Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
its alot more complex than pushing paper. those contracts are insurance for millions of businesses.
im in the electrical supply business and we have a huge copper wire inventory.
we use futures contracts to hedge our inventory . since we have to drop our prices with the markets we need to insure against loss with these contracts . we dont want delivery ,only hedging.
That's all good and great, but it's still the fundamental problem. That speculation, that "hedging", is artificially propping prices up. You just don't want to take it in the shorts, which is fine. Lower your capacity then. Oh that's right, that's not as efficient during the good times.
Nah, I think it IS that simple. We need to put an end to commodities speculation. Alas, we the sheeple have no pricing power, broke as a joke. The closest we get to hedge against this joke of a policy is play online poker at home.
You know, there is such a thing as National interests. This ain't orange juice, this is the mechanism by which the dispossessed that we call the american proletariat get to work and thus maintain the façade under which the rich and influential play golf during the week, free as a bird under the rule and law that the poor provide on their backs. But Wall Street is too snot nosed and greedy, they won't even leave that alone. They'll fall collectively once this country turns into Colombia and you need to go to the mall in an up-armored Humvee just to buy your teenager thongs at the American Eagle.
Wait until the working poor can't afford to put gas on their recreational vehicles (RV, boats, ATVs). The masses of idiocrats will torch this playground so swiftly it'll make the French Revolution look like a high school play. Don't eff with the poor's beer and circuses, rule #1 of income disparity management.
That hedging helps hold prices down for many many products that would have wild changes as well as helps companies plan.
Mattel locks in a budget as an example for a year to operate on because they do currancy hedging. They dont worry about currancy fluctuations upsetting their world wide marketing plans.
Kellogs hedges corn pricing allowing smooth planning regardless of where the price of corn goes . They can hold prices steady until those contracts expire.
Funny no one complains when price are falling.
whether there are speculators , short sellers or investors this is what makes free markets work good or bad.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,720 posts, read 58,054,000 times
Reputation: 46185
Quote:
Originally Posted by Willy702
Oil is going up because of dollar devaluation. ...
This is the main issue. Dollar 'valued oil', and a weak dollar, and a HUGE oil reserve (i.e. OPEC's piggy bank)
Quote:
Originally Posted by hindsight2020
Speculators pushing paper contracts and not a single physical barrel moves. ... Put an end to the silly casino games in a second. We're rewarding our smart people to go into that casino, we need to put an end to that too, but that's for another thread.
Also true. No dis-incentive YET for the financial crooks bringing USa the financial crisis = They will continue to rape us (the worker-bee / serfs).
Wait until the working poor can't afford to put gas on their recreational vehicles (RV, boats, ATVs). The masses of idiocrats will torch this playground so swiftly it'll make the French Revolution look like a high school play. Don't eff with the poor's beer and circuses, rule #1 of income disparity management.
I've been predicting a scenario where the working poor are totally hosed by a confluence of unaffordable rental housing which forces them to move further away from their jobs (we're on the way there), soaring fuel and energy costs (making their now-longer commute unaffordable), unaffordable food, and unaffordable healthcare.
We seem to be going in that direction faster than I had expected.
its alot more complex than pushing paper. those contracts are insurance for millions of businesses.
im in the electrical supply business and we have a huge copper wire inventory.
we use futures contracts to hedge our inventory . since we have to drop our prices with the markets we need to insure against loss with these contracts . we dont want delivery ,only hedging.
Dollar devaluation and increasing demand (corrected: SKYROCKETING demand) from developing countries are driving up prices. China has 1.3 billion people. 350 million of them now have more money than they ever had before and want to spend it. They're also getting credit cards and nontraditional loans to get nice clothes, nice stuff (mostly imported), nice cars ... and BINGO! More cars. GM is the fastest selling brand in China. Why? Same reason American cars used to be the fastest selling cars in Japan right after WWII. Bling bling. Status. And boy are those cars thirsty.
The "speculators" are driving up prices a bit but they are really just insurance ... they supply oil to those who need it (or insure those who want it) so that way we don't have the price of groceries and just about every single item you can think of going up and down with the price of crude.
That's a free market economy. Insurance is to make sure that people AREN'T socked with a HUUUGE bill one week, then rush to buy the next because of drastically falling prices. You can hate on the insurance contracts and "speculators" all you want, but the reality is, we need them to bring price STABILITY. This stability and conservatism in estimating futures are why the price of oil may fall but gas prices are still high... it takes time to catch up.
You want a target to shoot for? Look no further than the Fed. Helicopter Ben would rather see Zimbabwe like inflation rather than deflation and the myth that gradual deflation results in a stagnant economy when said populace is growing (Japan is different in that they are a nation of savers and aren't having babies ... Americans are spendthrifts and are having babies, or at least hte immigrants are). More dollars floating around = more dollars it takes to buy things. Simple.
This part is salient to this thread about speculation and inflation.
It's pretty hard to argue that what he describes is not what is happening.
For those of you interested in the reality side of things, here's the scoop: The price of oil is going to go way up, and way down, and way up again, and way down again until everyone is too broke to ask for any, and companies are too ruined to go get it for them, and governments are too broken to interfere in the process.
Ok, no argument with Kunsler's MOTO (master of the obvious) observations here. In the math and engineering world such a system is called Under-Damped. Each prior oscillation provides feedback into the next (higher and higher and lower and lower) cycle, until the system flies apart or explodes.
Sort of like what a car with no shock absorbers (and just springs) looks like going down a bumpy road. Each bump makes it bounce higher, on top of the prior bounce, until it just bounces right off the road.
For a sample of what Under Damped Oscillation looks like in the real world.
Simple. If you plan on buying a lot of gasoline in the future year (or so) buy a single gasoline futures contract. Something 5000 gallons, last time I looked, and it only costs something like 5% down. That fixes the price for you for the year.
Of course, if the price goes down, you have still paid for the higher price you contracted for. But that is exactly what the "evil, greedy" speculators are doing.
No free lunch.
If you really want to save a LOT on gasoline and Oil -- just stop buying the crap. Instant win. Won't just save you from the rise in prices, but rather the entire amount. THAT can pile to a LOT of money for a working slob, and cuts some of the income of the evil upper-end.
Is the mass of America REALLY this stupid? Really?
I am not slamming you or anyone on that -- But is America REALLY this stupid?
bernanke and krugman say that it is not QE and money printing that is making oil expensive.
I wonder, how does "Libya" also cause elevated prices of copper, iron, cotton, silver, sugar, corn, etc?
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
