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Politics : Electoral College 2000 - Ahead of the Curve
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To: Raymond Duray who wrote (6271)12/14/2000 4:35:40 PM
From: chomolungma  Read Replies (1) of 6710
 
Take for example the currency market which I have traded in for years.

A company sells goods to Japan. They are entering a contract that will give them 5 million yen in 6 months when they fill the contract. They are worried what the yen might do by then and won't make the deal unless they can guarantee a profit. I step in and take the other side of the currency position. I have facilitated international commerce by taking the risk away from the transaction.

Another example.

A builder worries that the price of lumber will soar before he has time to finish the project. His supplier won't lock him in. He buys a futures contract and if the price of lumber goes up the money he makes offsets his increased bill. I take the other side of the position.

Virtually the same can be made for every traded commodity form oil to eurodollars. The speculator assumes the risk and facilitates commerce and economic growth.

If you doubt what I say, ask yourself why countries without functioning markets never grow.
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