http://cafehayek.com/2008/07/nonsense-on-spe.html where orders emerge Mon, 16 Jan 2012 02:06:33 +0000 hourly 1 http://wordpress.org/?v= By: Martin Brock http://cafehayek.com/2008/07/nonsense-on-spe.html/comment-page-1#comment-27647 Martin Brock Tue, 22 Jul 2008 20:33:29 +0000 http://localhost/wordpress/?p=3171#comment-27647 <p>"... speculation accounts for the price fluctuations ..."</p> <p>"... the guys generating all of the speculation ... are responsible for the price movements, not the speculators."</p> <p>These statements are consistent. If I credibly threaten to nuke all the oil refineries in Saudi Arabia, people will immediately begin offering more for credible promises of future oil delivery, fearing a sudden cessation of oil deliveries from a major supplier. This rise in the price of oil is simply inevitable. If you didn't bid up the price, someone else surely would. Blaming these bidders for the rising price is absurd. Obviously, I'm to blame, because I've generated the speculation.<br /> </p> "… speculation accounts for the price fluctuations …"

"… the guys generating all of the speculation … are responsible for the price movements, not the speculators."

These statements are consistent. If I credibly threaten to nuke all the oil refineries in Saudi Arabia, people will immediately begin offering more for credible promises of future oil delivery, fearing a sudden cessation of oil deliveries from a major supplier. This rise in the price of oil is simply inevitable. If you didn't bid up the price, someone else surely would. Blaming these bidders for the rising price is absurd. Obviously, I'm to blame, because I've generated the speculation.

]]> By: vidyohs http://cafehayek.com/2008/07/nonsense-on-spe.html/comment-page-1#comment-27631 vidyohs Tue, 22 Jul 2008 16:31:35 +0000 http://localhost/wordpress/?p=3171#comment-27631 <p>martinduck,</p> <p>First you say:<br /> "however, when Morris says that speculation accounts for the price fluctuations, he's clearly right about that."</p> <p>then you say this:<br /> "They are responsible for the price movements, not the speculators."<br /> Posted by: Martin Brock | Jul 22, 2008 11:27:50 AM</p> <p><br /> Either the speculators are responsible for the price fluctuations or they are not.</p> <p>Which is it martinduck, me bucko? Chose a side, pick a partner, get off the fence, one or t'other ya know?</p> martinduck,

First you say:
"however, when Morris says that speculation accounts for the price fluctuations, he's clearly right about that."

then you say this:
"They are responsible for the price movements, not the speculators."
Posted by: Martin Brock | Jul 22, 2008 11:27:50 AM

Either the speculators are responsible for the price fluctuations or they are not.

Which is it martinduck, me bucko? Chose a side, pick a partner, get off the fence, one or t'other ya know?

]]> By: Rudy http://cafehayek.com/2008/07/nonsense-on-spe.html/comment-page-1#comment-27646 Rudy Tue, 22 Jul 2008 14:09:23 +0000 http://localhost/wordpress/?p=3171#comment-27646 <p>Thx Don, great response.</p> <p>Rudy<br /> </p> Thx Don, great response.

Rudy

]]> By: Martin Brock http://cafehayek.com/2008/07/nonsense-on-spe.html/comment-page-1#comment-27645 Martin Brock Tue, 22 Jul 2008 11:27:50 +0000 http://localhost/wordpress/?p=3171#comment-27645 <blockquote> The core offending passage is here: </blockquote> <p>I see nothing offensive or incorrect in this passage, except the attribution of recent price fluctuations entirely to speculation over offshore drilling. Opening more areas to offshore drilling could not much affect the market for oil over the term of these contracts, so I don't attribute recent speculation to this event. The recent speculation seems more related to the prospects of war with Iran; however, when Morris says that speculation accounts for the price fluctuations, he's clearly right about that.</p> <p>I agree that limiting access to the oil futures market is a mistake, and I have no problem with speculators. They're right to bid up the price of oil when the prospects of war with Iran seem so dire. I have a serious problem with the prospects of war. All of this talk about "speculation" is clearly camouflage for the guys generating all of the speculation, like all the cosponsors of the Congressional resolution advocating unprovoked acts of war (including a blockade) against Iran. They are responsible for the price movements, not the speculators.<br /> </p>

The core offending passage is here:

I see nothing offensive or incorrect in this passage, except the attribution of recent price fluctuations entirely to speculation over offshore drilling. Opening more areas to offshore drilling could not much affect the market for oil over the term of these contracts, so I don't attribute recent speculation to this event. The recent speculation seems more related to the prospects of war with Iran; however, when Morris says that speculation accounts for the price fluctuations, he's clearly right about that.

I agree that limiting access to the oil futures market is a mistake, and I have no problem with speculators. They're right to bid up the price of oil when the prospects of war with Iran seem so dire. I have a serious problem with the prospects of war. All of this talk about "speculation" is clearly camouflage for the guys generating all of the speculation, like all the cosponsors of the Congressional resolution advocating unprovoked acts of war (including a blockade) against Iran. They are responsible for the price movements, not the speculators.

]]> By: PaulD http://cafehayek.com/2008/07/nonsense-on-spe.html/comment-page-1#comment-27644 PaulD Tue, 22 Jul 2008 10:16:19 +0000 http://localhost/wordpress/?p=3171#comment-27644 <p>Over the years I have had countless discussions with liberals regarding whether free markets prices adequately reflect the long-term. Their arguments have been along the lines that free markets reflect only short-term, immediate influences on prices. <br /> I have always argued that this was bunk and pointed out that speculators make certain that current prices reflect long-term influences on prices. If they did not, speculators could make alot of money buying long-term options for a good. <br /> Now it is odd to watch many people who once complained about the shortsightedness of markets are now complaining about the role of speculation in incorporating future events into the current price of oil. </p> Over the years I have had countless discussions with liberals regarding whether free markets prices adequately reflect the long-term. Their arguments have been along the lines that free markets reflect only short-term, immediate influences on prices.
I have always argued that this was bunk and pointed out that speculators make certain that current prices reflect long-term influences on prices. If they did not, speculators could make alot of money buying long-term options for a good.
Now it is odd to watch many people who once complained about the shortsightedness of markets are now complaining about the role of speculation in incorporating future events into the current price of oil.

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