May
31
Trade, whether global, international, or local to the domestic market is all about demand and supply. The key understanding concerns the factors of production; land, labor, and capital. Which of these factors does a country have in abundance, which in scarcity, and is the country self-sufficient in factors? Demand is how much of a product or service a consumer, or group of consumers will seek to obtain. Certainly, the consumers have demands that are dependent on taste, cost, and whether having the product or service will increase the sense of well-being. Supply is not the obverse of demand, which is enlightening in itself. It is the amount of product or service a company, or group of companies will bring to the market. It is wholly dependent on the production requirements, how much does it cost to produce, and what can the company expect to receive in price for goods tendered to the market. We will select three theories of international trade that address what we think are the major theories, which are; comparative advantage, monopolistic competition, and oligopolies.
May 31, 2008
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May
31
Few people understand futures and options contracts on the open market, if one could call it that. Essentially, what we humans do is write on a piece of paper a price and a date for commodities such as oranges (Think Eddie Murphy in Trading Places), coffee, pork bellies, grain, and the most talked about today-oil. The futures pit used to be a place to hedge bets against a bad crop or to ensure future supplies at a pre-negotiated price. In this era, less than 1% of all futures contracts written will ever see the light of day in delivery of those items. It is all about shuffling the paper to stick the other guy with the speculative prices that a few million dollars has jacked-up. It isn’t like the stock market where millions of shares worth hundreds of billions can be manipulated and are….but not as easily. Leverage my friends is the “Power of the Schwartz” that allow few to make millions and now as the opportunists see the advantage of that leveraging, they are throwing their fund’s dollars at the commodities in anticipation of the same stupid hopes that the housing market counted on-that nothing ever goes down.
May 31, 2008
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