UNCTAD says markets cannot find prices
by Benjamin on September 26, 2009
UNCTAD just released their annual Trade and Development Report with a launch talk at the LSE, and never shy of controversy, they announced in the launch talk that “Financial Markets never find the right price”, while linking the crisis with development and climate change.
The director of Globalization and Development, Heiner Flassbeck, argued that spot prices in the financial and commodity market is not driven by some underlying fundamentals. Prices were driven by fluctuations in the future markets, which are so heavily disturbed by trading noise that they have little to do with the commodity. Spot prices are then dragged up or down by forward expectations, sometimes for years, before causing a crash somewhere, and then being dragged off in a new distorted direction. The argument is interesting and his talk is worth a listen – you can download it here.
The report, and Dr. Flassbeck, goes on to debate the issue of climate change, arguing that there are no real ‘costs’ of switching to green production, there is simply a change in preferences which will allow the market to find a new optimal distribution… I haven’t had a chance to read the report yet, but if anyone has a copy – let me know as the talk and following discussion was very interesting.
Tags: Climate Change, Development, Financial Markets, Globalization, Heiner Flassbeck, LSE, Trade, Trade and Development Report, UNCTAD
