Argh!
That should’ve read “even a nation of bright, thrifty and hardworking people, mr. NewtonsApple”.
Proofread, then post. Proofread, then post.
Norman exits, head bowed in shame.
The proponents of the Tobin Tax anticipate proceeds of Billions --with a “B”–of dollars a Day!
This money is to be used for ambiguous projects such as “promoting sustainable human developement.”
The money is going to come from someone who has money and be given to those that do not.
I do not think that it is unreasonable to assume a funneling of money from wealthy countires to poor countries.
Setting aside the great difficulties with collecting and distributing the tax, on principal such a tax is a tool for global socialism.
Considering that the US is one of the wealthiest nations, it is a credible hypothesis that the Tobin Tax would take money from the US (and other successful nations) and give it to others.
Now tell me, why is this a good idea for the US?
As a huge currency speculator, I can assure you there is a great deal of work involved.
The research of performances, the “gamble” of the purchase, the liability to other investors, the tracking of purchases and returns, the lightning speed that transactions must be made at. Im sorry but like any other stock broker, or investor, or speculator, I work my A** off to make my $.
Like heck I want some Anyhoo country to the north or anyother for that matter, taking my lifes work and earnings, cause they can hack it.
Currency speculation CANNOT undermine any nation even Luxembourg, becuase if it could it would have happened long ago. Trillions of dollars are earned yearly, for years now, can anyone name the country that disappeared or suffered for it?
YOu think our debt to Japan (in gold) isnt cashed by them so often when rates are higher? or that loans to other countries arent paid back when there currency is performing exceptionally well, thus cheating us of money? Its reality, its an art, its a job. The US may never see half of its debts repaid at the rates at which we loaned it or began debt in. Everyone plays the money markets to the advantage of their own country, everyone.
Is this the NAFTA of the money world? You want to take away jobs from US people because Canada and Mexico cant get it together and are tired of being second rate in the investment circles?
-N
Newt, since it has been repeatedly brought up that currency speculation does no good, could you share the benefits of it with us?
The speculation of money gives a government a temporary “boost” in the value of its currency, and its holdings. Buy low, sell hi.
I buy 1 million francs at say .85C (US), thus investing my US money (worth more) in the French, who can use my US money towards their debt or investments. For use of my money,I get the gained interest, they in return are on a short term loan.
The next day (or hour sometimes) the Franc is worth 1.00 (US), I sell having gained .15/ franc, and absorb the profits. The French, for whatever time period they had my money could have used it to invest in doing the exact same thing, but to some other country.
Its a common practice, and yes we lose sometimes, but research hopefully prevents this, plus we are not under the ruling of SEC in regards to insider trading. If I get a call from someone in the UK who says, buy now, and give me 5% for the tip, they are usually good tips. Thus its like insider info, yet legal.
If by this you mean, “I’m a fat person who once slipped a Canadian quarter to the hot-dog guy,” maybe. If you mean, “I trade currencies for a living,” it’s pretty clear that you do not.
Like when Soros beat the Bank of England? Or when currency speculation touched off the Asian crisis of ’98? Or when Korea’s currency crisis dragged them into the larger Asian crisis when their economic picture didn’t warrant it? You mean like that?
Indonesia? Mexico? Brazil? Ecuador? Russia?
Actually, that’s exactly what I think. First the BOJ’s claim against the U.S. is increasingly in Treasuries, not gold. Oh, and from time to time they threaten to sell the treasuries in large quantities in a rising rate environment, sending the bond market down a point or two until everyone realizes that they’re full of it.
Substantially all international loans to which the U.S. is a party are dollar-denominated.
We won’t even go into your mistakes in the second post.
So, to close, I hope that I’m right and that you are not a currency trader. If by some chance you are, please let me know where so I can short the stock.
Mr. Z, I’ll write up a little ditty on currency trading and post it tonight.
Livin’ on Tums, vitamin E and Rogaine
Yawn. whatt an asshole.
Hey David I want you to attach a title tag to people from now on. I want the above poster to be titled (under his poster name)
God damn know it all.
But remember buddy, I am so wrong, I am 25 and rich and live in a bigger house then you and your last 5 generations could have bought in all that time.
I see why so many people remain lurkers now. Cause a selective few I know every fucking thing people are the ones who CONSTANTLY ATTACK THOSE THAT ACTUALLY ENGAGE IN OR KNOW WHAT THEY ARE TALKING ABOUT.
-N
anyways
THanks to my ignorance as a matter of fact, my MAIDS live better than you do.
Seeing her walk by just now reminded me of that.
But hey have a nice day.
Seems to me that the items Manhattan cited were better explained by other financial policies. Indonesia, Mexico, Ecuador…hard to believe that their crisis resulted from currency speculation. My understanding was that they created too much in un-secured loans, thus circulationg too much currency, thus resulting in a greatly deflated currency which everybody then dumped.
But I do not know much about this whole game so I will defer to the experts.
My point is Newton that unless you have some substantative rebuttal, your credibility is shot.
Saying “Nyah, nyah, I’m rich so shut up!” does not give one much faith in your expertise in this arena.
Crap, I wwas hoping to learn something on this thread.
This is the second thread that I’ve read Newton’s ravings in and now I know why he is the way he is. Maybe an interesting topic for another thread should be “Does having money mean you are informed or even intelligent?”. In fact, I think I will open up said thread now.
PeeQueue
YOu will, Newton will deliver soon. I am off to find more backing here.
-I’ll be back
PQ-
I did get an education, a masters in fact. I love culture, art, ballet, opera, music, culinary arts, travel, and appreciation of beauty. So my education got me my money, and y money in turn got me more education. I can stand your comment, as I dont respect you. What I cant stand though is the lowly heel biting dogs. They have a comment, a belief, or thought, they snap it at you, in attempts to harm or hurt, then run, they have no purpose in this act. (now allege that I did the same in the mormonism thread so we can all see an illustration of your lack of understanding and inability to decide why the situations are different)
Corner them and they only fight like the lowly dog that they are, lignore them and they attack other pedestrians. Do you know what the point of this story is?
-N
heres a hint (half of my neighbors and family were mormon, the contempt I have for them and what I saw as blind following, led me to ask questions, they saw what I saw, but feared to change it or question it, now none of them are mormon, after much studying and searching for “truth”, its just another step in an education process)
BUT THIS BELONGS IN THAT THREAD
Hey Apple,
Bit off more than one could chew? Your manners on this thread are missing. We all get proved wrong occasionally on this page but, it really looked bad on you. Please accept my empathy for your misguided responses.
At least I’m not you. So I still have hope of recovery.
Sarcasm hurts doesnt it?
NA:
How did I run? I went and started new thread as I don’t want to hijack this one. Why are you continuing this argument here? This is not the place. I won’t attack back so as not to prompt you to do the same.
PeeQueue
no no, dont get me wrong PQ, no argument here.
Just adding my observation on the other thread, and it wasnt so much you as another poster.
Its okay, relax.
Smile
As promised, Mr. Zambezi, manhattan’s handy (and very simplified) guide to the benefits of currency speculation.
For purposes of this discussion, I will separate currency speculation activities into two broad kinds:
Those that occur between currencies with developed economies and at least some internal capital generation capability.
Those that occur between a currency associated with a developed economy and a developing one.
There is overlap, of course, of the benefits (and the dangers). But splitting it up this way may help people understand why the governments of developing economies are sometimes more likely to be attracted to the Tobin tax or other forms of capital controls. (What? Did someone mention the OP?).
Among developed economies
First and foremost is liquidity for non-speculators. Since about 80% of currency trading is done by speculators or hedgers, the other 20% can occur without creating short-term dislocations in exchange rates. Take Boeing (please!). When BA deliver a 747 to Japan, someone (usually the buyer) has to come up with $150 MM or so in USD, using Yen to get it. If that $150 MM represents only (made-up-number alert) 1/2 a day’s trading instead of 2 ½ days, the purchasing of dollars will move the exchange rate less. This benefits not only Boeing and the buyer, but the poor little import/export guy buying wasabi during the same timeframe.
An additional benefit is to impose, on the margin, discipline on the banking systems of developing countries. Most currency speculation that occurs among developing countries is for very large amounts for very short periods of time (or derivatives that have the same effect). The goal is to make a profit from short-term deviations in exchange and interest rates rather than to bet on the “crash” of one currency vis a vis another. The instantaneous flow of funds across borders tends to smooth out interest rate changes, just as a New York bank’s ability to buy and sell a CD in Florida would tend to even out national interest rates, adjusted for risk of course.
Speculation also provides a market for derivative products for long-term investors. European countries can borrow money in the US markets (which is much more developed for long-term bonds) and hedge the interest (and even the principal) payments that they will have to make. This lowers the cost of capital to the borrower while increasing promised returns to the lender. But that arbitrage is only available if there is a large, developed market to trade the “swaps” necessary to put the hedge on.
Between developed economies and developing ones
The main benefit is increased access to capital for the developing economies. Not only is the developed-economy currency devoted to currency speculation a source of capital in and of itself, but long-term investors want to see a developed exchange regime before they place money into an economy (that is to say, people won’t build a plant in a country if they don’t have hope of repatriating profits to the investing company’s home currency).
The other big benefit (or danger, if the country is an offender) is to lay bare the macro-economic faults of the developing country’s government. Mr. Zambezi said earlier that “the items Manhattan cited were better explained by other financial policies.” In many cases this is exactly right. In the short term, the “piling on” of currency speculators can and often does exacerbate the damage already done by poor domestic policies. In the intermediate and longer runs, the actions of speculators serve as a warning system for foreign investors and a watchdog for economic ministries.
The big problem with having the currency speculators act as watchdog is their collective ability to make prophesies self-fulfilling. The pool of capital available for speculation is large relative to the resources of many smaller economies. If the speculators act as a pack (or collusively, but that’s another thread), they can drive exchange rates far beyond the equilibrium that would be expected from the offending country’s domestic policy flaws. This is what happened in the case of the second big Mexico devaluation (the one when Rubin properly bailed out the country). It also happened in Korea. Korea had some structural flaws, but none nearly serious enough to justify a rate of 2400 Won/USD.
Sorry for the long post.
Livin’ on Tums, vitamin E and Rogaine
Thanks, Manhattan!
Now at least I’ve learned something today.
Guess this means I’ll have to stop despising currency dealers - well, most of them.
Okay, Tobin Tax: If I’m reading the last couple of paragraphs correctly, the market can in some instances “overreact”, causing unintended damage. Could one perhaps make a case for a more “selective” mechanism, in effect protecting the weaker economies from being overrun ?
Norman.
Worrying is the thinking man’s form of meditation.
Nah. They’re still mostly ay-holes. 
IMHO, placing restrictions on the free flow of capital is generally not a good idea. To the extent it becomes necessary or desirable for a country to place restrictions, I think that decision ought to be made by the sovereign government of the country who’s currency is involved. Malaysia had some short-term success when that country put on controls, but no one is building new chip plants there, whereas they are in neighboring countries. Over the long run, we’ll see. Memories are sometimes short enough that a country can get away with it.
In very rare instances, it may be to the strategic advantage of a country with a larger currency (the US, for example) to intervene on behalf of the smaller country. IIRC, Rubin’s ’94 Mexico plan sent a few overpaid 25-year olds scurrying back to B-school, and with good reason (the wisdom of bailing out the kids’ giant and well-capitalized employers was somewhat more suspect). But again, IMHO large-currency intervention ought to be rare.
Livin’ on Tums, vitamin E and Rogaine
Excellent post, manhattan! not only did I learn a lot, but it the info supports my view, so IT MUSt BE RIGHT! Yay!
If a country wants to get out of this game, can’t they just peg their currency to the dollar as Ecuador is thinking of doing?
One more question, would you say that purchasing a country’s currency is somewhat akin to buy a company’s stock? The more people want it, the more it becomes worth, and the more the owner benefits?