Movie Stock Exchange Proves Wall Street's Mad

Speculation doesn't really help anyone
By Kevin Spak,  Newser Staff
Posted Mar 12, 2010 11:38 AM CST
If only you'd bought three shares of Avatar in 2007, you'd be a millionaire right now! You know, if the movie stock exchange had existed back then.   (AP Photo/20th Century Fox, File)

(Newser) – The announcement that investors can soon buy “futures” in Hollywood movies, shouldn’t be too surprising—it’s the logical extension of what financial markets have become. Once tools for raising capital for real businesses, the markets “have turned themselves into high-tech casinos,” writes Steven Pearlstein of the Washington Post. Apologists say such markets create liquidity and manage risk, but it’s all “hogwash.” They’re just a dangerous game of chance.

The Hollywood exchange will be rife with insider trading, allowing those
"who are actually producing a movie to bet on its outcome against outsiders who have never read the script or seen the marketing budget," and since there’s no betting limit, it’s possible a $100 million movie could generate billions in financial losses—just like the subprime collapse. “The truth is that no great economic or social purpose is served by allowing people to profit from assets they do not control or hedge risks they do not have,” says Pearlstein. “To borrow a phrase from Nancy Reagan, the right policy is to Just Say No.”

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