You actually said "Markets exist for the benefits of hedgers / real-money players, and are arranged for their convenience.", that's pretty much saying markets are for "real hedgers", and semantics aside my point stands. If you change that to say you need a kernel of hedgers for a market for form around, then no-one would disagree with you, it allows arbitrage at the very least. However that's a very different thing than saying the market exists for them. There are actually a large number of markets where hedgers make up the minority of the market, for example less than 20% of the WTI crude futures market, so it's hard to say the market "exists" for that 20% and the 80% are merely "along for the ride". And look no further than single stock futures to see a world without market makers, ever try to trade one of those?
And actually I don't generally agree to disagree on basic math. I could have 50 vertical spreads on 50 different securities that all added up to a 5% of my portfolio in total risk. And still not be able to take delivery on those if a significant number of them ended up ITM. No reasonable/sane person would call a portfolio where if all your positions went to 0 you'd lose 5% over leveraged, and I haven't seen you offer a reason why it would be. I'm not sure why you're so doggedly holding onto that view except that it was one you originally espoused, it just doesn't make any sense.
