How do I sell something that I do not own? You pay me the money, I buy the umbrella, and I give it to you. Simple, right? That's how all brokers work. However, what happens if the person sells an umbrella that does not exist, and the buyer again sells it to someone else who sells it someone else and so on. All the while, no one has actually seen the umbrella since it doesn't really exist, just the promise of it. Now consider everyone who has bought the umbrella had to borrow money to make the purchase and the last buyer borrowed money from the first seller. Who loses?
Exceprt: Ramblings in Econometrics; Maity, Abhishek, Pengu, New York, 2007.
You got published? Congratulations!
ReplyDeleteYou really think I would write a book called "Ramblings in Econometrics"?
ReplyDeleteoh come now maity... you know econometrics brings out the best, most twisted, unexpectedly brilliant rambling in all of us...
ReplyDeleteam i the only one who still disregards the laws of capitaliSation in an informal online context?
no, there are many like you.
ReplyDelete"No-one has actually seen the umbrella, since it doesn't actually exist."
That's how I feel about derivatives, futures, and all the other money markets crap that I will never be able to understand. It's just a few million human beings getting excited over something quite unreal, IMHO.
Kasewa, I once prided myself in never using punctuation, but then it caused a few problems with the writing faculty at Hamilton. "Heretic" and "Son of the Devil" and whatnot they called me, so I have become a good Samaritan and now I even use proper punctuation on MSN, you know, typing out "hahaha" instead of LOL or LMHO (whatever that means).
ReplyDeleteTo answer Nisha, I will be in Kolkata over the winter break, so I will see you then.