No question the oil price is caused by speculators. Who are those speculators? The financial group which control US economy. They have to do so to avoid an economic collapse. The direct reason for the oil to jump from $90/barrel to $138 is because Iran abandons US dollars as oil trade currency. To block that petro-dollar going back to US, they have to raise the oil price. From this point of view, Iran war is unavoidable.
Here is an article I wrote two years ago.
437. Manipulate oil price (9/20/2006)
After Bush took the presidency, he created a huge budget deficit, and a huge trade deficit as well. The deficit will cause a big inflation. So Federal Reserve has to raise the interest rate to deal with it. In June 2006, the overnight interest rate was raised to 5.25%. The Federal 10 years treasury bill was 5.25% too. The 30 years fix mortgage rate reached its recent high: 6.93%. Although this rate is still low viewed from history, it touches off a down turn of the real estate market. Because the price of house is stretched too tight that a tiny increase of the mortgage rate will cause a big change.
Feds hold a large quantity of houses in my case, they tried their best to keep the property value. What we saw are: Federal Reserve stops its step to raise the interest rate. Oil price declined. The rate of bonds goes down. So does the mortgage rate. From June to September, the bench mark rate of Federal funds stays at 5.25%. The rate
RE:The real reason of high oil price
by Kat Sung on Jun 23, 2008 03:43 AM Permalink
The rate of 10 year treasury note drops to 4.73% from 5.25%. The 30 years mortgage rate is 6.44% now.
Today you only pay 4.73% interest rate for a ten years long term loan but have to pay 5.25% rate for an overnight loan. Does that mean there will be no inflation within ten years? Or even mean there is a deflation? With common sense you know it's impossible as long as the oil price doubled in one year. All these were done by Feds to protect their property value so you saw these strange phenomenon.
1. Oil price. The result of a big trade deficit is that foreign countries hold a large amount of US dollar. When US has not enough goods or assets to exchange these dollars back, it has to think of a way to make these countries to keep the dollar instead of dumping it. One way is to push up the oil price.
A country which consumes one million barrel of oil a year has to keep 30 million dollars in bank (when oil price is at 30 dollars/ barrel) Then how much should it reserve if the oil price jumped from 30/barrel to 60/barrel? It has to double its dollar reserve to 60 millions. So large amount of dollars were locked up in bank as oil payment (Dollar is the appointed currency in oil trading.)
Now you know why the oil price jumped so high. It is used to solve the deficit problem of US. To delay the US financial crisis. Who benefit from it? (1) Oil export country.(Though much of them are Islamic countries which US dislike. There is no choice.) (2) Speculator (mostly
RE:RE:The real reason of high oil price
by Kat Sung on Jun 23, 2008 03:44 AM Permalink
(2) Speculator (mostly oil groups). They bought in large quantity of future contracts in a short period. Say, from 30/bar to 60/bar, the average price paid was 45/bar. Then when the market was steady at 60/bar to 75/bar, they sold it at average of 67.5/bar. Their profit is 22.5/bar. (3) Federal Reserve and US economy. Federal Reserve can avoid to pay a high interest rate in order to lure the dollar in. US can avoid a financial crises.
The loser is always the average people. They have to take the final cost - a higher gas price.
But it's a double side sword. High oil price will also cause inflation to force the rising of interest rate. When it endangers real estate market, then we saw a dramatic decline of oil price. (from 75/bar/Aug 3 to 60/bar/Sept 19, a 20% decline in 6 weeks.) After all, the interest of Feds, is above everything else.
To keep in mind that when the oil price went up this year, it's not that oil supply was in shortage. And when the oil price drops recently, it's not that there is less demand. It's not a market economy any more. It's an artificial manipulating market.
Greenspan knew it. But he could only say what he was allowed to say. Quote, "The former Fed chief also detailed how investors, rather than users of oil, have come to set the price of oil through purchasing futures contracts."
No question the oil price is caused by speculators. Who are those speculators? The financial group which control US economy. They have to do so to avoid an economic collapse. The direct reason for the oil to jump from $90/barrel to $138 is because Iran abandons US dollars as oil trade currency. To block that petro-dollar going back to US, they have to raise the oil price. From this point of view, Iran war is unavoidable.
Here is an article I wrote two years ago.
437. Manipulate oil price (9/20/2006)
After Bush took the presidency, he created a huge budget deficit, and a huge trade deficit as well. The deficit will cause a big inflation. So Federal Reserve has to raise the interest rate to deal with it. In June 2006, the overnight interest rate was raised to 5.25%. The Federal 10 years treasury bill was 5.25% too. The 30 years fix mortgage rate reached its recent high: 6.93%. Although this rate is still low viewed from history, it touches off a down turn of the real estate market. Because the price of house is stretched too tight that a tiny increase of the mortgage rate will cause a big change.
Feds hold a large quantity of houses in my case, they tried their best to keep the property value. What we saw are: Federal Reserve stops its step to raise the interest rate. Oil price declined. The rate of bonds goes down. So does the mortgage rate. From June to September, the bench mark rate of Federal funds stays at 5.25%. The rate
All the 4 companies named in article are cheap brokers or 'dalals' and they are not only dishonest and manipulating investment companies but fixers of deals in financial markets.They are the guys who pay astronomical salaries to inexperienced but actually ordinary IIM types of graduates from developing countries to deflect attention from loot they do in these same economies.As regards oil, USA in dirty alliance with these compnaies used as a cover and in alliance with UK and some countries is manipulating prices to tax world citizens to pay for their heinous crime of invading IRAQ and other countries.They failed to get oil from IRAQ and are sitting on their wn reserves in Alaska. USA is no 1 enemy of world economies and should be boycotted.instaead of drooling and wagging their tails, third world governmnents and citizens should boycott USA economically and stop buying from them, supplying to them and sending their laborforce.It is time for reverse sanctions against USA and to clamp them down as they have done enough dadagiri.India and other counties should jin middle east counries and help kicking out USA from IRAQ,put oil emnargo against UK and USA and finish american economy if we all have to survive with dignity.Period!
I do agree speculation is the only reason for increase in the oil price, the developed nation invested in this commodity has a benifit at the same time it will put humps on the growth potential of emerging economies like India and China which they fear, and which is already clear. FII taking back money to crash the share market. souring inflation and a panic goverment. now development make a shift to survival. it is time for indian to develop other power sources rather than making chandrayan ( will it bring fuel from moon as told...?) you have more fuel in the earth from the sun. tap it... think India think... it is now or never... fuel your economy
The author is known for his unconventional and simplistic view of things. His whole argument that the speculators are responsible for the oil price rise is just absurd. He is calculating that out of $130, $100 is because of speculation. This is out of tune with reality. Speculation is just one of the causes for the price rise. The author has forgotten the increased demand from India and China. OPEC had sometime back cut down on production. All these factors have been omitted by the author because he wants to make a case for speculation-is-responsible-for-oil-price-rise theme.
His views are overly general and is not to be taken seriously. In general, a very average article which tends to misinform rather than inform.
RE:RE:Syriana
by Shawn Manjrekar on Jun 15, 2008 06:47 PM Permalink
India was famous for its intelligent work force and was becoming a threat to the world. Could the World Super Powers accept India as a super power ... no-no.
Then what do they do? They fund the politicians and the results is for all to see.
Step 1: - Blunt IIT and IIM. =>Increase the students, thus you have now 250 students per class. =>Increase quota systems, thus the quality of students and competition amongst its students would drop by itself.
Step 2: - Make it the world's back-office. => Flood India's job market with KPO's and BPO's, thus India's youth is busy living like yuppies doing night shifts. They will also fast realise that they work like slaves and would get use to that life. =>Mistreat the youth on International calls, thus they will have low self esteem and will feel low in Westerner's company. Thus Super powers would make themselves superior by default.
Step 3 - Hit India's financial capital Mumbai through regional parties => Regional parties are already ensuring that outsiders are mistreated. Thus force good people out. => Push jobs for marathi instead of Merit. If the political parties really cared, they would be teaching Marathi to be intelligent and well educated, rather than showing the world that Marathi youth are not capable of getting jobs on merit. This might force good companies to look outside Mumbai.
All aggressive or stupid replies to me are from Indians with low self esteem. Will not do anything in public, but will bark if somebod
The only Question is WHY THE US GOVERNMENT STILL DOES NOT HAVE A REGULATORY AUTHORITY FOR CRUDE OIL FUTURES LIKE WE ARE HAVING SEBI FOR STOCK MARKETS?
Crude Oil is easily Manipulative. Its very sensitive. Even a rumour could do anything drastic. In Such a Sensitive market why didn't the US Government keep such regulation? Still it lacks many. It doesnt have any law against manipulation. They're just going to pass the law. I hope so.
Crude Oil was used to hedge against US$ Weaknes. That was just upto the month of March. People started seeing it as a nice short term investment with robust appreciation.
Hedging Against Weak US$ ended up in Wedging the Strong World Economy, Especially Asian Economy.
Some Greedy Financial Organisations come into the play predicting some figures like $200 & $150/barrel. They've got good reputation, so their words.
US Government has reacted very late. Such a bad reflex they've got to take measures (Investigation on Crude Oil). They're in such a big responsible suits, just speculating the speculators doing all insanes.
I request all people to Hang-on till the oil bubble & the greedy financial organisations get bursted.
It'll come down shortly to $80 or even down. Both Technically & Fundamentally speaking.
No consumers would defend this spike. Only some speculators have gone Longs (Bought Crude Oil Futures) would defend the price spike. Out of So Many Reasons, 60-70% of the hike is Pure Manipulation.
Hats off to the author, he has rightly pointed out the reasons for the abnormal increase in oil prices.How long the rest of the world has to pay for this one obnoxious USA suking the blood of other developin countries?
