My postscript:
In fact this points to a larger problem of speculation in general, that is eating its way across the world. Lehmann speculated earnings & sold CDOs based on that. But what we dont understand, just because it comes from the giants, is that speculation is, after all, a form of gambling. You are no better than in Vegas, and outta get your hand burned once in a while.
When gambling you need to be smart to place your bets, same goes for speculation. Lehmann committed the grave mistake of falling for its own game!
I can imagine if the bartender drank @ his job everyday, where would he land?
I am yet to form an opinion on whether speculation should be allowed in India or not. We are still debating that as a nation, while each day a new kind of commodity exchange comes up.
I met a few of my school friends a month ago. Quite a few of them were into commodities like gold, spices & what not! What hit me was that they were just trading & speculating for profit. While I don't necessarily agree or disagree with their job profile, I wish to point out that speculation in general doesn't look too much on the right side to me.
I can't imagine bright shrewd people wasting their time ONLY earning money by speculation & not contributing to anything except wealth creation. Wealth is not the end, it is the start to create things, explore & evolve the world. If we are to keep haggling (the old term) on existing resources like oil, gold, spices, every food, I dont think we are doing much for securing them. In fact, we are artificially creating a bubble (as shown in Shyam's example) & forcing others to either join or perish.
The time has come where the financial system is falling into itself, not because the commodities that it relies on are wavering, but because the complex web of fantasies (this word is better than speculation, speculate my foot) the financial world created around itself, coming to a point where you dont even need to actually see or physically move the commodity that you have bought, is so dumbing a form of currency trade, that it defeats the purpose of having a currency.
Currency was invented to give a solid platform to compare things, avoid barter & have some future security against selling perishables. Imagine that basic concept being applied to the financial world & then multiplied millions of times over! In the end free-riders rule the stock, because to even unearth them, will take so much effort, that it is better to let them off & hope that others wont follow them!
More on free-riders later.
Coming back to US slowdown, I think the world deserves the slap on its face for creating a rotten-since-inception concept & then letting it prevail for such a long time. I look at the share market where all companies are showing profits, yet speculation is taking it to half its potential (as it took it to double its actual value). No one stops their business for hagglers. They can keep shouting themselves hoarse on the floor all they want. The wealth created is ours, by our bare hands. They have no right to squander it away!
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