History of Bubble Creation
Everyone on Wall Street are a bunch of evil speculators,
paying off ratings agencies to rate garbage mortgage backed securities triple
A, so they could resell them, pushing up worthless companies beyond ridiculous
valuations like CROX and many others only to leave a trail of carnage on the
downside, the tech bubble, apple stock, the various oil bubbles, the silver
bubble, cotton, coffee, corn you name it and Wall Street will try to manipulate
up far beyond the fundamentals. If you bought a car from Wall Street, they would
juice it up to $200,000 for a Honda Civic, and you think you have a
depreciating asset now.
Well gas prices are going up again due to those evil
speculators even as the economy shows signs again of recovery, the economy is
threatened once again by lowering disposable income in order to pay for exorbitant
gas prices. This cycle just keeps on repeating itself over and over again. The
economy starts to pick up, the evil speculators juice up gas prices, consumers
can`t afford these prices, the economy goes back near to recession levels as
consumers and small businesses pull back discretionary spending.
When are we ever going to learn in this country, and protect
essential commodities from the evil speculators by instigating physical delivery?
Physical delivery will ensure that when the economy is strong enough to
actually support a given price, demand will be there to support higher prices.
But what we have is paper demand screwing consumers once again due to the over zealous evil speculators in the oil market, and not true demand, so this Wall Street Gas Tax, just throws the economy back into recession territory. The average American cannot afford to fill up there gas tank for $65 every week without taking money out of some other money basket items in their budget. They usually charge up their credit cards, cut back on eating out or entertainment options, and some much worse scenarios for meeting these out of whack fuel costs.
Further Reading - When Natural Gas Replacing Diesel in Frac Jobs
Driver #1: Ben Bernanke & the Federal
Reserve
The drivers of the oil market for the evil speculators on Wall
Street are several; one of them is supported by your own government in the
branch of the Federal Reserve. When Ben Bernanke and the fed switched from
concentrating on mortgages with their previous QE program which didn`t give
banks the extra juice for the commodity markets and equities, and then started again
with another 45 billion per month of treasury purchases; well we have seen how
that juices markets from past QE
treasury buying. Buying mortgages doesn`t juice up asset prices like buying
treasuries that is clear as day!
So the federal reserve is again helping those who have
stocks in their portfolio, at the expense of the entire country who now has to
pay higher gas prices than the fundamentals would dictate because 45 billion
dollars is being injected into financial markets, and big banks are using this
liquidity to juice up asset prices including oil and gas.
Concentrate on mortgages Ben Bernanke I thought you finally learned something and were focusing on concentrating your liquidity programs where they could minimize the negatives of the easing program and still provide some overall positives to the economy.
However, the fed slipped back to the old give on one hand;
take on the other hand bi-polar monetary policy which just does more harm than
good to the overall economy.
Driver #2: Japanese Prime Minister
Shinzo Abe
The other is good old Japan, and their new policy of
bringing the country inflation at all costs, by considerably weakening the Yen,
this has not only raised Japanese gas prices, but their currency is used as a
major carry trade funding currency. So weakening the yen just provides juice to
all financial markets, not just Japanese markets. Traders take this weak Yen,
and fund their other trades, and you guessed it juice up risk assets like oil,
which then juices up gas prices. So you can thank the new Japanese Prime
Minister Shinzo Abe for your higher gas prices as well.
Driver #3: Wall Street Levered to the
Hilt once again
Wall Street is again using leverage, with margin at its
highest point in five years as all the banks and hedge funds are levering up
for the bullish first quarter, and this increased leverage is juicing up all
asset prices, including oil and gas. So as Wall Street banks and traders juice up
their returns, again the American consumer is footing the bill via higher
gasoline prices at the pump. Too bad they don`t give consumers a cut of those
big fat bonuses. But somebody has to pay, again the powerful take from the
poor.
Driver #4: Fear Mongering over “Potential” Supply Disruptions
The other long standing trick on Wall Street is to use fear
mongering to push up the oil markets, so any even remote pipeline leak, or
incident in the Middle East is used to scare up the market. The latest is Algeria
with a Natural Gas plant hostage situation. I know it doesn`t matter if it is
not even related to oil infrastructure, it doesn`t matter.
There has been no real supply disruption in the last 30
years with all kinds of flare ups in the Middle East, and requisite hype
run-ups in oil markets. Never one major supply disruption where actual supply
in the oil markets was scarce over the past 30 years!
Why because everybody needs money, and it doesn`t matter if
you’re a terrorist, a dictator, an insurgent, you’re going to sell oil because
this is what supports the entire region. So whoever is in charge is going to protect
the oil fields at all cost, and they are for the most part, the most secure
assets in the world. Safer than your Gold in a safety deposit box!
These incidents are used to hype markets and push up prices
regardless of actual legitimate threats to supply disruptions where oil would
actually be a scarce commodity.
Strategic Petroleum Reserves is
crucifix for Evil Speculators
It’s all a money game on Wall Street, and without a physical
deliverable market, the only solution to thwarting these evil speculators in
the oil markets is the tool of the SPR release.
It worked last year as these speculators started pushing oil
up, yeah it doesn`t matter if supplies are booming right now, and President
Obama threatened to release the SPRs and this turned around the market and sent
it back down.
You see this is highly effective as the speculators need to
make money like crack addicts, so once they realize that the game is over to
the upside, they get out of the market, and look for other markets they can
juice up.
This threat and actual release of the SPRs is the only thing
that has thwarted the evil speculators in the oil markets the last two years.
If it was left to their own devices we would all be paying for $150 oil, and 5
dollar gasoline. They don`t care who they hurt in the process of getting their
fat trading bonuses.
So once again, as oil markets are rampant with excessive
speculation, President Obama needs to bring out the old SPR Release Hammer and
send these evil speculators back to juicing up penny stocks on the OTC markets
or Netflix to $400 a share.
Further Reading - Counterpoints to Goldman Sachs Chief Commodity Strategist
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