Here’s a little required reading for my commodities speculation fans, courtesy of Rolling Stone.
It becomes a little more obvious, doesn’t it, why all the great verve to convince the easily fooled that commodities markets are governed by supply and demand? Greed.
I remain annoyed, frankly, that President Obama continues to fiddle while these scandals burn.
But as the article points out, the depths to which people have gone over the past 60 years to turn the commodities floor into a casino where only the ordinary man loses probably aren’t correctable in one presidential term.
Or two. Or three. Or four.
19 Comments
Why GS CANNOT lose:
http://www.zerohedge.com/article/another-view-goldmans-trading-perfection-and-statistical-improbabilities
Also, Fannie CANNOT lose:
http://www.zerohedge.com/article/latest-housing-crash-gimmick-fannies-sale-rentback-nightmare
http://www.zerohedge.com/article/fannie-mae-reports-massive-q3-loss-asks-another-15-billion-government-it-set-become-largest-
As always, the taxpayer is expected to pucker up. The Fed is all about protecting the big banks and GSEs, not the public.
And your solution Bill?
Some kind of government intervention, no doubt.
No government intervention has worked SO well, hasn’t it – for profiteers, but not for the taxpayer, eh?
If there’s a moral to the story, it’s that there’s been bi-partisan support for market manipulation for decades – and that it clearly continues under the current administration.
But please, keep up the free market drumbeat. Just know that there are those of us out here who don’t buy it.
For a minute.
Again Bill, I await your solution.
Why do you think government can regulate the commodity markets better than the markets themselves. Exactly who are these super-smart people that are so equipped to do this regulating?
I know you don’t buy it b/c you are a left-of-center, big governemnt guy. And you make no bones about it.
But it would seem that you could at least offer an alternative. Exactly what regulation do you propose and what would it do?
Gee, when did the definition of “left-of-center, big government guy” expand to include “stop the ripoffs?”
No matter. I always find it fascinating to witness those who defend this kind of corporate gouging, rather like I find it fascinating to watch the impassioned defenses of a health care system in which 30 percent of capital is sucked off by an insurance system that adds nothing of a medical value to doctors or patients.
The fear of killing the golden goose is palatable. I think the Bard put it best: “Me thinks they doth protest too much.”
It might help, for starters, for government to cease being complicit in the plundering of Americans. I know this will come as a shock, but government DOESN’T EXIST PURELY FOR THE PROFIT OF BUSINESS.
But then, that’s what the term “free market” really means, doesn’t it? Somewhere along the line, the definition morphed into “give us all your money” and that brand of greed has to stop.
I once had a new business owner described to me thusly: “He’s very good with a dollar. Primarily, taking your dollar and making it his dollar.”
Sad that’s what America has become all about, isn’t it?
Bill, and your solutions is what?
Exactly what gouging is going on? Who is forcing the people to buy the futures contracts?
Do you really think government health care will be better than what we have?
Sorry you can’t handle and honest debate with very simple questions.
You are complaing about the system but offer no alternatives?
Oh, and Rolling Stone is really your source of commodity info? Do you ever read the Wall Street Journal?
Are you denying you are a left of center, big govt guy?
I would be willing to bet that Bill reads the Murdoch Journal – just as I do.
I don’t think anyone claimed that people are forced to buy the futures contracts. the issue lies in the distortion of the ‘retail’ markets that this speculation causes. And we are effectively ‘forced’ to buy necessities like food and energy.
I agree with you bth. That said, it is frustrating that personal accountability is always left off the table. If gasoline prices are having a negative impact on my lifestyle, I need to adjust my lifestyle accordingly. The people I hear complain the most about gas prices are those that drive from Wellington, Augusta or Cheney every day to Wichita.
Come on, Jerry. You can do better than selectively applying “personal accountability” to those who are forced to purchase energy without any control whatsoever of the artificial manipulation of the commodities markets, let alone those who’ve been encouraged by urban sprawl and easy credit to relocate to suburbia.
That’s like blaming a swine flu outbreak on the people who catch it, although I recognize that kind of rationalization plays well on Wall Street. I know. He who has the money sets the rules. Sorry. Doesn’t make it right – or tolerable.
Blaming a victim for being taken isn’t going to play well here, Jerry. Not any better than a vacant plea for solutions when my original premise stands – the unregulated financial markets have been turned into a playground for, ahem, manipulation.
Now, although we’re not talking healthcare here, I will interject that I find laughable ANY defense of a system that allows a non-essential provider adding NO medical services to drain off 30 percent of the capital inherent in said system.
Pretty simple, actually: Why are private insurers, their lobbyists, etc. afraid of competition?
The answer, fellas, is obvious: The Golden Goose, and all that. All the disingenuous (trying to be charitable here – there are far more blunt words that come to mind) hand-wringing about public options is the same sort of facade we’ve been seeing for decades on Wall Street: A lot of smoke, mirrors and death panels so a gullible American public doesn’t see the better deal is right around the corner.
So, I believe that we now know where we all stand, don’t we?
And for Frankie, you can correctly assume that someone who believes that the unregulated financial markets have failed might like to see a reasonable government, with the best interests of Americans at heart, step in and turn Wall Street back into an investment house and away from a casino where the house always wins.
The American economy didn’t get to this point because of Barack Obama, and its problems are not an “us versus them” issue. It’s a “we” issue, with all due respect – none – to all the special interests jousting to protect their ill-gotten piles of the common man’s gold.
The economy crashed here through a clear bipartisan neglect of rudimentary Wall Street oversight, a neglect that Obama’s administration is perpetuating. Gee, whatever could the rea$on$ be for that?
You said one thing I agree with, Jerry. I, too, am frustrated with the lack of personal accountability in the economy’s collapse.
Except you and I are at opposite ends of the spectrum on where that accountability needs to fall.
See Bill? We’re not “victims”. We are individuals free to make our own decisions. And if we make bad ones, we should learn and move on. If high gas prices are your peeve, move closer to work. Ride a bike. Buy a hybrid. Support energy independence. But proclaiming “we need more government regulation!!!” is akin to saying we need standard government regulation on umbrellas because they cost more on a rainy day.
Is it not true that those that relocate to suburbia do so for the advantage of suburban lifestyle? The further away from Wichita, the more money will buy you in relationship to homes, land and usually taxes. Not to mention safety. One of the trade-offs is gas prices.
The oil producers have the system absolutely gamed. They charge the most they can, without losing their hold on the commodity. Collusion at it’s finest. Speculators have their day once in a while, but they take it in the shorts just as well.
If my credit stinks and I make minimum wage, should I buy a $300,000 house? Should the bank have loaned me the money? Should a insurance company guaranteed the loan? Then the financial institutions take my note and lump it into a credit default swap as they sell it to another financial institution? Because Uncle Sam “regulated” that my initial loan is GUARANTEED by the Federal Government?
It was Buckley who said “a liberal is someone who wants to reach into your shower and adjust the temperature of the water”.
Those little adjustments usually have unforeseen consequences.
jerry – a cmment on commutes. We don’t always have as much control there as we might like. Jobs change – it is not realistic to move across town just because your jo moved. Also, there are often TWO job locatios to consider. You can’t necessarily be close to both of them.
I can, however, chose the vehicle for that commute. If I were driving a Hummer then obviously my gasolice costs would be higher – due to my own choice. That is why I drive a Civic.
Transit would be a nice option – we used that elsewhere. It usually doesn’t work for suburb-to-suburb commuting but definitely should be an option to downtown. Perhaps someday they will decide to equip Wichita buses with headlights so they can run at night. Then transit commuting might become an option.
A comment on mortgages – from an outsider. It seems to me from my reading that a lot of people got suckered in by slick brokers. It has been interesting to see how many of them had joined church groups so they would appear trust-worthy. Madoff did much the same through religious connections. I have used ARMs in the past to stretch my dollars – but with open eyes. Based on 1-year treasury rate plus 275 basis points as I recall. A good option when rates were high in the early 80s. But to get an ARM with some wierd unknown benchmark when rates are low? CRAZY!
Hi bth. I really don’t find fault with anything you’ve stated. I just think you’re statements are founded on “exceptions” and not the “norm”.
Too many people like to pi$$ and moan, period. If gas prices are that high, I GUARANTEE that individual decisions can be made to offset those costs (what? No HBO?). Regardless of the lack of transit, do any of us know people that live in the city limits that carpool? Not many. But maybe we could open a candle factory for those headlights?
Mortgages? What happened to “if it sounds too good to be true, it is”? Yes, there are slick brokers. And roofers. And pavers. And charities. And churches. And family members. And, and, and…
One last point. Let’s say overnight there was a technical breakthrough that all cars could run on a new product (other than oil) for a cost of $1.75 per gallon. Gasoline at the pump would drop to about $1.45, because the oil producers will not be left out in the cold. Which would Americans buy?
And just when is anyone going to focus on the elephant in the room, JOBS?
JOBS – I agree wholeheartedly. In fact, that is related to one of my points – people seeking jobs take them where they can find them. And, from what I have seen, that is the rule, not the exception.
Carpooling often has a similar problem as transit. I not only have to have a co-worker living nearby but we have to work the same hours. I think it CAN be an option at places like Boeing where schedules are set but all too often not elsewhere. I was able to carpool when I worked at that sort of ‘campus’ and I loved it. It did, however, often take us an extra hour on the way home. Something about stopping on the way for a cold one …
One thing that I would LOVE to see is telecommuting. I think that is much more doable than many employers are ready to accept. Can you tell from my post where I am sitting right now?
In the final estimation, Jerry, I suspect that we view the concept of free markets quite differently. There’s theory and then there’s actuality.
For me, it’s a little bit like my dog’s food dish: For four years, I filled it and he ate it when he wanted it.
Then, he became diabetic and I had to control when he got food, and make sure he didn’t get all he wanted.
I’d prefer to trust everyone – until they give me a reason not to. But those reasons happen, so I guess I see our financial services system as “diabetic.”
Well, diabetes (financial services) is certainly a common ailment among the morbidly obese (gov’t).
When will we see your proposal on the regulation of gold speculators?
Bill, and your answer is what?
You don’t trust the players in the marketplace, but you trust government regulators? Really?
You don’t think market participants can make decisions for themselves?
I don’t think any market participant can be legitimately held accountable for the decisions they make in the marketplace when the information available to them is, to put it charitably, skewed. One of the biggest laughs I’ve had recently came from the CEO of a major investment house, who publicly claimed to be doing “God’s work.”
The goal would be to regulate against those who profit by misleading market participants; it would not involve total market regulation. Hopefully, none of you defend those who profit from misleading investors.
I thought the “God’s work” was a bit of stretch myself. Quite the gesture on the part of Goldman Sachs to pass out $500,000,000.00 to 10,000 small businesses. Maybe it makes them feel better about receiving payment (at 100 cents on the dollar) for all of the distressed assets they had insured by AIG. Of course our Federal Government’s bailout covered AIG at full list price (incredibly stupid and irresponsible) which us good ol’ taxpayers get to repay. But what’s 27 billion amongst friends?
When I took macro-econ we discussed the issue of “free markets” at length. We also discussed the situation where there are not really free amrkets – oligopoly and monopoly. Unfortunately that is what we have in the financial markets – oligopoly – WITH COLLUSION.