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Debates Forum

Debates Forum

  1. 01 May '13 00:41
    Is it unethical for central banks to buy equities?

    http://www.bloomberg.com/news/2013-04-24/central-banks-load-up-on-equities-as-low-rates-kill-bond-yields.html

    Is this a sign of desperation to prop up economies?
  2. 01 May '13 05:07
    Originally posted by Metal Brain
    Is it unethical for central banks to buy equities?

    http://www.bloomberg.com/news/2013-04-24/central-banks-load-up-on-equities-as-low-rates-kill-bond-yields.html

    Is this a sign of desperation to prop up economies?
    If they lose their shirt then they will get bailout and give the executives huge bonuses. I want in on this!!!!! I am ready to be rich!!!!
  3. 01 May '13 11:45
    Originally posted by Metal Brain
    Is it unethical for central banks to buy equities?

    http://www.bloomberg.com/news/2013-04-24/central-banks-load-up-on-equities-as-low-rates-kill-bond-yields.html

    Is this a sign of desperation to prop up economies?
    Why would it be unethical?
  4. 01 May '13 13:18
    Originally posted by Metal Brain
    Is it unethical for central banks to buy equities?

    http://www.bloomberg.com/news/2013-04-24/central-banks-load-up-on-equities-as-low-rates-kill-bond-yields.html

    Is this a sign of desperation to prop up economies?
    Looking at the wikipedia article on central banks and securities I see that central banks buy and sell securities, and equity stocks are a security. So while ethical breaches and breaches of fiduciary responsibility can occur in any transaction, I don't see how the open buying and selling of stocks is itself unethical.
  5. 01 May '13 14:15
    Originally posted by JS357
    Looking at the wikipedia article on central banks and securities I see that central banks buy and sell securities, and equity stocks are a security. So while ethical breaches and breaches of fiduciary responsibility can occur in any transaction, I don't see how the open buying and selling of stocks is itself unethical.
    What if the buying of stocks by central banks is not open and kept secret?
  6. 01 May '13 14:21
    Originally posted by Metal Brain
    What if the buying of stocks by central banks is not open and kept secret?
    In that case it's all part of a grand conspiracy.
  7. 01 May '13 14:35
    Originally posted by KazetNagorra
    In that case it's all part of a grand conspiracy.
    Why can't they just let stock prices be determined by common investors of the public? Do you think they cannot be trusted to determine if stocks are overvalued or undervalued?
  8. 01 May '13 15:00
    Originally posted by Metal Brain
    Why can't they just let stock prices be determined by common investors of the public? Do you think they cannot be trusted to determine if stocks are overvalued or undervalued?
    Of course they can't. Not that governments or central banks generally know any better, but still.
  9. 01 May '13 15:21
    Originally posted by KazetNagorra
    Of course they can't. Not that governments or central banks generally know any better, but still.
    Aaaah, there you go. Central banks could be driving stocks up so they are overvalued. That can make the landing much harder than otherwise. Not good.
  10. 01 May '13 15:29 / 1 edit
    Originally posted by Metal Brain
    Why can't they just let stock prices be determined by common investors of the public? Do you think they cannot be trusted to determine if stocks are overvalued or undervalued?
    What do you mean by "common investors of the public" -- do you just mean the private sector?

    I just think this isn't an ethical issue, it is a "role of government" issue and the central bank as an institution that controls the money supply should be discussed in general terms first. I would have to see (and understand) how it works for example is it how GM was propped up in the recession?

    "When the Treasury Department sold its last remaining shares in insurance giant AIG recently, it announced that it had earned a profit on the controversial bailout that began in 2008. That will not be the case for General Motors.

    Treasury has finalized a plan to sell its remaining stake in the nation's biggest automaker over the next 15 months, beginning with GM buying back 200 million shares from the Treasury by the end of this year. That will leave the government holding about 19 percent of GM's shares, which it plans to sell throughout 2013 and perhaps into 2014."

    http://www.usnews.com/news/blogs/rick-newman/2012/12/19/its-official-taxpayers-will-lose-big-on-the-gm-bailout

    Edit, in accordance with the open market concept, I assume that others will be able to buy or sell GM stock at the same price (at whatever valuation the market determines) during this time.
  11. 01 May '13 15:33
    Originally posted by Metal Brain
    What if the buying of stocks by central banks is not open and kept secret?
    By open I mean by what is called an open market operation which basically means, buying and selling on the open market like anyone else, not from or to select sellers or buyers. But I don't think this is an ethical question, it is a role of government question.
  12. 01 May '13 17:08
    Originally posted by JS357
    By open I mean by what is called an open market operation which basically means, buying and selling on the open market like anyone else, not from or to select sellers or buyers. But I don't think this is an ethical question, it is a role of government question.
    The market is rigged. It has been for a long time.

    https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
  13. 01 May '13 17:33 / 1 edit
    Originally posted by Metal Brain
    The market is rigged. It has been for a long time.

    https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
    If that is your position "going in" to these discussions then what are they for? Venting therapy? That's fine by me, because once in a while you bring up something that leads me to do a little research. Rarely if ever am I persuaded that extreme rhetoric is a useful way to approach issues. I associate that rhetoric with crotchety old men in their rocking chairs. (Which is becoming more and more true about me.)

    I note that the Working Group was started by a Reagan Executive Order.

    Government can't help but strongly influence the market, in direct proportion to the size of each. [Edit: Even laissez faire would be a strong influence.] All of the different forces that are influential on the market, form it into what it is, and it is what the strongest forces make it. The individual or even small institutional investor like my homeowner association has a negligible impact on the market, financially or politically, and can only try to navigate it.

    As the sailing aphorism goes, you can't control the wind, but you can adjust the sails.
  14. 01 May '13 18:53
    Originally posted by Metal Brain
    The market is rigged. It has been for a long time.

    https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
    The markets are very volatile and only work on one principle.

    Stability.

    If there is stability ( especially political stability ) then the market
    works fine and there are few surprises. Trade is regarded as normal
    and prices don't fluctuate all that much.

    It is the job of Central Banks to get involved.

    Their role is two fold.

    1. They set interest rate for lending to other banks.

    2. They worry about inflation.

    As such they are integral to the economy and so act accordingly.
  15. 01 May '13 23:23
    Originally posted by johnnylongwoody
    The markets are very volatile and only work on one principle.

    Stability.

    If there is stability ( especially political stability ) then the market
    works fine and there are few surprises. Trade is regarded as normal
    and prices don't fluctuate all that much.

    It is the job of Central Banks to get involved.

    Their role is two fold.

    1. Th ...[text shortened]... They worry about inflation.

    As such they are integral to the economy and so act accordingly.
    "2. They worry about inflation."

    They create inflation. Inflation is a tax and central banks like to tax with inflation. You clearly have bought into the propaganda that they are there to protect the value of currency. They are there to erode it.