In economics and finance, arbitrage ( //) is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit at zero cost.
In principle and in academic use, an arbitrage is risk-free; in common use, as in statistical arbitrage, it may refer to expected profit, though losses may occur, and in practice, there are always risks in arbitrage, some minor (such as fluctuation of prices decreasing profit margins), some major (such as devaluation of a currency or derivative). In academic use, an arbitrage involves taking advantage of differences in price of a single asset or identical cash-flows; in common use, it is also used to refer to differences between similar assets (relative value or convergence trades), as in merger arbitrage.
People who engage in arbitrage are called arbitrageurs (IPA //)—such as a bank or brokerage firm. The term is mainly applied to trading in financial instruments, such as bonds, stocks, derivatives, commodities and currencies.It is the heart and soul of what we have become. Money for nothing. Chicks for Free.
But, while I want to say that the the description really only applies to the political class, or even the financial class, I am afraid that it just ain't so. From the chump (and I include myself) buying a lottery ticket to the purveyors of CDO's and other such chicanery, we are all complicit in rebelling against getting up and going to work everyday.
There is a Buddhist saying; “Before enlightenment chop wood – carry water, after enlightenment chop wood carry water." It would appear that we have twisted a simple truth to read, “before enlightenment Chop Wood – Carry Water, after enlightenment get someone else to do it for you!!!”
Wherefore I perceive that there is nothing better, than that a man should rejoice in his own works; for that is his portion: for who shall bring him to see what shall be after him?