We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.

Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]

Samizdata quote of the day

So few people have any understanding of the importance liquidity plays in markets (which is why ‘speculator’ is a dirty word to the ill-educated twats who don’t grasp the essential role speculators play).

– Perry de Havilland

38 comments to Samizdata quote of the day

  • Ferox

    There is a whole catalog of economic fallacies which stem from this: When cookies are passed out to children, the more talented and the more hardworking don’t get extra cookies. Each child gets a cookie, all the same.

    This is intuitively fair to children. And some children just don’t grow up. Instead, they become BernieBros or other types of ill-informed dorks.

    Misunderstandings about liquidity, IMO, fall into this category.

  • Julie near Chicago

    Disagree. Far better that children be taught that sometimes one gets a treat (special perk) as a reward for work well done, or done at all, and sometimes everybody gets a treat because the society consisting of this class or this group enjoys not just the former case but also the case where everybody gets a treat just because they’re all friends.

    Case in point: When I was in HS, an issue arose about whether membership in the band s/b by audition only, or whether it was better to let everyone who wanted to do so to learn to play an instrument and hopefully, therefore, to learn at least to like music, and to work as a team besides.

    (School too small to support two bands, e.g. “general admission” and “J.V.” Of course, if a student never shows up or obviously never picks the clarinet up from one practice to the next, he eventually is told that his presence is no longer required. And also of course, there is competition for first and second chairs, though usually it’s nothing people get much exercised over.)

    Or, what? you go to a birthday party and you only get ice-cream and cake if you pass some stupid test of personal value dreamed up by the honoree or some military-minded adult?

    The Great Frog help us!

    PS. Of course it’s against my principles to say so, but in the extremely unlikely event *ahem* that I’ve misunderstood you, Ferox, a correction would be in order. :>)

  • Ferox

    Julie, I think it is perfectly right and proper than children should learn to share, and that each child should get a cookie.

    I just think that at some point, adults should stop thinking that life ought to be “fair”, that everybody gets the same amount, or that it’s unfair if someone else has more than you.

    In the transition from child to adult that should be one of the belief sets that goes away.

  • Julie near Chicago

    “It is difficult to argue” with that, Ferox. Agree completely. :>)

  • Fraser Orr

    I suspect that most people discussing these matters don’t even know what speculation or liquidity mean. All they know is people in fancy suits on Wall Street are ripping them off, and that George Soros is a really great guy.

    (BTW is it “…know what speculation or liquidity mean” or “… means”? I’m sure Julie will set me straight.)

  • Fraser Orr

    BTW, just as an aside commenting on the cookie analogy. I have run software teams for many years and looked at many ways to motivate them to get more work done or better quality work done. Many times I have tried the option of paying people based on their productivity and what I can tell you is that it simply doesn’t work, in fact it is often counterproductive. I could discuss the reasons why I think it doesn’t work, but I guess I can’t say for sure. What does work are softer things like giving people interesting things to do, giving them recognition, helping them to see that their work is worthwhile and meaningful, and even, in the case of programmers, giving them geegaws that they like — extra monitors, faster processors, fancy chairs, ping pong tables. This is good to know because geegaws and ataboy’s cost a lot less that 10% bonuses.

    I’m not calling into question the idea that rewards motivate people, but it is not as simple as money, especially when you are paid well enough that you don’t have to worry about paying for food, car and apartment.

    However, “speculators” or sales people don’t do it for the job satisfaction. They do it purely for the money, and so performance is directly related to pay. I guess people are different and what they value is different.

  • Nicholas (Unlicensed Joker) Gray

    I think it should be ‘means’. You are opting for a singular noun, so the verb should have an ending in ‘s’. Though, with English, you never know. Which is correct- the United States is powerful, or the United States are powerful? Perhaps both?

  • APL

    PdH: “which is why ‘speculator’ is a dirty word to the ill-educated twats who don’t grasp the essential role speculators play”

    There is nothing wrong with speculating with your own money, nothing wrong with speculating with someone else’s money, either, providing you have their consent.

    A speculator is entitled to risk his own money or that of his partners too.

    But a speculator should never be bailed out by the government because his speculation has lost him/her money and should he have levered his speculation because it was a ‘sure bet’, now his speculation will not just lose him money but bankrupt him.

    It’s instructive to watch how quickly these supposed capitalists and speculators run to the government to demand their speculation indemnity when they speculation fails.

    That sort of ‘speculation’ is not speculation, it’s just corrupt rent seeking.

    You are not a speculator if you are not prepared to take the consequences of your speculation turning a loss.

  • Julie near Chicago and Ferox, I went to a school where everyone got school lunch (and the special last-day-before-Christmas lunch, and the Burns Supper ‘haggis and bashed neeps’ – though given how the cut-price caterers cooked it, the treat would have been to be excused that last). At the same school, the bright kids got prizes and the other kids got to clap while the winners were handed those prizes at the annual ceremony. (They also got to call the winners ‘swots’, of course – how Ron speaks to Hermione in the Harry Potter books captures it.)

    A black child once described how he had a similar experience at his ghetto school in the 1950s, then benefitted from his talents (and also, I expect, the increased opportunities of the 1960s and 1970s) to become a successful black journalist, and in time received the ultimate accolade – being asked to present prizes at his old school. He looked forward to giving the kids the benefit of his experience – but was then disconcerted to learn he’d be presenting at an evening ceremony to the prize-winners and their families only. The default attitude of the black school body to academic success (to ‘playing whitey’s game’) was so hostile, and the ability of the mostly black teaching staff to control it so poor, that they dared not hold a school-wide ceremony, because the other pupils’ response to the prize-winners would indeed have been physical and involved using their hands, but not to clap.

    So I’d say you need to experience both and it is very harmful to children to experience only one.

  • the United States is powerful, or the United States are powerful? Perhaps both?

    is it “…know what speculation or liquidity mean” or “… means”? I’m sure Julie will set me straight.

    As Julie is near Chicago, she is likely asleep at the moment, so I will tentatively answer and see if Julie awards me the prize. 🙂

    1) The United States is powerful: the United States is a single country – being a country of many united states no more makes ‘The United States’ plural than its being a country of a a great many people does. The United Kingdom is a country made from the union of four kingdoms and is likewise singular.

    2) I think there can only be a customary rule, not an actual indisputable answer, in cases like ‘speculation or liquidity means’ and ‘speculation and liquidity mean’. I have written what my logical/mathematic mind would choose: adding two singular subjects gives a plural subject but or-ing two singular subjects does not. I recall reading more than one explanation in a discussion of grammar but precisely because the linguists cannot solve the logical problem but only a customary rule, I do not now with certainty recall even whether the advocated rules agreed, or what they were.

  • Nullius in Verba

    Shouldn’t we be called “The United Kingdoms”, then? 🙂

  • Shouldn’t we be called “The United Kingdoms”, then? 🙂(Nullius in Verba, April 7, 2020 at 9:23 am)

    No, because a single monarch inherits all – but, as this (pre-Brexit) quick look at British political geography shows, there is scope for confusion. 🙂

    Arguably, I should have written “A kingdom of countries” or “A kingdom of historical kingdoms” or …. And arguably it’s a lot easier to decide singular or plural than exactly what the thing is that is singular (or plural). 🙂

  • JohnK

    Which is correct- the United States is powerful, or the United States are powerful? Perhaps both?

    I recall reading once that before the War between the States, one might have said “the United States are…”, but that afterwards it became “the United States is…”.

    That would make sense, inasmuch as before the war the USA could be seen as a voluntary association of sovereign states, whereas after it, it was clear that that was not the case, and any state with the desire to leave the union would be met with ultimate force.

  • Fred Z

    Fraser Orr: I’m a “speculator” and I absolutely it do for the job satisfaction, not the money. It’s fun. Like playing monopoly with real money. I’m comfortable financially, and make small enough bets that the losses or gains don’t really matter to my life.

  • Philip Scott Thomas

    There is a common idea that before The War for Southern Independence the usage was “the United States are”, but after the war it changed to “the United States is”. It’s sorta, kinda, not really true. It’s all a bit messier than that. This article is a pretty good summary. Basically, it’s a function of the way in which American English changed.

    Semi-relatedly, standard American English can’t do something that British English does regularly: in British English group nouns can take either a singular or a plural verb, depending on context. So in British English both “the team are putting on their boots” and “the team is coming on to the pitch” are valid.

  • bobby b

    Nicholas (Unlicensed Joker) Gray
    April 7, 2020 at 7:41 am

    “Which is correct- the United States is powerful, or the United States are powerful?”

    If you do not capitalize the words – if you use “united states” – then use “are.”

    If you capitalize – and you thus name the singular, discrete, unitary federal government body created as per our Constitution called the “United States” – then use “is.”

  • Novus

    If “speculation” and “liquidity” have two separate definitions, then I would say “what speculation and liquidity mean”. If together the two words form a single concept, eg “mergers and acquisitions”, then I would say “what mergers and acquisitions means”.

  • Johnathan Pearce (London)

    I remember reading an article about how it is evil for people to profit by “shorting” a market (which is the practice of borrowing a security, selling it and repurchasing it at a lower price, and pocketing the difference). But without people being able to profit by correctly guessing negatively on a particular thing, you reduce the total availability of people willing to play in a market. The lower the liquidity, the more volatile prices are, the less people want to play, and a vicious cycle takes hold.

  • Johnathan Pearce (London)

    APL writes: You are not a speculator if you are not prepared to take the consequences of your speculation turning a loss.

    Being a consistent radical classical liberal, and someone who has worked in financial markets, I am sure Perry de Havilland is entirely aware of that point.

  • Mr Ed

    To me, the phrase ‘The United States‘ conjures up not a country but an organisation, (and usually an image of a Federal indictment), existing over and above the several States, and it is a singular entity.

    Certainly in terms of sports teams, I would say that to say e.g. “England are going to win this one.” sounds right (at least grammatically).

  • Fraser Orr

    It’s instructive to watch how quickly these supposed capitalists and speculators run to the government to demand their speculation indemnity when they speculation fails.

    I think though there is a second order consideration here. If the speculators work for a company, and that company has a fiduciary duty to the shareholders to use all means necessary and legal to improve the shareholders return, it would, in a sense, be a breach of that duty for the speculators not to take, and perhaps even seek a bailout by the government. Again, assuming they do so within the limits of the law.

    So the problem is not speculators or large companies taking the money, it is that the government is giving it, that it is willing to take money from one disfavored group (generally speaking tax payers, or tax payers yet to be born) and give it to favored groups. And the fact that that money often comes with political agenda strings attached really tells you all you need to know.

  • Plamus

    You would be amazed how many people with post-graduate degrees have, for all practical purposes, zero idea how any market other than the farmer’s variety works. The concepts of bid and ask prices never fail to draw looks of “okay, moving on”; the concept of an ETF loses them as soon as I get to the “kinda like a mutual fund” part.

    Here’s one example I have used when people tell me “finance is easy”: imagine you have a business making widgets, and selling those widgets to others. No abstraction here; a real business with buildings, machines, employees, and all that jazz.

    Abstraction level 1: You incorporate. Now your business is a legal entity, distinct from it’s physical manifestation.
    Abstraction level 2: You issue publicly traded stock. Now you have separated ownership from production and management.
    Abstraction level 3: You get included in an index, like the S&P500. Now many people benchmark their performance in part to yours, and buy your stock just because you’re in the index, not because they like your business or your tie.
    Abstraction level 4: People trade derivatives, in this case options, on the S&P500, either for speculation or for hedging – and no, you cannot have one without the other.
    Abstraction level 5: Based on these traded options, people calculate other indices – in this case a volatility index, like the famous VIX.
    Abstraction level 6: Yet other people create and trade futures based on VIX.
    Abstraction level 7: Yet other people create and trade ETFs with various bells and whistles (long, short, leveraged, near month, far month, etc.) based on those VIX futures, e.g. UVXY.
    Abstraction level 8: Yet other people create and trade options on UVXY.

    I would not be surprised if there are hedge funds who buy OTC abstraction level 9 products from investment banks. All of this does not exist because of a divine commandment. It exists because some people want to sell some risk, some other people are willing to buy it, and yet other people are willing to help them do that (more) efficiently for a fee. For, oh, I don’t know, 98% of people, the only risk they ever trade in their life is buying insurance, so of course they cannot comprehend the need for anything much more sophisticated than that, let alone the infrastructure and participants that can make it work.

  • bobby b

    Liquidity in the market – that’s the soda-pop section at the grocery store, right?

  • Fraser Orr

    bobby b
    Liquidity in the market – that’s the soda-pop section at the grocery store, right?

    Yeah, because if you shake it up to much it explodes and makes a huge mess.

  • Novus: speculators add liquidity to markets, if all you have is institutional investors, that would be a very illiquid market.

  • Fraser Orr

    @Perry de Havilland (London)
    Novus: speculators add liquidity to markets, if all you have is institutional investors, that would be a very illiquid market.

    What does that mean? It means that if you go into your Ameritrade account and try to buy some shares of Google, it means you will get your order filled immediately. You probably bought from a short term speculator because institutional investors don’t sell very often. And of course the flip side is true, if you want to pull some money out of your retirement account you have to sell your equities, and you want the cash right now, and again it is probably an evil speculator buying from you. That evil bastard is letting you pay your rent, buy your groceries and take a vacation. Scumbag.

    Another important aspect of this is that speculators force prices to move. So they see an undervalued stock and buy it, forcing the value up to its market level or vice versa. Sometimes that is not an entirely stable process (because what a stock is correctly valued at isn’t a precise number) but it forces that markets to do a better job accurately pricing stocks and other equities. This means it sucks inefficiency out of the market and forces capital to be deployed where it will be used best.

    So speculators are like lubricant. Lubricant adds a little cost to running your engine, and it is pretty disgusting, slimy stuff, but the cost is worth it if you actually want the motor to turn. Money is only valuable when it is moving and speculators help it move in the capital markets.

  • staghounds

    “There are certain things that cannot be adequately explained to a virgin by words or pictures, and losing a whole bunch of real money that you actually own is one of them.” Fred Schwed

  • Paul Marks

    There are two sorts of “speculator”.

    Someone who either invests their own Real Savings (sacrifice of consumption) or the Real Savings of other people voluntarily entrusted to them.


    Someone who is playing with funny “money” – the Credit Bubble Expansion of the government backed Central Bank and its Corporate Welfare pets, the other banks and enterprises connected to them. “Savings” that no one really saved – no sacrifice of consumption.

    The first sort of “speculator” is a blessing – the other sort of “speculator” is a curse.

    Hat tip to Richard Cantillon (first John Law’s business partner – then his chief critic) for this 300 year old point.

  • Julie near Chicago

    Ahem. Back to more important matters, in this case English grammar….

    Sometime between 1955 and 1960 we were taught that there is a group of nouns, called “group nouns,” which can properly be treated as either singular or plural. Thus, “The club is going horseback riding” and “the club are going horseback riding” are both correct.

    Now that I am older and entitled to wear purple (the meaning of which title finally hit me like a bolt from the blue perhaps 5 years ago, no flies on me — but I might have gotten it sooner had the dang poem struck me as being at all worth reading based on the first line), I rule that it depends on what the speaker means. If he means to emphasize that it’s to be an activity undertaken by the group as a whole, use the singular. If his point is that the individual members are all (or almost all) going, for their own individual enjoyment in company with the rest of the gang, use the plural. :>)

    Per PST above at April 7, 2020 at 10:49 am, that is also how it is (or was???) taught in England.



    “I suspect that most people discussing these matters don’t even know what speculation or liquidity mean.”

    No, s/b “don’t know what speculation or liquidity means,” as Nicholas above points out:

    “I don’t know what A or B means.”

    However, Fraser, what you’re trying to say is probably correct. :>))


  • Ferox

    Speculators add liquidity, but they also curb irrationality (both unjustified pessimism and unjustified exuberance). A point I often make to some of my relatives who are convinced that speculation is somehow stealing: if you want to see a real nosedive-right-into-the-ground market crash, make it impossible for speculators to work. Imagine a crash where nobody is buying – the value of your holdings functionally drops to zero when there are no buyers at all.

  • Fraser Orr

    @Julie near Chicago
    Thanks for the ruling Judge Julie…

    “I don’t know what A or B means.”

    So I am a computer guy, and this is the problem here — “or” can be a bit misleading in English. If you say “A or B” it is true if A is true and B is false, and it is true if B is true and A is false, and it is false if A and B are both false. But what if A and B are both true? If I say to my daughter “You can have ice cream or a cookie” can she justifiably claim I have authorized her to have both? But clearly if I say I want to buy a blue car or a chevy, then I am not excluding the possibility of buying a blue Chevy.

    In the computer world we have a wonderful operation called exclusive or (XOR, or sometimes for the old timers EOR) which if false if both are true. I really think we need to introduce that into English to eliminate this ambiguity. My daughter can have ice cream eor a cookie.

    So for plurality that is the problem of ambiguity here as to whether the last remaining form of English morphological conjugation applies here. Perhaps we should just get rid of the blasted s at the end of verbs anyway.

  • the problem is not speculators or large companies taking the money, it is that the government is giving it (Fraser Orr, April 7, 2020 at 2:42 pm)


  • Paul Marks

    Fraser Orr (April 7th 2.42 pm) is correct – and Niall is correct to back him up.

    But I would add it is not just open government subsidies that are the problem – it is the hidden ones from Bank of England and the banks (and the rest of the financial industry).

    The idea that Credit Expansion is “saving – just as real as any other form” (Lord Keynes) is wrong.

    Indeed I would use much stronger language than “wrong” – but a lady is present on this thread.

  • Nico

    Without speculators, markets would (and do) seize up. Ergo the Left goes after speculators so that then they can claim the markets don’t work. The Left also goes after speculators because while the markets are open and functioning, they function as a vote-with-one’s-wallet service, and a very loud one at that, and the Left can’t stand criticism of it.

  • APL

    Warning! Capitalist spotted

    CNBC anchor, “I think we agree with you more money for main St is needed as well […] more money is needed everywhere ..”

    The level of financial analysis, in the media. ‘More money is needed everywhere’.