If I went to the Business
Minister in Cardiff with a business plan that said I was going to create new
jobs by training people to go into the nearest casino and place a large number
of large bets, I wouldn’t really expect the Government to offer me money from
the ‘Economic Growth Fund’, no matter how well-paid the jobs appeared to be.
However, if I
called the casino a trading floor, and said that I wasn’t going to train the
employees to bet, just to buy and sell bets placed by other people, I’d
probably be in with a better chance, in the light of this story from last week.
I’m unclear at what
point precisely gambling and speculating becomes transformed into ‘financial
services’; the dividing line is far from clear, although whenever I hear or
read the word ‘derivatives’, I start to suspect that a line has been crossed.
At one extreme,
placing bets in a casino is clearly gambling; at the other extreme, there needs
to be a market in which commodities are traded.
But somewhere between the two, ‘trading’ changes from being about the
efficient exchange of goods to being a mechanism for complicated gambling. And complicated gambling was a major factor
in the financial collapse.
The Welsh
Government’s apparent pre-occupation with ‘financial services’ is of concern. The argument that 'it’s going to happen
somewhere, so why shouldn’t Wales benefit?' is not one with which I am
comfortable – it sounds awfully similar to the argument that 'someone will sell
armaments to dictators so why not us?'. It’s
an excuse for putting morality and long term considerations to one side in the
name of getting whatever jobs we can in the short term.
There is a
parallel, in a strange sort of way, with the support shown by some for new
nuclear power stations in Wales;
in both cases the big questions about the sort of economy/ environment we want
to create are cast to one side in the interests of short term advantage.
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3 comments:
John
OSTC (Wales) is a small stockbroking operation
The information about it --- available in the public domain confirms this
You blog is correct in that Wales online portrays it differently but not quite as a potential Swansea based Microsoft 2
Why the Welsh Government allegedly should portray it in a rose tinted light must be left to the imagination and a vivid one at that
John - I agree with you to a certain extent that a lot - probably most - of derivatives trading is pure gambling. Mostly these are financial derivatives which have no connection to real trade, and are extremely toxic to the economy. However, commodity derivatives - at least in my day - were mostly futures and options that were essential for producers and for their customers to mitigate the price risk inherent in volatile markets, and they do in fact play an important part in facilitating commerce.
Sionyn is correct. Hedge activity goes back (or maybe before) US farmers that were given a price for their product to bring some stability to their operations.
What has gone wrong is the activity of young kids in red braces taking bets on the outcome of bets.
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