Invisible Markets

[RGacky3]

The derivatives markets at least in the United States is not on the open market, credit default swaps are also not on an open market, these are the most well known 'side bets' on prices.

These are things that are very new to Capitalism and are things that I think are not given enough attention to by Socialists. I think a lot of Socialists are stuck in the old way of Owner and worker, most have moved on to the modern way which is Executives and workers and the spreading of meaningless ownership (read as risk, because its not actualy controlling ownership) of stocks, there we have capital markets, still mostly dominated by what I would call the "buisiness class" which includes old time capitalists (corporate executives, buisiness owners, at least controlling owners) as well as new Capitalists (financial players, capital movers, money movers, wall street types).

The first type are still the masters of the universe, they still control the reaon production, and the resources, Socialists get that.

The second type is something slightly different, The stock and bond markets gave rise to it, however as more and more of the economy became dependant on those markets, which started to become more and more speculative, nowerdays however the Capital markets almost seem old and reasonable, they are on the open market, they are proportionally tied to tangeble value.

However now a huge part of the economy is capital Not tied to any tangible value, it might be tied to debt, prices, currency, insurances or whatever.

Its value is not at all preportional, i.e. a $1 debt can be hedged for $1000, and even further, when you throw that type of money around, what do you think happens to the value of that debt?

Its not on the open market, thats a big deal, because what it essencially does is hides tons and tons of value from everyone, and it gives false incentives that most people won't get. Not only that it also hides any responsibility for any problems that come out of it.

These sort of markets have changed capitalism significantly. It allows players in this market to significantly alter incentives, it can incentives crashes, it incentivises destroying economies that might be healthy. It allows players to create fake wealth out of nowhere and destroy real wealth out of nothing.

Really this sort of capitalism is really hard to fight from a lefists perspective, its not directly relyant on labor, regulation is'nt gonna happen any time soon.

So whats the Socialists response to this? How do you fight this sort of capitalist power?

[Revolution starts with U]

B doing what we should have been doing all along; seizing welth instead of money.
Sure, it's nice to demand a higher wage. But what we really need is for workers to have 50%+ control of ownership, and that comes by owning its stock.

[RGacky3]

But what we really need is for workers to have 50%+ control of ownership, and that comes by owning its stock.

I'm gonna have to 100% disagree with you there.

Stock ownership, unless its a real controlling share, i.e. the company is pretty muc not a public company is meaningless.

Most Public Companies are way way too tightly controlled by the board and executives to even begin something like that.

Stock ownership nower days has become very much disattached from ownership by virtue of speculation and side bets.

its MUCH more complicated than that, these derivatives guys can de value a stock through sidebets.

IF your talking about revolution (for you Buds out there all I mean by that is chang the whole system as opposed to not reform, not storming the barricades) the stock market would be gotten rid off, however first you gotta fight the finance industries power.

[Revolution starts with U]

I think as long as the monetary system still exists, the stock market is relatively progressive; allowing wide ranging people to invest in companies (jobs) which they would otherwise have no knowledge of.
What I want to see is control of the company in the hands of the workers. If they control the stock, they control who to give it to. (Hopefully) they would be far less likely to give it to someone untrustworthy.
(Of course ownership of the actual workplace would be good to).

[RGacky3]

the stock market is relatively progressive; allowing wide ranging people to invest in companies (jobs) which they would otherwise have no knowledge of.


No all that does is socialize risk and privatise profits. What it really does is get people to fund the ruling class AND ties THEIR wealth to corporate well doing, which is really a hedge against revolution, thats why corporations love to give out stock options, thats why private retirement funds are the prefered option amung Corporations than a government system.


What I want to see is control of the company in the hands of the workers. If they control the stock, they control who to give it to. (Hopefully) they would be far less likely to give it to someone untrustworthy.


The way most corporations work is that the board selects the executive which is ratified by the holders, who then selects the board (almost exactly like the Leninist model really). So for workers to have enough share to really change that system would be close to impossible. Before that happened the stock would be devalued completeley, or just diluted so that a controlling share would be impossible.

Plus my whole point here was how side bets, derivatives and credit default swaps are the new capitalist tool, some of those have to do with stocks, many don't.

Remember stocks don't have much to do with any real control in public corporations.

[Hoipolloi Cassidy]

"Invisible markets" - is that a technical term? Where can I find out more about this? One aspect of the concept I find interesting: prices in the "Invisible Market" (at least in the area that interests me, the art world) don't reflect value, let alone demand, instead they monopolize through the restriction of the "owners."

Thanks for any suggestions.

[RGacky3]

Its not a technical term, its one I'm just using it, the technical term is the derivative markets, hedgefunds, inside these things there are tons and tons of different markets, much of which is not on the open market.

Heres an interesting article in the Newyorker (http://www.newyorker.com/reporting/2010/11/29/101129fa_fact_cassidy) that basically admits flat out, that most of Wall Street does'nt create any real value at all, and that it infact plays off of the inefficiency of markets and manipulates them to create and profit from different bubbles and other market inefficiencies.

Keep in mind though that in these markets, actual securities (which are tied to capital with real value, although not nessesarily priced accordingly) are the things out of which these "invisible" financial instruments are based, and in turn have influence over. So technically speaking they don't monopolize anything directly.

[Havet]

sX4B4bMnOEU

[RGacky3]

Thats one idea, i.e. getting out of for profit banks in favor of credit unions and the such, but its also really unrealistic, and it also does'nt really change the securities situation. Also considering most peoples wealth is really insignificant, it won't change much.

Remember the top 1% control more wealth than the bottom 90%, so really, they are the ones with the keys.

[Havet]

Thats one idea, i.e. getting out of for profit banks in favor of credit unions and the such, but its also really unrealistic, and it also does'nt really change the securities situation. Also considering most peoples wealth is really insignificant, it won't change much.

Remember the top 1% control more wealth than the bottom 90%, so really, they are the ones with the keys.

If the top 1% control more wealth than the bottom 90%, how is it that the whole financial system almost collapsed when a portion of those 90% couldn't pay the mortgages back (the subprime mortgages)?

[RGacky3]

because people in wallstreet took those morgages, and made them into speculative investments, sold them off as exponentially growing securities, while they betted against them. They were sold of as part of solid securities and then heavily speculated on, which increases their effect exponentially, as well as betting against them.

After that it created a sort of spiral, it was'nt JUST the morgages.

BTW, you should know this stuff Havet, common now.


If the top 1% control more wealth than the bottom 90%

Your not denying that are you?

[Havet]

because people in wallstreet took those morgages, and made them into speculative investments, sold them off as exponentially growing securities, while they betted against them. They were sold of as part of solid securities and then heavily speculated on, which increases their effect exponentially, as well as betting against them.

After that it created a sort of spiral, it was'nt JUST the morgages.

But the mortgages triggered everything. And wall street folks are still speculating on people's money in bank accounts. You need to start thinking at what happens if people start to demand their money back, since most banks don't actually have money in them, but have invested that money in other projects, seeking profit.


Your not denying that are you?

I was just using that if as a logical consequence of the argument.

[RGacky3]

You need to start thinking at what happens if people start to demand their money back, since most banks don't actually have money in them, but have invested that money in other projects, seeking profit.


FDIC insured, no revolution, not only that but most people don't have that much money in savings, not a big deal.

Most of the money in the derivatives market is credit anyway, not actually peoples money, but it still has a huge effect.

[Havet]

FDIC insured, no revolution, not only that but most people don't have that much money in savings, not a big deal.

Most of the money in the derivatives market is credit anyway, not actually peoples money, but it still has a huge effect.

This is one of those discussions like the bubbles one we had. We'll see what happens on the 7th of December. If there is much addherence to the event, I believe a strong blow will be dealt. if not, then I am wrong.

[RGacky3]

well, we'll have to see, I'm not saying it won't be a big deal, but its not gonna change anything systemically.

[Havet]

I'm not saying it won't be a big deal, but its not gonna change anything systemically.

Agreed

[Revolution starts with U]

wait.. what's on the 7th?

[Bud Struggle]

wait.. what's on the 7th?


It's a day that will live in infamy!

http://www.ccdemo.info/PearlHarbor/PearlHarborDayRemembered.html

[Revolution starts with U]

Ya, I know that. But what is the event Havet is referring to?

[Bud Struggle]

Ya, I know that. But what is the event Havet is referring to?


Oh that's just Havet--with him you just have to go with the flow. :D

[RGacky3]

ON that date in france this guy, and some group is trying to organize a mass bank withdrawell.

I don't think its gonna have an effect because theres no way enough people will participate, and theres no way the people who make a difference will (i.e. the rich). Im my opinion this could make a difference if along with it came some sort of redistribution of wealth.

The power of the hedgefunders does'nt come from your average worker with a checkings and maybe a savings. In my opinion blind derivatives should just be straight up be banned, and also I think the leverage should be 1:1, honestly I don't trying to weaken the banks through withdrawels will change anything except bail the banks out.

What might happen is the credit market will crash (part of what banks do is risk other peoples money on behalf of rich people), because essencially it'll have to be the rich playing with their own money.

But that does'nt take away power from the hedgefunders to essnecially manipulate the capital market.


Oh that's just Havet--with him you just have to go with the flow. http://www.revleft.com/vb/invisible-markets-t145308/revleft/smilies/biggrin.gif

Or watch the video .... And learn French or Spanish :P

[Havet]

Ya, I know that. But what is the event Havet is referring to?

It was explained in the video I posted. Basically a lot of people became fed up with how banks caused this crisis, and have decided to go there and withdraw their whole savings from banks, as a way to punish them for their actions.

This is in contrast to the old fashioned way of dressing in black, picking some rocks and try to stone the building to death until the police arrives and arrests everyone. This time, they won't use weapons or protests. They will just strike the banks where it hurts the most. We'll see how that goes.

[Revolution starts with U]

Oh btw Bud. In Havet's quote of you, it's "well paying job." (They pay is good, they are paying you well) Learn some grammar ;)
All kidding aside. Unless the rich are going to join in with this boycott, it won't hit them where it hurts... really at all. In fact, they will just jack up their loan rates, and business owners will have to raise prices. There will still be money to lend, just a slight bit less.
It's a good idea, but it needs more with it. They should boycott the bank, and any company that doesn't join in the boycott.

[RGacky3]

Unless the rich are going to join in with this boycott, it won't hit them where it hurts... really at all. In fact, they will just jack up their loan rates, and business owners will have to raise prices. There will still be money to lend, just a slight bit less.


Thats the problem with any sort of "market based" resistance, it won't work because the rich own the market.


It's a good idea, but it needs more with it. They should boycott the bank, and any company that doesn't join in the boycott.

Which is gonna be every company, most likely, and you won't even be able know it.

Also keep in mind that hedgefunders can make tons and tons of money crashing economies or companies.

Even if peoples money in the bank is'nt effected perse, it has a compound effect on the economy.

[ckaihatsu]

IF your talking about revolution (for you Buds out there all I mean by that is chang the whole system as opposed to not reform, not storming the barricades) the stock market would be gotten rid off, however first you gotta fight the finance industries power.





[T]he idea [...] is to first revolutionize the *ownership* aspect solely, so that the mechanism isn't being controlled by the profit bribe-takers. It's almost like the liberal ideal itself -- that capitalism should be accountable to the larger public interest.

We know, however, that, under nationalization, it's the *workers* *only* who need to be the ones in control of the revolution, the nationalization process, the shop floor, and the state ownership. This would put the transition on a solid trajectory towards full communal control once all lingering bourgeois claims to ownership and control have been soundly defeated.

All of the basic, organic economic premises of an economy could be retained, but the *purpose* of its operation would be revolutionized so that the machinery could be diverted away from the no-one-at-the-wheel, irrational mode of capital accumulation that it's been stuck in ever since it began.

Instead of shattering the whole thing and trying to pick up the pieces at local levels the point is to keep the overall *machinery* intact and just repurpose it according to the will of the mass working class. It's a necessary step -- not Stalinist 'stage' -- so as to have an orderly transition and to keep in line with people's current practices, understandings, and expectations as to what an economy is *continuously* supposed to be able to do.





Thats the problem with any sort of "market based" resistance, it won't work because the rich own the market.


Precisely -- it's like trying to take down the house of someone you don't like by kicking at their walls with your foot.

But even *more* to the point is that "market-based resistance" is merely a publicity stunt, at best -- by constraining its actions to the monetary system it abdicates any claim to fully conscious politically sound intentionality, on a mass scale.

[Revolution starts with U]

"it abdicates any claim to fully conscious, politically sound intenentionality, on a mass scale" what exactly do you mean by that?

[ckaihatsu]

"it abdicates any claim to fully conscious, politically sound intenentionality, on a mass scale" what exactly do you mean by that?


I would liken it to the difference between representing your own best material interests through your own wording and actions, or hiring someone to do it for you.

Sure, we revolutionaries can't just snap our fingers and have an immediate revolution so instead there are incremental actions (of protest, etc.) that we see more regularly. These less-than-world-revolution actions are mere hollows of what we know to be the *best* actions for the working class' best interests, but such is the current state of mass political consciousness -- there are innumerable diversions and flavors of political bullshit that distract from decisive practice.

[RGacky3]

I honestly think that bangsters and hedgefunders are what they tycoons of industry was in the early 20th century, the rockefellas and such, I think these guys ultimately have more power than the major corporate executives, am I wrong?

[RGacky3]

A great documentary about the quants, they guys that do the math for the hedgefunders and banksters. Its interesting how these guys are very much a product of marxism and historical materialism when it comes to economics, but basterdized the concept to manipulate markets.

http://topdocumentaryfilms.com/quants-alchemists-wall-street/

All I can say is Goddamn!!!