Oil Speculators Back In The Saddle With Easy Credit

What’s New This Week

"Efficient market theory dominated economic thinking from the days of Ronald Reagan to the collapse of 2008. It was the rationale for deregulation, the cause of a massive transfer of wealth and income from the middle class to a tiny number of the very rich. Now it is dead and gone but Republican politicians won’t let go, and many in the media show no understanding of the issue." Republicans Are Locked in a Passionate Embrace with a Corpse and Won't Let Go

"Reconciliation is not being considered for [Senate] passing comprehensive health-care reform. Major health-care reform legislation passed the Senate without reconciliation on Christmas Eve ." The Role for Reconciliation

October 29th, 2008 · No Comments · Wall Street

October 29, 2008

The Facts

Yesterday the stock market had a huge upward surge. It was the 2nd largest one-day increase in the history of the stock market. The Dow was up nearly 900 points. The business channels and business reporters are all smiles as a result. Crude oil price increased $1.62 yesterday and is up this morning by more than $4.00.

The reason for this sudden found fortune is the easing of credit by banks yesterday as a result of the infusion of taxpayer money. Cheap money is available once again for all major investors.

My View

I guess the thing that makes me the sickest about this raping of American citizens (and the rest of the world) is the denial by these “experts” of what is causing the high prices of oil. Going back as much as five months ago, they were displaying such a holier-than-thou arrogance at anyone suggesting the price of oil was a result of speculators. They kept insisting the price was a “supply & demand” thing, and speculative buying had nothing to with it. Well, I guess they were right. The price of oil was, and is, based on supply & demand. But not a supply & demand of oil; a supply & demand of easy money.

These “experts” arrogance was further displayed with the attitude of “there, I’ve said it and that settles it”; so just shut up”. In other words, “you’re stupid and I’m not”. But, of course, that attitude goes along with what we’ve been seeing for the past three decades; “the truth is what I say it is, not what it is”.

Earlier this month I wrote a post on “Why Crude Oil Prices Dropped 28% Pver The Past 21 Days“, where I pointed out it was because of the unavailability of money. The easing of credit yesterday with a resulting increase of oil prices validates that.

Oil speculators are required to put down only 5% of their own money to buy oil futures. 95% is paid with short-term, low interest loans from banks. And in this case, taxpayer money. So you might say that the thieves are taking money stolen from us by our elected officials and using that money to steal more money from us. You can put any kind of spin on it you want, but it amounts to no more than theft using our own money as the weapon. But don’t forget; the bailout was for main street, not Wall Street. Yea, right!

I’ve heard only one person suggest speculators should be required to put down more of their own money, with that person suggesting 50% should come out of their own pocket rather than just 5%. But no body wants to talk about that. If we’ve learn nothing else in this financial fiasco, it’s that people will not control themselves if easy, cheap money is made available to them.

I have written several posts on this subject, and the track of oil prices have bared out what I have been saying. This indiscriminant raping will continue until controls are placed on the way Wall Street conducts business. They have proven they will not control their own greed. But of course, that would take away the “free market” system, wouldn’t it? And God knows we want a free market, right? That is, until we don’t (taxpayer bailout).