Streetwise Professor

October 11, 2008

Should I Sue, or Just Remember That Imitation is the Sincerest Form of Flattery?

Filed under: Commodities,Derivatives,Economics,Energy — The Professor @ 8:41 pm

The Economist has two articles that cleave very closely to various SWP posts that predate their publication.

This one discusses the “collateral damage” of the SEC short-sale ban on the convertible bond market, and particularly its effect on banks. The 9 October article says that the effect on convertibles was “a typical example of the unintended consequences of meddling with the markets in response to populist pressures.” Gee, but that seems very, very similar to what I wrote on 27 September in “Unintended–But Totally Predictable–Consequences.” Specific use of the term “Collateral damage”? Check. Specific use of the term “Unintended consequences”? Check. Analysis of the damaging effect on convertibles market and on banks? Check. Criticism of stupid pandering policy? Check. Very pronounced similarities here, undoubtedly.

This one makes several arguments regarding commodity speculation that I have flogged repeatedly on SWP and in my Congressional testimony and WSJ piece. Here, the similarities aren’t quite as close, but the focus on looking for distortions in stocks and the lack of a direct channel by which fund money can affect physical commodity prices reprises two themes that I have emphasized repeatedly.

But, then again, maybe both things are so obvious that it’s no surprise that the Economist advanced the same arguments. But, especially with the short sale ban post, the similarities in argument and language make me lean towards rejecting the null hypothesis of “coincidence.”

Any thoughts, readers?

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