Posted by: graemebird | October 30, 2008

Storage-Speculation Versus Bookie-Operations

Last night I saw the tail-end of a story on TV about a two-up expert who is not allowed to run this particular gambling operation. This is just most unfortunate and ITS TREATING PEOPLE DIFFERENTLY BEFORE THE LAW and therefore its not on.

The story explained that though the two-up manager takes a cut your odds are much better playing two-up then playing the pokies. And it was his feeling that if he were allowed to promote and run this form of gambling it would serve to draw a lot of people away from these pokies that just suck money out of their pockets.

Well clearly he has a good case. And clearly we would need a clear set of non-discriminatory rules for gambling and we need all types of gambling to be treated the same if we are going to treat gambling different from non-gambling.

Of course the libertarian answer is to just let it all be. But in moving towards liberty sometimes we need to work hard on transitional matters. And it may be the case that we can free things up a bit under the rubrick of damage-management or harm-minimisation.

Earlier in this blog I suggested that the best harm minimization for dipsomaniacs of all description would be to take the State and Federal governments cut and send it to the dipsomaniacs superannuation fund, or health savings account. Or if in the case of Americans their 401k fund.

So as this applies to beer we currently pay about $4AUD for a long tall cold one. And a great deal of this is tax. Now supposing we want to practice harm minimisation for dipsos. The juicer in this case might buy the tall cold one for $6AUD. Distribution is opened right up so the costs of distribution are reduced. And perhaps it would be that the juicer is buying the beer for 2AUD and 4 dollars of enforced savings is going to his superannuation. Nothing is going to the state or the feds. That means that someone can come out of a period of heavy drinking determined to look after his health but without being totally demoralized or being in a position where he is likely to become a welfare case for the rest of us.

As this applies to the pokies, if pokie-proprietor income from pokies is non-taxable by either state or feds but the hotelier is getting the same cut as he does now, once all calculations are made……… And the cut that would have gone to the government is now going to the gamblers superannuation. Well the same thing might apply. The gambler decides that he’s sick of wearing second-hand-clothes and running out of money all the time. But he is not demoralised, nor will he be a welfare problem for us down the track.

So the two-up ought to come under the same rubrick. 


Whatever regulations we have now and whatever regulations we intend to have in the future is a secondary question to the first question which is to decide what is and isn’t gambling. The first thing to do is to sort out gambling from non-gambling and to sheet off the gambling to the regulatory  framework as it exists.

And the futures and derivatives markets are gambling and thats all they’ll ever be. Any commodities trading where all outstanding paper isn’t 100% backed by commodities already in storage is gambling and it ought to be hand-balled to the correct department to be regulated according to norms as they exist now.

Any indexed fund that does not warehouse all the necessary shares to be able to divide these shares up proportionately so that their customers can buy into a real SHARE-OF-THESE-SHARES is not an investment fund. Rather its a bookie operation and must be hand-balled over to the gaming department to regulate under whatever norms they have going.

The reason is we don’t want the price system and our capital markets debauched by what are essentially bookie-operations. Which is not to say that bookie-operations of all sorts ought not be legal. They just have to be separated in the minds of the public with serious investment. And serious investment is always 100%-backed.

To understand why this must be the case a pre-requisite to the rest of this discussion is in the thread about decisive versus ineffectual loanable funds. You see if you invest in something that is wholly or partly a bookie-operation, rather than a 100% backed trading operation…. If you do that your money invested isn’t decisively passing on the resources and price information that is needed for your speculation to be a wealth-creator. Your money rather is being siphoned off for gambling, or it may be actually leading to price and resources distortion in the market. You can be no more sure that you are in the wealth creation game then those guys who are getting up before work to go to the early opener and gamble with grim determination.

Now in reality you may be PARTLY helping in the production process and you may be PARTLY distorting the production process depending on to what extent the paper-trading operation you are participating in is backed and to what extent it is unbacked. But we want to separate bookie-operations from storage-speculation operations without condemning one or the other.  And if we don’t do that we have no way of having a clean efficient market fully integrated with the wider needs of the economy. 

AND IF WE DON’T DO THIS we have no way of stopping the dipsomaniacs involving themselves in bookie-operations from being a welfare problem to us all. 

See the rich  American banker. His investment bank deals in prime brokerage (share pyramiding) and provides derivatives. He is a welfare recipient. He is costing everyone big-time. This is because his regulators failed to understand the basic nature of what he does for a living.



  1. “JC. Says:
    October 30th, 2008 at 10:47 pm
    As far as I’m concerned I shouldn’t give a shit as I’m pretty ambidextrous. If he screws up I’ll short stocks. If he looks like doing well I’ll buy them.
    And yes Bird I’ll SHORT US stocks as people are ALLOWED to.
    Bird naked shorting doesn’t mean you take your clothes off when you’re doing the trade.”

    The lying just never stops with this idiot.

  2. The last post proved that Cambria is disohonest. This one proves he’s an idiot:

    “JC. Says:
    October 30th, 2008 at 9:46 pm
    Anyone know why Bird is obssessed with liquefied coal?
    He can’t stop talking about that shit. Does he think he can drink it or something?
    he want’s to turn it into money now.
    This is unique. The bubblehead is talking about using a product that no one uses or desires as backing for new money.”

    Proof that you don’t have to be too bright to be a banker.

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