What are the banks doing with the $$$$Billions we gave them? Screwing us again via oil speculation.

[girl gone mad]

Guest Post: The Good, The Bad And The GDP
http://zerohedge.blogspot.com/2009/05/guest-post-good-bad-and-gdp.html">Zero Hedge
Posted by Tyler Durden at 12:50 PM
Submitted by Phil of Phil's Stock World

Clearly there are people who will do anything for money.



In the classic movie, "The Good, the Bad and the Ugly," the characters all lie, cheat, steal and kill as they chase after a cache of government gold. They all kill, they all try to kill each other and the only character trait they all share is that will all do anything for money. We are lucky enough to have a modern version of that, with our own government supplying GOLDman Sachs and other bad market manipulators with TARP money, which they are using to, not to lend money to the good citizens of the US but rather to prop up the commodities market, stealing Billions of dollars from the very people they claimed they were going to help.

Since the November bail-out, consumer lending had gone down, home foreclosures have gone up, unemployment has gone up, housing has gone down yet the CRB has gone up 25%, led by oil, which is up 88% at $66 this morning. $66 oil is a noose around the neck of this economy as the it was cheaper oil that helped us begin to recover as it stayed around $40 from November through the beginning of March. On a per barrel basis alone, that was $500M a day LESS than we are paying now but, despite the fact that oil is still 54% in price from this time last year, gasoline has gone up so fast that it’s only down 23% from the prices that knocked the wheels out from our economy. Including refined products, that extra $26 a barrel is costing US consumers $1Bn a day, $365Bn a year or 1/2 of the TARP money going straight out of our economy and back to the countries that fund terrorism through the very ugly hands of GS (who are partners in ICE) and other TARP recipients who have funded and coordinated this commodity "rally," screwing the American people over with our own tax dollars.

Aside from the very obvious upgrades by the TARP-sponsored Financial houses of anything and everything that even smells like oil and the GE-sponsored 24/7 pump-fest on CNBC, we now have Goldman Sachs this morning telling the sheeple specifically to: "sell Petrobras October $34 put options for $1.95 because a U.S. economic recovery and lower petrochemical supplies will limit declines in the price of oil." What Goldman does not mention is that they were one of the "large speculators" that increased their net long positions in commodities 300% since they got their TARP money. This is just BRILLIANT - take OUR money and invest it in commodities, then pull out all the stops to run oil up 88% where these leveraged investment can pay off 10:1 and then give us our money back early at virtually no cost while keeping the 900% gains for themselves - BRILLIANT!



This is the exact same nonsense pulled by GS and company back when they were flush with cash and they drained the American public dry last year, as is documented here in "http://www.tradersnarrative.com/what-is-really-going-on-with-the-price-of-crude-oil-1719.html">What Is Really Going On With The Price Of Crude Oil?" Of course this strategy blew up in their face and we had to bail them out when it collapsed, but not before the American people were forced to spend over $4Bn a day for petroleum products last summer - that’s $800Bn we’ll never see again - enough money to employ 16M US citizens with $50,000 jobs or enough to pay 12 Arab Sheiks and 1,000 Wall Street bonuses. Guess what they chose and guess what they are choosing again? It was also enough money to destabilize the balance of trade, throw this country into massive debt, crash the housing market and (in the one positive outcome) finally threw the Republicans out of power. Are the Democrats about to prove that they are no better? Can the same nonsense really go on less than one year after we "learned our lesson"?

http://zerohedge.blogspot.com/2009/05/guest-post-good-bad-and-gdp.html">More...

[pscot]

1. It's like the old joke about the scorpion and the frog

They can't help themselves. It's their nature. They're going to take us all down.

[Hawkowl]

3. Indeed

My girlfriend and I had that very same discussion the other day and how that variants of that myth abound among many cultures. It is indeed their nature.

[Zenlitened]

2. Yep. And last summer's oil price shocks turned a recession...

... into a Collapse.

Turned a period of belt-tightening for businesses large and small into Bankruptcy and Liquidation.

Turned tough times for countless ordinary Americans into The End of the American Dream.

Turned a shot at making a decent living into Starvation, Conflict and Death for countless ordinary people all around the globe.

Now the summer of 2008 brings us... what? The blockbuster sequel?

Who'll be left when the closing credits roll this time?

[Hawkowl]

4. Audacity of hopelessness

If President Obama let's this happen AGAIN, he is either a fool, corrupt, or a sadist. I hope he takes time out of his busy day eating hamburgers and dreaming up internet security to get a handle on the FUCKING ROBBER BARONS DESTROYING THE WORLD!

[truedelphi]

8. Unfortunately, Obama is now best buddies with

The Robber Baron/Pirates' Leaders. He spoke of Geithner with total devotion and reverrence at the Correspondant's Dinner just three weeks ago.

[azul]

6. Bingo! Disaster capitalism buzzards swoop in,

and the democratic administration and congress is left with a social programs-crushing whopper of a deficit.

Transfer of wealth and the commons to private investors and corporations.

[fasttense]

5. We have yet to see the worse of this failing economy.

It is going to get bad, very bad. It's going to happen by this August. Think things are tough now? Just wait, it'll get worse, unless Obama immediately starts pumping billions (not hundreds, not thousands, not millions) into the hands of the poor and middle class through jobs programs or increases in wages. Unless Obama does this, we are scheduled to run into the wall of the 2nd Republicon Great Depression at full speed. This time 300 of the uber wealthy will not be able to manipulate their way out of major losses.

Hang on to your hats.

[Old Hob]

9. COMWEC-complete meltdown of western civilization

gonna be interesting.

[inteltrue]

10. Hang on to your hats?

Reading DU is always instructive; fasttense care to elaborate?

[Wednesdays]

7. K&R

:kick:

[Joanne98]

11. YEP

Wed May 27, 2009 at 12:15:40 AM PDT

A new article posted on the McClatchy website says crude-oil inventories are at levels not seen for almost two decades, demand is at a 10-year low, and refiners are operating at less than 85 percent of capacity. Why have crude oil prices increased more than 70 percent since mid-January and gasoline prices increased 28 cents/gallon in the last month?

We hear that supply and demand drives market prices but these numbers don't support that claim. It appears we are back to the argument about speculators dumping huge sums of money into commodities markets and driving up the prices. Because Wall Street banks are not subject to the same regulations that limit positions in commodities investments, we don't know how much they are dumping into commodities markets. So we will continue to argue this until the Commodity Futures Modernization Act of 2000 is repealed, or at least modified to limit how much the commodities markets can be controlled and manipulated.

FWIW's diary :: :: As Devilstower reminded us a few days ago in You have the right to be played for a fool:

... At no time during that period (summer of 2000) did California's demand for electricity actually outstrip supply. There was no need for any of the blackouts that struck the state, and no justification for the sharp jumps in electrical cost. Like the 1869 gold panic, it was all manipulation by traders such as Enron, who limited capacity on the electrical grid to simulate a shortage. And it worked.

We don't know if speculators are driving up oil prices. The problem is that there is no way we can know. The same laws, or lack of them, that enabled Enron to manipulate the energy market in 2000 allow for the same kind of manipulation today. Contracts for future deliveries of commodities are traded on the New York Mercantile Exchange (Nymex). The futures market for oil has position limits that restrict how much of the market big speculators can control. Private contracts between big investors are made in over-the-counter markets, that "are thought to be 10 times larger than the futures market, and they have no position limits and no regulation." According to the McClatchy story, Goldman Sachs, Morgan Stanley and others not subject to regulations now far outnumber big fuel consumers such as airlines and trucking companies. These are the same companies that got billions of dollars from taxpayers in the bailout - that was 'necessary' because this same type of behavior.

Michael Masters, a hedge-fund manager who testified before Congress last year, says "...the speculative flow of money into commodities markets is a self-fulfilling prophecy that's distorting the usual process by which buyers and sellers set prices and is driving up the prices of oil, gasoline, grains and other essentials." He also said institutional investors were sucking the air out of the fragile economic recovery. "What they don't realize is because we don't have position limits, the money they put in is driving up the price" for oil and other commodities. I would wager that they do realize they are driving up prices; that may well be the objective.

CNBC television senior energy correspondent Sharon Epperson said in a May 6 report:

Nymex traders tell me they're seeing new money coming in from passive funds that are reallocating assets away from precious metals and into energy holdings. It's this money flow — rather than the fundamental supply-demand data — that's driving oil prices higher.

That is, prices are "disconnected from supply and demand."

In a report from April 16 of last year, the Federal Energy Regulatory Commission said the increases "occurred as large pools of capital flowed into various financial instruments that essentially turn commodities like natural gas into investment vehicles. Ultimately, we believe that financial fundamentals ... explains natural gas prices during the year."

Michael Dunn, acting Chairman of the Commodity Futures Trading Commission, agrees ... sort of. He said, "We were in essence operating with a blindfold on for those over-the-counter markets that we couldn't see." He says "were" and "couldn't" as though the problem he describes is in the past. What he should have said is, "We are operating with a blindfold on for those over-the-counter markets that we can't see." He made the comments during a news news conference last week to announce proposed new regulation of derivatives markets. He also said:

The Modernization Act (of 2000) specifically said we were not going to look at those; we weren't going to regulate them. Times have changed, and now we think it is time for us to look at them. Everybody has an opinion of what drove the market in the energy crisis. Do I think it (speculation) was part of the problem? I do. Do I think it was all of the problem? No. I think monetary policies — a weak dollar — had an impact on it. I think speculation by the herd, people saying prices of fuel are going to go up and I want to get in on that" also played a part.

I don't have a problem with people making a profit. If you don't make a profit, you will go out of business. I do have a problem with people manipulating markets, which is what appears to be happening. Again. It is time to get real regulations back in place.
http://www.dailykos.com/storyonly/2009/5/27/735859/-Commodity-Speculators-Manipulating-Oil-Prices