-
The Politicization Crusade
May 8, 2013 | 56 comments
-
Deceiver in Chief
March 20, 2013 | 204 comments
-
Chronicle of Liberal Disasters
February 25, 2013 | 70 comments
-
President Obama’s Minimum Wage Delusion
February 14, 2013 | 203 comments
-
The Democrats’ Rough Re-entry Into Reality
October 19, 2012 | 148 comments
A Further Perspective
Speculators and Manipulators
Obama’s latest blame game contestants.
Other than killing Osama bin Laden, President Obama seems incapable of taking responsibility for anything. Blaming speculators is the latest iteration in his ongoing crusade to escape responsibility and to change the subject. He has added speculators to a long list that includes George Bush, insurance companies, greedy physicians, big oil companies, “fair share” fugitives, and Republicans in Congress. He should change his name to Barack Oblama.
Obama’s specific charge is that speculators are the reason for rising gasoline prices. Robert Reich, who for some unknown reason claims to be an economist, says that “speculation by U.S. index fund traders has been raising prices by up to $1 per gallon.”
Speculation can mean many things and take many forms. Basically, it is the attempt to profit from price changes.
Confusion about the role and impact of speculation has been common and recurring throughout history. Take, for example, the accusation that speculators artificially increase the price of the commodity in question.
It’s true, of course, that speculators can contribute to an increase in the market price of something by adding to the demand for it. What’s important to keep in mind, however, is that’s only half the picture. A speculator cannot make a profit by simply buying something. There’s no profit in hoarding. There has to be a round trip of both buying and selling. The main objective is to buy at one price, and then to sell at a higher price.
The impact of buying pushes prices up, the impact of selling pushes prices down. There is absolutely no reason to assume that speculators permanently increase the price of anything.
Speculation can benefit the economy in a number of ways, one of which is to allocate resources between time periods. An economy, like everything else, exists in time and space. The value and usefulness of something can be increased by changing the time and/or location it’s made available to users.
The supply of no commodity is constant over time. Prices tend to be low when supply is abundant and high when it’s not. The supply of corn is highest right after harvest time. If all of that corn were dumped on the market at the same time the price would be extremely low. The incentive to use it efficiently would be weak. Months later we could expect a shortage of corn and the price would spike. Speculators anticipate this dynamic. They buy when the supply is abundant and the price low, pushing up the price, and sell when the supply is low, pushing down the price. The net result is that both market prices and available supply are moderated.
Speculators, as such, are not philanthropists. They don’t wake up in the morning asking themselves, “How can I benefit humanity by stabilizing prices and supply over time?” Their actions are motivated by self-interest and profits. In the words of Adam Smith, “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.” The societal and economic value of speculators is not as obvious as for butchers, brewers, and bakers, but it can be every bit as real.
The information and incentives provided by the price system are crucial to the efficiency of how and when resources are employed. Speculation helps short-term prices conform to long-term realities. The economy functions best when we don’t allow temporary abundance to give false signals about what will be true in the long run.
Speculation is one of the factors that lead to what economists call “price efficiency,” meaning prices that reflect all available information. Such information includes expectations about future conditions. For example, if a stock’s price is expected to be higher tomorrow, it will be higher today.
Speculators assume the risk other economic players would rather avoid. A farmer can sell his crop even before he plants it. The farmer essentially transfers the risk (uncertainty) of price fluctuations to someone else. He can focus his efforts on farming and not worry about the vicissitudes of the market.
Speculators usually face intense competition with other speculators. The current price will be bid up until the anticipated profit is roughly equal to the average of other investment alternatives. At a minimum, the expected price change has to cover the costs of storage if they are to make a profit. Furthermore, speculators are not assured a profit. When their predictions are wrong, they lose.
Blaming speculation for high prices reflects the rawest kind of economic ignorance. I couldn’t begin to count the number of times I have been stunned by the utter lack of economic understanding demonstrated by Barack Obama.
Obama and his ilk are willingly and deliberately ignorant of economics and economic realities. Economics is an annoying impediment to their utopian belief system and their political objectives. Obama doesn’t understand how a market economy works, and doesn’t want to know. If he could he would criminalize the free market. He is as clueless as the worst economics student I ever taught, even at the beginning of the class. Obama never lets ignorance slow him down and we all suffer as a result.
Regulations against market “manipulation” already exist and are enforced by the Commodity Futures Trading Commission. President Obama has recommended increasing fines tenfold to a maximum of $10 million per violation, as well as more enforcement funding for the CFTC. According to the Wall Street Journal, “In the past 35 years, the CFTC has brought dozens of cases of manipulation in energy markets. It was successful in proving only one in court.” Besides prohibitions on manipulation, the regulations also prohibit “recklessness” and the creation of prices that are “artificial” (in contrast to being determined by supply and demand). The CFTC has the all but impossible task of proving that one firm has the ability to affect prices on the multi-billion-dollar commodities markets. No wonder the agency has such an atrocious track record.
More regulations and more bureaucracy will not stop imaginary problems that are impossible to define or enforce. They may help Barack Obama distract attention from his disastrous first term, but otherwise they are a counterproductive waste of time and resources.
About the Author
Ron Ross Ph.D. is an economist who lives in Arcata, California. He is the author of The Unbeatable Market. Reach him at rossecon@gmail.com.
Letter to the Editor View all comments (62) | Leave a comment
More Articles by Ron Ross
More Articles From A Further Perspective
http://spectator.org/archives/2012/05/03/speculators-and-manipulators
Follow us:
ADVERTISEMENT
SPONSORED LINKS
FLASHBACK TO: 1995
-
Pope Culture
A man of faith in a godless age is hitting Americans where it hurts.
-
Why the GOP Does Not, Like, Totally Suck
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
-
Dames at Sea
-
In the Absence of Guns
In Britain, defending your property can get you life.
-
The Metaphysical Martini
-
Counting the Costs of Clintonism
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
-
Chuck McHagel
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
-
The Legacy of Old John and Mother Fresh-Roasted
-
It’s the Best Time of the Year
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
-
The Bush Crack-Up
Was the President done in by the economy, or by the politics of the economy?
Clip of the Day
ADVERTISEMENT
Appleby| 5.3.12 @ 6:35AM
Being a socialist, Obama obviously believes that money falls from the sky when angels overturn their golden baskets, and how much you have depends on where you were standing when the baskets were overturned.
Jack in Wi.| 5.3.12 @ 7:22AM
It's an old Democrat game plan to blame the rich and the Republicans for their own monumental failures. Thats what FDR and Truman did. It is too bad that the rich and the Republicans are such big easy targets.
Doctor Detroit| 5.3.12 @ 11:49AM
then why are you voting for him?
eric a| 5.3.12 @ 6:37AM
You write that Obama's blaming of speculators for price spikes caused by his bad economic policies is from "ignorance". But there is ample evidence that Obama understands how the free market works, but chooses to undermine it and then attack it for the failures caused by monkey-wrenching socialism. Classic Marxist playbook. I think he is still the same college Marxist he was when age 21, sharing the romance of international revolution with his imaginary ("composite") girlfriend.
And just as the international communist friends of his youth noticed him quietly "distancing" himself from them as he began to think of elective office, today's cagey Obama hides his true heart's desire: replacing market functions with socialism. If only you dumb-cluck voters would quit impeding him with your constitutional republic.
DTOM!| 5.3.12 @ 7:21AM
Mr. Ross;
Excellent article. I ask this question:
Would not limiting futures markets to those willing to accept physical fulfilment of contracts sideline the pure gamblers?
I recognize that any restriction would be hard to enforce. But do you think that the real threat of having a lot of pork bellies dropped off at one's office, or being sued for a simple breach of contract for failing to deliver that lot of pork bellies might be a heckuva lot more enforceable?
Yes, I recognize that this restriction would reduce the number of futures pit players. But when Geo W Bush announced in late September 2008 that the US was going to drill in our offshore fields the open market price of crude fell from $145/bbl to about $35/bbl in two months or less. I still have a hard time accepting those price impacts as having been reflective of real cost impacts...
Regards,
Don't Tread On Me!
TLP| 5.3.12 @ 11:09AM
He is responsible for the Economy. He's responsible for the Price of Everything. Increases, such as Food, Clothing, Fuel, and Health Care, as well as Decreases, such as our Home Values, our Savings, and our Incomes.
He got rid of our Manned Space Program. He is Gutting our Military. He sat on his ass, while Oil, from a Rig that He gave Environmental Impact Study WAIVER, and a SAFETY AWARD to. An Oil Rig owned by a Company that He got more Money from, than anyone else.
These are His Deficits. That's His $5 Trillion in New Debt, in then last 3 Years. These are His Poverty Numbers. His Foreclosure Numbers. HE is the Food Stamp President.
Everything else is just DISTRACTION.
The sooner our side learns to BLOCK OUT all of the Backround Noise, and to FOCUS on the Cold, Hard. FACTS, of the last 3 1/2 Years of THE ONE?
The sooner this piece of Human Debris can go back to his worthless life, in the Soddom that we call Chicago, with that Imperious Sack of Sh*t Wife of his, with her $600 Sneakers, her $3000 Handbags, and her $5,000 Evening Gowns draped over wide load Ass, while the rest of us try and climb out of our latest encounter with a Democrat Party that will never be satisfied, until most of us are behind Barbed Wire, dressed in rags, with a Government Tatoo on our Forearm, and awaiting our turn in the Shower.
Doctor Detroit| 5.3.12 @ 11:51AM
good point on the oil rig. had this been Bush, it would have been a monumental scandal. It's what the media DON"T cover that is the most damaging aspect of liberal bias.
numbatdog| 5.3.12 @ 7:42AM
When a speculator gets up in the morning, he/she thinks about only one thing -
"How can I maximize my profit today"
When shopkeepers gets up in the morning, they think about only one thing -
"How can I maximize my profit today"
In fact when almost every working person in the USA gets up, they think the same thing. That sentiment, self interest, is what produces and sustains a Capitalist economy. The drive for personal profit maximizes production, innovation and productivity. It produced the most vibrant economy on earth.
In socialist (and government) circles, profit is a dirty word. Something to be ashamed of. Too much of it and you become a hated millionaire or billionaire.
We are now so deep into leftist group-think that a large portion of the population thinks it is government, not profits that sustains our country.
We had better wake up quickly before it's all gone.
Von Mises Jr| 5.3.12 @ 10:32AM
Mises in "Human Action" and Friedman in "Money Mischief" explain how price fluctuates due to money manipulations causing inflation sending false signals to the market. When inflation brings more dollars into the market, the producers mistake it for increased organic demand for their product. But they do not know and cannot know that all prices are rising. So the mal-invest by producing more, only to find out input costs go up in 9 months. Then it becomes an upward price spiral to make real profits.
The same applies for speculators. Because they smooth the supply, false signals are avoided as much as possible. They create stability for this reason.
numbatdog is correct. Obama may not understand Austrian Economics, but Soros does. He crashed half-dozen currencies. What a scumbag. So the socialist portray profit as a villain since that is the same profit they intend to steal by fascist control of markets. Revenue less Cost of Goods Sold less Operating Expense always and everywhere is the profit. They can't change supply and demand, but they can demonize profit in order to confiscate it?
Dmac | 5.3.12 @ 12:25PM
numbatdog,
Wouldn't you say that too much greed can also scew the market up?
When a prostitute gets up in the afternoon, he/she thinks about only one thing-how can screw someone for more profit.
Our business philosophy has to be one of morality. Making a profit is fine, screwing American society in the process is not.
Mike 3/505| 5.3.12 @ 12:53PM
"Our business philosophy has to be one of morality. "
In business, that "morality" is called "property rights" and "contract law." If both of those are enforced, preferably without the government going ouside the rules, the "morality" will take care of itself. It's when the Government usurps the rules, as in the case of the GM takeover, that "immoral" things happen.
Regards,
Mike
Dmac | 5.3.12 @ 2:13PM
I totally agree that the GM takeover was wrong, I also feel the bailouts were wrong.
numbatdog| 5.3.12 @ 8:56PM
Dmac,
Why are you automatically equating profits with greed?
Market demand and competition ensures that the profit margin is correct. Too much profit and you lose market share.
The greed comes in when competitors collude to control the market or price.
That is what oversight regulations should stop. Not to create or determine which markets should succeed and which should fail.
That is the job of the consumer. Not the authorities.
fiscal| 5.3.12 @ 7:50AM
Mr. Ross, you demonstrate old, school taught, theoretical premises. You explain how speculation is supposed to work, but in fact, it doesn't work that way anymore because of split second trading by supercomputers and hedge funds. Just like our experience with mortgage derivatives, large hedge funds and investment banks "insure" their bets with swaps and shorts and gain a virtually guaranteed profit on the margin. It is no longer speculation as we experienced in the 20th century -- and that is the problem. You claim that eventually order must come to the market and that is true, but order today does not come in short periods of time, it comes with delayed bubbles because, as Alan Greenspan learned, there is too much institutional exuberance. We can get rid of these artificial price manipulations and make speculation work properly if we get rid of supercomputer trading and hedge fund "insurance" vehicles. But alas, most people, probably including Obama, understand only the schoolbook premises to which you subscribe. I learned the same theory in school, but actual work in the industry taught me what really occurs.
As said earlier, forcing people to "take delivery" or regulating short term trades could cause the speculation market to work properly as you described -- but that is not the case at present as there is very little trading risk for the very large investors -- and only trading risk makes markets work properly.
The fact is that prices are rising faster than normal speculative pricing due to the way large investors trade today. They are properly taking advantage of Middle East instability and rising demand in developing countries, but also hyping up the amount of increase through modern trading loopholes.
So in the end, while Obama is wrong that speculators are causing ALL of the rise, he is right that speculators are causing a more than normal increase in prices that will only come crashing down when the bubble bursts perhaps in a year or two.
DTOM!| 5.3.12 @ 8:25AM
oh, fiscal,
Weren't "mortgage derivatives" nothing more than a fancy paint job on a bundle of bad debt? And those who bought them the fools, because they trusted the sellers? And the sellers viewed themselves as the victims of unscrupulous mortgage lenders and ersatz homeowners? So it was okay to pass the bad money along to somebody else? Just don't get caught with the bundle of bad mortgages when the music stopped? When will it stop? It will eventually.
Anybody remember the great S&L crisis of the late '80's? Of course not - they stopped the music, the bad assets and their attendant losses were recognized and the good assets were separated from the bad and fairly, freely sold. Problem solved and forgotten. The whole process took about two years and cost a heckuva a lot less than estimated. Adults handled the problem in an adult fashion.
One 'hopes' some adult will show up at today's FM and FM crisis, soon.
So fiscal, And the "school book" premises are still true, it is the current markets that are no longer fair.
Fraud, deceit, misrepresentation, and theft are the order of the day. Especially as practiced by the federal government. Find a GM bondholder, ask him.
Today is no reasonable recourse for fraud, deceit, theft. The courts no longer enforce contracts against those wishing to escape commitments they freely made so long as they have sufficient legal tenacity and capacity (i.e. legal staff on salary.)
The speed of computers does NOT matter, it is the complete lack of integrity of those making the deals. It all started when we had to start taking "Ethics" courses in business school.
If your mom and dad don't teach you ethics, no business school can ever.
Don't Tread On Me!
Stilton A. Cheese| 5.3.12 @ 11:15AM
Mortgage backed securities (not derivatives)came into being, I believe, in the 1950's when everyone had a 30 (or 15) year mortgage with 25% down and low default rates. They became popular with institutional investors because of the cash flow they generated.
Indiana Alex| 5.3.12 @ 9:12AM
My response didn't show up accordingly, but reducing market participants is a way to increase, rather than reduce price volatility.
TrueBlue | 5.4.12 @ 10:12AM
Exactly. The less people involved the easier it would be for them to get together and manipulate the prices.
Indiana Alex| 5.3.12 @ 8:30AM
This would also significantly reduce liquidity in the markets. It would indeed reduce "speculation", but in reducing liquidity, would also increase price volitility.
Reduce the number of buyers or sellers and the buyers or sellers can't be selective as selective about price.
DTOM!| 5.3.12 @ 10:12AM
I agree that reducing the number of buyers and sellers with rational, similar motivations would increase the volatility.
But would the inclusion of buyers and sellers whose only objective is inducing volatility in the market increase or decrease volatility? I suggest that they would increase volatility, not decrease it.
Remember the auction scene in North by Northwest, in which Cary Grant starts bidding quite irrationally? Including crazy people with little 'skin in the game' in a market is not a good thing.
Should markets be open to those intending to distort or destroy them? It's really not much different than freedom of speech issues. Should we let anarchists speak out freely?
Yes, we should, but that's because their speech, while entertaining, is not implicitly harmful. We do not let people shout "Fire!" in crowded theaters because it's not funny and it is very harmful.
So back to gambling options traders: are they shouting "fire" or are they funny anarchists?
I'm thinking that markets should police themselves to keep gamblers out...You can't just walk into a trading pit and start bidding, can you?
But as surely as you can't walk into a pit and start bidding, you cannot maintain order using government authority. The traders will always outmanuever any ham-handed legislation the economists in Washington concoct. It has to be done by the traders themselves.
Gotta go...
Indiana Alex| 5.3.12 @ 1:25PM
I don't believe the motivation of the buyer or seller means anything to the person on the other end of the transaction. I also believe that anyone trading on an exchange has "skin in the game". "Irrational" buying or selling will not amount to a long or prosperous career.
But let's please return to the notion that "speculator" in the futures market, (leaving aside of course the fact that one could consider the act of engaging in any futures contract speculation) is manipulating prices in the cash market.
Let's look at it from an intro to Econ level of Freedman's "Pencil" lesson. Now with everything that goes into the pricing of something like oil, to even suggest a quantifiable impact to the market from something as vague as "speculation" is an exercise in economic ignorance.
DTOM!| 5.3.12 @ 4:02PM
You cannot overlook the $145 to $35/bbl price fall in September-November 2008. That big of a swing was accompanied by no real, physical situations other than Democrats setting Republicans' hair on fire...
Jack London| 5.3.12 @ 8:33AM
Amazing. No mention of Enron. The author must have amnesia or more likely is happy to push the usual lies.
Indiana Alex| 5.3.12 @ 9:10AM
Good lord Moe, do you not recall that the Enron fiasco was addressed by Sarbaines/Oxley, which had absolutely nothing to do with the subject, or "lies" at hand?
But please, regale us with your regurgitated talking points on the impact of "speculators", on market pricing, and please include a sentence or two on how speculators can only drive prices up, or at least are only a problem when they do so.
Jack London| 5.3.12 @ 10:21AM
It was Enron that lobbied for the 'Enron loophole' to exempt energy speculation from regulation. That was partially closed but Obama pledged to bring energy speculation fully into regulated markets.
It's because of the toxic effects of energy speculation that Argentina has recently nationalised its main oil company. It's profoundly undemocratic for vital interests to be stripped and traded by faceless suits in Wall Street and London.
Oldefarte| 5.3.12 @ 11:04AM
http://youtu.be/U6DVOqdayU8
Indiana Alex| 5.3.12 @ 12:07PM
Jack,
To be a useful idiot you have to be somewhat "useful".
"It's because of the toxic effects of energy speculation that Argentina has recently nationalised its main oil company."
This might be the dumbest thing ever expressed on the internet.
Jack London| 5.3.12 @ 12:56PM
Not as dumb as saying something is dumb and then not saying why. I can back my comment up with expert references. I expect you're only backup is to play even more dumb.
Indiana Alex| 5.3.12 @ 1:39PM
I can't say what's more interesting or entertaining, the fact that such an excuse was used to steal someone else's assets, or the fact that it has actually been repeated as fact.
Of course from your perspective government seizure of private capital is to be celebrated, and excuses can be provided later.
Then of course there's the ubiquitous "drilling in the US doesn't help because oil is sold on the global market", but confiscation of one company's assets will solve the speculation problem in Argentina.
You guys really have to tie yourselves in knots to try to defend your bankrupt ideology. Get a clue, it's not that complicated, and it actually makes sense.
Jack London| 5.3.12 @ 3:48PM
So what you're saying is that even if private speculation strips your country's assets, or those assets were corruptly sold, or speculation causes financial meltdown as in 2008 you should sit by and do nothing? You have no cojones my friend.
For the latest I've seen on this - and if you're prepared to think (a tall order I know) see this article from a top British academic:
http://www.guardian.co.uk/comm.....na-bolivia
From the Desk of Media Matters| 5.3.12 @ 5:58PM
Ding ding ding ding ding ding!
And the round of golf at Pebble Beach all costs covered by winning the bottom rung MM mindless retarded parrot office pool goes to MM staff!
A 'Guardian' article?
A top British academic?
Whose major career contribution to date is
"Imperial Science and a Scientific Empire: Kew Gardens and the Uses of Nature, 1772 - 1903"?
MM staff loves speculating on the despicable lying stupidity of our bottom rung MM mindless retarded parrot pathetic idiots and manipulating their office pools.
From the Desk of Media Matters| 5.3.12 @ 1:58PM
PA PING!
From the Desk of Media Matters| 5.3.12 @ 1:23PM
Dear Indiana Alex,
MM staff begs to differ.
MM staff gloats that that sentence is extremely useful as the proceeds from MM staff's victory in one of the bottom rung MM mindless retarded parrot office pools can attest.
MM staff now has the cash for a new 64 degree wedge baby.
Ca Ching - er - Pa Ping.
And MM staff notes the day is young, the bottom rung MM mindless retarded parrots love office pools, MM staff loves winning bottom rung MM mindless retarded parrot office pools, there are several more bottom rung MM mindless retarded parrot office pools still pending, and pathetic humiliated degraded debased disgraced stupid lying idiots like Jacquelina Maddow-Moscow Penelope Pansy Wasserman-Pelosi Barney Fecal Barney-Dooddie PePeLePewLeAss Brooks Any And All DReadfulness have no shame and doubtless will provide a plethora of posts as the day progresses - er - regresses.
MM staff loves earning a profit off of the abilities of the asses - er - masses according to their deeds - er - posts.
- MM sta . . .
. . . aaaaand . . . just like that MM staff has just been informed of a brand new bottom rung MM mindless retarded parrot office pool that has all the bottom rung MM mindless retarded parrots carrying on idiotically as if it they were at Chicago's Grant Park in November 2008 all over again.
MM staff wants to speculate on
'the expert references'
that Penelope Fecal DRachel PePe Le Jacquelina Cheerio is going to use to
'back up'
his
'comment'
and manipulate bottom rung MM mindless retarded parrot office pools for some more toys.
- MM staff
From the Desk of Media Matters| 5.3.12 @ 9:58AM
Penelope Pink Putz Rachel Fecal Barney Fecal Maxine Jacquelina Wasserman Schultz Pantywaste Maddow Moscow Pelosi Pansy,
Even our other bottom rung MM mindless retarded parrots look vorwarts to the great leaps you make helping us in winning the future on which we can't wait by regaling everyone on speculation.
Even our retarded bottom rung MM mindless retarded parrots look vorwarts to these great leaps helping us in winning the future on which we can't wait so you can then regale everyone on the scientific fact of anthropogenic global warming and the economic fact of the superiority of British and Canadian healthcare.
Our other bottom rung MM mindless retarded parrots look vorwarts to these great leaps of delusion because our other bottom rung MM mindless retarded parrots have several office pools pending your inevitable responses.
MM staff meanwhile looks vorwarts to the great leaps you can make helping new hire Barney Fiscal Fecal in winning the future he Fecal Barney Fiscal assured MM staff that no one would ever suspect he was just another MM troll adept in the lingo of finance and economics we couldn't wait to prove.
MM staff looks vorwarts to we can't wait winning the future of several of our bottom rung MM mindless retarded parrot office pools by betting on how pathetically humiliated and degraded and debased and shamed and disgraced you are willing to leap to be.
Stop embarrassing and discrediting the art of trolling.
- MM staff
randyinrocklin| 5.3.12 @ 11:03AM
ummmm....Jon Corzine is the epitome of a "speculator" after losing billions of other people's money in MF Global. So instead of enforcing present laws against this crook, where he should be in jail, he is bundling campaign cash for Oblama. Nice work Barack.
gene| 5.3.12 @ 11:22AM
How many more people can he point the finger at?
The blame game. It did not work for President Jimmy Carter. It will not work for Obama. The Republican candidate has not yet won the Election. But he can throw it away and lose it unless he starts looking liking Reagan in a big hurrry. The Democrats need to call up Carville, bring him in, lose the high minded attitude and do everything he recommends. I doubt it will happen.
Dmac | 5.3.12 @ 11:44AM
Mr. Ross,
Your theory on specualtion the speulation of oil misses a few points.
First, you're talking about oil. Not oranges or pork bellies. Some years there is an over abundance of oranges and pork bellies, other years not. Since OPEC regulates its output there is no over abundance. Every drop of oil is sold. Therefore specualation would have a more dire affect on the price of oil. Speculation produces a false urgency for the delivery and need of the oil and does increase the cost and does it for no gain except to the speculator. Being that all modern economies are based on their energy cost, speculation also creates a rise in the cost of every product produced. Let me repeat that, speculation of oil(energy) causes the price of every item produced to rise. Can you say that about oranges or pork bellies? No.
I really don't care if it's Republicans or Democrats, neither has a plan or have developed a plan that is sound energy policy for this country and the citizens of this country. For some reason we all seem to get lost in the specualtors right to make money, but American society has a right to expect its government to protect the products we produce and the products we buy from being inflated in cost because a few specualtors.
If you agree that un-regulated specualtion is okay, then you would have no problem if there were only one oil company, one power company, or one political party.
Jack London| 5.3.12 @ 1:23PM
Very well said. You'll scare people here though - they don't like reading about facts in their bunkers.
From the Desk of Media Matters| 5.3.12 @ 1:34PM
PA PING!
MM staff loves when bottom rung MM mindless retarded parrots show no shame!
Indiana Alex| 5.3.12 @ 1:44PM
Do you know why there is not an "over abundance" of oil produced, or why gasoline inventories in the US have varied very little for the past 15 years?
There is actually a market at work here, and it's bigger, badder, and better than any "speculator" or hedge fund that might want to take a run at it.
Well, maybe Soros could. Maybe.
Dmac | 5.3.12 @ 2:25PM
Indiana,
What i don't ubderstand is why, if we are exporting gasoline, and we are the worlds largest exporter of it, why is the price so high? Why do we not have some kind ofpolicy in this country that recognizes how the cost of energy affects everything we as country produces and everything we as consumers buy, and do something to keep the retail price of gasoline at a reasonable level in the U.S.?
Why do 350 million Americans have to pay an inflated price for gasoline, and put our country's econimic future in jeapordy so that a very few can become obscenely wealthy? Is there some point that we as Americans say to these corporations, "hey, you're fucking with our lives, our livelyhoods and the wellfare 9of the nation and we're damn tired of it!" Grat, you wanna get rich, go for it, I'm all for it. I'm just tired of the lies we hear from these people in the quest to get obscenely rich. Just how many millions does an individual need to happy and content, or put another way, just deeply do you need to screw over the average American to feel good about yourself?
There seems to be no morality in our corporations or by those who run them and there certainly seems to be no morality left in out government. I know I'm ranting, but you can pump every barrel of oil the earth has out of the ground tomorroe and the cost of gasoline will still be over $3.00 a gallon in the united States.
Here in Houston there used to be a quiet deal, you can pollute the air, just make sure our gas prices are reasonable. Now Houston has the highest gasoline prices in the state. The shipping cost are less since it's just a drive across town from the refinery to the pump so it should be the least expensive gasoline in the state. The reason we hear now is "supply and demand". I've got news for the oil companies, you already sell all the you produce so the price should be the same everywhere with the difference being the cost of transportation. I'm just sick of the lies.
Bill| 5.3.12 @ 12:20PM
That's free market, baby, believe it or not!
Sugartown Super| 5.3.12 @ 1:50PM
DMAC's painful ignorance is revealed in the simple statement: "Since OPEC regulates its output there is no over abundance." Anyone with any actual, working knowledge of the physical supply of crude oil / refined products in the world today is ROFL at that howler. While speculaton clearly can distort markets in the short term, ultimately it rationalizes the marketplace value of the commodity in question. When users / producers are free to hedge their exposure to price fluctuation in the commodities market, everyone benefits. Southwest Airlines is case and point: the airline hedged its JP-1 requirements and was thus able to lock-in their fuel costs over the long term. The profitablity of the airline was often assured by either selling their paper position or taking physical delivery. Their counterparties were rarely, if ever oil companies. Enron expolited the fact that there were too few counterparties in the futures markets in which they operated. They also were cooking their books and playing 3-card monte with their cash.
Sugartown Super| 5.3.12 @ 1:51PM
Sorry; that should be "Enron exploited..."
Indiana Alex| 5.3.12 @ 2:08PM
Agreed, painfully ignorant.
While I will agree that speculation can distort a market in the short term, I would suggest that liquidity is the ultimate guard against this type of speculation.
I think the type of speculation, or at least futures speculation, that can distort a cash price, would be in an OTC market, or at least a market with little liquidity.
Sugartown Super| 5.3.12 @ 2:13PM
The oil markets are particularly balanced between the regulated futures markets in London and New York and the effectively OTC un-regulated futures markets in such markets as dated Brent and Boston Hbr gasoline.
Dmac | 5.3.12 @ 2:32PM
Then please explain to me how you can buy gasoline for $2.80 a gallon in Mexico? Some people will make any excuse for the oil companies to screw us, and yes, they are screwing the American consumer.
Indiana Alex| 5.3.12 @ 3:09PM
Most of the business in Asia is done OTC as well.
Bill| 5.3.12 @ 3:40PM
OPEC is controlled by some fanatic Arabs, and all we can do drilling to reduce their influence in the oil market. OPEC is a cartel, set up by the Saudi Monarchy to finance Jihad against America and Israel. Islamic-Nazi regimes will do anything to sabotage our oil industry, and so we need to drill now.
Dmac | 5.3.12 @ 2:37PM
By the way Sugartown,The U.S. consumes less gasoline now than we did ten years ago, but we produce more of it. Yet the price is up in the domestic market. Explain yourself out of that with your non-related B.S. about SW Airlines . Two totally different types of business. Sw Airlines does not sell every seat on every flight. The oil companies do sell every gallon of gasoline they make. They actually have closed refineries in the U.S. down so they don't produce enough to cause the price to go down. They have years of experience of how to manipulate the markets and they're damn good at it. But it hurts the nation.It hurts the young people trying to get started. It keeps young people from being able to save and buy a house andhousing is what brings up almost every sector of our economy.
Indiana Alex| 5.3.12 @ 3:09PM
They closed the east coast refineries down because they couldn't make a profit with them. The refining costs were too high for the kind of crude that makes it to that part of the country.
It's far easier to make a profit exporting gasoline, mostly because you don't have to worry about making different blends for different countries, or different times of the year.
By the way, have you bought any May blend gasoline yet?
Pat| 5.3.12 @ 5:20PM
Indiana Alex: You’re absolutely correct, gasoline is a commodity, meaning that you can burn it in Canada, Italy or Singapore – except here in California where we have special additives whose formulas are known only to Friends of the Democrats. But the naïve concept that a local oil well pumps it out, ships it to a local refinery and then the local price at the pump is correspondingly lower because it was home grown ignores modern business practices. Oil companies trade with each other in petroleum just as with any commodity.
Shipping the actual oil is expensive so Chevron in California can trade oil with BP in Europe, but the oil doesn’t move an inch – it’s all traded on paper after some dickering over price. That’s the convenient feature of a commodity – it doesn’t matter where it is produced, what matters is where the immediate demand is. Chevron can utilize local oil supplies in America owned by B. P. and vice versa. Consequently, gas stations in Europe can pump gas and diesel from local reserves in their part of the world owned by Chevron and Chevron gets a world market price from the European oil company which needs it for their local retail/wholesale outlets – everyone is happy and the geographic supply and demand balance is handled with enviable efficiency.
Just as with gasoline, Americans consume millions of gallons of coffee annually. But we don’t grow a single bean. No Blue Ridge Mountain blends, no Malibu dark roasts – no American coffee plantations for as far as the eye can see. So, if the naïve economists who write comments for this website had their way about gasoline producers then we Americans should be paying $150 a pound for a bag of Folger’s and $25 for a Starbucks non-fat, no whip latte.
POST American| 5.3.12 @ 11:22PM
-----Son of Globalist CIA--linked Ann Dunham
--------Object of 'mysterious' benefactors
-----------Harvard/Princetone 'innie'
--------------Former aide to none other than
Henry Kissinger
------------------POSSIBLE stealth clone and
EUGENICS homage to the very godather of
CFR Globalism, and director of Soviet and
MAOist empowerment ops
---the 'uncannily' absent from discourse
-----------------AVERELL HARRIMAN-----------------
AGAIN good people ---BEHOLD!
-------------'BAR--Rockefeller' H. Obama!-----------
Cross of Gold| 5.4.12 @ 12:29PM
There is NO reason Americans should be allowed to speculate in oil futures! I don't care if your Roosevelt or Reagan. Back in the day of the "gold standard" Americans could not speculate in gold. Period. I fail to see the difference between gold then & oil now. I consider myself a Reagan conservative, but opposing this particular Obama initiative is just another example of knee-jerk conservatism. Oil speculators in the U.S. are killing the lower & middle classes. That's NOT Reagan conservatism. Reagan used the markets, I think they call that supply and demand. Speculation is NOT supply and demand! It is capitalist elitest creation that generates a profit for an very very small few at the expense of creating real wealth in our economy, IMHO.
zamoracarl| 5.4.12 @ 7:51PM
just as Rose explained I didnt know that you able to profit $4638 in a few weeks on the computer. did you look at this web site M a k e c a s h 16 . c о m
jiml| 5.6.12 @ 5:44PM
I have a "?" Who the helli s this obama? We know whaat he is..a fraud and deceiver!
allen69 | 5.30.12 @ 10:52AM
Other characteristics getting looked over are the shoes are easy to place on and that they assist the normal mid-foot http://www.freerunningnike.org.....-c-13.html through the foot. Just like any shoes, be sure they have been fitted correctly.