http://www.huffingtonpost.com/ellen-brown/will-hollywood-go-the-way...

As if attacks from paparazzi and star-crazed fans weren't enough, Hollywood stars may soon have a literal price put on their heads by investors in the Cantor Exchange, a real-money trading platform where people can bet on the gross profits of upcoming movies. Sales of The Dark Knight skyrocketed
after Heath Ledger died unexpectedly, and so did sales after the deaths
of Michael Jackson, Elvis Presley and Marilyn Monroe. Will greed-driven
investors now be laying in wait for the stars of movies they have bet
on?

The Cantor Exchange (CE) is based on a virtual trading platform called the Hollywood Stock Exchange (HSX), a web-based, multiplayer simulation in which players buy and sell "shares" of actors, directors, upcoming films, and film-related
options. The difference is that where the HSX uses virtual money, CE
will turn the game into a real casino using real dollars.

On April 21, Cantor Exchange reported that it had just received regulatory approval from the Commodity Futures Trading Commission (CFTC), which oversees futures exchanges. "This is a significant step
forward in achieving our ultimate goal," it said in a letter, "which is to launch a market in Domestic Box Office Receipt Contracts."

Having "contracts" out on movies and movie stars, however, has an ominous ring; and the Motion Picture Association of America (MPAA) apparently doesn't like the sound of it. The Cantor letter said that
its tentative launch date of April 22 was being delayed because the
MPAA and others "raised concerns about the economic purpose of this
market and its usefulness as a hedging vehicle."

The legitimate hedgers, the moviemakers and equity holders with a real financial interest to protect, don't want it. But Cantor is pushing forward, because gambling is big business and there are vast
sums of money to be made.

Critics are worried that the new exchange will turn Hollywood into another derivatives casino, vulnerable to insider trading. Even if short
sellers aren't hiding behind bushes waiting to trip up the stars, the
exchange could create bizarre incentives for moviemakers to manipulate
and distort the market for their own products, perhaps intentionally
sabotaging movies they know are losers.

The Derivative Craze

A "derivative" market is one that is "derived" from an underlying asset, but participants don't have to own the asset to play. Like gamblers at a race track, they can bet without owning a horse.
Derivatives have now become a $605 trillion
industry, about ten times the gross domestic product of all the
countries of the world combined. This money is not contributing capital
to businesses, helping the economy to grow. Rather, it is being
diverted into wagers. Money is made by taking it from someone else.

Worse, half the wagers are negative: the players want the thing to fail. Warren Buffet called derivatives "financial weapons of mass destruction." By massively short selling a stock or a currency, speculators can actually force the price down. Derivatives can be used to sabotage not only businesses but whole
economies. Derivatives have been blamed for such economic disasters as
the collapse of Japan's stock market in 1987, the Asian crisis of 1998,
and the recent collapse of Greece.

Gaming the Hollywood Game

Max Keiser, who founded CE's virtual forerunner HSX in the 1990s, has firsthand knowledge of how the Hollywood exchange can be abused. When
he was CEO of HSX, he says, he came under pressure from fellow board
members to give in to studio heads who were offering cash and other
inducements to manipulate the prices of projects, either up (to
legitimize more marketing dollars) or down (to sabotage competing
projects). "These guys, including my own board of directors," he says,
"could not tell the difference between marketing and market
manipulation."

Whether a movie's stock price rises or falls is considered to be a predictor of the movie's future success; but Keiser warns that today, the prediction value of market pricing is largely a hoax. Traders using
sophisticated computer programs have learned how to manipulate prices,
and market rigging has become institutionalized.

"The only difference between the new box office futures contracts being manipulated and blowing up," he says, "and stocks in companies like Lehman Brothers being manipulated and blowing up, is that people
losing their money can imagine getting screwed by Scarlett Johansson
instead of Dick Fuld."

Keiser predicts that his altered HSX computer technology, if approved by the CFTC for use in a real-money exchange, will produce an insider trader's paradise, with Hollywood going the way of Enron and
Lehman Brothers in two years or less.

"But this is what rigged market capitalism is all about," he says.
"It's not economics really. It's arson. They bet against a company or a
country and then burn it down."