How about another scenario.
Joe farmer decides to sell his crop to the cwb. Cwb pays him 4.00 a bushel and the cwb sells the bushel for over ten bucks. Gets paid because the cwb doesn't have credit sales anymore. Cwb needs more grain and calls for another 25 percent. Pays joe farmer 4.00 a bushel and sells the grain for 10.00 a bushel. Remainder of the crop that joe has in the bin is at his risk. The cwb goes to the MGEX and plays the market with the spread money that he owes Joe Farmer.
Cwb loses 250 million in discretionary trading. Joe doesn't get the average price, he gets another buck a bushel and fifty percent of his contracted grain is in his bin that the cwb never calls in.
Next year comes and Joe contracts his new grain and the remainder left in his bin to the cwb. The cwb does the same thing but they lower the price. They need to re coup the 250 million they lost.
Zero risk to the cwb but they risk everything to play the market. They have no business in the futures market the way they buy and sell grain.
Unfortunately, experts and farmers alike believe they do to protect the farmers interest.
Its all bullshit, which is why the cwb has to go.
Two questions for everyone:
1. Why does the cwb need to manage risk when they have none? Zero.
2. Why does this not look like every other ponzi scheme?
Joe farmer decides to sell his crop to the cwb. Cwb pays him 4.00 a bushel and the cwb sells the bushel for over ten bucks. Gets paid because the cwb doesn't have credit sales anymore. Cwb needs more grain and calls for another 25 percent. Pays joe farmer 4.00 a bushel and sells the grain for 10.00 a bushel. Remainder of the crop that joe has in the bin is at his risk. The cwb goes to the MGEX and plays the market with the spread money that he owes Joe Farmer.
Cwb loses 250 million in discretionary trading. Joe doesn't get the average price, he gets another buck a bushel and fifty percent of his contracted grain is in his bin that the cwb never calls in.
Next year comes and Joe contracts his new grain and the remainder left in his bin to the cwb. The cwb does the same thing but they lower the price. They need to re coup the 250 million they lost.
Zero risk to the cwb but they risk everything to play the market. They have no business in the futures market the way they buy and sell grain.
Unfortunately, experts and farmers alike believe they do to protect the farmers interest.
Its all bullshit, which is why the cwb has to go.
Two questions for everyone:
1. Why does the cwb need to manage risk when they have none? Zero.
2. Why does this not look like every other ponzi scheme?
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