It's in vogue, you could say it's "in". What? Well swear on nasty speculators from Wall Street, who make such immoral money from someone else's misfortune. One would like to believe that it is they who are to blame for the expensive bread, the economic crisis or the currently bad mood of any of us. But is this fashion wave justified? Let's look at what is not visible…
First, let's look at what it is textbook speculator:
Speculators occur in volatile markets, where the price can suddenly rise or fall sharply. It is logical - practically the first speculations in history appeared in agriculture, where the price is determined by the harvest and is therefore difficult to predict. Why? Well, because the crop is affected by unpredictable influences, such as weather, crop diseases or the spread of pests. A small harvest means an increase in price and a large harvest means a decrease in price.
The harvest can change unpredictably from year to year, and therefore the price along with it. And speculators began to gain in that.
Let's introduce some Mr. Novak. This gentleman is a specialist who focuses on the wheat market and speculates on a change in its price. In April, he received information that rust had appeared on wheat and was slowly spreading to important growing areas.
From this he concluded that the wheat crop would be slightly lower than in the past and therefore that its price would rise. He will therefore speculate on a rise in price - he will start buying wheat in the spring to sell it at a higher price in the autumn.
Suppose that the price of wheat in the spring is CZK 3000 per tonne. Mr. Novák estimates that its autumn price will increase to CZK 4 per tonne. So Mr. Novák will start buying wheat in the spring, those who have it in stock will be happy to sell it.
However, Mr. Novák is not the only speculator with wheat. There are many similar speculators on the market, so in the spring wheat will start to be bought en masse in the spring. This will increase the price of wheat. Suppose that spring purchases by speculators increased the spring price of wheat from CZK 3 per tonne to CZK 200. This increase in the price of wheat will result in a reduction in its spring consumption - more expensive wheat means more expensive flour, more expensive bread and more.
Time goes on - and what will happen in the fall? After a bad harvest, the price of wheat begins to rise in the fall. It could grow up to 4 crowns per tonne, but as speculators start selling it from stocks purchased in the spring, the price of wheat will rise less - for example to 200 crowns.
So the speculator Novák will buy his future (summer) wheat crop from the farmer Svoboda in the spring, with Mr. Svoboda delivering it only in September.
Mr Svoboda is pleased to have sold his summer crop in April, unaware that he is selling it at a lower price than wheat is likely to have in September. Although he is a grower, he is not a specialist in the wheat market - he can at most estimate his own harvest, but not the total yield (and therefore the market price) of wheat.
Now you probably think of that that's terriblethat Mr. Novák robbed Mr. Svoboda! However, this is not the case. Imagine the opposite situation - what if Mr. Novák, on the basis of information, estimates that the wheat crop will be large, ie that the price will fall? Mr. Novák will speculate on a drop in the price - he will sell wheat to traders in the spring with a delivery date in September. When the delivery date is approaching, he will buy the wheat just harvested from Mr. Svoboda so that he can fulfill the contracts concluded in May. However, with these purchases, speculators increase the autumn price of wheat. In this case, Mr Svoboda can thank speculators like Mr Novák, because without them, he would receive a lower price for his harvest.
(The example is partly taken from the textbook Economics by Mr. Robert Holman, as I really don't know a better example).
So, purely theoretically, speculators stabilize prices those products whose price could be subject to large fluctuations. Of course, a speculator can be mistaken and lost. However, frequent mistakes would exclude a speculator from the market, replace him with more successful ones with better estimates, and better information.
Financial market speculators are quite similar to those in the agricultural commodity market. Financial markets have their cornerstone in what they are named - in finance. Finance, it's mostly money. Money, that is central bank and state policy. Just as agriculture, the unpredictable effects of weather, disease and pests are unpredictable, the financial market is unpredictable. political decisions and central bank policy.
A few years ago, an analyst remarked a little mockingly, “How will the price of the dollar develop? Well, it depends on whether the US goes to Iraq or not. ”At that time, the invasion of Afghanistan began. So they are especially politicians and central bankers who make their decisions form features of the financial market. Like soil quality and climate, they are features of agriculture. So - at least outside the EU, that's the way it is.
Another important feature that shapes financial markets is the information that speculators follow. How is this information created? To a large extent, several factors contribute to them - firstly, they are knowledge -knowledge of general laws of economics, according to which some development can be roughly assumed. Secondly, they are zkušenosti from the past, and thirdly they are knowledge immediate developments mediated by the media, lobbyists, various agents and so on.
It can be compared to driving auta. When I graduated from driving school (and not so long ago), my instructor told me that it is very important to use rear-view mirrors while driving - to know if I can overtake, if there is free time in the lane where I want to join, and so on. . I would compare them to this use of rear-view mirrors zkušenostiwhen you need to look back from time to time. While studying driving school, I also had to read a textbook to know theoretically what each brand means and what traffic rules actually apply on roads. It's them knowledge. And in the end, she needs that knowledge immediate development, which is looking through the windshield ahead on the road to see if I have a turn or an obstacle on the road.
But what has happened in the past? Politicians and central bankers strongly affected the economy. After all - I wrote it once, in an article How we fought the economic cycle, or our path to slavery, today, I will transfer only that principle to the creation of information that has a strong influence on speculators' decisions.
So let's take a look at what has happened in the last few decades. At any sign of a cyclical recession (a very common phenomenon necessary for a market economy), politicians and central bankers have begun to intervene in the functioning of markets so that the recession does not occur as far as possible. As a result, there was a lot going on here long period relatively rapid growth. People (including speculators, they are also people, not Martians) have gained the illusion of endless growth and thus began to follow.
Again, I compare it to driving auta. The driver must be driving auta cautious, because the driving conditions are constantly changing - we have bends, potholes on the road and more. Politicians, however, did that road straightened. And he keeps trying to straighten it out. The driver will after some time come to the opinion (based on experience) that the road it was straight and therefore still will be straight - that is, there is no need to be careful. The state will then send to the markets false signals, false information. The state that actually creates an environment for financial markets, creates completely illusory environment - That completely straight road. However, the state cannot straighten that road indefinitely, one day it will run out of funds. At that moment, however, it will be fully revealed bad decision of speculators, which was based on illusory ideas and bad information provided to speculators by the state.
By constantly trying (and trying) to avoid cyclical fluctuations in the economy (= straightening the road), the state has given the opportunity to bad speculators to "weed out" the speculator market (= gave the opportunity to bad drivers) so that this "market" ceased to function ( = many drivers have stopped being cautious). When it manifested itself today failure of the illusory environmentcreated by states, politicians usually respond by beginning to directly determine the behavior of speculators in addition to influencing the environment.
It's as if the state has taught drivers to turn and let everyone on the road, even those who can't drive, and the moment this mistake is revealed, the state will start cursing the drivers and saying that their auto better to drive yourself. At least it will be more convincing to prove who is responsible for the collision, only in the future withmelt as the driver crashes.
It is completely ridiculous to swear and blame the mistakes of financial market speculators when they are it is the states that create and correct financial markets by their actions. This is not a failure of speculators, it is a failure of states that, with their de-facto nationalization of the financial market, have de facto devastated the entire market. For the last few decades, a virtually free financial market does not exist, since it is only an illusion of a free market, where the state strongly interferes with the market, but covertlyso that in case of problems he can throw speculators to the masses. People will vent their anger at them and the state can quietly continue to liquidate the financial market.
The state actually he made the speculators oxen, white horses, scapegoats. Speculators I can not for poor ratings by rating agencies, speculators I can not for the malfunctioning of financial markets, on the contrary, they are stateswhich these markets creates and which these markets most affected, these are the states that created the illusion of endless growth, which persuaded rating agencies to unrealistically evaluate many economies and to make bad decisions by speculators in the market.
If we complain today that speculators have committed some of the frauds that caused the current crisis, we should realize that they are and have just been States, which, by trying to "balance" the economic cycle, gave the pretext for a general one moral hazard, when everyone is in unrealistic debt and when no one sees a reason think about the futurebecause they all live in the illusion of endless growth. It is precisely the states that have become captains of that plane, when it was the intervention of states that gave the opportunity to carry out dubious financial machinations.
Again, the only thing that turns out is - the more the state wants to protect and help, the worse it turns out.