The panic of greed

A worldwide near-panic erupted when the Shanghai sharemarket lost nine percent of its value. Sharemarkets around the world dropped, one after the other, before starting to recover.

By the time the panic spread to New Zealand, some reason had re-entered the scene, and the NZSX50 was down only 1.5 percent, “one of the smallest drops around the world,” according to the New Zealand Herald.

Some investors imagined it was a crash like 1987. Experts, so-called, were saying that the Shanghai market was “over valued” and this was merely a “correction.” It was nothing of the sort.

It turns out that panicked sellers in Shanghai started selling amid “rumours the Chinese Government was planning to clamp down on sharemarket speculators,” according to the Dominion Post. Commentators added other “causes” as the wave crossed the globe, but, in the end, it comes down to the same thing: Greed.

Stockmarket speculators are nothing more than gamblers, but instead of high-stakes Las Vegas poker, they’re playing with livelihoods and lives. In essence, these gamblers are only following the current business paradigm which demands pursuit of maximum profit—no matter what. I’ve written about this paradigm here.

A few small investors own share directly. Most are held by pension funds or other institutions, and the rest by managed funds and rich individuals. Small investors generally don’t have the time or inclination to speculate in shares and, anyway, their shareholdings are too small to create crashes, even if all small investors take the same actions.

Aggressive managed funds and rich people who play the market like a game are the ones primarily responsible for these crashes through their unrestricted gambling. They should be stopped.

When these gamblers play with the sharemarkets, real people are made to suffer. The gamblers’ actions can destroy companies, and so, employment for ordinary people. They can also destroy value for shareholders who wouldn’t dream of gambling with other people’s lives.

I’ve had quite enough of the whingeing and moaning of the super rich and their fund managers who are upset that existing laws prevent them from having unrestricted access to ever more money at the expense of non-gamblers and other ordinary people. It’s time that those of us who are victimised by this bald greed got a fair go. It’s far past time for the gamblers to be brought under control. That’s an action I’d invest in.