Felix Salmon on Hollywood’s Future(s)

IN the 1950s, onion growers were often shocked at the low prices they were getting. Casting around for a villain to blame, they alighted on derivatives traders, and they persuaded Congress to ban any futures trading in onions

Today onions are the only commodity for which futures trading is banned. Not coincidentally, onion prices remain extremely volatile: they doubled in 2008, and then fell by 25 percent in 2009.

Today, no one is silly enough to ask a member of Congress to simply outlaw futures trading in a certain type of contract – no one, that is, except Hollywood film producers.

As Felix notes, the ban is likely to harm Hollywood more than anyone else who with futures markets would get improved hedging, prediction and promotion.

Hat tip to Daniel Lippman.


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