Albert J. NockThe Crony system is alive and well in the various exchanges across the globe. When there is a huge difference between the closing price and the settlement price, that is evidence of cronyism in the pit committee. When they close trading floors without a vote from the membership, that is cronyism. When the exchanges' hired management acts as the enemy of the membership, a la Nock, that is cronyism. When the hired management favors certain commercial interests with a quid pro quo, that is cronyism. When elections are rigged and committees are stuffed, that is cronyism. When jobs are created for the simple reason of getting friends on the payroll, that is cronyism. When dissent is not tolerated and members are fined for speaking publicly, it's the backroom cronies pulling the strings. You could substitute government bureaucracy for exchange management, and there would be little difference. Nock's views apply equally to exchanges as well as the state.





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4 Comments so far

  1. tom marks on January 13, 2010 4:16 pm

    Exchanges are like jars of cronyism. Like mayonnaise, only thicker. Accordingly, somebody in power's self-interest is slathered on most every decision.

  2. Rocky Humbert on January 13, 2010 4:59 pm

    The Chicago Mercantile Exchange went public in December, 2002. The IPO gave its members a windfall $900 Million in new stock. Over the past seven years, CME’s stock appreciated by roughly 900% so members who didn’t sell have stock worth roughly $9 Billion.

    Members and public shareholders have compounded at 35% annually, and outperformed the S&P500 by 685%. If this is an example of crony capitalism, I want more of it!

  3. tom marks on January 14, 2010 10:38 am

    Recent stratospheric stock returns notwithstanding, one had to have worked in a couple of these self-interest factories for decades to fully appreciate exactly how the sausages got made. Upton Sinclair would not have approved. A lot of offal, gristle, and bone ended up on the unsuspecting customers' plates.

  4. vniederhoffer on January 14, 2010 12:16 pm

    regrettably, one has been grist for that mill. vic


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