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A day late and a dollar short — 23 Comments

  1. Cute quote from a “Chinese banker” – “You will know how worried by the thunder of denials this news will generate.” Nice rhetorical trick, whereby affirmation, silence, and denial are all posited to be confirmation.

    In any case, if we want to the dollar to be the gold standard (so to speak), we need to have an economy which actually makes things that people want to buy, not an economy where major efforts are devoted to looting and destroying productive enterprises.

  2. This action should come as no surprise. No nation can undermine its currency with massive borrowing and unfavorable trade balances without suffering devaluation.

    Nobody with a half a brain wants to get stuck holding bad paper.

    Devaluation is such a cruel tax that it is criminal. Wastrel politicians that promote policies that lead to currency devaluation should be punished with jail time for abuse of office.

  3. Devaluing the dollar doesn’t cause inflation, it IS inflation and huge tax on the American people. It’s the reason for the rush to gold, silver and other commodoties. This could be bad news, or it might be good. Because a stable worldwide currency exchange is more important for the gloabal economy than a weak dollar being front and center.

    And notice, ETFs with gold and silver stocks are rallying big time on this news. Expect an even greater flight to real goods and commodites now. It’s also why the stock market is rallying for little good reason…..Obama wants us to invest in other things, while he keeps the dollar depressed. He and Ben are pleased until the real day of reckoning comes and when and if it comes, all hell will literally break loose.

  4. The United States announced today it would stop using U S currency to make the world safe from tinpot dictators, kleptocrats, murderous tyrants, the degenerate Saudi royal family, Russian adventurism, and Chinese dumping of inferior and sometimes dangerous “Made In China” crap — and oh yes, the currency would no longer be used in the service of French and EU dependence on America for their defense. If only.

  5. Get ready for a huge spike in energy prices, even the new find of gas in texas wont help (thats natural gas, not gasoline).

    in the game of international chess, what are the pieces and people being arranged in?

    here is a bit of a blast from the near past just before the elections.

    EXCLUSIVE: Cyber-Hackers Break Into IMF Computer System http://www.foxnews.com/story/0,2933,452348,00.html

    World Bank Under Cyber Siege in ‘Unprecedented Crisis’
    http://www.foxnews.com/story/0,2933,435681,00.html

    While it remains unclear how much data has been pilfered from the bank, it’s a lot. According to internal memos, “a minimum of 18 servers have been compromised,” including some of the bank’s most sensitive systems – ranging from the bank’s security and password server to a Human Resources server “that contains scanned images of staff documents.”
    blogs.harvardbusiness.org/cs/2009/10/fixing_the_fdic.html#

    and this is an interesting find
    MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
    (in billions of dollars)
    http://www.treas.gov/tic/mfh.txt

  6. 1) Well, for one thing, it’s Robert Fisk…. That guy has never been right about anything.

    2) When I read one of theses many, many articles about the Dollar no longer being used as reserve currency or to price oil, I have one question: “Really, what will you use instead?” No article has ever answered that question.

    3) From the article: “oil will no longer be priced in dollars.” Really?, what will it priced in instead? Oddly, the article is silent on this.

    4) “Basket of currencies”? Hahahaha! F’in please….

    5) The dollar is in great shape compared to everyone else. It will continue to remain the world reserve currency.

    6) No, I don’t know why I chose to number my paragraphs….. It likely won’t happen again.

  7. Gray: I know Fisk—the man who gave his name to the verb “fisk”—isn’t exactly the most reliable source. But I thought it interesting nonetheless—and, if true, troubling.

  8. Well, look at it from their perspective; all this rampant deficit spending and dollar printing certainly does nothing to improve our currency’s standing with foreign investors…quite the contrary. 😡

  9. Dear Neo,
    Max nix. If it’s priced in greenbacks you pay with those. If Euros, then those. Francs, Pounds, Rubles? Ditto. The price of oil is what it is. If it’s in $ and $ are inflated then the price will be high – in $ – but not in other currencies.

    Small fry such as ourselves will never have the faintest inkling of what’s going on with all the hedging and trimming (and watering, weeding, and fertilizing) so we might as well stop worrying and just relax and enjoy it.

    And emulate the Beautiful People by adopting lots of third world children who can be trained as rickshaw drivers.

  10. This would require more brains that I have but I wonder if you went back to about 1920 and tracked the price of a barrel of oil for each year relative to the price of an ounce of gold using some kind of average of dollars, pounds, and francs (Swiss) and you might find it has been fairly constant.

  11. Prudent caution would seem advised. The author of this report is Robert Fisk, who made the word fisking a necessary addition to the English language. As Wikipedia says:

    The blogosphere term fisking refers not to what (Robert) Fisk does but to what is done to him, and others; the fisker begins by copying text from the fiskee, and then produces an interlinear critique pointing out flaws and raising doubts. “The fisker can without too much trouble make the fiskee look ridiculous. The term originated from partisan attacks on Fisk’s credibility, but has been extended to others, even the Archbishop of Canterbury.

    [Although it would seem that the Most Reverend and Right Honourable Rowan Williams would have been an early and likely target of fisking…]

  12. Where is George Soros?

    This guy was neck deep in the collapse of the British currency a few years back, made huge profits off of that event, and is described as being responsible for “breaking the Bank of England”.

    Prior to that, he was convicted of certain financial misdeeds by the French involving a French bank:

    http://www.nytimes.com/2002/12/21/business/soros-is-found-guilty-in-france-on-charges-of-insider-trading.html

    A little research will quickly show that Soros has been talking down the US dollar for years, and I recall speculation that he may try a repeat of what he did to British currency on the US dollar.

    This link is from January 2008 and shows just how down he was on the dollar at that time:

    http://www.telegraph.co.uk/finance/economics/2783147/Dollars-golden-era-is-ending-warns-Soros.html

    If you don’t recall roughly when the economy started to slide, here’s a link that is fascinating to play with:

    http://www.google.com/finance?q=INDEXDJX:.DJI

    It shows that the economy was quite healthy at the time Soros was talking down the US currency, with highs and lows being consistent with those of 2007 at the time Soros was making such pronouncements as I linked to.

    There were of course underlying weaknesses – namely the Chris Dodd specials lurking in the background – but the overall economy was doing well and Soros didn’t even touch on the coming housing market disasters – he wasn’t predicting that at all.

    So I’m curious as to why Soros would start making such pronouncements regarding the US dollar at the time I noted.

    Was he being prescient or simply telegraphing his next move?

    Don’t forget, it was an election year as well.

    Midway through 2008 the economy really nosedived.

    It nosedived because Bush & Co. years earlier decided to have a weak US dollar.

    http://www.nationalreview.com/nrof_bartlett/bartlett200312080912.asp

    This isn’t the first time a president has pursued this policy, and such a policy had been in place for years prior to 2008 which resulted in massive economic growth, as indicated in the link provided earlier that tracks the DOW.

    http://www.google.com/finance?q=INDEXDJX:.DJI

    So what happened?

    In real terms a weak dollar drove up the price of oil (taking more dollars to buy the same amount of oil as each dollar was weaker) and thereby lit the fuse on the current economic woes we’ve had to deal with.

    Yes, Bush has some responsibility in what happened because he wanted a weak dollar, but why did it go so disastrously this time? After all, other presidents have pursued a weak dollar from time to time.

    Consider this fact – Soros was not a fan of Bush.

    http://www.guardian.co.uk/world/2003/nov/12/uselections2004.usa

    A lot of folks, faced with gas prices leaping from $2.00 – $2.50 / gallon up to $4.00 – $5.00 / gallon in a very short period of time suddenly found themselves having a hard time paying mortgages when every commodity that gas is used to move across the highway system, whether it is pizza or auto parts, starts to go up in price.

    Notice it was gas prices, fluctuating along with oil prices, that really tipped the scales.

    The weak dollar didn’t help, but it was a policy that had been in place for years by that time.

    What changed?

    Who would have been in a position to ratchet up oil prices via speculation to such a degree, exacerbating the effects of a weak dollar?

    Hedge fund managers, maybe?

    And what do we read about in the article neo linked to that they want to use a “basket” of currencies to purchase?

    Oil.

    Oh, and where is George Soros?

    Why he is attending the World Bank/G-7 shin dig in Istanbul. Not only is he attending – he is presenting!

    http://www.reuters.com/article/usDollarRpt/idUSIMFDIARY20091005

    Then there is Soros’ infamous contributions to the political left – he’s a huge Obama booster, and has the money to back his puppet, as noted here:

    http://nicedeb.wordpress.com/2009/09/08/could-george-soros-be-behind-the-obama-administrations-disgraceful-treatment-of-honduras/

    Anyone think this convicted felon wouldn’t stoop to manipulating the economy to influence a US election?

    Keep in mind, Soros runs a hedge fund that is basically a black hole as far as determining how it operates. No light comes out of it at all, money simply disappears into it.

    Any efforts to peek into this organization, or to regulate it, are stymied by Soros’ political allies.

    George Soros’ fingerprints are all over this “basket of currency” idea, and when playing one currency against another he’ll always manage to fleece his own private tax out of the world’s economies.

    Too bad the French didn’t send Soros’ sorry butt to jail for a few years when they had the chance….

  13. its going to get worse… turns out that Obama is going to expand the community investment act and then put regulatory power and oversight in the hands of something like ACORN or SEIU.

    http://www.forbes.com/2009/10/03/community-reinvestment-act-mortgages-housing-opinions-contributors-peter-schweizer.html

    As we try to shake off the financial crisis, here’s a bright idea. Take a law that has led to the writing of an enormous amount of bad mortgages and expand it. Then take enforcement away from bank examiners and give it to housing activists.
    Sound like a poisonous cocktail? Well, it is what the Obama administration and Democrats are currently stirring up on Capitol Hill.

    heck, delegation of power is unconstitutional in a republic.

    their logic is now attempting to blame the riots of african children beating to death african children on predatory lending.

    [do you get the idea that all of them are like that habitual liar character who just connect disparate things to see if it clicks with the people? yeah yeah thats it, thats the ticket… predatory lending causes teenagers to murder each other! ]

  14. Nolanimrod Says: I wonder if you went back to about 1920 and tracked the price of a barrel of oil for each year relative to the price of an ounce of gold using some kind of average of dollars, pounds, and francs (Swiss) and you might find it has been fairly constant.

    and rather than actually do something to know the real answer, we instead replace it with our imagination sans effort.

    I am not saying your hypothesis is wrong, however why inject some answer when all you are doing is wondering? how bout looking it up and making a half hearted attempt to actually know?

    all i did was type into google,
    oil prices historical chart
    gold prices historical chart

    its easy enough to check the graph below against others from other sources.
    http://www.wtrg.com/oil_graphs/oilprice1869.gif

    however the historical graphs they put up are just as interesting.
    http://www.wtrg.com/oil_graphs/oilprice1947.gif
    http://www.wtrg.com/oil_graphs/oilprice1970.gif

    again, they are not the only people who track such, so its fairly easy to look for cooroborating info.

    here is another historical chart from another source. not much different (its in 2009 dollars not 2008)
    http://www.inflationdata.com/inflation/images/charts/Oil/Inflation_Adj_Oil_Prices_Chart.htm

    The price of gold remained remarkably stable for long periods of time. For example, Sir Isaac Newton, as master of the U.K. Mint, set the gold price at L3.17s. 10d. per troy ounce in 1717, and it remained effectively the same for two hundred years until 1914. The only exception was during the Napoleonic wars from 1797 to 1821. The official U.S. Government gold price has changed only four times from 1792 to the present. Starting at $19.75 per troy ounce, raised to $20.67 in 1834, and $35 in 1934. In 1972, the price was raised to $38 and then to $42.22 in 1973. A two-tiered pricing system was created in 1968, and the market price for gold has been free to fluctuate since then as the table below shows.
    http://www.nma.org/pdf/gold/his_gold_prices.pdf

    basically each time the gold was inflated, it deflated the value of fiat dollars… since the dollars value went down, every time gold went up the cost (in dollars) of oil went up too as it took more dollars to buy it.

    you will note that the two times it went boom was the stagflation of the 70s (a time when good will between men and the ability to do piece work and survive was easier), and today…

    however if you look at the prices, every since the democratic revolution of socialism in the 60s, they have been deflating the currency more and more and more, as from that point on, gold rose.

    in this way, they skim the full value of dollars and use those before the value has diffused through the system and adjusted. in this way, time preference is shorter and they get you to spend, because the money you earn today will not be as valuable tomorrow.

    this page has 30 year history going back to 71..
    it covors london pm fix, yen per ounce, etc.

    most are close to the same, but some, like australia, never went back down from the time of the first deflation late 70s, early 80s. (from the grand push that started late 60s)

    took about 5 mins to find the graphs… took longer to type something.

  15. Who would have been in a position to ratchet up oil prices via speculation to such a degree, exacerbating the effects of a weak dollar?

    hedge funds and their ‘ilk’ as you put lower prices. or a better way of putting it, they decrease value fluctuations (which some would call lower as they percieve the peaks being lower, but dont realize the valleys are not as deep).

    hard to ‘speculate’ in a heavily controlled industry whose prices are pumped and changed according to the whims and needs of a cartel.

    algeria, angola, ecuador, iran, iraq, kuwait, lybia, nigeria, qatar, sauds, uae, venzeuela are all members of a price fixing cartel.

    so speculation in this amounts to trying to guess what the members will do to the prices, and not actyually speculate as much on things like production in other areas.

    they are assisted by the Socialists in the US who consider paying artificially high prices for oil, increases their investments as well as redistributes wealth to the country they serve (which is not us).

    you can read articles that will wash this subject from literally every direction. however the right one is basic simple economics.

    if large producers are prevented from producing, and their refining capacity cant change, while at the same time a large segment of the ‘market’ is a cartel that meets to collude on prices, then its controlled as the other players have little choice but to follow along.

    OPEC basically modifies production rates to get the prices they want as a group. this would be like all the sugar producers in the US controlling the price of sugar by not competing against each other, but by colluding and agreeing to limit production to maximize profits on each grain of sugar.

    here is anotehr graph of oil prices from 1861 at wiki.
    en.wikipedia.org/wiki/File:Oil_Prices_1861_2007.svg
    opec net oil export revenues 1972 – 2007
    en.wikipedia.org/wiki/File:Opecrev.gif

    here is a wiki that kind of goes over each explanation… of course the whole thing isnt opec… however they have a HUGE affect on it, and the subsidies of socialist states (everyone) distorts the market more…

    its odd that their explanations dont bring in fixed productive capacity. no new nuclear plants. saturation of water and other good sources of energy.

    these things control price more than any of the other explanations. espeically hedge fund speculation… (different kinds of traders act like capacitor vilters on the supply. the more htey do their work the less prices fluctuate as they can only make their cash in the fluctuations. a flat line does them no good. by the way, the reason us physics guys end up as quants is that in that sentence you should see that money and information follow many of the same conservation laws and math relationships in physics. the above is why the market is a hard way to make money and why its large swings are completely unpredictable. ie. the large swings are where the investors, hedgers, and others couldnt extract the ‘energy’ from it)

    to make the whole thing simple…

    from the 70/80s onwards the attempts to grab the reigns of the economy and put the pedal to the metal to hasten the future to today created a situation where the market was not allowed to respond to the needs of imperical reality.

    that is, without any way to know what the needs of the market would be, they either overshot (glut) or they undershot (high prices)… with a favor on undershoot to maintain higher profits.

    if the market was allowed to respond by its needs, opec couldnt be like a driver on a high way with a loose steering linkage!!!! the less their decisions were based on actual empirical reality and more on their own needs, the less they were able to keep prices consistent.

    while hedge fund people and others tend to take whatever the graph says, and desire to clip it. they want to round off all peaks since they cant predict turning point. and down valies are the same since one can invert the investment.

    if they knew that a drop would happen with a higher price afterwards, they would just sit on their stocks and so make that dip smaller. if there are options guys in there, they are evening out the dips and gains at a higher frequency. so if they are in, then the dip will not be as high… and the high that the other is wanting will also be lower.

    each acts like a capacitor… the good ones average out volitility the way a piezo can extract some energy from the environment but not all… and the bad ones turn their passive mining into active injection of volitility. (to which the good ones whish to remove that volitility by posessing the difference).

    open the market up… and you will find that the US could double its nuclear capacity in less than 5 years. it could increase its refining capacity in similar timeframe, and could seriously lower prices as drilling in the gulf would open up, california would open up, alaska would open up, the new huge field in montana would open up, and a lot more.

    however along with this, you would get the US state to lose a HUGE amount of tax money it gets to make us mroe communist!!!!!!!!!!!

    the tax rate on oil is a funciton of the price of oil. therefore, the state gets more money for socialist programs and more restrictive control if they can help keep the prices of such artificially high. (they are too stupid to realize that as the price declines they can skim the declines by doublind taxes and we wouldnt notice… that is they are too stupid to see that revenue will increase. if the price drops from 70 to 15 a barrel, they could make a 150% tax on price… and the end result would be a lower price for all, just not as low as 15$…

    sorry so its so long…

  16. by the way, we are up against people with this kind of economic sense. or rather, we are now being led by people with this kind of economic sense.

    The Myth of the Tragedy of the Commons
    http://www.socialistvoice.ca/?p=316

    they actually do no better than hardin on proof, however they also bet that any one reading them would have a left world view, an so would not have a proper perspective on things like global fishing.

    want to know whats missing from their story? the periods they talk of as examples of such things, is a period of mass starvation. that is, the town could not EFFICIENTLY use the pastures. so when he talkes that they were successful for thousands of years, he doesnt include that the reason was that those too poor starved and so the population didnt grow much.

    he doesnt point out that capitalism and a mans desire to outcompete, managed the land better, increased the efficiency… moved the work to better areas, and used the worse areas for different things.

    that trhough this whole thing, as well as with help from men like jethro tull (not the rock group), production went up prices went down, and the subsistence level was abolised in socieites that adopted it.

    Hardin assumed that peasant farmers are unable to change their behaviour in the face of certain disaster. But in the real world, small farmers, fishers and others have created their own institutions and rules for preserving resources and ensuring that the commons community survived through good years and bad.

    they are unable… socialist press doesnt talk about the banruptcies in a business in which one bad season can cream you.

    the argument relies on people not wanting to maximize their resources to maximize their ability to trade for other goods from other maximizers.

    basically they always make the argument that stagnation and freezing things (a dark age) is progress!!!!

    Hardin assumed that human nature is selfish and unchanging, and that society is just an assemblage of self-interested individuals who don’t care about the impact of their actions on the community. The same idea, explicitly or implicitly, is a fundamental component of mainstream (i.e., pro-capitalist) economic theory.

    All the evidence (not to mention common sense) shows that this is absurd: people are social beings, and society is much more than the arithmetic sum of its members. Even capitalist society, which rewards the most anti-social behaviour, has not crushed human cooperation and solidarity. The very fact that for centuries “rational herdsmen” did not overgraze the commons disproves Hardin’s most fundamental assumptions – but that hasn’t stopped him or his disciples from erecting policy castles on foundations of sand.

    society is NOT more than a mathematical construct. society doesnt exist. its form is never the same from moment to moment. it would be like calling all of the land of bacteria society. why? cause they all live together, survive together, prey upon one another, etc… and you can group them by set theory into the set called society.

    what they fail to realize, or rather they realize and hide from the nicer people they will parasite, is that their idea of social cohesion breaks down the minute one of their own cheats. the minute that dodd cheated, the validity of the whole system was broken. they never see this.

    again his argument does not reveal that this stasis was preserved by starvation.

    ok…

    now i will make it VERY VERY VERY interesting.

    they start their story in 1968… and they tell you that the commons referred to in the title is the british commons where grazing happens.

    but what about
    The distribution of wealth By John Rogers Commons
    tinyurl.com/yawze23

    Commons, the The concept that the major resources of the planet (land, air, and water) are commodities to which all people have equal right of access and use, and which no one has a right to spoil. The concept was popularized following the publication of an article, ‘The Tragedy of the Commons’, by Garrett Hardin, in Science in 1968, Hardin having derived it from a pamphlet by William Forster Lloyd (1794—1852) published in 1833.

    and here on john commons:
    Commons’s first book, Distribution of Wealth (1894), was based on a Turnerian framework. Commons claimed that a turning point had been reached in the economic affairs of the United States because of the disappearance of easily available land.

    so was a trajedy of the commons explanation what was written in 68… or did it serve to promote a plaigerist… and dispromote a socialist theorist named commons?

    in case you havent noticed, a company called KGB obfuscates searching for information ont he state agency. and a search on peoples republic will get a fashion stylist company…

    In 1896 Commons went to Syracuse University to fill a chair in sociology, and the following year he published Proportional Representation. This work reflected his belief in a democratic, voluntary society and in a system where balance was attained as a result of conflicting pressures.

    so again… was commons the commons in england and in the example… of was commons a whole pool of related work by a man named commons and so the concept held was from his name at the time, and revisioned to the alternative meaning?

    i dont know…

    The atmosphere was congenial there, as Commons shared faith in adult education and in the “Wisconsin idea”; that is, the state government would utilize the expertise of university professors in reforming and running this same government.

    Commons’s ideas found expression in other books, the most important of which are Legal Foundations of Capitalism (1924) and Institutional Economics (1934). The former portrayed the law as a necessary link to hold society together; the latter held that unemployment was the greatest hazard of capitalism but that collective action could eliminate it. Historical development, Commons believed, came from the bottom up, and the function of scholars was to aid in the reconstruction of society in a classic, progressive way.

    Commons died on May 11, 1945. He was acknowledged as the most significant labor historian of his day, and his ideas were perpetuated by his students, the best-known of whom was Selig Perlman at Columbia.

  17. The only problem with this story? the Arabs and the Chinese own Texas-sized shitloads of US currency in one form or another.

    This would require them to take a beating of their own, which I don’t see happening.

  18. I R A Darth Aggie,

    Never dismiss the idea that a nation’s leaders are willing to undergo what to them may be short term pain if they think their interests will profit in the end.

    Going to war, for instance, is an expensive option – but one that nations historically have taken if the end result is deemed to be worth the national treasure spent.

    In this case, the Arabs – ever mindful of how the US generally supports Israel, and the Chinese – who are even now building a blue water navy to eventually secure ocean routes for their own commerce and potentially confront the US navy (who else are they going to fight with a blue water navy?), have their own national interests at heart.

    If cutting down the US furthers their own national interests they will certainly do it in a heartbeat even if they have to take a certain amount of financial pain themselves in the short term.

  19. Artfldgr,

    Are you suggesting, just to be clear here, that speculation didn’t have anything to do with the rapid rise in oil prices last year?

  20. I am saying that the games they play make speculators falsely percieve they can make a bigger buck, that in turn causes the herd to act on a monetary system that doesnt actually exist. in essence it loostens up their linkages so that they cant stear as well and they end up curving wide.

    anyone realize how many of those speculators lost a lot of money when the prices didnt work out that way? then ask who was in the know that DID make out from the speculators mistake?

    i know this example is way over simplefied, but i hope it serves.

    like a cartoon that paints the stripes of the road black, and then repaints the line into a wall. the ones driving in the dark of night depend on that line being correct.

    the nice thing for the gamesmen in this is that we generally wont try to understand their function, what they do, how what they do works overall, and then trace back to their games.

    its a statist form of pump and dump… since the market is very fixed by the state players and their games which the companies HAVE to follow.

    there is no way to decide if an act is speculation or investment before the fact.

    the idea that the public suffers from their actions is completely erroneous as they can only make cash on the differences.

    speculators dont do what the left says they are doing. again, they are playing with the IMAGE of what speculators do, not the ACTUALITY of what speculators do (and i assume we are talking about professionals not the guy who sells his house to buy pork bellies on a tip)

    the biggest part that breaks the speculators main benifit to society is that others cant enter the competition and so cant mediate the speculators.

    below is a paragraph that takes your angle on things. and its well writtn and they are not wrong. however its a snapshot, and like a graph where the perspective shifts is wrong.

    In the most recent sustained run-up in energy prices, large financial institutions, hedge funds, pension funds, and other investors have been pouring billions of dollars into the energy commodities markets to try to take advantage of price changes or hedge against them. Most of this additional investment has not come from producers or consumers of these commodities, but from speculators seeking to take advantage of these price changes. The CFTC defines a speculator as a person who “does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes.”

    The large purchases of crude oil futures contracts by speculators have, in effect, created an additional demand for oil, driving up the price of oil for future delivery in the same manner that additional demand for contracts for the delivery of a physical barrel today drives up the price for oil on the spot market. As far as the market is concerned, the demand for a barrel of oil that results from the purchase of a futures contract by a speculator is just as real as the demand for a barrel that results from the purchase of a futures contract by a refiner or other user of petroleum.

    i made sure to get that from a site that was NOT a financial site. because a financial site would not stop the story at the point that second paragraph did.

    that is when you cut the story short, it has a different perception as when you complete it.

    so if speculators drive up the price today, the response is to produce more oil (something the left doesnt want). this increased production to take advantage of the price increase, in effect, lowers the price and makes the speculators wrong and lose money.

    if this was more flexible, this process would lower prices till they were in line with their supply and value (but never perfect of course).

    however, now consider a fixed capacity for storage and refinement. now the speculators are driving up costs because they know that when that thing slamps into a certain wall, the capitalists are forbidden from increasing production to take advantage of that.

    and by not being allowed to do that, they then do not end up lowering prices.

    for the benifit of others who i havent talked to i will try to put it easier.

    say we own a gold mine… and we are mining a ton of ore to get gold out.. and we are profitable to a point. we are not profitable enough to quadruple our ability to dig more gold or process more, but we can grow at a steady pace.

    now along comes the speculator. gary sour-us.. and he drives up the price. (on the flip side which they also leave out are speculators betting the opposite way and balancing the speculators driving up costs!!!! that is you cant speculate unless someone is speculating the other way – see options trading. when no one wants to bet that its going to go down, then they are moving the price up due to a real lack of product)

    [note that we are not talking stock but commodities]

    so the speculator drives up the price, and suddenly our gold mines profits are up 400 percent for the same amount of production. so what do we do? do we sit there and just plink along or do we buy some more trucks hire some more people and try to cash in?

    well, each gold mine then also makes a bet and decides whether to sock away the money and try to increase production in the future, or to increase production now.

    so they increase production… they start to sell more on the market to take advantage of the prices, and as they do, the price goes down.

    gary sour-us now has gold he bought at 1000 and the price is 600… he lost 400 dollars an ounce in money because the market responded.

    in the future, gary sour-us will not go so wild and drive the price up so far that he screws himself, will he?

    but what if california, utah, and other places around the world say that each mines productino is limited? and not limited by scale or investment but arbitrarily limited by a false wall created by the state?

    well now the gold miners cant respond to the market. they DO make more money for the amout of gold they have, but they cant produce more and so lower price.

    now here is the key to all of this… especially oil.

    the politicians own oil shares… democrats more so than others. why? becuase they have fixed the game.

    its not the oil companies that make all the money, its the people who have owned preferred shares who collude by passing it on to the democrats to pay them to stop the oil companies from expanding and so lowering the price!!!

    remember, its the left that refuses to let domestic things affect this system!!!!!!!!!!!

    so is it the speculators or is it the state?

    the speculators do what they always do and that is not where the broken part is. to blame them for making money taking advantage of the artificial situation that the democrats have created in collusion with the sauds and communists, is basically helping the colluders prevent these guys from creating a situaiton where some foreign busienss that the dems CANT limit see a profit and then act and lower prices!!!

    basically the dems and their supporters have a trading circle going.

    they are in the game and they are silent, letting natural forces at play act to their benifit, and then maniupulating laws to create an artificial reality where specuilation does not cause increase in production.

  21. by the way… here is a link that is better at telling us what is different and what that means. the difference is that this was written at a financial site. (not a liberal article at how does it work)

    yellowroad.wallstreetexaminer.com/blogs/?p=9

    There is a fundamental difference between stock market and commodity market. You can buy and hold any stock as long as the company exists (when company goes belly up you can say the stock “expired”).

    In opposite, at the commodity market everything expires and is temporary. There are two markets — spot and futures. At spot market you buy for quick delivery of physical, at futures market you buy the contract for future delivery. Every single physical is traded at the market either for immediate or future delivery and every future contract is eventually replaced by physical delivery.

    just from that paragraph alone one can see that these guys are the magic part of the system that helps create the lowest prices as the producers try to take advantage of the futures contracts that are fixed…

    if the futures contract expires, the speculator loses everythign they put into it. (this is mroe like options trading, which is why i said that is a good place to start).

    while the explanation is better than the one at how does it work above, it fails at the end. why? because it fails to note that the expirations are continous not convergent. and that the way it works is not that everyone comes in and keeps pouring money in in one direction, there are also futures who are trying to work the other way.

    so again… its missing informatino that would critically change the outcome if one knows it.

    however this one was written for more financially savvy people and so could nto get away with leaving so much out. so they worked at a different level.

    now read this post which is not trying to leave things out to create an image they want to portray to achieve a political end they want over a empirical end they hope to change.

    speculation is an important part of the United States economy. Speculation is done in all aspects of investing including stocks, commodities, bonds, and currency exchanges. Speculation is not well received because most people have no idea what speculation is and ignorance breeds rumors and misinformation. Speculators are usually experienced and successful financial planners who understand the motion of the stock market and the fluctuations in the global economy.

    and so he says what i said above abotu the difference between the peopel who play at speculation and those who do it for a living.

    Speculation is defined as the process of choosing investments, today, based on the predicted profit of that investment in the future. Speculation is not gambling because investors utilize research, past and present performance, and market trends to make their decisions. Many speculators use hedging to prevent significant market losses. For example, a farmer plants his crops and sells his anticipated crop production at a set price.

    so in essence YOU are a speculator every time you make a purchase in which you are trying to beat a future price!!!!!!!!!!!!!!!

    do you buy a telivision now, or do you speculate as to the future price and change your attitude? so this action extende frmo some esoteric stuff all the way down to when you decide not to buy peas this week because you believe they will be on sale next week. those who watch the trends in sales and things can anticipate these hanges and so take advantage of prices swings by controlling their spending in time (rather than impulse).

    this is fundementally why central planning cant work.. EVERYONE SPECULATES!!!!!

    so if you stop speculation you stop all economic action as to trying to be right about FUTURE prices and costs.

    when you buy a house, your specuilating that the neighborhood will be well, and so forth. you are not randomly selecting the investment, are you?

    A speculator buys up these stocks. If the price goes up, in the stock market, they sell the stocks for a profit. However, if the price falls below what they originally paid for it, they lose money.

    and notice that every other bad explanatino leaves out that they LOSE big money too. that paints the FALSE image that a speculator is one who drives up prices and is never wrong so he is making easy money while poor schmoes are struggling.

    got to jam every explanation into that same old jealous envy based world view. in taht way, you start to see everything through that schema and you stop seeing what responsible people can do about it rather than sit around!!!!!!!!!!!!

    If there were no speculators, there would be no security for corporations and our national industries that drive the American economy. Obviously, speculation is high risk and should not be attempted by the casual investor. However, there are several websites which allow investors to “practice” their hand at speculation without risking money.

    Many financial experts believe that our economy needs more speculative. For example, with increased speculation, there can be guaranteed prices for commodities which are currently overpriced and increasing. Wouldn’t it be great if gas prices could become stable and you could predict exactly how much money you would need to fill up your car.

    You could simply buy a contact and pay for your next 500 gallons of gas, at a set price per gallon. Once you entered the contract the price per gallon would never increase for you. Speculation can be a tricky endeavor but knowing how speculation works and how it could effect the future prices of common commodities is extremely important.

    i knew a man who did the end part exactly like that.

    when gas prices went low, he filled up a tank on his property… he basically invested in a tank the size of a gas stations. so when gas was say 1.50, he purchased it. and so locked in the price at a 1.50 until he was done using his huge tank. sometimes he would let you fill up on his property for 2 bits while gas was at 3.50. nice off the books profit eh?

    he speculated in gas… he knew that gas would go up in price in the future, and so decided not to buy in on the spot 30 gallons at a time, but to buy it by the truckload…. (i also know others that do this).

    by the way, his actions lower the price of higher priced gas because he isnt buying at the higher price.

    capitalism IS speculation

    every buyer speculates as to prices and futures, every seller does the same…

    the winners mutuially walk away happy, the losers walk away unhappy (and envious).

  22. Artfldgr,

    What I am referring to is the situation wherein the supposed financial wizards bid up the price of oil in something of a bidding war in an effort to extract profits from the difference, not someone gambling that they had better buy the fuel they need now as they are guessing the price of oil will increase tomorrow and they don’t want to pay the higher price until they have to.

    Both are a form of speculation, but the end result is quite different when applied to a national scale.

    I would even agree that there is nothing inherently wrong with either practice, unless you have someone manipulating the markets – hence the reference to George Soros who definitely has the means and the motivation to do so.

    Regarding the issue of speculation, and my view that it is predominantly the mechanism that drove up oil prices last year (and created havoc in the world economy as a result), consider this:

    The price of oil continued to rise last year even though:

    More oil was being pumped out of the ground,

    while consumption was dropping,

    which was due to a faltering economy,

    which had a lower fuel demand due to decreasing activity,

    while Bush was begging the Saudis to pump more oil,

    even though there were tankers off the Gulf Coast that were sitting full of oil,

    but could not offload because there was no excess storage capacity in the system,

    as there was an oil glut at the time as the system was so chock full of oil,

    that they couldn’t move the oil out of the system due to decreased demand.

    Under those circumstances, the only rational explanation for a continuing rise in oil prices is speculation.

    Even though the US had a weak dollar policy in effect for several years before, it was only in 2008 that oil prices suddenly skyrocketed so high and so fast and gas shot up to $4 to $5 a gallon.

    This was only a few months after Soros’ predictions, which occurred during an election year in which Soros bent about every rule you can imagine to get Obama elected, and Soros has continued to push what amounts to a socialist agenda worldwide.

    So yes, I’m quite suspicious…..and yes, I still believe quite logically that speculation played a large role in the rise of fuel prices.

    My biggest issue is the question of whether or not the markets were manipulated by Soros.

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