How have we got ourselves into this pickle where a few get-rich-quick speculators buying or selling a currency, Government bonds or company shares can make nations shudder?
It is simply frightening to think that people who have no concern whatever for the consequences of their actions or the welfare of others can disrupt businesses and economies just to make themselves rich.
It is beyond comprehension why people who live in democracies allow this to happen. (It is easy to understand the anger of people in Greece)
How can a business or a country suddenly (like overnight or over a few weeks) go from being able to meet its commitments to being unable to do so?
Of course this sometimes happens when a delibierate attempt at fraud is found out - and a fraudster deserves what he gets.
But for the most part it occurs because some shyster, who has no role in the management of the business, thinks he can make a profit for himself by buying bonds or shares and selling them a few weeks later, or even a few seconds later. The money he pays for the shares never gets into the business as investment funds - it just circulates among shareholders with a bit being chipped of each time by the brokers. Then the said shyster gets worried that the shares he bought a few days ago might not appreciate in price quickly enough so he wants to sell them in a rush - or maybe he wants the cash to invest in something else. The net effect is that the other shysters see that cheap shares are available and they also become worried - so the share price tumbles and the whole world worries.
But none of this has been caused by, or has any impact on the business which is happily making and selling widgets just as it did several weeks ago before the shysters appeared on the scene.
EITHER the world stops getting in a panic when shysters do what shysters do
OR Governments (acting for the vast majority of voters) legislate to prevent shares, bonds etc from being sold within, say, 24 months from the date they were bought - so that the madness of short term speculation is stopped.
- And equally, if you sell shares or bonds you can't buy more of the same for 24 months either.
- Or perhaps the only person you can buy from or sell to is the company or government that issued them - and they have no obligation to buy or sell and then only at their face value so that the reward comes from company dividends or interest payments and not from capital gains.
- Or, if they are (say) 5 year bonds you simply have to keep them for the 5 years.
- And you can't sell anything you don't already own.
Of course the tiny tiny fraction of the population with a vested interest in the status quo will find all sorts of reasons why you can't interfere with the market like this. They are all well educated and very articulate - and very good at pulling strings behind the scenes.
But we could easily do it if we wanted to.
