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Cocaine To Blame for Stock Market Volatility, Says Italy

Cocaine To Blame for Stock Market Volatility, Says Italy

There’s an old economics joke that since “the market” is made up of 25-year-old traders, all it really wants is sex and cocaine. It turns out, though, that this may not be too far off from the truth: Italian officials are currently considering mandatory drug tests for all stock market traders.

According to Carlo Giovanardi, an undersecretary to Silvio Berlusconi, one of the reasons why the stockmarket has so many inexplicable ups and downs is because those who are running the thing are “not capable of making decisions” because they’re high on cocaine. This is the first step in implementing drug testing policies for anyone who takes responsibility for the lives or money of others.

Though some might think that this is simply a ploy to take attention off of Italy’s weak market, it does point to an interesting question: why do markets fluctuate so much? One reason that makes a lot of sense (or at least as much as cocaine) is that, well, there is no reason why the market moves inexplicably. It just sort of does, and the best we can do is shake it off and move on to the next counterintuitive drop or gain.

At the same time, though, there certainly are cases in which excessive drug use influences market outcomes. Last year, a British trader bought so many oil futures while in a drunken stupor that he managed to move the global price of oil. There’s no question that regulations should address this reckless and dangerous behavior, especially since traders are working with other peoples’ money. And given how much power stock traders have over the rest of the world, the 99% if you will, any kind of regulation reining in market excess is certainly necessary.

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Photo credit: Giuseppe Bognanni's Flickr stream.

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33 comments

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7:08AM PDT on Oct 17, 2011

this is to Luvenia V. and where do you think "GREED and lack of morals" comes from??????
I can tell you from my experience of how a person's environment at their birth is connected with addiction to drugs in their lifetime.......symptoms of drug addiction include a lack of morals...which lead to greed!!!

2:34PM PDT on Oct 16, 2011

Whilst drug testing under the present system would be a good idea it is not the solution - the problems will always exist when you have a system that allows gambling with other people's lives - it is the system that needs changing not just the people working in it.

8:12AM PDT on Oct 13, 2011

well, we all know what they do with their money! in this world, you're either on street drugs, alchohol or big pharma meds! we even put our children on drugs right from the start, well, it's legal and it's advertised as good for you!!

9:59PM PDT on Oct 12, 2011

Well that would be one explanation for it!

7:50PM PDT on Oct 12, 2011

At least they're not picking on the middle class

5:39PM PDT on Oct 12, 2011

This is like " duh, no shit Sherlock" - again, personal knowledge of that beast called Wall Street and it's inhabitants.

4:24PM PDT on Oct 12, 2011

I do remember some news about pounds of coke being sold from wall street.
The story got hushed quickly.
I don't know if a lot of the people use coke on wall street, but the up and down of the stocks is a cycle that has been controlled for a long time.
If you control whole areas of society.....you can control what happens in it.
There were 'shortage's' made in the 60's-70's to see how the public would react.

4:02PM PDT on Oct 12, 2011

Makes sense.

3:23PM PDT on Oct 12, 2011

It's certainly a start. Those stockbrokers who fail the drug test should be required to do some hard jail time, followed by some community service among people who have lost their jobs due to the influence of Wall Street.

2:11PM PDT on Oct 12, 2011

Most Wall steet traders are on coke - I've seen it first hand. It's been that way since the 70's (as far as I know). How do you think they keep up the energy and speed to deal with all those lightening fast transactions? Day after day. The market is volatile? Look at the people who are driving it!!!
Indeed, coke is a rich man's habit. You'd be surprised how much of their bonuses go on drugs and champagne! And all the 'rich-man' toys - fast cars, yachts and private planes. Take away the coke, and see how well they keep up. Many won't be able to - then maybe we'd get some stability in financial trading.
YES! Test for drugs!!!

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