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Prez to AG – “Get Krasting”
So the president of the United States has ordered the Attorney General
to go after the speculators who have been drive up the price of oil and
therefore gas. What can I say about this? Does the President think the
American people are stupid? No one is going to fall for this line of
crap.
Up front, let me acknowledge my guilt in this matter. I’m a speculator. I
try my best at it. Some of my best friends are speculators. Many of my
readers are speculators. In one-way or the other we are all speculators.
Those that don’t think they speculate are actually speculators.
My local oil delivery company let’s me play in the big casino. I bought
an option at a fixed price for 5,000 gallons of heating oil. The premium
for the option was 20 cents a gallon. So I paid them $1,000 cash. That
was sort of gambling money. If the cash price were to fall I’d get the
lower price. If it rises, my cost is locked in. Last I looked I was 70
cents in the money. My option cost was 20 cents so I’m “up” 50 cents on
5,000. That’s $2,500 so I’m feeling good on this spec.
It’s not hard to find ways to make money in a rising energy market. I
don’t have the balls to trade Brent futures. I overweight energy names
in the global stock market. It’s worked pretty well.
I have some investments with funds that do trade energy futures (a
“macro” directional fund). They’ve been doing great. I have nothing to
do with their market bets, but since I (and many others) provide the
equity I have to take some responsibility for their actions.
So if the AG is looking for someone who’s hands are “dirty”, well, I guess I’m on the list. If he did look me up, I would tell him that it was the Ben Bernanke that told me to do it. If the Justice Department wants to lean on me they also have to lean on the Fed.
If the AG, Eric Holder, bothered to look it wouldn’t be too hard for him
to see that the blame for all this speculating can be laid at the feet
of the Fed. Mr. Holder will not need a PhD in Economics to make this
conclusion. All he has to do is read the FAQ’s on the home page of the Federal Reserve. From the FAQ (link):
Monetary policy also has an important influence on inflation. When the federal funds rate is reduced, the resulting stronger demand tends to push wages and other costs higher.
Ah! This is easy. When the Federal Funds rate is low,
inflation rises. The price of goods rise! So what is the policy on
Federal Funds? Also easy. It has been ZERO for the past two and a half years! What’s the outlook for ZERO interest rates being maintained? That’s easy too!! The Fed tells us every six weeks or so:
Interest rates will be kept exceptionally low for an extended period of time.
So the Fed is telling us in its FAQ that they want goods to go up in
price. Now all they have to do is push me into action as a speculator.
More from the FAQ:
policy actions can influence expectations about how the economy will perform in the future, including expectations for prices
To me, this is pretty clear, hopefully Holder will agree.
The Fed has succeeded in its effort to change my expectations of the
future of my energy costs. With my expectations being influenced, it is
only natural that I would react. When I pay $1,000 to lock in a price to heat my home it is exactly what Bernanke would want me to do. I’m the best evidence that he has that his policy is “working”.
I think most Americans understand that we import half our oil and that
the value of the dollar is a big factor in the price we pay for crude. A
weak dollar causes the price of oil to rise. So what's the Fed’s
policy on the dollar? Once more from the FAQ:
movements in the exchange value of the dollar represent an important consideration for monetary policy--such movements exert influence on U.S. economic activity and prices
Bingo! The desired consequence of the Fed’s monetary
policy is to devalue the dollar in order to increase economic activity.
But that same action also results in higher imported prices for crude.
The only conclusion that I can come to is that higher oil prices are the
desired consequence of Fed policy. Bernanke has brought
me to the water and strongly suggested I should drink some. It's all
spelled out in the FAQs. Its not hidden in some obscure language. Shame
on me (and the President) if I had ignored such an obvious outcome.
The President and the AG need to determine why folks like me are
speculating rather than just blaming me for high prices. When they look
at the facts they can’t help but see that it is Bernanke that’s behind
all that high priced gas. The speculators like me are just the mechanism
that Bernanke uses to achieve his ends.
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Yes the american sheeple will fall for the crap.
Bad things are always the fault of a boogie man.
Complex economic events are beyond the understanding of the average person.
There are still people who believe the best way to control oil prices and ensure plentiful supply is to
institute price controls or rationing.
Dear topcallingtroll:
Because of websites -- I don't want to say "like this one" because no site is like this one -- I believe more people DO know that bad things AREN'T the fault of boogie men, but of the government that we trusted and thought was above venality and corruption. Perhaps that's just something people believed (in "my time") before it was demonstrated to be untrue. But now I think that many, many more DO know that these things "don't just happen."
By the end of 2008 I didn't think I could possibly become more cynical. But guess what? I have, and I expect things to get worse, not better, before they... probably go from worser to worsest. I think a lot of folks think so too, or at least a lot more than did at the end of 2008.
I agree that the internet and websites have improved understanding. But far and away the general public (sheeple) does accept that "speculators" drive up prices. And a politician that cracks down on speculators is doing a good deed. fnord
Politicians "SAY" that they're gonna crack down os speculators until they find those very same speculators are funding their re-election efforts -- political eyewash to placate the Ignorati, nothing more!
You're right of course. Politicians saying and doing differently is so second nature to me, I didn't even think of saying it explicitly.
Especially when the boogie men are banker-gangsters causing economic dislocation from the comfort of their little unregulated, untaxed gambling dens.
Commodities profits are untaxed? So if I buy gold and sell it for a profit, I don't have to pay taxes? I hope you don't prepare taxes for a living.
What a fucking prevaricator you are. If you're going to intentionally misrepresent me, at least do so cleverly.
There is no tax on the hundreds of trillions of dollars in daily derivatives turnover, which the banker-gangsters have bribed everyone imaginable to preserve.
Since when have daily trades ever been taxed? Again, I hope you are not in the tax preparation business.
They never have been.
And thats a problem, Skippy, especially since the fucking morons who satisfy their gambling addiction with government largesse end up running the economy off a cliff with their jerkoff computer programs every few years. If the government won't get rid of these parasites, AT LEAST tax them.
After all, it's not all about making money to afford YOUR coke-habit and YOUR whores, sun tzu. Real people in the REAL world who do REAL work actually use the stuff. If you want to buy 10m gallons of gasoline for delivery tomorrow, that's fine: you can post 100% margin unless you're taking delivery.
Stop relying on government handouts and put YOUR money where you're big fucking mouth is.
Dear downwithbanks:
guillotine, yet?
The 'reasoning' (HA!) for banker-gangsters is "I need to make money on something that I don't own in order to support my drug addiction and avoid doing real work for a living".
Don't give yourself more credit than you deserve. There are obvious ways to stop parasites from ratfucking the REAL economy: 100% margin requirements to non-end users would get things started. A turnover tax is step #2, with the guillotine soon to follow.
Turnover tax -- yes, indeed. Excellent comment.
just the other day instead of buying my usual one banana i bought two since not only was it cheaper but i fear the usual rise in the price of banana's and figured "my speculation would be correct that prices only rise vis a vis food" so "i better stock up."
We should use the guillotine on Benocide Bernankebub and shut down his printing presses. My guess is that oil and gas prices would drop.
Common sense? How naive, yet welcome!
Idiotic. In your delusion, you seem to imagine that the oil market is American--in fact, it is worldwide--, and that buyers can drive up the market regardless of supply and demand, which is absurd . Which do you want to outlaw, purchase or sale? Every trade involves both.
The debt-addled derivatives merchants aren't PURCHASING anything, and you know it. They're making bets with their bookies at the London ICE.
Nothing real changes hands when the banker-gangsters shuffle paper (tax free, of course). The hedonistic little coke-heads on Wall St. get paid to bid up real commodities with their welfare checks from Uncle Sam.
To hear you tell it, there's lots of fucking value in that. Meanwhile, these useless dipshits can't even make toast or use a shovel.
If you want to stop speculation, tax turnover to the gills and differentiate the (legitimate) end-user hedging from the destructive mathematical masturbation taking place day in Capitalism's whorehouses by jerkoff quants.
Then cut off their heads.
You have (maybe unwittingly) identified the core of the problem. It is not speculators (we are ALL specs). The problem is that some of the traders (aka TBTF banks) are trading with free money. If the FED was giving me free money, I would be placing bets in commodities as well. Don't kill the specs (which is every person on the planet to some degree), just cut-off the liquidity spigot.
The banker-gangsters run the Fed. Ergo, seize the banker-gangsters 'assets' and shut them down.
Don't they also get paid to bid down real commodities?
We can ban commodities trading in America, but it will continue in Hong Kong, Tokyo, Sydney, Mumbai, Paris, Frankfurt, London, Rio, Toronto and the rest of the world outside of America. You can also ban the airlines, farmers, trucking companies, utility companies from hedging their costs too.
Do you understand the distinction between an end-user hedging on the price of commodities for which they plan to deliver/take delivery and banker-gangsters paper-shuffling with Uncle Sam's money to afford the nights supply of blow and hookers?
A lot of people here understand the difference, but writing Law to cover black and white also puts pressure on the shades of gray -- better that you should support eliminating the Fed and Fractional Reserve Banking, IMHO.
Of course. Eliminate the Fed, and seize the assets of its member banks.
Exactly. There's not a damn thing Obama or Holder can do about it. Even a bonehead like me understands that.
This is, of course, patently idiotic. The President could seize and nationalize the Fed with an executive order, cutting off the supply of drugs to the addicts.
This would be especially just, since the very banker-gangsters spending the most time in the derivatives game are wards of the state, anyway.
The issue is that a puppet of the banker-gangsters would never do anything to harm the people who got him his job.
Hopeless and very naive.
You fought the good fight, spekulatn.
There's a growing horde of troll retards on this site who think the Fed is "private" and that their beloved government should seize it and "nationalize" the banks. They're convient idiots in the chess game for globalized central banking.
They also don't understand that I don't actually have to exchange physical things for a market to clear.
Your big lie, that 'The Fed' is run by government, smacks of either ignorance or deception.
The parasitical derivatives-merchants seriously believe that they matter! They believe that paper-shuffling by drug-addled banker-gangsters drunk on government paper is a vital and unstoppable force outside of anyone's power to control!
Their historical ignorance and mind-boggling arrogance, especially considering they blow up the world economy once every decade or so, will make their fall from glory that much more sweet.
And bloody.
eys the only people awake seem to hang out on this blog.
More people are concerned with britney spears upskirt shots, or who is gunna win the next american idol. Dumb, people...just dumb.
LOL.
The dollar looks horrible here. Those FFT guys have been crushing the market latetly. I am a VIP member and love their technical analysis, but they just uploaded a FREE video of what they think is going to happen in the next few weeks to the S&P 500. Its well worth a watch!
==> http://www.youtube.com/watch?v=Lnt5HuGGcKw
Double top.
i thought an inverted head and shoulders worked as a bottoming pattern. it's hard to look at now in the context of the last two years (or the last fifteen) as a bottoming pattern. topping? yes that is at least a possibility. sentiment also seems more like a top than a bottom. but you never (ever) really know.
Someone with a plan!!
I'm listening.
There is no reason to demonize speculators. They only exist because of cheap money. If you raise interest rates, their business activities will become much more limited in nature because the cost of money will not make it profitable..
nice article pointing out the insanity and irrationality of targeting people for desired actions in an effort to pretend the desired actions weren't desired.
yes, they think we are stupid - a chumptocracy, if you will.
Cheap money exists because of the banker-gangsters.