I don't know about who is trading derivatives now, but I know from earlier
studies, may were sold to people who did not know what they were doing --
according to Frank Partnoy's book.
I am now looking at
Bryan, Dick and Michael Rafferty. 2006. Capitalism with Derivatives: A
Political Economy of Financial Derivatives, Capital and Class (NY: Palgrave
Macmillan).
They write:
70-1: "A conventional notion that equity involves ownership and
debt does not is therefore also broken down: financial
derivatives have transformed the role of capital as property and
as social relation and merged the categories of property and
finance. In so doing, financial derivatives are helping to break
down the distinctiveness of all particular forms of capitaJ, and
serving to bring to the fore the characteristics that al1 forms of
capital within capitalism share in common: the social relations of
capitalist competition."♦
Is this stricltly true i.e. the financial markets being a zero-sum game?
Forgetting for the moment the nonsense about different utility curves etc, the
options-futures markets as I understand it is almost entirely for the big boys
i.e. the Morgan Stanleys, Goldman Sachs, Merrill Lynch, Morgan-Chase and their
like. In the last five years I believe *ALL* of these companies have been
making massive trading profits - so who is losing money? An Amarath here and a
Refco here surely does not account for all those massive Wall St profits and
bonuses? What are we missing? My favorite theory is that there is money
creation going on in the futures market i.e. it is a positive sum game with a
massive barrier to entry. Any comments?
-raghu.
Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901
www.michaelperelman.wordpress.com
