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Just what we need: Split CFTC approves box-office futures

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June 15, 2010 – Comments (8)

Fantastic. I was hoping this thing wouldn't pass, but it did. What a crazy bunch of crap.

http://news.yahoo.com/s/ap/20100615/ap_on_en_mo/us_cftc_betting_on_box_office

[excerpt]

Soon playing in a theater online: trading of future box-office receipts for movies on a new exchange, following approval by federal regulators. Unless, that is, Hollywood studios get their way and Senate legislation to ban the box-office futures becomes law.

A divided Commodity Futures Trading Commission on Monday approved the proposed futures contracts for the new Trend Exchange. That means the movie futures trading can proceed; it is expected to begin sometime in the third quarter. The first proposed contract for the exchange is for opening-weekend receipts for "Takers," being released Aug. 20. Matt Dillon plays a cop who takes on a team of expert bank robbers. Major movie studios strongly oppose the idea. They say rival studios could sabotage films by betting against them. In giving its approval, the CFTC said it found that box-office receipts fit the law's definition of a commodity, that the Trend Exchange contracts aren't "readily susceptible" to manipulation, and they provide a way of managing risk.

The agency's vote was 3-2. Two CFTC commissioners, Democrat Bart Chilton and Republican Jill Sommers, voted against approving the contracts for the Trend Exchange.


Nathan had this great rant regarding this here: http://economicedge.blogspot.com/2010/06/morning-update-market-thread-615.html

Crank of the day goes to the CFTC who approved, with a 3-2 vote, the creation of futures contracts based upon movie box-office receipts! Hollywood is furious, as they now see speculators shorting their films, LOL. It’s so funny I’d cry if it weren’t so disgusting. What it shows so clearly is how our current version of a “marketplace” is nothing but a gambling parlor – a joke. Oh wait, now movie studios can “hedge” their productions! Or better, an actor can take a lucrative contract, short the movie, and then produce a stinker, “throwing” the film for profit! LOL, what fun there is in a casino.

Hey, I’m thinking of creating a new family of ETFs… first I’ll create one for “Red,” and another for “Black.” Each morning I’ll spin the wheel to determine which one rises or falls, and in about three month’s time I plan on rolling out my 3X versions of my new ETF’s. Anyone want to “invest” in my new enterprise? It’s going to be big, I’ll follow the red and black ETFs with “heads” and “tails.”

8 Comments – Post Your Own

#1) On June 15, 2010 at 10:21 AM, outoffocus (23.24) wrote:

Oh wait, now movie studios can “hedge” their productions! Or better, an actor can take a lucrative contract, short the movie, and then produce a stinker, “throwing” the film for profit!

Also called the "Goldman Sachs Efficient Profit theory".

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#2) On June 15, 2010 at 10:23 AM, binve (< 20) wrote:

outoffocus ,

>>Also called the "Goldman Sachs Efficient Profit theory".

LOL! That is awesome :)..

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#3) On June 15, 2010 at 10:41 AM, brickcityman (< 20) wrote:

Quick, somebody get Micheal Moore on the phone to start a documentary on tulips...

 

Also one wonders whether this would allow someone to "naked short" an expose' type documentary out of existence.  How much longer before we start doing a similar thing for TV shows, and by extension allow "Big Money" to rule over what shreds remain of journalism (nevermind, that already looks like an assinine concern).

 

Perhaps some good will come of this though...  If it splits the attention of the adrenalin junkies (excuse me banksters, oops again I mean banks) then maybe, just maybe stocks will get a little less volatile.

 

BTW - LOL @ outoffocus

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#4) On June 15, 2010 at 10:42 AM, binve (< 20) wrote:

brickcityman,

>>Perhaps some good will come of this though...  If it splits the attention of the adrenalin junkies (excuse me banksters, oops again I mean banks) then maybe, just maybe stocks will get a little less volatile.

Nice :)..

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#5) On June 15, 2010 at 11:31 AM, Starfirenv (< 20) wrote:

 Ziggy started it.  Ever heard of "Bowie Bonds"?
 "Back in 1997 Bowie came up with the idea of selling his projected royalties income in the form of ‘Bowie Bonds'.

In other words, Bowie realised he would have a steady stream of money coming in from the sale of his music but rather than wait for it to accrue, he sold the rights to the future earnings so he could withdraw a large cash sum there and then. This became known as ‘securitisation'."
http://new.uk.music.yahoo.com/blogs/guestlist/14935/did-david-bowie-cause-the-credit-crunch

"Bowie Bonds are asset-backed securities of current and future revenues of the first 25 albums (287 songs) of David Bowie's collection recorded before 1990.

Issued by David Bowie in 1997, they were bought for $55 million by the Prudential Insurance Company. The 287 included songs also acted as collateral to insure the bond.

The Bonds were a ten-year issue, after which the royalties of the songs would return to David Bowie.

By forfeiting ten years worth of royalties, Bowie was able to receive $55 million up front, which allowed him to buy out the rights to the David Bowie songs owned by a former manager. David Bowie now owns the rights to every one of his songs.

The Bowie Bond issuance was perhaps the first instance of intellectual property rights securitization. The securitization of the collections of other artists, such James Brown, Ashford & Simpson and the Isley Brothers, later followed.

These Bonds are named Pullman Bonds after David Pullman, the banker who pushed the original Bowie deal.Bowie Bonds offer a rich 7.9% yield; however, this is not without risk".
http://www.commodityonline.com/news/David-Bowie-Bonds--IP-Securitization-1896-3-1.html

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#6) On June 15, 2010 at 11:41 AM, binve (< 20) wrote:

Starfirenv ,

I had not! That is very interesting, thanks!..

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#7) On June 15, 2010 at 3:18 PM, Tastylunch (29.38) wrote:

At this point I'm ready to ban all derivatives including options and futures.

None of this crap really adds any economic value, but sure is efficient at wasting it!

 

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#8) On June 15, 2010 at 3:27 PM, binve (< 20) wrote:

Tastylunch ,

>>None of this crap really adds any economic value, but sure is efficient at wasting it!

No kidding man! What a mess :(

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