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A Contrarian View On Commodity "Speculation"

Tyler Durden's picture


In response to the president's moronic witch hunt of oil "traders" which, for a POTUS so set on distinguishing himself from the prior administration, was only missing the phrasing "read my lips, no more speculators" for people to suffer the biggest glitch in the matrix to date, we decided to present this note from Jared Dillian, editor of the Daily Dirtnap published back in January discussing the imminent surge in food prices, which however is just as applicable to the surge in any commodity, and most certainly crude. Dillian's point is so simple we are not at all surprised that it is lost on all sock puppets in Washington. "I say that speculators have a very important role to play in setting commodity prices, and the very idea that we would limit the role that speculators play in commodity prices is an early signal that world food markets are about to get a good deal more unfree, which means we are about to undo all the progress we have made in the last fifty years. This is why speculators are important in setting prices. They make money. That is their job. Making money is an end in itself. But an interesting by-product of a speculator setting prices is that he forces the producers of the commodities to respond, and consequently, adjust production." To be sure, there are always those speculators who in their pursuit of price disequilibria, through the wager of capital, will break the law, just as there are those who will commit criminal acts in every aspect of life. But for the most part, speculators operate within the confines of the law, as poorly drafted as it may be. Yet the core point remains: by pushing the clearing price substantially from the equilibrium due to excess demand (or supply) specs merely precipitate an equal and opposite reaction which promptly corrects this disequilibrium. As Dillian concludes when observing a hypothetical explosion in food prices: "Well, guess what: when prices are ten times higher, the market is
going to be full of farmers, and nobody is going to complain very much
about that."

Blaming speculators for price surges is beyond short sighted, especially when the proximal cause is infinite supplies of Fed produced liquidity which is merely looking for the path of least resistance to the highest possible returns. Yet it does bring up a point - while in most commodities price surges are short lived, when it comes to crude there is almost never any price elasticity to the downside. Meaing that suppliers, of whom the marginal block is a production cartel are either unwilling to, far more likely, unable to provide excess supply. Which is in line with what we have seen out of Saudi Arabia recently: instead of increasing production in March in the aftermath of Libya, Saudi came up with the most ridiculous excuse for demand destruction one could conceive, and lowered output. It is this act, in addition naturally to the excess liquidity provided by Bernanke that should be pursued by the Dynamic Duo of Obama-Holder. But to do so who distrurb the far more sensitive equilibria of the petrodollar bond producer on one hand, and, of course, the Wall Street capital base on the other. Which is why it is always easiest to blame the nameless, faceless "speculator" scapegoat. After all it worked so well for Greece which said it was all CDS traders' fault... At least of course until Greece went banrkrupt for the first time... and then for the second time.

From Jared Dillian's Daily Dirtnap "Food Fight", January 2011:

Jared Dillian

You do not want to mess with food.

You know, we are not so far away from a time where we did not take food for granted. We are not so far away from a time in history when people really went hungry. Nobody goes hungry now, and I am not being exceedingly glib. We have an obesity problem, not a hunger problem. We have solved the problem of growing and delivering enough calories to everyone in the country at incredibly low prices. We have tamed agriculture, something our ancestors had been trying to do for millennia, and we can now feed everyone easily, with room to spare. To the extent that someone goes hungry in a developed country, it has to do with something else, not the production and delivery of food.

We have arrived.

Does everyone realize how incredible this is? Yes, there is still hunger in the world. But it is better. And it seems like the really, really bad famines on the planet these days are man-made (North Korea). Overpopulation? People were worried about being able to feed the planet when we were 4 billion people. Now we’re at 7 billion. To the extent that agriculture and markets are free and freely traded, there is literally no limit to what we can do.

But we go through periods of time in history when things get ugly (remember Kondratieff, he was all about agriculture), and the price of food can get very, very hairy. I am all about the prices of things getting hairy, I have said that it is going to happen to apparel (another commodity that comes out of the ground), but there is a tendency for the prices of things that had previously been dormant for decades to suddenly come alive. Do we care why this happens? Do we need to know? Or can we profit off it without knowing?

We can profit off it without knowing. But I will tell you why this happens, and it gets back to Kondratieff, K-waves happen over time because of long-term cycles in social psychology, and over periods of time, people will develop some very illiberal ideas about how food should be produced, managed, bought, sold, and distributed, ideas that, in the best case scenario, cause prices to rise, and in the worst case, severe shortages and even famines.

There is ideology in this, I admit. I remember sitting back in seventh grade social studies class and us having this in-depth discussion about how senseless it was to have a planned economy, who is omniscient enough to decide who gets what and how much to pay for it? Senseless. And this was the mid-eighties, and we knew back then that the Soviet Union and Eastern Europe was having a tough time, or at least we had a hunch, and we knew that our system provided more for more people than theirs did. That was twenty-five years ago.

But time will go by and people will start to question the very ideas which they held to be absolute truths, they see food prices starting to rise, and they say, hey, this isn’t a game, people shouldn’t be making money off of food, food is a necessity, people need food, and we shouldn’t let this vast unregulated casino going around deciding how much people who are already strapped for cash are going to be paying for bread. And it is always true in capitalism that any time you are talking about things that people need (like food and health care), those have the potential to be the least free, and the things that people really don’t need at all (like iPods), those are the goods with the really free markets. Right?

This is the age-old question in political economy (what exactly is political economy?), which is: should markets be trusted with something as precious and as sensitive as food? To which I ask, rhetorically: should government be trusted with something as precious and as sensitive as food? But we are getting ahead of ourselves.

The problem that we will be faced with imminently is the idea that speculators are making money being long certain commodities, the prices of which have doubled or so, and people are starting to get pissed. Why should somebody be turning into Richie Rich when I have to pay twice as much for a cup of coffee? Et cetera. And listen: people I respect a great deal disagree with me on this, and reasonable people can disagree on this issue, but I say that speculators have a very important role to play in setting commodity prices, and the very idea that we would limit the role that speculators play in commodity prices is an early signal that world food markets are about to get a good deal more unfree, which means we are about to undo all the progress we have made in the last fifty years.

This is why speculators are important in setting prices. They make money. That is their job. Making money is an end in itself. But an interesting by-product of a speculator setting prices is that he forces the producers of the commodities to respond, and consequently, adjust production. Let me explain.

So let’s say that a speculator thinks the price of grain is going to go up this year, and the reason he thinks that is because he is some expert on weather, he can forecast the weather better than anyone else, and this is a very lucrative skill to have. So prices right now are low, and by buying grain forward, he is causing prices to go up. Other speculators with their weather geeks are also buying grain forward in advance of nasty weather, and in doing so, they are all driving the price up.

In response, the farmers are going to plant and grow a lot more grain, because the price is higher! They are responding to price, which is a market signal. The higher the price, the bigger their eyes get, and the more they plant. And by planting more grain, they will be able to avert the weather crisis that is coming and will be able to feed everyone in the world at a reasonable price.

It’s so easy a caveman can do it.

But the idea that a speculator would make money off of someone else’s misfortune is a pretty repugnant idea for people, especially when they look around and see that the market is full of speculators. Well, guess what: when prices are ten times higher, the market is going to be full of farmers, and nobody is going to complain very much about that.

But in not allowing speculators to profit from near-term price increases, we are setting ourselves up for big-time failure, because prices are not being allowed to rise to the levels that would induce people to quit their jobs as newsletter writers and strike out to get rich as farmers. Oh, prices will get there eventually, but by limiting the role that speculators play, they will get there at the worst possible time, when people are not ready for it, and there is not going to be enough food to go around.

Most if not all of the preceding applies to oil as well.


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Thu, 04/21/2011 - 21:38 | 1194968 zen0
zen0's picture

Hog cycle?

Thu, 04/21/2011 - 22:08 | 1195033 spiral_eyes
spiral_eyes's picture

lean hogs, bitchez

Thu, 04/21/2011 - 22:27 | 1195077 bonddude
bonddude's picture

"Mr. Valentine has set the price." - from Trading Places- 1983

Thu, 04/21/2011 - 23:43 | 1195222 SparkyvonBellagio
SparkyvonBellagio's picture

Though I love the movie, and even if you're 18 and trading you should know every line from trading places. No need to give up the quotes origin. We know.

Bacon, like you'd have in a bacon, lettuce, and tomato sandwich.


Whiskey, all you want!




Fri, 04/22/2011 - 00:10 | 1195262 SilverRhino
SilverRhino's picture

You know? This kind of shit happens to me EVERY WEEK!!

Fri, 04/22/2011 - 05:00 | 1195529 Sudden Debt
Sudden Debt's picture

open whiskey bar?



Fri, 04/22/2011 - 08:43 | 1195686 SheepDog-One
SheepDog-One's picture

Yes Mr Valentine has set the price.

Mon, 04/25/2011 - 18:57 | 1205639 tomster0126
tomster0126's picture

Count me in for some J.D. and coke...we do need speculators, and they play such an interesting role in this equation.  All i know is that I'm prepared for gas prices never to fall again; i've accepted that as our reality.

Fri, 04/22/2011 - 07:37 | 1195613 bonddude
bonddude's picture

Yeah thanks. Spelling corrections in ...3...2...1...

Fri, 04/22/2011 - 08:23 | 1195666 spelledwrong
spelledwrong's picture

Cause I'm a karate man! And a karate man bruises on the inside! They don't show their weakness. But you don't know that because you're a big Barry White looking motherfucker!

Fri, 04/22/2011 - 08:44 | 1195688 SheepDog-One
SheepDog-One's picture

Drop a quart technique, hit ya and a quart of blood just drop outta you.

Fri, 04/22/2011 - 07:39 | 1195604 BrobamaReds
BrobamaReds's picture

I personally know traders at Sempra Energy in CT that made (and continue to make) a killing on the california blackouts while Enron was the only firm looked at.  These sempra guys have it made:  they are not a bank, no one from the mainstream knows who they are and they practically run the speculation game for all commodities and cry if they don't earn $25MM in a year.  One friend of mine has made $20MM+ per year for 10 years+ makes Derek Jeter look like a joke...will make even more now that he runs an area and he can still fly commercial because no one know who the fuck he is!   He was long when oil ran to $147, made a killing on corn and copper, blah blah blah. This guy still lives in a small greenwich condo and drives an older A6....for 10 years.....totally under the radar, just killin it, 100MM+  he could give two shits, lol.....good luck america.

Fri, 04/22/2011 - 08:38 | 1195674 Ray1968
Ray1968's picture

Dammit. Your friend is living MY dream.

M-Fer. I'm jealous. I bet the SOB has gold bars stashed under his apartment floorboards as well.

Fri, 04/22/2011 - 08:44 | 1195690 tgatliff
tgatliff's picture

Yes I agree this is a problem... But you dont solve it by limiting activities of traders.  You do it by raising the cost of money.   (aka Raise Interest Rates ASAHP)   Yes, this will make all of the banks collapse, and yes this is a good thing because it is inevitable.

Fri, 04/22/2011 - 12:32 | 1196460 glenlloyd
glenlloyd's picture

half of what you've written is unreadable.

Fri, 04/22/2011 - 15:28 | 1197172 flattrader
flattrader's picture

I though it was just me.  Poorly written.  Poorly reasoned.

I guess this Tyler isn't aware that the speculative Vampire Squid drove people to hunger and killed them just a few years ago.

They don't care if you die.

And it's happening again.

Fri, 04/22/2011 - 08:17 | 1195657 Twindrives
Twindrives's picture

Kenyan national Barry Soetoro has his head in a dark spot, as usual.

Fri, 04/22/2011 - 08:45 | 1195693 SheepDog-One
SheepDog-One's picture

'When prices are 10X higher, it wont be a problem because everyone will be farmers'? 

Wow pie in the sky economics...first of all does everyone already own 50 acres to farm? And can the avg american even keep a fern alive, much less grow a corn or wheat crop? I suppose when beef shoots up to $40 a pound, suddenly everyone will just become a cattle rancher as well? Silly economics.

Fri, 04/22/2011 - 14:39 | 1196920 AnAnonymous
AnAnonymous's picture

That is the story of the US nineteenth century: the 50 acres were provided generously by the Indian sponsors.

It has to be this way all day long if you believe US citizens.

Higher prices will bring more farmers and they will not be limited by arable land availability. No, no, because there will be generous sponsors to support the US exceptional project.

Sat, 04/23/2011 - 01:12 | 1198472 Tail Dogging The Wag
Tail Dogging The Wag's picture

"Investors need to diversify, they need to own some real estate, they need to own some farmland, they need to own some equities, some cash, and some precious metals..."   Marc Faber —Investment analyst

Got real estate and farmland outside your home country yet?

Thu, 04/21/2011 - 21:41 | 1194975 Misean
Misean's picture

You mean prices transmit information to the rest of humanity imparting an incentive to engage in activities most highly prized by their fellows?!?! Wow!

The next thing someone will say is that this is why centrally planned ebubblemies CAN'T work...

Thu, 04/21/2011 - 22:34 | 1195095 Doña K
Doña K's picture

Maybe, Obummer should take the 5 minute university.

Old but basic. Min. 1.47 on economics

Fri, 04/22/2011 - 06:01 | 1195550 Ricky Bobby
Ricky Bobby's picture


Long Marxism, short classical liberalism.

Fri, 04/22/2011 - 06:26 | 1195573 Al Gorerhythm
Al Gorerhythm's picture

Does Obaminable write his own speeches? If so he has a mop for a brain. It's like the whole political class has been dumbed down, and he's the President!

Thu, 04/21/2011 - 21:47 | 1194987 buzzsaw99
buzzsaw99's picture

Another apologist piece. :sigh:


Speculators use free leveraged money to drive up prices. Then, just about the time the farmer goes to sell the price drops. Everyone loses except the damn speculators, they get bailed out. The days of trading places where the little guy wipes out the big guy once in awhile are over. Everything is rigged and dollar debauchery always goes to the maggots first.

Thu, 04/21/2011 - 22:10 | 1195043 KinorSensase
KinorSensase's picture

agreed.  speculators are parasites that contribute nothing to economic production beyond the illusion of their own grandeur and self-importance. the day speculators trade places with farmers, put their hands in the dirt, and actually produce something....then I'll believe in their good intentions.  otherwise this is complete, ahem, hogwash.

Fri, 04/22/2011 - 06:02 | 1195552 Ricky Bobby
Ricky Bobby's picture

You just made the authors point.

Thu, 04/21/2011 - 22:16 | 1195051 CrashisOptimistic
CrashisOptimistic's picture

Maybe speculators are holding the price down and oil scarcity should truly be priced much higher.

Thu, 04/21/2011 - 22:20 | 1195059 Yancey Ward
Yancey Ward's picture

Indeed.  People always forget there are two sides to this trade.

Fri, 04/22/2011 - 07:43 | 1195617 DonnieD
DonnieD's picture

Maybe there shouldn't be either side of the trade for those who are only involved for gambling purposes. Maybe bankers need to go back to what they started out as instead of inventing an endless array of bullshit securities to gamble on.

A firm pushing prices up or down just because their bank roll and influence is bigger than everyone else's doesn't seem to accomplish anything for society and I somehow doubt that was the original intention of a futures contract of corn for a farmer in Illinois.

We laugh at algo's pushing the price of Netflix into the stratosphere but if you needed that stock to feed your family or put gas in your car we might view it differently. 


Fri, 04/22/2011 - 08:02 | 1195640 Paul E. Math
Paul E. Math's picture

You have identified the real problem.  There is nothing wrong with speculators and speculation per se.

The problem is when speculators are able to deliberately push prices in one direction or the other. 

This is wrong in the same way that it is wrong when government pushes prices in one direction or the other.  It leads to resource misallocation and either we starve for lack of food or farmers starve for lack of income.

So how about we go about addressing the problem of price manipulation rather than just blaming speculation itself?


Fri, 04/22/2011 - 08:34 | 1195672 Thomas
Thomas's picture

The proximate cause is unteathered access to capital at no cost. If these guys had to borrow my money I sure as hell would exact a little more interest out of them. They do not, however, need to compensate the savers when there is a central bank to preempt the free market. The rampant speculation is a symptom, not a cause.

Fri, 04/22/2011 - 09:30 | 1195782 DaddyO
DaddyO's picture




Fri, 04/22/2011 - 11:18 | 1196184 buzzsaw99
buzzsaw99's picture

excellent point.

Fri, 04/22/2011 - 11:45 | 1196297 nevadan
nevadan's picture

Exactly right and the root of the problem.

Sat, 04/23/2011 - 06:13 | 1198627 Hexus
Hexus's picture

The speculators weren't having fed money thrown at them back when oil was at $150. Why do you HAVE to blame the fed all the time? What's wrong with giving the vampires a share of the blame?

Fri, 04/22/2011 - 14:42 | 1196929 AnAnonymous
AnAnonymous's picture

You define a new kind of speculators, the ones who dont expect that their actions give them grip on the price in one direction or another.

Thu, 04/21/2011 - 23:37 | 1195212 tmosley
tmosley's picture

lol, it's funny that you think the world is conspiring against you.  Most people don't want to hold things short.  There might be a few large institutions that are short, but such institutions aren't large enough to suppress the gargantuan oil market.

You want peak oil so BAD, don't you?

Fri, 04/22/2011 - 02:47 | 1195458 AnAnonymous
AnAnonymous's picture

Another apologist piece. :sigh:


Speculators use free leveraged money to drive up prices.


Free leveraged money is catalysis, nothing more. It helps but is not the root.

The author forgot what abundance or mass production is. Curious for a US citizen as abundance was key in their so called exceptional project.

There is no equilibrium, only the pursue of imbalance. The author once again touts the possibility of infinite collection/extraction and all. It is so stupid.

Mass production is dying and the world is reaching an age of levelled production.

US citizens are really confused by their own history, built on theft that has mechanically increased the input to their economy, favouring more activity.


Okay, 90 pc more farmers and so what? Where are the lands to farm? 90pc more farmers would drive the costs of labour down but would not solve the scarcity of land. As arable lands are located in countries like the US whose general environment is extremelly expensive due to decades of wealth accumulation, farmers would not be able to make the living required to support themselves in this kind of environment. It is already what is happening as crops are subsidized to match the imbalance between the general environment and the valuation of the activity.


The article is so stupid. US citizens have better to understand that globalization is nearing its end, that expansionism will never be the same as the good old glorious nineteen century. Lacking land? Just take from the Indians. More land, more farmers, more food. This scheme is ending.

Only one thing is known to be able to cope with speculation: mass production. It is not surprised that oil can be manipulated by speculators as oil extraction has reached a plateau. The supply side can barely grow, that is the lever of speculators who are once again able to capture a meaningful enough share to drive up prices.

High prices of oil, more oil extractors, prices down. Who could believe that drivel? Doesnt make sense as the oil extraction is all absorbed by the consumption actors. You can barely extract more oil. So where is the growth in supply needed to compensate the speculators?


It has never been about equilibrium but imbalance. Chasing and creating imbalance to extract as much wealth as it is possible. A gradient story. 

Fri, 04/22/2011 - 08:34 | 1195671 Hexus
Hexus's picture


But what should we expect from a site run by the very same egomaniacal parasites ZH pretends to critisize. Or maybe we are just blind to the subtlety of the great markets, really it's a good thing when food prices double and children starve, it's the markets way of telling us those children were inferior specimins of humanity.

Fri, 04/22/2011 - 11:00 | 1196114 chunkylover42
chunkylover42's picture

yes, by all means let's ban speculators and speculation, which is what you are implying with your comment.  That way, legitimate hedgers like an airline can just hedge with.... other hedgers?  That should work out great, don't you think?

Fri, 04/22/2011 - 11:25 | 1196207 buzzsaw99
buzzsaw99's picture

I don't have a problem with those who hedge and intend to take delivery. The average WTI contract trades like five hundred times before it is finally taken by the (much) poor(er) end user.

Fri, 04/22/2011 - 14:44 | 1196939 AnAnonymous
AnAnonymous's picture

yes, by all means let's ban speculators and speculation, which is what you are implying with your comment.  That way, legitimate hedgers like an airline can just hedge with.... other hedgers?  That should work out great, don't you think?


Useless. Only one thing is known to be efficient against speculation: abundancy or mass production.

Levelled production means that speculation can no longer be diluted as it used to.

Banning, non banning, it is irrelevant.

Fri, 04/22/2011 - 21:19 | 1198057 mkkby
mkkby's picture

Smart farmers look at the futures price at harvest time before they even buy their first seed.  If they can make a profit at that price, they buy the inputs they need and lock in the price. Very little risk if done correctly.  Only sell forward 80% in case the weather doesn't cooperate.  The rest can be gambled on at harvest time.

Thu, 04/21/2011 - 21:53 | 1194996 gordengeko
gordengeko's picture

 "Which is why it is always easiest to blame the nameless, faceless "speculator" scapegoat."

Are we seriously going to let them continue this fucking bullshit???  Did they not say the same god damn thing with terrorists to get the patriot act in place and start molesting 6 year olds for chirst sake?!  I hope to God people start putting two and two together, they are trying to take complete control and it's more than obvious.  Call me a conspiracy theroist whatever the fuck that means, I don't care.  We let them continue and there will be no where else to go and the end game is the reduction of the population.  Use your brain, think, this is all propaganda bullshit to keep you locked in the game.  In your mind!  Has nothing to do with anything that is outside yourself.  Whenever they come out and start making public threats against phantom fake boogiemen to start making new rules taking more "freedoms" away we need to step up the alternative news calling them out with logic, reasoning and information to get the power players to start making some moves.  Cause at the end of the day you can have all the money in the world but if the world is gone up in flames what are you left with and most importantly, what are you going to take with you when you leave this earth?  You can say you actually tried to doing something good with your life or you spent your whole life trying to make a ton of worthless fiat shit paper!

Thu, 04/21/2011 - 23:17 | 1195182 Sock Puppet
Sock Puppet's picture

Gorden, how is your credit rating doing?

Fri, 04/22/2011 - 00:17 | 1195295 bobert
bobert's picture

lol, thanks!

Fri, 04/22/2011 - 06:24 | 1195571 gordengeko
gordengeko's picture

You say it like it matters. Words still get

Fri, 04/22/2011 - 03:34 | 1195480 Pondmaster
Pondmaster's picture

"Are we seriously going to let them continue this bullshit???"

Until the demise of "American Idol"," Dancing with the Stars" and the NFL  and beer , the answer is YES!!!!!!!!!!! . Dumbed down America will do NOTHING . Absolutely nothing . Thank God there are still those who think for themselves, and haven't eaten the porpaganda. We need a new 60's generation. F... the establishment. But, alas , if groups organize they will be zapped in public gatherings by Gov't produced Raytheon crowd control microwave weapons . Can you alone stand against the corruption?  

Fri, 04/22/2011 - 06:07 | 1195558 gordengeko
gordengeko's picture

Not talking about getting some crayons and some cardboard to do some yelling. The masses will be reduced, nothing to do about that was thinking more along the lines of getting people with a lot of money to take delivery of the silver and crash the party early. Protesting is for sheep unless the majority of the herd gathers which is doubtful.

Fri, 04/22/2011 - 07:30 | 1195607 ibjamming
ibjamming's picture

They control the media...they'll make you look like a'll be marginalized...that's how they win.

Fri, 04/22/2011 - 07:42 | 1195615 gordengeko
gordengeko's picture

Look, I'm not advocating violence nor am I talking about anarchy. The fundamentals need to be changed in order to change the system. You can add new rules and regulations but when there is demoralization on a mass level what good are more rules and less freedoms? Surely there has to be some affluent people left that can start to organize politcally? If I'm mistaken, then I'm just talking bullshit with no meaning.

Thu, 04/21/2011 - 21:56 | 1195002 Tunga
Tunga's picture

"disequilibria" Now that is just plain fun to say. It will probably be banned in China by tomorrow. Or yesterday. Whatever it is there right now.  

Thu, 04/21/2011 - 22:00 | 1195014 Misean
Misean's picture

Disequilibria is what counterfeiters create. Dunno if it could be used in a rallying cry though...

Thu, 04/21/2011 - 22:57 | 1195148 Doña K
Doña K's picture

I think antibiotics may work on these gut bacteria.

Fri, 04/22/2011 - 00:16 | 1195284 A Nanny Moose
A Nanny Moose's picture

My thirst has resulted in disequilibria in my beer glass.

Thu, 04/21/2011 - 21:59 | 1195005 narnia
narnia's picture

Seems like there's a perfect storm in agriculture.  Countries like China dramatically increasing their inventories, the flood of easy money chasing anything real, the low interest incentive to speculate, the sinking of the $, the craze behind biofuels, some crop failures due to extreme temperatures, increasing populations, aging farmers, decreases in yields for industrially produced food, agriculture being so petrol dependent, and the organic food demand.  All of these factors are pushing prices up, despite the fact that we spend BILLIONS of $ subsidizing them.  

He's taking the explanation that suits his political agenda, no matter how little of the whole story it tells.  They are beating the "top 1%" drum quite a bit.  The more you hear them beating the "corporate greed", "increased regulation" & "invest in our communities", which works well with the top 1%, the closer to the end we are.  They are framing a socialist solution.  This whole mess needs to be pinned on central planning, and I sure as hell hope the American people see that.  For this reason, he needs to be taken to the cleaners on this, and I applaud you are doing your part Tyler.

Thu, 04/21/2011 - 23:07 | 1195170 Doña K
Doña K's picture

Food is the most basic commodity that everyone understands, especially those who have experienced pain from hunger. It is also the first element on the pyramid of needs along with shelter.

It is therefore, understandable that securing food for the future and becoming self sufficient is a priority.

Farmers are also hedging due to weather unpredictability and lately fiat money.

So Mr. Obummer: Where is wrong with doing, what I have just described? You are just a demagogue and you do not care about anything else but getting reelected by lying and cheating.





Thu, 04/21/2011 - 23:52 | 1195242 bobert
bobert's picture

I like it when you speak your mind without first checking with the "hubby."

Thu, 04/21/2011 - 22:02 | 1195008 IdioTsincracY
IdioTsincracY's picture

The point that you are missing is that society is governed by rules. These rules are set based on the needs of the society...

Finance laws do not fall under the 'natural' laws of the universe, they can be changed if and when needed.

It used to be that 'Finance' (hence the word) was supposed to finance human activities and reward the best effort and ideas.

Then it all went wrong ... forget research and ideas, just play trends, and now algos are in charge...

the system has become the opposite of what Finance is supposed to be.

Making money is an end in itself,... fine! .... however as a democratic society we have a responsibility to take actions (in a democratic way) when things get out of hand.

The market has gone from a system to reward competition and the best ideas, to a big Monopoly board game on global scale and the major tool of wealth extraction.... and now is run by computers ... sorry but we need to regulate it!

Of course, it will not happen until it will self-destruct

Thu, 04/21/2011 - 22:04 | 1195024 Misean
Misean's picture

" to a big Monopoly board game..."

You get so close, and then fall back on "regulation". It is the monopoly money created by regulation that is causing the problem.

Thu, 04/21/2011 - 22:05 | 1195032 IdioTsincracY
IdioTsincracY's picture

I actually agree with you .. current regulations (or lack thereof) have been put in place by the oligarchy for its own benefit, and we see the results.

We need to change the current rules ... stop the leeches ... say it any way you want ... but let's hope it happens soon

Thu, 04/21/2011 - 23:33 | 1195209 StarvingLion
StarvingLion's picture

The immune system in your body detects pathogens, and then targets and kills them.  Get it? 

Thu, 04/21/2011 - 22:20 | 1195055 griff
griff's picture

It's not regulation, its the pretense of regulation and the false sense of security that it provides that causes problems.

Thu, 04/21/2011 - 22:19 | 1195049 gordengeko
gordengeko's picture

@idio, "Finance laws do not fall under the 'natural' laws of the universe, they can be changed if and when needed."

You're exactly right.  I 100% agree with you.  Having said that, thank you for proving MY point.  Not sure what country you live in but when my country was founded, there were actually "rules" set forth making each person a soverign.  "Natural laws" of the universe if you will, our country has since been subverted by these foreign bankers who implanted YOUR finance laws thrusting this population into debt slavery.  You throw out terms like democratic society and goverened like they actually have a meaning in todays world.  If you believe that you are surely mistaken my friend.

Thu, 04/21/2011 - 22:37 | 1195105 thedrickster
thedrickster's picture

You are a looter at heart, go away.

Fri, 04/22/2011 - 01:35 | 1195397 Central Bankster
Central Bankster's picture


The point that you are missing is that society is governed by rules. These rules are set based on the needs of the society..."


The whole point of economics is to understand the natural order of human interaction with respect to scarce resources.  These are naturally occuring markets-- free market economics is superior to central planning and crony capitalism because it does not attempt to artificially impose "standards" or "needs" of a third party.  Do they teach anything useful in school anymore?

Fri, 04/22/2011 - 03:44 | 1195483 i-dog
i-dog's picture

"The point that you are missing is that society is governed by rules. These rules are set based on the needs of the society..."

The point that you are missing is that society is governed by natural law (in a nutshell: don't lie; don't cheat; don't steal; don't hit). All the rest of the "rules" of which you speak are not necessary for a society to function, but merely to improve control over the society by the rule-making class (to their own advantage first; to the general well-being of lesser mortals as a [possible] after effect).

Fucking socialists are always trying to control somebody other than themselves!

Fri, 04/22/2011 - 03:45 | 1195485 MolotovCockhead
MolotovCockhead's picture

"If you control the oil you control the country; if you control food, you control the population.If you control the money you control the world":- Henry Kissinger

Still can't see that they(NWO) are preparing you for their Utopia? Have you not notice the "chaos" all around? Actually those are more likely control demolition.......think Building7 at ground zero!

Say bye bye to your US Dollar, it's a matter of time they usher in the NW currency and remember to exchange your FRN for real money/PM. Whatever that are printed on a piece of paper will be worth the piece paper it was printed on.

Thu, 04/21/2011 - 22:01 | 1195009 Bob
Bob's picture

When prices are ten times higher, the market is going to be full of farmers . . . and nobody is going to complain very much about that? 

Certainly not the million who starved due to the high prices before the next crop was planted by all those new farmers. 

Sure, where would free markets be without speculators pouring liquidity in.  The argument reminds me of an old story I heard:

Thu, 04/21/2011 - 22:43 | 1195109 topcallingtroll
topcallingtroll's picture

(double douchery)

Thu, 04/21/2011 - 22:39 | 1195112 topcallingtroll
topcallingtroll's picture


The lamp is on right?

A summable series must go to completion right?

The troll is a stat genius but abstract math retard.

Guys this is fun! Someone show me the proof!

Thu, 04/21/2011 - 23:25 | 1195194 Doña K
Doña K's picture

A street smart Greek asked Zeno that if an arrow was thrown, whould the same principle apply? (It will never reach the target as every time the arrow will have half the distance and so on.) Zeno said yes.

Then the street smart Greek put an arrow in his bow and ask Zeno to stand 1/8 of a stadium away (25 meters) Zeno conceded.   

Fri, 04/22/2011 - 08:33 | 1195622 Bob
Bob's picture

That night, Zeno went home and got shit faced drunk.  He knew something wasn't right about this.  What to do, what to do.  Somehow this had to be tested. 


He took the bet on very good terms.  He sold what he callled "shares" to 1000 people, each of whom would take successive positions halfway between the arrow and the target.  Bids became understandably lower each step of the way, leaving all to wonder how he was gonna make this thing work . . . nobody wanted that final share, not at any price. 

Whereupon Zeno pulled the rabbit of genius out of his hat.  When all the shareholders were assembled he called his trusted slave Xternality to assume the final position in the series for him by what he called "proxy,"  explaining to him that everybody was depending upon him to get this thing over with and that everybody had to do their part.  He himself had to make sure the arrow was shot correctly and he sure as hell couldn't be in two places at once!  The slave was naturally anxious, but how could he let all these people down?  By now the entire city had come to a standstill.  Did he not believe in his beloved Master? So Xternality took his position and the arrow was launched. 

Zeno made out like a bandit.  Likewise for all the "investors" in the secondary markets.  Not only was great wealth created, but order was restored. 

Thu, 04/21/2011 - 21:58 | 1195016 max2205
max2205's picture

Traders set prices?! JPM GS ect.... Thanks for the thought.

One word Twinkies, they are cake on the outside and cream in the middle. They never go bad

Thu, 04/21/2011 - 22:00 | 1195020 Davilis
Davilis's picture

Blah blah blah.  Yes, speculators are ramping up prices.  QE1 completed and agricultural commodity prices were still at low levels.  QE2 was ANNOUNCED and prices started to ramp.  Pretty obvious.  Nobody should be fooled, but they are.

Thu, 04/21/2011 - 22:08 | 1195037 IdioTsincracY
IdioTsincracY's picture

I consider speculation also the printing of money by the Fed to benefit the Banks that in turn buy T-Bonds ... that is not financing ideas, or rewarding effort, or promoting competition ... that also is making money in itself by perverting the system.

We're in this together ..

Thu, 04/21/2011 - 22:02 | 1195023 Bear
Bear's picture

Obama and Holder are absolute idiots ... I'm a speculator and I have lost my ass in Crude. Do they not realize that for every long there is a short. Obviously their Blue Ribbon Commission has nothing to do with manipulation of the markets ... only manipulation of their serfs.

Thu, 04/21/2011 - 22:32 | 1195094 bonddude
bonddude's picture

Lloyd and the other rats will never see a prosecution just more bailouts.

By the time a small segment of the US public realizes this silver will be $200...about 1 year or so?

Thu, 04/21/2011 - 22:05 | 1195025 I am Jobe
I am Jobe's picture

Speculators Bitchez

Inflation Bitchez


Listen to the President Bitchez. All is fine. LOL, take cover and hide or leave the USA fast .

Thu, 04/21/2011 - 22:02 | 1195026 Silver Bug
Silver Bug's picture

Farming is definitely going to be a profitable job in the near future. Jim Rogers talks about this quite often.

Thu, 04/21/2011 - 22:39 | 1195103 bonddude
bonddude's picture

He's is a smug little fella but he has been sooooo right about the $, commodities, stock melt up, 

farm land melt up. I been waiting for another crash to back up the truck. Can't wait anymore.

Thu, 04/21/2011 - 22:51 | 1195133 America- Some A...
America- Some Assembly Required's picture

Only until they outlaw farming and make us all eat the GMO poison so that Big Pharma can treat us for cancer.

Thu, 04/21/2011 - 23:42 | 1195219 StarvingLion
StarvingLion's picture

Well I own farm land.  All I need is $100,000 for a tractor, $100,000 for implements, ...etc.  Why I'll be another Bill Gates....or more likely a debt serf on a farm plantation after my land is stolen because I can't afford to farm it.

Thu, 04/21/2011 - 23:54 | 1195249 bobert
bobert's picture

Tell us more.

What are you experiencing?

Fri, 04/22/2011 - 00:13 | 1195272 StarvingLion
StarvingLion's picture

I am experiencing a govt forced takeover.  CAn't sit on it, can't farm it without losing control.  The small farmers around me are throwing in the towel.  This Jim Rogers guy makes me laugh.

Fri, 04/22/2011 - 00:13 | 1195281 bobert
bobert's picture

When they throw in the towel, who get's the land?

Just asking.

Fri, 04/22/2011 - 11:03 | 1196115 Creed
Creed's picture

that's funny Starving


I read about US farmers loving every minute of this commodity ramp job, buying up acreage & new pickup trucks


several months ago


Thu, 04/21/2011 - 22:03 | 1195029 buzzsaw99
buzzsaw99's picture

I thank jebus every day that speculators front run my demand for ribs slathered in bbq sauce. Cole slaw too, would someone pleace buy some cole slaw futures? I love that stuff.

Thu, 04/21/2011 - 22:15 | 1195050 gkm
gkm's picture


Thu, 04/21/2011 - 22:21 | 1195061 MrBoompi
MrBoompi's picture

Speculation, as in the way it was originally invented, was and is important for managing the cost of commodities for producers and end users.

But a new form of speculation was allowed. Exemptions were granted for people who weren't either a producer or an end user. These people, LIKE GOLDMAN SACHS, can pile in on one side of the trade, influencing the price.

The fact they can pile in with freshly-printed funny money doesn't justify any of the price gouging we see today.

Thu, 04/21/2011 - 22:28 | 1195075 Tyler Durden
Tyler Durden's picture

This is correct. But it is the fault of the Bernanke Put that these entities will push prices beyond fair value with impunity and without fear of risk, as losses are guaranteed to be socialized. Do not blame speculators for doing what the broken system allows and even encourages them to do. Blame the system. Or, specifically, the Fed.

Thu, 04/21/2011 - 22:56 | 1195142 KickIce
KickIce's picture

I'll blame the government for pissing away their power and caving to the CBs.  Without the bailouts we have a hard fall in 2008 but are well on the way to recovery and these asshats are no longer manipulating the markets.  In order for free markets to work justice must apply to all.  We have been sold to the highest bidder.

Fri, 04/22/2011 - 09:06 | 1195732 dark pools of soros
dark pools of soros's picture

there's nothing to speculate, just BTFD!!!

Fri, 04/22/2011 - 07:35 | 1195610 pan-the-ist
pan-the-ist's picture

I blame you for putting the puzzle together and waking me up.  That being said the naive factions within the government believe they are doing right by the people, and get angry when their futile efforts are exposed.  My guess is that a real CPI is due and they won't be able to hide the inflation (that they caused.)

Fri, 04/22/2011 - 10:28 | 1195919 DaveyJones
DaveyJones's picture

Well said. As you said the probelm is, there is no "system"

Great Onion/CNBC title this morning

Saudi Arabia Sees Need to Pump More Oil
Fri, 04/22/2011 - 11:53 | 1196323 Printfaster
Printfaster's picture

Wrong Tyler

Blame the system. Or, specifically, the Fed.

Blame it on free spending by the government.  The Fed is but a mere slave to free spending and debt issuance.  All the debt that is issued is nothing but money created.  All the fed does is move the government debt down the yield curve to zero, both in rate and maturity period.  The Fed has no choice.  The government does -- it can quit spending.  It does not.

As for Obama, he is our Pogo:  "We have met the enemy, and he is us"


Sat, 04/23/2011 - 06:26 | 1198637 Hexus
Hexus's picture

The speculators own the Fed, the speculators own the SEC. If Ben Bernanke was so powerful he'd be giving himself trillions of dollars, clearly whoever recieves the money is in control.

Thu, 04/21/2011 - 23:19 | 1195187 vas deferens
vas deferens's picture

When there is so much funny money, and free (no interest) funny money a lot of things are will become inflated. This is created by the FED not speculators!  Speculators are just the result of the FED's actions.

Look at the stock market, totally inflated no one says anything but what a success! But when oil goes gets inflated due to the same reasons now there is a problem??? 

Thu, 04/21/2011 - 23:56 | 1195253 bobert
bobert's picture

I have access to money @ 3.5%.

What should I buy?

Fri, 04/22/2011 - 09:10 | 1195742 dark pools of soros
dark pools of soros's picture

iPads and Tokyo

Thu, 04/21/2011 - 22:39 | 1195076 jmc8888
jmc8888's picture

It does depend, how much do they get paid in subsudies not to plant? But 10x higher is over that threshold.

Look...the rise in commodities is due to speculators....they're raising the prices in actuality.  BUT, with the caveat that the speculation is forced upon it, and the direction and pace baked into it, due to the printing of the federal reserve for fraud...and you can't print corn.

So the key isn't to go after speculators trying to protect their money, or make some, it's the printing for fraudulent debt via the Federal Reserve that needs to be gone after.  Because stopping one, stops the reason for the other.

You have to call it for what it is.  Then turn around and show the reason why.  Federal Reserve.   Then as said above, show why it isn't just oil, but all commodities, and anything not printed. 

But what if some speculators were using bailout money to speculate on it? Now that would be interesting...if it was GS/jp morgan/bofa invested in them. That would be an interesting dilemma/debate/whatever.

It could be said that if you slapped food price controls on, the speculators would be even more venomous at the federal reserve for destroying their pissing grounds. (and would pile into other markets, like gold/silver) So even if it happens, it could be good in that respect...because perhaps that is the final nail in the federal reserve coffin.  Or the results of the piling in on other commodities.  If you can't bet  on oil, or corn, you just might pile into silver, and I'm sure JP Morgan would love that for their short positions.  Which might blow up the system because of the law of unintended consequences.

It does all go back to the federal reserve, and the best way to end this is to go after that, and what they do, print...for fraudulent debt.  Not speculators.  But we all know the fed and the gov't will easily sacrifice speculators as opposed to themselves, and they are partially right, even if it is unfair.  But oh what a retarded option with limited benefit it would be.  But it would have one.  Again it could be the final nail in the coffin as even more people would bitch against the fed.

Use Glass-Steagall on the reason WHY the fed is printing, or like idiots want to cut, and then the speculators can still do what they do in commodities, without causing the rise as a reflex to money printing. 

Now THAT is so easy, a caveman can do it.  Price controls are a poor substitute to Glass-Steagall the fraud. 

They did it in 1933, they can do it again.

But again, if you're not part of the fraud, directly, you are expendable.  Commodity traders you are the scapegoat.  A little part of the problem, the one who actually raises the prices, but only as a reflex to the reality of the money printing, and so you will be used as the scapegoat by the fed, obama, or any repub/tea that's in power.  Better realize it.  They painted you in the corner, and are loading up the gun now.

Glass-Steagall is and always has been the key.

(well and actually having it enforced...but you have to talk about it...before you can hold your congressman to account for it, and if not, you have to wait until the next election after start asking questions, or else 2014 will be the time people might be ready to hold to account their congressman and elect people that promise to champion Glass-Steagall.  But we have to get it out there, so that people can judge their current congressmen...and either set up the 2014 for 2012, or worst case 2014.  Either way, it's probably too late by either date, but you gotta try, and in a breakdown, the people need to have something they can immediately know, and Glass-Steagall is that, and it is well-known because it's part of our history.)


Thu, 04/21/2011 - 22:33 | 1195085 Re-Discovery
Re-Discovery's picture

Efficient price discovery is the cornerstone to any free market.  In fact, its the whole foundation.  Our government aided by large monied interests has obfusctaed this discovery for decades.   We are now left with confusion and discord masked as calm.  Price discovery comes in short fits and spurts called flash crash or financial crisis or housing downturn or Oil shocks and the problem is that fewer and fewer see these events as GOOD for our markets.  Instead, our President leads the charge against truth and rational markets.


Regulation?  OK, yes to some degree.  But not where stress tests value assets at AAA when the are CCC-.

Price discovery will only come when we RE-DISCOVER our country.  And I am all for starting that process now!


Thu, 04/21/2011 - 23:35 | 1195207 topcallingtroll
topcallingtroll's picture

Excellent and concise

Thu, 04/21/2011 - 23:50 | 1195235 StarvingLion
StarvingLion's picture

RE-DISCOVER our country?  What the hell does that mean?  Enrich uranium in the garage? 

Fri, 04/22/2011 - 00:19 | 1195300 Re-Discovery
Re-Discovery's picture

What does 'enrich uranium in the garage' mean?

Re-discover this country means to have people and our leaders find what makes this country great -- including things like a strong reliable currency, constitutional adherence, a benign and sustainable foreign policy, respect for individual rights and freedoms, protection of citizenship.

We have had these things before in our society.  And we need to find them again.  

Fri, 04/22/2011 - 14:49 | 1196952 AnAnonymous
AnAnonymous's picture

Rediscovery of this country?

In the 19th century, the great US century for fable believers in here, speculation was handed through land grabbing, which mechanically increased the inputs to the US economy.

Rediscovery of Indians maybe is what you meant.

Fri, 04/22/2011 - 09:22 | 1195756 dark pools of soros
dark pools of soros's picture

price discovery is alive and well in the lobbying speculation market..  all others can be shuttered

Thu, 04/21/2011 - 22:36 | 1195100 KickIce
KickIce's picture

#1  Food prices are already high enough to cause riots in the ME.

#2  We may have obesity among the poor but many of those are also suffering from malnutition as eating healthy is still fairly expensive.  Right along with this we have over 50% of the population receiving assistance from the government.

#3  You just don't go out and start "farming".

#4  The government has subsidized food for years so we could buy our ipods and various other cheap crap from China.

Bottom line, anybody that thinks we can absorb x times higher commodity prices and still maintain civil order is living a pipe dream.


Thu, 04/21/2011 - 23:34 | 1195210 UninterestedObserver
UninterestedObserver's picture

Yup and anyone that thinks printing trillions of fiatscos won't have a ripple effect on the way EVERYTHING is priced is blind

Fri, 04/22/2011 - 11:08 | 1196133 Creed
Creed's picture

Bottom line, anybody that thinks we can absorb x times higher commodity prices and still maintain civil order is living a pipe dream.




Victory Gardens.


Had them before, will have them again.


Every lawn a grocery store.


It's been happening around here since 2008.

Thu, 04/21/2011 - 22:40 | 1195115 Dr. Porkchop
Dr. Porkchop's picture

The article doesn't really cover the growing side of the food issue. There is plenty of control there. Milk, chickens, eggs, they all have their control boards that dictate who can produce, sell and how much. Over time it has become a racket that, lo and behold, favors agricorp.. the ones with the lobby. Regulations that protect safety ostensibly become barriers to entry in the market by small players.

Thu, 04/21/2011 - 23:44 | 1195224 topcallingtroll
topcallingtroll's picture

Multiply that by all major services and industry and you have succinctly explained the rise and fall of republics.

Fri, 04/22/2011 - 01:58 | 1195411 Dirt Rat
Dirt Rat's picture

You should check out trying to get your crops certified USDA Organic. You have to employ a bunch of plant geneticists to provide the evidence that you meet organic requirements and a bunch of lawyers to fill out the paper work. It's not a process for the little guy.

Thu, 04/21/2011 - 22:44 | 1195117 IdioTsincracY
IdioTsincracY's picture

Of course the comment on Jews that was deleted was excessive.

However, (and please understand this is not intednded to offend anybody), for a government that values diversity in every field, it is truly amazing that 90% of the members of FED boards are jewish, that most economic advisors to all administrations are jewish, and so on and so forth... kind of weird for a minority that amount to 1% of the population....

Just weird!

Thu, 04/21/2011 - 23:29 | 1195198 topcallingtroll
topcallingtroll's picture


Thats why they are the master race and we are ( goyem) cattle.

It could also be that europeans (you too france and swiss) helped cull all the stupid ones.

Fri, 04/22/2011 - 11:12 | 1196165 Creed
Creed's picture




seems like the jew bashers always get around to using violence & murder to solve their emotional hangups with the jews



by topcallingtroll
on Thu, 04/21/2011 - 23:29



Thats why they are the master race and we are ( goyem) cattle.

It could also be that europeans (you too france and swiss) helped cull all the stupid ones.











Thu, 04/21/2011 - 22:47 | 1195128 Steroid
Steroid's picture


Thank you for this post. It is so rare to hear a contrarian, individualist view in this protosocialist world, unfortunataly, even here at ZH.

Thu, 04/21/2011 - 22:49 | 1195130 IdioTsincracY
IdioTsincracY's picture

I fail to grasp how the defense of the current corrupt financial and speculative system is a take on individualism versus protowhatever!

Thu, 04/21/2011 - 23:00 | 1195149 gordengeko
gordengeko's picture

Shufly, I called you out. your cover is blown, come back under new name.

Thu, 04/21/2011 - 23:00 | 1195150 gordengeko
gordengeko's picture


Thu, 04/21/2011 - 23:20 | 1195190 Yen Cross
Yen Cross's picture

What cometh up must peak, (or consolidate)!

Thu, 04/21/2011 - 23:38 | 1195215 topcallingtroll
topcallingtroll's picture

Yen dude whats the word on japan. Whats the market telling you.

Thu, 04/21/2011 - 23:56 | 1195252 Yen Cross
Yen Cross's picture

I'm short yen. Over the medium term. I have an average around 81.6(usd/jpy) on that recent dip. Keep an eye on eur/jpy. If the eur/usd leg of the trade breaks down it could be very profitable. I am still very strong on the yen crosses. (gbp/jpy) in particular. I Like GB's austerity program. Best wishes!

Thu, 04/21/2011 - 23:46 | 1195227 ebworthen
ebworthen's picture


Roulette wheels bitchez!


Thu, 04/21/2011 - 23:50 | 1195230 SparkyvonBellagio
SparkyvonBellagio's picture

I know it's the first time at the rodeo for O and his I ax you a question posse, he should just wear Hammers Pants in 'Can't Touch This' and get it over with, since it's damn Gina, this dude is F'n it up even worse than that idiot "W", stain-master Clinton, and the father of the bastard George. Seriously, Americans Elect the F'n Retards of Society to "PUPPET" their campfire. What gives USA?  God Damn Melon-Heads! 

Truly Sad.


Oh Yeah, Please Run you Rug-wearin' Barron of Bankruptcy. 

F-U Trumpetty of Loser-ville. Please. Tell us what to do, since your Daddy gave you all your money, and you've only got BK more than that freaky looking KING of Whoppers.

Thank You Incans for only allowing this guy about 7 weeks to Celebrate if the Comb-OverInChief ever gets elected, but at least he'll never 'officially' take office.




12-21-2012. PLEASE HURRY.





Fri, 04/22/2011 - 00:00 | 1195258 bobert
bobert's picture

I think you are somewhat understandable.

Fri, 04/22/2011 - 00:09 | 1195268 Yen Cross
Yen Cross's picture

You know more than I do. BoBert> I have Zero interest in that ebonic rant!

Fri, 04/22/2011 - 00:15 | 1195289 bobert
bobert's picture

Yeah, I'm trying to be nice.

Fri, 04/22/2011 - 00:16 | 1195293 bobert
bobert's picture

Yeah, I'm trying to be nice.

Thu, 04/21/2011 - 23:52 | 1195232 dogson
dogson's picture


There must be some song that describes this mournful situation. I grow my own food, and live next to a farmer who actually tries to make a living milking cows with his extended family. I can't believe you guys don't get whose system you are really serving here.  I remember a poster from lower Manhattan that I used to not really understand; a headless suit with the caption, your whole system sucks.


Fri, 04/22/2011 - 00:14 | 1195276 SparkyvonBellagio
SparkyvonBellagio's picture

Where O'where are you tonight?

Why did you leave me here all alone?

I searched the world over and thought I found true love.

You met another and ttthhhhhpppp you was gone.




Gloom Dispair and Agony on Me.

Hee Haw Salutes the town of Washington DC, Population Print'em if you've Got'da Ink.



I kinda think ol'Bernank had to have been Grandpa, to get all that he's done the Ol'Country Okay - Grandpa you know best you F'n 'Tard!!!!

That said, how about a bit of Banjo Music.....


Yep, go'in heavy on the Banjo!


Deliverance Banjo-

Thu, 04/21/2011 - 23:48 | 1195234 JW n FL
JW n FL's picture

Peak Affordable Oil!


Peak Lite Sweet Crude!!


NOT! Peak Oil.. the video is 2 years old and describes all of these events to the letter!

Thu, 04/21/2011 - 23:49 | 1195238 smokeybear
smokeybear's picture

"Well, guess what: when prices are ten times higher, the market is going to be full of farmers, and nobody is going to complain very much about that."

With falling incomes the market can only handle a limited amount of farmers -- that is, unless the farmers pay menial workers enough to survive and thrive. More farmers does not equal more production.

The financial casino is filled with bums who are trying to profit for producing nothing.

Meanwhile the real, physical producers must deal with the economic imbalance poker chip creation financial speculation creates.

To hell with the president's and placeholder's rhetoric. How much more of this inequity will we tolerate before we start burning down the mansion?

Take your bets.

Thu, 04/21/2011 - 23:52 | 1195239 Manny
Manny's picture

TBTF will be proud of this article.

Speculators in a non transparent market with little or no enforcement. That sounds like a "good" idea!

Fri, 04/22/2011 - 00:14 | 1195283 Yen Cross
Yen Cross's picture

Share that with the (Dodd Frank) camp.

Thu, 04/21/2011 - 23:53 | 1195245 MrBoompi
MrBoompi's picture

Yes that's what makes it so unfair. Guaranteed gains on one side and guaranteed losses on the other. People were strung up for this a few short decades ago.

Fri, 04/22/2011 - 00:20 | 1195301 AmazingLarry
AmazingLarry's picture

Uhhhh, without a 60-70 $ billion farm bill there's no "food" production in the US, it's a barren dustbowl of dead soil and petrochemicals. You can't blame the Fed when the Mc GMO meal goes from $3 to $4 when Big Ag just fires one of their cronies over to head up the USDA or FDA to run the opporation in their best interests.

And yes we're starving in America; starving for nutrition. Cheap, food-like substances that are just as toxic and vacant as ever, which cost more FRN's than ever, are just Mom Nature's answer to killing off those that don't know any better than to mindlessly stuff them down their food hole. That's the shit about it; food prices rise as the nutrition in them falls. Than you sir, may I have another?

Read the book "Farmers For 40 Centuries" and you'll see how much of China and Japan can do just fine if need be. Because, hey, that's just how real food is grown and people prosper as a result.






Fri, 04/22/2011 - 00:27 | 1195318 AldoHux_IV
AldoHux_IV's picture

It isn't a problem of scarcity inasmuch as it is a problem of control-- centrally planned economic control that will further put the strain on anyone that isn't in the top2%.

The current system needs to end and ironically it is the growing problem of debt and currency destruction that will upset enough people to get them to finally act.

Fri, 04/22/2011 - 00:54 | 1195355 Yen Cross
Yen Cross's picture

This Country is on the verge of Civil War and we all know it! Where is Barney Frank? Fudge Packing it's(his cnn Anderson Cooper west Village) interns?

Fri, 04/22/2011 - 01:38 | 1195401 Central Bankster
Central Bankster's picture

This whole conversation is fucking ridiculous.  If the "market" prices were out of equilibrium (too high for example), than too much food would be produced/conserved.  Those parties stuck with excess food would be willing to sell their excesses at lower prices (than the current market) rather than allow it go to waste.  Oh, and I'm not talking about the scraps you didnt give to your dog you heartless bastards.

Fri, 04/22/2011 - 08:20 | 1195660 pan-the-ist
pan-the-ist's picture

1. Everyone needs to eat.

2. There is no surplus of food.

3 .....

4. Profit.

Fri, 04/22/2011 - 01:40 | 1195402 Gooserooster
Gooserooster's picture

I totally agree with the argument the author of the article is making, under normal free market conditions.  The problem with the current "speculators" is that they are operating in a market that has few of the characteristics of what I would consider to be a free market.  In a free market, which is operating without coercion, manipulation, which has a large number of independent buyers & sellers, I agree that speculators speed up the process of price discovery, and improve the efficiency of the market.

Some of our commodities markets are not markets anymore.  To call the Crude Oil market, a market is really a stretch.  The crude oil business is so much more than a commodities market, that you can't consider "speculators" in this market the same way you would consider speculators in a typical, free market.


The current oil market functions on many different levels, accomplishing many different outcomes.  The oil market operations go far beyond the simple buying and selling of crude oil, so you can't assign to the crude oil speculators the same characteristics you would assign speculators in a traditional free market.


For instance, there's no question that the United States Treasury has created certain market conditions for the purposes of maintaining the value of the U.S. dollar.  Further, when the U.S. Dollar comes under pressure, the U.S. always benefits from higher oil prices because higher oil prices have an immediate strengthening affect on the dollar.


Using oil prices to bolster the value of the dollar is an operation that can be undertaken very quickly, with immediate results.  Resultant dollar strength can be achieved in a matter of days, or weeks, which is much quicker than trying to strengthen the dollar by lowering the national debt, or increasing taxes.


Raising oil prices also creates an immediate increase in demand for U.S. Treasuries, and the increase in the demand for treasuries can be achieved very quickly through an increase in oil prices.  Saudi Arabia and Quwait for example, both have agreements with the U.S. to use oil sales reciepts for the purchase of U.S. government securities, and an increase in the price of oil provides for an increase in these countries' oil sales reciepts, which provides for their increased ability to purchase U.S. Treasuries.


So in the case of crude oil, the largest speculator is the U.S. government, operating through proxies.  Their goal is not to produce enormous speculative profits for themselves in the same way a typical "speculator" would.  Under these circumstances, while it would probably be worthwhile to eliminate the U.S. government as a "speculator" from the market, but I really don't think it would be possible.


One thing is certain, the recent dramatic increase in the price of crude oil has nothing to do with the availability of supply, or any increase in demand.  Saudi Arabia cut their production because there currently is an oversupply, and they correctly predicted that the rapidly increasing prices would result in lower demand, and a further increase in supply, for which, they would not be able to find enough buyers.  They cut supply because they have no choice, they simply don't have anywhere to put increased supply, and increasing the supply doesn't have any effect on the price, which is controlled via other non market mechanisms.


The last time oil went sky high, Saudi Arabia went on record with statements that they had additional supplies available, but there were no buyers interested in purchasing any increase in supply.  This statement shows very clearly that supply and demand no longer play a role in the pricing of crude oil.

Fri, 04/22/2011 - 03:18 | 1195473 AnAnonymous
AnAnonymous's picture

Disagreement on SA.

Their story about oversupply is ridiculous. Unsatisfied demand for oil is growing.


Oil extractors work on a finite resource. They have to cut down the supply for that reason, not price.

SA projects its economy in a near future, they do plans, they grow expectations of revenues.

A high oil price could indeed be damaging for them as it could distort totally their predictions, considering the consumption economy.

SA sells oil at high prices, they extract more and keep selling it at high prices. Hence more revenues. What to do with the increased revenues? They can not save and need to consume, buy T bonds, buy papers and all. It also puts them in the scheme of endless expansion. They grow their standards of life accordingly with their ever increasing revenues, get hooked.

What happens when they can no longer sustain the rate of extraction they just have?

The most profitable course for SA would be to cut down their production(savings) and to keep a steady revenue from oil due to high price. That way, they dont overexpand and extend their oil extraction scheme.

But they can not do as the US expects them to provide oil. SA is stuck. The high price in oil will only lead them to ruin their oil fields faster, pushing them in a higher standard of life.

Added to that, SA has its obligations on debt, social services and all. Once the volatility of price is factored in, meaning that price can go downwards, the obligations would mean selling even more oil at a lower price to meet them, ruining even faster the oil fields.


SA is a nasty corner: by their allegiance to the US, they have supported a model that is going to destroy them.

SA sell oil =>receive USD in exchange=> buy US debt => US activity is up=>more demand on oil=>SA increases oil extraction=>SA sells oil;

They can not preserve. They can not use the high price of oil to get the same while decreasing the extraction. It is over for them. They are going to be consumed. They are doomed to sell as much oil as it is possible and receive higher prices for it is a disaster as it will generate more activity.

Fri, 04/22/2011 - 04:52 | 1195523 Kickaha
Kickaha's picture

I dare you to make less sense.

Fri, 04/22/2011 - 14:26 | 1196835 AnAnonymous
AnAnonymous's picture

The Saudis are living the situation. They hope it makes less sense indeed.

Fri, 04/22/2011 - 10:26 | 1195933 DaveyJones
DaveyJones's picture

well said

Fri, 04/22/2011 - 03:11 | 1195469 luciusfargo
luciusfargo's picture

We heard this same nonsense when bond traders started dumping sovereign debt in the eurozone. 

Fri, 04/22/2011 - 03:20 | 1195476 honestann
honestann's picture

Yes, futures markets should exist.  But for every contract that exists, the commodity must be delivered at the expiration date.  Otherwise the whole system becomes a paper game, which can be grossly manipulated with fiat dollars available at zero cost to favored scumbags.

Fri, 04/22/2011 - 04:39 | 1195515 midnight
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