# Does finance really need the middle men?



## nioka (3 October 2008)

The financial system is out of control . In the current form it will destroy the capitalist system. It has many faults

1. It promotes greed.
2. It is too expensive.
3. It puts the control of our society in the hands of a few.
4. Much of the control is in the hands of the faceless few.
5. It allows the benefits of productivity to be unfairly distributed.
6. There are too many middlemen (leaches in my view) sucking the lifeblood from productivity.
7. It allows those that get hold of the controls of a business to reward themselves with benefits out of proportion to their actual worth.



Farmers have learnt the hard way that the middlemen were keeping them in the poor house. Take the chicken industry. There used to be ;
1. A farmer growing grain
2. A grain merchant
3. A carrier
4. A feed miller
5 Another carrier
6 A chicken hatchery
7 A carrier
8 A chicken grower
9 A poultry auction house or buyer.
10 An abattoir
11 A poultry wholesaler.

 Between each one there was a bank and each step there was a bank transaction.

Then came integration. Chicken changed from being a special occasion luxury food to being a cheap and readily available one.

I rest my case  ... for now.


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## chops_a_must (3 October 2008)

What do you propose?

The means of production be given to the workers?


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## nioka (3 October 2008)

chops_a_must said:


> What do you propose?
> 
> The means of production be given to the workers?



 Chops, Your response was too quick for you to have given the suggestion reasonable thought. Think more before you act may be good advice for you at this stage.
  And no that is definitely NOT my suggestion. Didn't you understand my post including the three Ms. Men. Money. Machinery. First thing you learn in business management. They must be balanced for success in business.


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## chops_a_must (3 October 2008)

nioka said:


> Chops, Your response was too quick for you to have given the suggestion reasonable thought. Think more before you act may be good advice for you at this stage.
> And no that is definitely NOT my suggestion. Didn't you understand my post including the three Ms. Men. Money. Machinery. First thing you learn in business management. They must be balanced for success in business.




Tell me how these points:



> 3. It puts the control of our society in the hands of a few.
> 4. Much of the control is in the hands of the faceless few.
> *5. It allows the benefits of productivity to be unfairly distributed.
> 6. There are too many middlemen (leaches in my view) sucking the lifeblood from productivity.
> 7. It allows those that get hold of the controls of a business to reward themselves with benefits out of proportion to their actual worth.*




especially points 5, 6 and 7, are not socialist at heart.

By the way, I agree with points 6 and 7, but I have been known to be a communist at various stages...


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## nioka (3 October 2008)

chops_a_must said:


> Tell me how these points:
> 
> 
> 
> ...




5. Capitalist management principles are clear that each section and stage of a business deserve a share of the rewards. Communist principles share the reward of a business over all society equally.
6. You can't be serious here. Communist principles ??? Never having been one I don't know how they treat leaches.
7. Any system that allows execs to take huge performance bonuses when the business is going backwards is wrong. Capitalist or communist.

One of these days you may come to realise that all capitalists aren't out to rape and pillage the system. Some of us only want our fair share.

I still find the title communist offensive, but you know that and that is why it keep coming up. I'll leave that for others to judge.


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## chops_a_must (3 October 2008)

nioka said:


> 5. Capitalist management principles are clear that each section and stage of a business deserve a share of the rewards. Communist principles share the reward of a business over all society equally.
> 6. You can't be serious here. Communist principles ??? Never having been one I don't know how they treat leaches.
> 7. Any system that allows execs to take huge performance bonuses when the business is going backwards is wrong. Capitalist or communist.
> 
> ...




5. Communist and socialist theory doesn't share wealth over society equally, but shares it based on wealth created and value to society (in principle). Something that is congruent with your views.

6. Communism attempts to eliminate 'leaches' that profit from other people's wealth creation, and hinder benefits to society.

7. Capitalism has always paid disproportionate amounts to people far in excess of their actual worth. Take brickies or tradies compared to scientists for example. And that's regardless of progression to a cause.

Before you shoot your mouth off again, it might be worth checking out workers collectives/ collaboratives in places like Spain, which have a system in place, exactly like you are proposing. But that is socialist/ communist in nature as well, but functions perfectly well.

And others have already made the observation about you sharing beliefs with communists.


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## xoa (3 October 2008)

No, finance doesn't need the middlemen. It's a problem in many industries, not just finance. 

For example, look at health system. Once upon a time there were doctors, nurses, orderlies, cooks, and the occasional receptionist or typist. Now they're outnumbered by HR consultants, public relations experts, social workers, OH&S directors, osteopaths, aromatherapists, policy analysts, administrative and liaison officers, and chiefs to supervise them all.

With every year, there's fewer people who create value, and more people to administer and redistribute it. 

If the middlemen were sacked, we'd have a terrible unemployment rate.


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## Macquack (3 October 2008)

nioka said:


> The financial system is out of control . In the current form it will destroy the capitalist system. It has many faults
> 
> 1. It promotes greed.
> 2. It is too expensive.
> ...




I agree with all 7 points.

Bankers have a privileged position in our society. They own the rights to "extend credit" / "create credit" / "money multiply" / "create money out of thin air" (All these terms refer to the same thing).

The public is awakening from its credit induced sleep and starting to see through the facade of the financial sector.

I believe the current financial crisis is a consequence of "fractional reserve banking" morphing into "zero reserve-unlimited credit" banking.


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## CanOz (3 October 2008)

nioka said:


> Chops, Your response was too quick for you to have given the suggestion reasonable thought. Think more before you act may be good advice for you at this stage.
> And no that is definitely NOT my suggestion. Didn't you understand my post including the three Ms. Men. Money. Machinery. First thing you learn in business management. They must be balanced for success in business.




Last i checked there were still 5 "M"'s. 

Materials
Manpower
Machinery
Methods or Management
and
Money

CanOz


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## KIWIKARLOS (3 October 2008)

the biggest problem is that the finance industry is not actually productive in fact its the opposite it rapes value from companies. Rel productivity and value comes from investing in things that in turn create more productivity.
Look at islamic financial rules they actually are based on fair rues and create value. The current system is just a rigged gambling ring where companies with heaps of cash can actually manipulate the odds. First and foremost housing should never have been treated as a commodity the whole basis of market principals only works if they is an alternative product. Housing is a need and there is no alternative. 

Take shorting for example how does it in any way produce value in a company or the economic environment, borrowing shares selling them then hoping to buy at a lower price. Its rediculous its basically legalised criminality, the biggest problem is the gambling is rigged by the house they place shorts then sell the crap out of a company.

Speculation is banned in islamic law, dont get me wrong im not islamic but i think the ideals make a lot of sense. You can only sell products that you plan to deliver, what benefit can be made out of buying produts on paper that you never intend to take hold of, it inherintly breeds bubbles and pointless specualtion and makes us pay more for products that are in plentiful supply. 

Its essentially pirac of the worlds resources by large economies, that is over now.

Other problem  is corporations are essentially a way of making huge private wealth with no private responcibility.The multi nationals operate acrosss boarders with no real laws of any country. They have no countries interest at heart and the only goal is creating wealthfrom nothing. Tax evasion , dodgy accounting all a product of greed and deregulation.

Does anyone find i funny that 10 years after th Glass seigal act (which was created as a byproduct of the great depression) was revoked that we find ourselves in another great depression.

US politics is ruled by proxy and guided by lobby groups, these groups should be outlawed. How can business putting money into politics everbe independant and fair ! The us citizens only have themselves to blaim. 
The country has always been dog eat dog but when criminals start running the country you are destined for trouble.

I mean the president from any party in the lst 20 years has been a puppet. 
They ae a country of people that let go of rights and values and embraced self rightousness and individuality.


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## nioka (3 October 2008)

CanOz said:


> Last i checked there were still 5 "M"'s.
> 
> Materials
> Manpower
> ...




3 Ms for beginners, 5 when you get down to business further down the track. Then there is the "E"s, Enterprise, Enthuasium  & Effort. Then the "R"s Risk etc. 

Let us balance the first three first. Regardless of how you look at it, the money position has become corrupted and needs reorganisation.

Note my change of avatar. I can't be WRONG all the time so I've decided chops needs it more than I do. Hence the new one.


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## Macquack (3 October 2008)

nioka said:


> 7. It allows those that get hold of the controls of a business to reward themselves with benefits out of proportion to their actual worth.




Alan Moss, former CEO of Macquarie Bank/Group would have to be a prime example of the financial sectors excesses, before the credit crisis.

Remuneration
$33.5 million in 2007
$24.8 million in 2008
Plus
$50.0 million golden parachute.

The bludger has never raised a sweat in his life.


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## Smurf1976 (3 October 2008)

chops_a_must said:


> 7. Capitalism has always paid disproportionate amounts to people far in excess of their actual worth.



Capitalism pays people whatever ammount is needed to match supply and demand in the labour market. Hence it pays prostitutes more than most political leaders and there's a simple reason for that. Lots of people would be willing to give being prime minister a go but few are willing to do the other occupation. Supply and demand.


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## Temjin (3 October 2008)

We can complain all we want, but the fact remains that this system has been with us for many decades and it would be practically impossible to change it for the "greater good". Call me a conspiracy theorist or something, but I'd rather take advantage of the system than be taken advantage of it. I'd worried about things that I could take control in rather than complaining about things I have no control in. Immoral? Not really, I call it being a realist. 

So yes, I agree with Nokia on how corrupt and broken our current system is. But what can we do? Might as well jump along the train and ignore everyone else. hehe


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## nioka (3 October 2008)

Temjin said:


> So yes, I agree with Nokia on how corrupt and broken our current system is. But what can we do? Might as well jump along the train and ignore everyone else. hehe




I think we should stop the train, get off and get another form of transport. This one is derailed and heading for a a pile of rocks, If it gets past those it is heading for a river where there used to be a bridge. If it gets past that you will have the answer to another thread (Is there a god?)


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## wayneL (3 October 2008)

KIWIKARLOS said:


> Take shorting for example how does it in any way produce value in a company or the economic environment, borrowing shares selling them then hoping to buy at a lower price. Its rediculous its basically legalised criminality, the biggest problem is the gambling is rigged by the house they place shorts then sell the crap out of a company.




Fair points for debate in the rest of your post, but on this one point, (not withstanding the manipulation which is a fair point) you're not thinking straight.

You say shorting does not said shorting does not add value. Well, can you please explain to me how going long via the stock exchange adds any value to the company... IT DOESN'T.

You are punting on the actual business adding value to itself and hoping to sell at a higher price. You are also hoping to remove value from the company in many cases via a dividend.

How is that adding value??????

On your point of manipulation, institutions and the business themselves manipulate prices to the long side similarly by rumours and fraudulent accounting.

Ergo, if shorting is legalized criminality, then so is longing, unless in a capital raising.

Please people, think things through before casting aspersions on a legitimate commercial activity, because by your logic, _ipso facto_, you are a criminal too.

Disclaimer _ad naseum_: Manipulation and naked short should of course be addressed.


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## gav (3 October 2008)

wayneL said:


> Fair points for debate in the rest of your post, but on this one point, (not withstanding the manipulation which is a fair point) you're not thinking straight.
> 
> You say shorting does not said shorting does not add value. Well, can you please explain to me how going long via the stock exchange adds any value to the company... IT DOESN'T.
> 
> ...




Exactly.  And selling shares you own should also be illegal, because you are selling in the anticipation that the share price would go down.  If you thought the share price was going to continue to rise, then you wouldnt sell!


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## bluelabel (4 October 2008)

Temjin said:


> We can complain all we want, but the fact remains that this system has been with us for many decades and it would be practically impossible to change it for the "greater good".
> 
> So yes, I agree with Nokia on how corrupt and broken our current system is. But what can we do? Might as well jump along the train and ignore everyone else. hehe




This is the very attitude that keeps the current system in place.  If it is that bad then we as the ultimate consumers need to let the market know.  I for one am all for a piece of the socialist pie.  A bit of state ownership and regulation wouldn’t go astray... note: I said a bit. 



Macquack said:


> prime example of the financial sectors excesses
> 
> Remuneration
> $33.5 million in 2007
> ...





What could someone possibly do to earn $33mil a year?

Did they cure cancer? No... 
Did they alleviate poverty? No... 
Did the achieve world peace? No...
Did they stop global warming? No... 
I could go on...

So I will side with Nioka and ask the same question; does finance really need the middle men?  But in asking that, and using the poultry example above as reference, you could almost say that about most industries.

:bier:

 blue


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## Trembling Hand (4 October 2008)

bluelabel said:


> I for one am all for a piece of the socialist pie.  A bit of state ownership and regulation wouldn’t go astray... note: I said a bit.



Like being a bit pregnant?


bluelabel said:


> What could someone possibly do to earn $33mil a year?
> 
> Did they cure cancer? No...
> Did they alleviate poverty? No...
> ...



 I know.......Play soccer??


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## Macquack (4 October 2008)

Trembling Hand said:


> I know.......Play soccer??




At least soccer players sweat. Its money for exertion.


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## Temjin (4 October 2008)

nioka said:


> I think we should stop the train, get off and get another form of transport. This one is derailed and heading for a a pile of rocks, If it gets past those it is heading for a river where there used to be a bridge. If it gets past that you will have the answer to another thread (Is there a god?)




Maybe some of you have misunderstood me because of the tone of my post. 

Which train are you talking about anyway? 

I was referring to the whole capitalism system, and not just how greedy CEOs were able to take huge advantages through regulations loopholes and pursue short term personal profits with no regards to the well being of the entire economy. This is what Nassim say how one small advantage can lead to a huge disportional reward. The fact remains that life is NEVER FAIR. 

I was merely referring to the whole capitalism system where a huge amount of global wealth are being controlled by a relatively small group of people. Of course, this result in every middle class being "slaved" to their jobs and suffer from their inability to go against the rich and power at times like this. 

Unfortunately, this system has been in place for too long and personally, I think it would be pointless to even think about changing it. 

Let's try to be realistic. What do you think we can do?? Do you think those in "power" would even let the middle class to threaten their wealth? Again, cal me a conspiracy theorist or something, but without appropriate power and wealth, there is nothing we can do to fight against such..."evil".? 

Ron Paul is definitely trying to do that. Though while I admire him for his effort and courage, I would have to say that he has little chance to make any real changes to the whole "unfair" system. Of course, I hope he could at least make some changes and shift some of the power back to the middle class.  

Sorry, I'm not quite on topic here.


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## Trembling Hand (4 October 2008)

Macquack said:


> Its money for exertion.




On that theory a brickies labourer should earn $330 mil a year

:bricks1:


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## Macquack (4 October 2008)

Trembling Hand said:


> On that theory a brickies labourer should earn $330 mil a year
> 
> :bricks1:




Well they have a lot of catching up to do..

"Bricklayer's labourer jobs usually earn around $31,200 to start, assuming a regular flow of work (since the job is often project-based)."  jobs.com.au

It would take a brickies labourer *1080 years *to earn what Alan Moss earnt in *one year *- 2007 ($33.5 million), let alone your stupid figure of  $330 mil a year.


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## chops_a_must (4 October 2008)

Temjin said:


> Let's try to be realistic. What do you think we can do?? Do you think those in "power" would even let the middle class to threaten their wealth? Again, cal me a conspiracy theorist or something, but without appropriate power and wealth, there is nothing we can do to fight against such..."evil".?



Just about every revolution I can think of throughout history has been the result of the middle class, despite the romantic notions to the contrary.

You start mucking around with their wealth, do things to change their perception of upward mobility and they will revolt.

Basically, one of the only reasons Great Britain didn't revolt in 1848 was because of the work done to appease the middle class.

It's not much good having wealth, if those with the real power in society (the middle class) refuse to implement your wishes and side with the antagonists.


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## Happy (4 October 2008)

Trembling Hand said:


> Like being a bit pregnant?
> I know.......Play soccer??





I know, salary cap like in football


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## nioka (4 October 2008)

Temjin said:


> Which train are you talking about anyway?
> .




The gravy train. The one that arrived with the pyramid selling of finance. The one heading for a crash. The one I am leaving behind. The one I never saw going anywhere.
 ( check out my early posts for the quote "neither a borrower nor a lender be.")


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## Trembling Hand (4 October 2008)

nioka said:


> ( check out my early posts for the quote "neither a borrower nor a lender be.")




Very interesting Nioka. So

1. You have never had a loan?

2. Your business has never taken a loan or lease?

3. You invest in companies that don't have dept?

4. You don't invest in companies that lend?


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## nioka (4 October 2008)

Trembling Hand said:


> Very interesting Nioka. So
> 
> 1. You have never had a loan?
> 
> ...




 1. Yes I have had loans  ( but I never inhaled ???) They never did me any good . I worked for the bank while I had loans. That is why I don't believe in most loans.
 2. My business accepted finance as part of normal business practice ( remember the 3Ms (or 5Ms if you see it that way)
 3. I try and invest in companies that have their own financial backing. Part of the fundamental requirements. ( I do have shares in centro although not expensive ones as they are discounted in my eyes by their debt)
 4. No, or rather yes. Yes I avoid companies that lend.

 I have found over the years that you get more for your money in the end if you save for what you want to have. Slow and steady wins the race.

 It is the leaches I dislike. For example I know of a case where a struggling businessman was refused a $10,000 increase in his overdraft but two days later received a letter from his bankcard provider offering a $10,000 increase in his credit limit. 

To get back to the issue in this thread. Does business need the middle man where finance is required. The question is not does business need finance. Business does need finance. That is why they issue shares in the first place. That is why they lease premises. Do they need a middle man?. If they use a middle man then what is a fair charge for the service by that middle man.

Right now I am working to try and save a company that is brought to the brink of bankrupsy by convertable notes attracting a 24% interest charge that former directors stupidly used as temporary finance. If I succeed that company will function without debt in the future. If I don't, then I'm sure the company is history.


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## chops_a_must (4 October 2008)

nioka said:


> It is the leaches I dislike. For example I know of a case where a struggling businessman was refused a $10,000 increase in his overdraft but two days later received a letter from his bankcard provider offering a $10,000 increase in his credit limit.



Or Commsec advising not to get a short term fixed interest on the margin loan, before interest rates shot up, and then sending me a letter saying to fix interest (which you have to pay on regardless), when I have no margin...


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## Julia (4 October 2008)

chops_a_must said:


> What do you propose?
> 
> The means of production be given to the workers?



Shades of "Animal Farm"?

Nioka, have you read this?


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## Gundini (4 October 2008)

nioka said:


> The financial system is out of control . In the current form it will destroy the capitalist system. It has many faults
> 
> 1. It promotes greed.
> 2. It is too expensive.
> ...




While I don't argue with your post, why is it edited by the Professor?


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## nioka (4 October 2008)

Gundini said:


> While I don't argue with your post, why is it edited by the Professor?



Ask the professor. He believes th.... Just ask the professor


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## nioka (4 October 2008)

Julia said:


> Shades of "Animal Farm"?
> 
> Nioka, have you read this?




Sometimes I think that this forum has more in common with animal farm than reality. If only it wasn't so serious a problem it would make a great comedy movie. Now that I am the resident troll and a troll appears to be half animal and I do have a hobby farm maybe I am living out animal farm in real life. 

But then look at it this way; I only ask the questions that need to be answered.


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## chops_a_must (5 October 2008)

nioka said:


> Sometimes I think that this forum has more in common with animal farm than reality. If only it wasn't so serious a problem it would make a great comedy movie. Now that I am the resident troll and a troll appears to be half animal and I do have a hobby farm maybe I am living out animal farm in real life.
> 
> But then look at it this way; I only ask the questions that need to be answered.




My first post was actually half serious Nioka...

Although I'm antagonistic, I and others certainly share your sentiment, regardless of where the basis of what your stand point is.

So what do you actually propose be done?

Simple things like growers/ farmers markets are fantastic on the small scale, but it is where more ideological bound people than yourself come undone, trying to implement similar ideas on a larger scale.


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## wayneL (5 October 2008)

nioka said:


> But then look at it this way; I only ask the questions that need to be answered.



...but never answer questions that need to be asked.


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## cuttlefish (5 October 2008)

bluelabel said:


> What could someone possibly do to earn $33mil a year?
> 
> Did they cure cancer? No...
> Did they alleviate poverty? No...
> ...






			
				Trembling Hand said:
			
		

> I know.......Play soccer??




Way too much effort - how about ...

Drive a car 

_The world's highest-salaried athlete pulls in *$35 million a year *from his racing contract with Ferrari. While rumors swirled that the carmaker wanted the German to take a pay cut, *Schumacher *just signed a contract extension through 2006 with a reported 10% raise. Licensing income and personal endorsement contracts with companies like Vodafone also add to the coffers._
http://www.forbes.com/celebrities20...ListType=Person&uniqueId=5WRJ&datatype=Person

or even easier

Get dressed and walk around 

_supermodel *Gisele Bundchen *rakes in *$33 million a year*, the new Forbes list of the top 15 richest supermodels says.._

http://www.chinadaily.com.cn/lifestyle/2007-07/17/content_5438080.htm


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## nioka (5 October 2008)

wayneL said:


> ...but never answer questions that need to be asked.




What was the question again? 
Then again I don't profess to have all the answers and some of those I have will be wrong. However I am open to reason. Some of my ideas are set in stone but they have to have proved themselves to earn that status with me. Then again I often change my mind. To convince me to change it needs reasoned discussion, any abuse and name calling will get the treatment it deserves. In life I have found it better to be beaten than bullied.

Some seem to get the impression that I love Government regulation. I detest it. I believe that for every new law there should be an old one repealed to balance. All new laws should have a sunset clause so they can be reviewed to see if they are still necessary. That would apply to the rules for shorting. Even though I hate regulation I'm afraid in this society there are too many villians that take advantages of our freedoms. Take the gun laws. I own guns, I believe everyone should know how to use a gun and the pros and cons associated with guns. The fact that they can be so dangerous in the hands of idiots and criminals made the gun laws necessary and our Johnny used it as a political weapon to make them onerous on the genuine gun owners. Now we are not as safe in our own homes because the crims know that they have little chance of getting shot for their trouble. 

Sorry for the ramble, what was the Question?


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