We Are All Max Bialystock*

Have you heard the latest derivative?

Cantor-Fitzgerald, showing evidence that they are still insane with grief after having ²/₃ of their employees on 911, have come up with a twist to their new and innovative financial product, the Hollywood Stock Exchange, a game where people can "bet" funny on the success and failure of movies.

The twist, they are asking for regulatory approval to allow people to bet real money.

If any of you have seen The Producers, then you understand the possibilities:

Here's how it would work. Hollywood studios, actors, directors, investment banks, hedge funds, and anyone else would be able to buy and sell contracts based on the value of all ticket sales in the first four weeks of a movie's release. According to Cantor Fitzgerald's plans, the contracts would each be worth one-millionth of a given movie's gross sales during that four-week period. Let’s say that you thought Avatar would pull in $500 million during its first four weeks. So, you buy 100 futures contracts at $490, figuring that when Avatar made $500 million you’d be up $1,000. Unfortunately, as it turned out, Avatar "only" made some $430 million domestically in the first month after its release—meaning that you’d lose a cool six grand.

One problem, skeptics say, is that Hollywood insiders could have a huge advantage in such a market. People in the movie business often have far greater access to crucial information about a film’s box office prospects than ordinary investors do—such as how big the marketing budget will be or how bad the performances are. "If the industry is selling, odds are that it is a bad idea to buy," says Dean Baker, the codirector of the Center for Economic and Policy Research.

The deeper meaning to all of this is that these folks at Cantor Fitzgerald really see an opportunity for people to use their inside information as a way to steal from the general as a legitimate financial innovation.

It's not, it's a fraud, and it is transparently a fraud conceived for the purpose of generating commissions.

It is an indictment of the very concept of "financial innovation" as put forward by Wall Street.

Whoever came up with this idea should be banned from working as a broker for life.

^*Seriously, if you don't understand the reference, for Pete's sake, get out more, or go to the Wiki.