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post #21 of 34 (permalink) Old 06-13-2008, 11:52 AM
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Demand Growth, Not Speculators, Behind Oil-Price Surge, U.K. Says

LONDON -- The recent rise in prices of oil and other commodities isn't being driven by speculation, but rather by supplies not keeping up with rising demand, the British government said.

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post #22 of 34 (permalink) Old 06-13-2008, 12:32 PM
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Jayshit4brain,
Guess you are wrong again. Care to admit it and STFU for good?

Market Dispatches - MSN Money
June 8, 2008 -- BAN the speculators! Ban the speculators!

The leading authority on fair and balanced markets, George Soros, took to Capitol Hill this week to rail against the speculators - testifying that index funds were contributing to what may be a commodities bubble.

Be responsible
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post #23 of 34 (permalink) Old 06-13-2008, 02:44 PM
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June 8, 2008 -- BAN the speculators! Ban the speculators!

The leading authority on fair and balanced markets, George Soros, took to Capitol Hill this week to rail against the speculators - testifying that index funds were contributing to what may be a commodities bubble.
George Soros is a well-known left-wing nut-job. The only thing he knows about bubbles is the one in his head!

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post #24 of 34 (permalink) Old 06-13-2008, 06:35 PM Thread Starter
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^ And you're a well-known right-wing nut-job, so it all washes.
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post #25 of 34 (permalink) Old 06-23-2008, 08:30 PM Thread Starter
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Can't wait for Jay's take on this one.

Congress Urges Oil Speculation Crackdown, Lawmakers Say Urgent Action Is Needed To Curb Speculation Driving Historic Fuel Prices - CBS News
Congress Urges Oil Speculation Crackdown
Lawmakers Say Urgent Action Is Needed To Curb Speculation Driving Historic Fuel Prices

WASHINGTON, June 23, 2008

(CBS/ AP) Lawmakers continue to blame large investors for their role in propping up oil prices, pointing out Monday that speculation in crude futures has nearly doubled since 2000.

Pension funds, Wall Street banks and other large investors that have no intention of taking delivery of fuel have increasingly pumped money into contracts for oil and other commodities as a hedge against inflation when the dollar falls.

After more than a half dozen hearings in Congress on the issue, Democratic House lawmakers said they intend to tighten restrictions on pension funds, investment banks and other large investors that they blame for driving up fuel prices.

Many Republicans, analysts and regulators, however, say soaring oil prices are a reflection of macro-economic factors, including the falling dollar, unrest in the Middle East and increased demand from countries like China and India.

But Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation.

Oil prices rose $1.38 to settle at $136.66 a barrel Monday on the New York Mercantile Exchange on disappointment over Saudi Arabia's modest production increase and concerns that output from Nigeria will decline.

Saudi Arabia said Sunday it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May. But that pledge at the meeting held in the Saudi city of Jeddah fell far short of U.S. hopes for a larger increase.

"Make no mistake about it, the excessive speculation in commodity markets is having a devastating effect at the gas pump that is rippling through our entire economy," said Rep. Bart Stupak, D-Mich., who chaired the hearing of a House Energy and Commerce subcommittee.

But Rep. Joe Barton, R-Texas, said insufficient supply is the main driver behind rising energy prices. He called for increased domestic production of oil, natural gas and coal.

A series of charts detailed the massive influx of money pouring into the oil futures market from pension and hedge funds and investment banks whose only intention is to make money - not actually own oil, reports CBS News chief investigative correspondent Armen Keteyian.

Speculators have increased their share of oil futures contracts on the Nymex to 71 percent this year, up from 37 percent in 2000, according to figures released by Stupak's office. At the same time contracts held by traditional oil users have fallen to less than 30 percent from over 60 percent.

Experts testified that by ending or severely limiting speculation, the price of oil could drop as much as 50 percent within a month, Keteyian reports.

Lawmakers have cited the pain prices are causing airlines, trucking companies, farmers and consumers in calling for restrictions on speculative trading. At the pump, gas prices dipped less than a penny overnight to remain at a national average of over $4.07 a gallon, more than $1 above the year-ago average, according to AAA and the Oil Price Information Service.

A panel of analysts and oil industry experts told lawmakers that the recent influx of institutional dollars has disrupted the futures market's traditional function as a tool for the buying and selling of commodities.

Panelists said pension funds, sovereign wealth funds and other large investors have taken advantage of loopholes that let them bypass speculative limits imposed by U.S. regulators.

In the last five years, investments in index funds tied to commodities grew to $260 billion from $13 billion, according to testimony from Michael Masters, managing member of the Virgin Islands-based hedge fund Masters Capital Management.

Sen. Joe Lieberman, I-Conn., has floated a proposal to ban pension funds and other institutional investors from futures exchanges altogether.

Northwest Airlines Corp. Chief Executive Douglas Steenland endorsed that idea Monday, and also urged lawmakers to close loopholes that allow traders to dodge U.S. speculation limits by trading on foreign exchanges or through over-the-counter transactions.

"Our highest priority is to tackle the overall price of fuel which is now 40 percent of our cost pie," Steenland told lawmakers. "Addressing excessive speculation is the most immediate remedy Congress could deliver."

The debate over oil speculation spilled onto the campaign trail over the weekend with presumptive presidential contenders Sens. Barack Obama, D-Ill., and John McCain, R-Ariz., sparring over who would be tougher on policing energy futures markets.

House Democrats on Monday suggested a range of actions, including: higher margin requirements, stricter position limits and increased disclosure of unregulated over-the-counter trades.

Energy and Commerce Committee Chairman John Dingell, D-Mich., said those measures and more "need to be debated, evaluated, and acted on, sooner rather than later."

In prepared testimony, New York Mercantile Exchange Chief Executive James Newsome said limits on oil trading are "misguided." Such restrictions would drive large investors toward less transparent, less regulated markets, doing more harm than good.
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post #26 of 34 (permalink) Old 06-23-2008, 08:38 PM Thread Starter
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Jay, when just about 95% of everything behind each position you take turns out to be WRONG, and you keep getting pasted up as the poster child for adult moronism around here, where do you get the courage to go on? Is it just a case of ignorance being the analog to bliss - ergo, you're too dumb to know how dumb you are, so you just keep on keeping on?

Utterly fascinating. I just can't let it go.
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post #27 of 34 (permalink) Old 06-23-2008, 08:45 PM
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"Intellect is uniquely interesting in that its shortcoming is generally only recognized in others. Those who lack speed, strength, or other highly regarded qualities are generally aware of their failings, not so much in regard to intellect, a source of unending frustration for many..."

"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon
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post #28 of 34 (permalink) Old 06-23-2008, 10:55 PM
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Hmmmmmm No shortage of Gas here tonite........
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post #29 of 34 (permalink) Old 06-23-2008, 11:01 PM
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"Intellect is uniquely interesting in that its shortcoming is generally only recognized in others. Those who lack speed, strength, or other highly regarded qualities are generally aware of their failings, not so much in regard to intellect, a source of unending frustration for many..."

Sadly I know of my short comings all too well. One of the reasons I stay quiet. All I can hope for is to cut the balls off when they are least expecting. Ho hum, no insercurity here, nope, no way.
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post #30 of 34 (permalink) Old 06-24-2008, 10:12 AM
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I think it is good to carefully monitor speculation, but we need to be careful what we wish for. The "cure" proposed by a bunch of politically motivated Congressional hacks can do far more harm than good. Here is a sampling of what the experts are saying today:

"Every dogma has its day, and so it is with the posturing that blames the run-up in oil prices on "speculators." The new political consensus is that further "common-sense regulation" of the energy futures market is necessary. Let's grant that the sentiment is common, but the sense – like the evidence – is nonexistent.

On Sunday, Barack Obama rolled out a proposal that will supposedly thwart market manipulation by "a few energy lobbyists and speculators." John McCain chimed in that Mr. Obama was merely following his lead; last week, the Republican denounced "some people on Wall Street" for "gaming the system." If there's a Congressman who isn't calling for his own crackdown, he's gone into witness protection. And sure enough, even this week's impromptu oil summit in Jeddah blamed "speculators" for high prices.

The futures market may be a convenient scapegoat, but it's simply a price discovery mechanism. Major energy consumers – refiners, airlines – buy and sell these contracts to lock in goods at a future price, as a hedge against volatility. Essentially, they're guesses about coming oil supply and demand, as well as the rate of inflation. The political theory is that such futures trading is creating a bubble in the spot market (i.e., oil purchased for immediate delivery) beyond oil fundamentals. Thus, $4 gas.

But there's no inherent reason to "bet" that commodities will go up rather than down. Bet wrong – place all your chips on red, say – and you lose. If a company purchases the future right to buy oil at $140 a barrel and it instead sells for $130, the option is worthless. Besides, somebody has to take the other side of any futures contract: Some are trying to predict where the price will go in the future, while the other side is attempting to sell its future price risk. But no one knows how things will end up..."

Political Speculators - WSJ.com

"But the CFTC sought to counter that presentation. In a separate note, the commission said the 70% share includes both long positions, or bets on a price gain, and short positions, or bets on a fall, held by swap dealers and speculators. Swap dealers as a whole have a close to neutral position in the crude-oil markets, the CFTC said, meaning they are almost equally long and short in the marketplace.

The CFTC has traditionally said that speculators only represent around 30% of the market, but after lawmakers asked the agency to reclassify swaps dealers as speculators, and not commercial hedgers such as airlines, the ratio dramatically flips.

Acting CFTC Chairman Walter Lukken said a large portion of those swaps deals would be for commercial businesses looking to hedge fuel costs. "Morgan Stanley manages all of United Airlines' risk," Mr. Lukken told reporters on the sidelines of the subcommittee hearing. The acting chairman said that the CFTC's old data showed that speculation wasn't pushing prices up, "But I think what would be admitted is that our data could be improved."

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"Lawmakers eager to curb speculation in oil markets got support Monday from witnesses who told a House subcommittee that oil prices could fall sharply if Congress put strict limits on trading in energy futures by investment banks, pension funds and other financial investors.

But officials of the Commodity Futures Trading Commission disputed the findings of a Congressional study that concluded 70% of trading in certain key oil futures contracts is now speculative. And leaders of the world's two leading oil exchanges, the New York Mercantile Exchange and the ICE Futures Europe, based in New York and London, respectively, ..."

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