THE DARK SIDE OF THE SPECULATION

From the point of view of the markets, speculation is simply realize commercial or financial operations with the objective of making a profit, usually based on variations in products prices or variations in the values changes, that is, without providing no value added. The speculator is, therefore, a figure  more of the market, that along with others, such as producers, manufacturers, brokers, business, financial, etc., make that the whole complex and complicated framework of the economy work. Despite the bad press that always is gives to the term speculator, this one is really negative only when acting out of ethical principles and violates the most elementary norms of accepted practices in the sectors in which it operates, in all other case, not only this work is not negative, but rather necessary. For this reason, provided that certain conditions are met, the speculation may be considered simply as part of a professional job. In this sense, it would not be unreasonable to say, that it's so obvious that speculation can have positive effects on the economy, as well as can provide great abuses that generate the opposite effect. The issue more important is that from the public authorities  make all effort to avoid excesses; but as not all can be regulated, is essential that individuals engaged in these activities, are always willing to do a valuation exercise of their ethical behaviors.

Since the beginning of time, speculation is a behavior that has presided over almost any human activity. Today, in a world far more complex, is present in all economic orders, from the financial products, which is where most often it is associated, to the raw materials for food, to energy markets, the metals and estate businesses, among others. In all cases, the speculation has a important role, but it can be positive or negative, depending on the shape and direction in which will to act.

If we refer to the capital markets, where one of the most important premises is liquidity, a condition that requires extensive coverage of risks, enabling investors to recover their investments without having to bear high costs, actions that advance towards the improvement in the operation of economic system, making it more agile and efficient, can be considered positive and, therefore, ethically correct, as they will contribute to wealth creation and to increase the welfare of society. In this line, the work of speculators may represent a very important and beneficial task. But, when performing maneuvers designed to manipulate the prices, is being speculated insider, or is doing abuse is the ignorance of others, for the sole purpose of obtaining a quick and easy personal benefit to the detriment of the common good,  are adulterating the beginning and end of their own existence and, therefore, deserve the strongest condemnation. This is precisely the more negative part of the system, which seriously damage the public image of these agents, and is the causes of the highest level of distrust in potential investors. Unfortunately, the law isn't always have enough and conclusive answers to avoid, or, failing that, cut down, these irregularities, which, by altering the normal functioning of markets, have serious repercussions on the economy in general.

If the bad practices of speculators tend to disturb financial markets, causing considerable losses to many investors, that, not infrequently, have seen vanish their dividends or capitals in the stock market, when this type of action is transferred to food markets, the consequences are even more destructive. The acquisition and accumulation of cereals, removing them from the human consumption, in order to put it on the market in four or five years later at a much higher price, condemning thousands of families to hunger, misery and death, at the expense of benefits of few, would have not to have any space in a world that calls itself civilized. Although growing concerns that are emerging in this regard, more for the  reason that it can be a destabilizing factor in world politics, which by reason of bring into play the lives of thousands of innocent people, the reality is that the progress achieved so far, judging by the results, are rather scarce. If we are now about 7,000 million people onto this planet, with an unequal distribution of scarce food resources, and  we have a scenario of approximately 9,000 million of individuals in the year 2050, we not have much time to take steps that can lead us to avoid a whole and utter disaster. The question is whether we are all sufficiently aware of the problem and, if so, whether we all have the enough restlessness about the need to resolve it.

Together with the practice of cereals storage, for purely speculative, voluntarily recalling  from the market amounts that are absolutely necessary for human consumption, joins that of those who are engaged in the manufacture of biofuels, which have come to invade an area devoted to food, increasing in that form its lack. This industry, which was originally designed so that some nations may have a new alternative economic activity; to date, due to lack of adequate specific regulation, has created more problems than benefits. An evident proof of this is the disproportionate increase that the  prices have experienced during the past year. From mid-June 2012, until mid-August, world wheat prices have risen by more than 50%, and corn by more than 45%. With regarding  soybeans, prices have risen by 30% in two months, and since early this year by nearly 60%. Are data that, by themselves, should make us reflect on the magnitude of the problem.

Just as we speak of the bad practices of the speculation in financial products and food, and its consequences, we could also do with the petroleum, where from small investors to the specialized brokers, going through fund managers, trading agencies and, of course, the producing countries themselves, that are blaming speculation of sharp increases of product prices, are also contributing to this by invest some of their surplus in the  futures market.

Another victim of speculation, which is closely related to the economic crisis we are experiencing, is the real estate sector, where the lack of scruples of many, coupled with the ambition of getting rich quickly, has led to a big  price escalation, totally artificial, causing the generation of a huge bubble, whose bursting has wiped out thousands of jobs, putting  into economic limit situation  to many families, while culprits maximum of all this mess, as always seems to happen, are circumventing the law to maintain their huge profits to safely tucked.

Some person without scruples, often try to justify these unpresentable actions saying that "business is business", without taking into account the limits imposed by morality and ethics. The answer to this would be that business is business only if they are ethical, otherwise, are only committed robberies, with varying degrees of subtlety, outside or inside the law, to one person or, by extension, to the entire society.

Today, the general consideration is that speculation without scruples is at the base of the global economic crisis, at which has contributed, to a very notable form, the lack of laws and rules that be enabled to regulate the market that, at the present time, is called free. All authorities, of all countries, are creating a state of consciousness to try to prevent this can happen again. What remains to be seen is whether, after overcoming this crisis, we will begin to relax, to return again to regret when next arrives. There would be nothing uncommon, given that history is full of such events.

C. Díaz Fdez.

February 2013