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Forum Post: Oil Men Will Be Upset

Posted 2 months ago on Aug. 25, 2014, 8:35 a.m. EST by turbocharger (1491)
This content is user submitted and not an official statement

Like an addict, the bailouts are slowly dwindling down, now at a meager $25B per month. Without those injections, stocks are having a hard time keeping up.

Forget what the pundits are saying about oil being at 6 month lows. Its still summer, there is massive turmoil in the ME and the jobs data has been decent. And yet here we are, at six month lows.

Look for them to do something to launch the price back up.

http://www.marketwatch.com/story/oil-futures-steady-ahead-of-us-inventory-report-2014-08-06

39 Comments

39 Comments


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[-] 1 points by grapes (3317) 2 months ago

ISIL conquering the Levant and going straight for Libya will launch the oil price up but that is still a bit way off.

[-] 1 points by grapes (3317) 2 months ago

The U.S. is NOT the only country that matters for the global commodity trading of oil. The EU is huge and so is China. Oil prices tend to track economic outlooks most. The U.S. economy looks reasonably good (stock indices, consumer confidence, first-time jobless claims, and unemployment and inflation rates are all fairly good) but the EU and China are NOT doing great so the oil traders looking ahead pushed the prices of oil down. In a few more years, China will become the largest economy and the U.S. will drop to third place. Dropping of oil prices boosts the U.S. consumer confidence so the so-so economies abroad have positive impacts in the U.S.

The EU and China combined FAR outweighs the U.S. but the U.S. has better guidance by the markets and various institutions all vying.

[-] 1 points by turbocharger (1491) 2 months ago

How much of the stock indices- and most everything else- do think is a result of 5 years of bailouts?

[-] 1 points by grapes (3317) 2 months ago

The bailouts put a (hair-gel-like) solid foundation for economic recovery. They made sure that the pool water level did not recede too quickly to expose the banksters skinnydipping in the cracked Black House Reserve swimming pool. Tapering QE has zero ill effect once the E-coli infested "investment" salads have been fed to Mikey and his almond-eyed friends across the pond.

I would venture a guess and say that the last five years of bailouts have puffed up the stock indices by 30%. As long as no one looks below the waists, we see perfectly respectable bankers cavorting. At any rate, the stock indices are products of investors' hopes and dreams and suckers for transferring money to stronger hands so they need not track reality until the awakening comes.

I will be watching for how the U.S. Treasury interest rates respond when the QE ends and normalization of short-term rates is allowed to happen. Note that the rise in Treasury rates can burn a Pacific-Ocean-sized hole in the U.S. budget due to the gargantuan national debt outstanding, not to mention the state/municipality and consumer debts. Debt drinking parties always end with an awful hangover for all the next morning once the fraternity's punch bowl has been removed from the pool party.

[-] 0 points by turbocharger (1491) 2 months ago

You are correct for sure about the pacific ocean sized hole, so going forward, with the debt only further increasing and most of the world not wanting much of it anymore (meaning we somehow own our own debt) how do rates ever rise?

[-] 1 points by grapes (3317) 2 months ago

Rates if not artificially controlled strenuously as in the past few years will respond to supply and demand. If there is insufficient domestic savings to buy up the floated treasuries and if there is insufficient foreign demand which is what you say is already happening, then treasury rates will rise if untethered. That can prick open the tens of trillions of dollars worth debt bubble puffed up even more by the last few years of easy-money policy.

Right now, there is not much pressure because the U.S. economy is improving so the U.S. revenue is increasing lowering the treasury borrowing needed. Besides, any excess is still being bought up by the (No-)Reserve and the rising stock market keeps the dollar strong making treasuries more attractive. It will be very tricky how the debt bomb will be defused but I have hope that Mikey's almond-eyed friends across the pond will enjoy the discount salads.

Most of the world not wanting much of it anymore is a definite problem. Even ISIL demanded 100 million euros instead of in U.S. dollars (which we can print) for the ransom of James Wright Foley. How sad!

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

It is all entirely bogus.All of that fluffy bailout money is going to kick in hard when ZIRG is retired.Think they will chicken out again? Maybe,but they are all out of options.These incredibly stupid policies have been promoted by people who apparently don't give a shit about anything but lying,falsifying data and covering their wrinkly old white asses.When the whip comes down again,it's going to hurt,to put it mildly.Will ANYONE be held accountable for all of this criminal malfeasance? EVER?

[-] 1 points by grapes (3317) 2 months ago

Whoever are caught holding the empty bags when the music stops will be the ones held accountable. Hasn't it ALWAYS worked that way?

In traffic accidents for example, the reckless driver usually gets away scot-free because other drivers swerve. It is relatively easy to avoid the reckless driver but far harder to avoid that tree, utility pole, or pedestrian next. Once someone has slammed into the utility pole or run over that child, who would chase after the reckless driver rather than attending to the injured? Usually, no one. The taxpayers and the people paying for the medical or funeral expenses will be held accountable. Remember that the investment world sells risks so the game of throwing the grenade with the pulled pin among the fraternity always ends by its exploding the last person catching it and I do mean the last, probably the least informed. The Devil takes the hindmost.

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

It's not that hard to figure out.Whoever is the weakest.Crucify the Bond Traders,because how can they fight back? Destroy small players like the arbs because how will you ever get in trouble for doing evil acts nobody ever hears of? Check out the top line on Zero Hedge today about the CFR.Could there be a ray of hope breaking through the thunderheads?

[-] 1 points by grapes (3317) 2 months ago

The populace tends to persecute the highly visible low-level people but not the ones really responsible for the misdeed. It is for example very common for managers to claim the glory of slaying the dragon when all they did was to send the knight there. If the dragon ate the knight, the managers would point fingers at each other and convene an independent inquiry commission to investigate and produce a report. No one goes to jail because distributed responsibilities are really irresponsibilities. We can guillotine the henchmen but seldom the big shots.

[-] 2 points by trashyharry (2896) from Waterville, NY 2 months ago

Deny,obfuscate by bringing up unrelated issues,make counteraccusations.

[-] 1 points by grapes (3317) 1 month ago

Surprise! Was it really? EU joins the burglary team.

Trading euro bonds would have sent you "happily loaded all the way to your bank." If you see enough of these developments, you can acquire the "eye and mind." Money comes and money goes - you need to know where it flows.

[-] 1 points by grapes (3317) 2 months ago

The CFR's proposal for handing consumers cash directly has merit but it may already be years too late. It can still be done although its benefit will be more muted than years before. We are in a bubble due to the easy-money policy so it may pop but the EU and China will embark on their own easing, too, so everyone will join the burglary team. The only problem is that the joint effort may be discovered causing the workers, savers, and investors to balk eventually spooking the bond market.

Helicopter money was dropped to first time home-buyers a few years ago. $8000 was not a shabby sum although it tended to go to the Caucasians far more than the Chocolate Races. There were also increased personal exemptions, etc. You probably know that the feds hope to recover the credits they loaned to the banks, with interests eventually. Whether that can be achieved remains to be seen, largely depending on the performance of the economy over the long term.

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

The velocity of money is at historic low levels.This is causing terrible doldrums.Here in NY we are experiencing awful stagflation-16 bucks out of every 100 magically disappears.The condition of The Poors around here is appalling.The latest report I got is so bad-so shocking, I am thinking about posting a description of the situation here to try to get people interested in real world real people and the real ugliness that is unfolding in hidden pockets of misery in Upstate New York.It's so bad it beggars description,and I'm afraid nobody would believe me.This is poverty as bad as what is going on in Greece,but with lots of guns & ammo.I am also a Poor,and I remember being given 200 bucks when Obama got in.The banks are gonna do what banks do-whatever they fuckin' want,and the bubblicious culture ? Everybody's doin' it doin' it-pickin' their nose an' chewin' it chewin' it-they really gotta stop doing that,their parents should have taught them better--These speculators deserve the death penalty, if anyone does...IMHO,of course.

[-] 2 points by grapes (3317) 2 months ago

Speculators work on cues from the credit creating authorities. If cheap credit is available and inflation is expected, they pile into commodities. They get out fast too if the "wind direction" reverses. It is the monetary policy of prolonged duration of cheap money that creates price inflation eventually. The U.S. central bank has dealt with inflation for many decades so it is more comfortable and experienced in creating inflation contrary to Germany which had been badly burnt by hyperinflation. The U.S. way to get out of the Great Depression was to enter World War II, truly a massive stimulus program.

[-] 1 points by turbocharger (1491) 2 months ago

Good points.

[-] 2 points by grapes (3317) 2 months ago

Economics is a mostly descriptive discipline. The terrible doldrums manifest as historically low velocity of money, not the other way around. The ones who have much money to spend can only spend so much at a time when their numbers are small. Of course, they can spend far more very quickly in socially or legally unacceptable ways, viz. for paid sex, gambling, drinking alcohol, doing illicit drugs, etc. There are socially productive ways of increasing the velocity of money by having festivals, conferences, fairs, farm stands, etc. The basis is good communication. Nowadays, that may be easier to achieve through online media. Think online and build trading communities.

There are very miserable people living in NYC, too, but intense competitions drive down prices of some staples and services so it is not too bad if one knows the ins-and-outs. I believe what you say about upstate NY. It probably lacks the intense competition among suppliers so stagflation can start easier than in NYC. Also the large population in NYC provides the scale to support extremely specialized trades and crafts that give higher quality, cost far more or are totally unavailable elsewhere. That is a reason why the rich people like to have a foot in NYC. Another reason is that their business is in NYC. With the Erie Canal, NYC became connected to the Great Lakes, Chicago, and much of the Mississippi Valley all the way to New Orleans. Your area may experience some economic revival if it finds ways of revitalizing the canal. I overheard conversation about where to buy the cheapest vegetables so that is a concern for the poorer people. It was truly just nickel and dime difference but the point is that what is negligible to some can be a big deal to others. We should always keep that in mind.

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

That is very interesting that you brought up the Canal.I happen to be a canal buff myself and lived in a house that was situated right next to the original course of the Erie Canal in Utica,NY.One thing we can't figure out is how is it that the Canal (The Barge Canal) managed to not be filled in and destroyed by the State.The history of the Canal Era is totally fascinating.As far as organizing capital to try to do something build up a situation that could attract more capital,the prospects are poor for a number of reasons.The idea is sometimes discussed but has never found legs.At least the Canal still exists and has been well maintained with a modest number of State Workers.So the potential is there,and here and there development has taken place on a very small scale.More traffic would probably help.

[-] 1 points by grapes (3317) 2 months ago

Your being close to the Erie Canal lets you observe the traffic pattern and kinds. If you find out what is being carried on the barges, you may discover a reason for why the canal still exists.

The trucking industry using the interstate highways outcompetes barge traffic on speed but barge traffic can be cheaper in bulk. As fossil fuel prices increase hitting the trucking industry hard, barge traffic will become more attractive.

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

There is great utility in the Canal and I have noted the barge traffic.The simple fact of the Canal being a great thing that even the stupidest person can appreciate does not explain its survival,IMHO.This is a VERY corrupt state.It must be that no Cronies or Mafia types could make money off of wrecking it,and the maintainence costs and modest workforce costs never attracted the attention of Republicans who want to cut expenditures.Certainly they could sell it for alot of money.That might even be worth considering because it might attract capital to create more businesses along the route.

[-] 1 points by grapes (3317) 2 months ago

You may want to look for mainly Caucasians who have moved up from immigrant ranks to get rackets going as public-sector "servants." The old Mafia's offspring are now school superintendents, policemen, teachers, judges, and other government workers or cronies. Expect the money trail to reveal why the canal still exists - it may provide for jobs, pension vesting, and other incomes to some workers.

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

Yes-Food for thought,grounds for further investigation for anybody wanting to figure out ways to protect the Canal in the future.I can't help but suspect that the Canal faces threats similar to other infrastructure that belongs to the Commons.

[-] 1 points by grapes (3317) 2 months ago

Not all speculators are bad. Not all are good, either. Those who trade based on fundamental information about actual scarcity and abundance of goods and the demand for them perform important functions for the economy because they "ration" goods through prices. If they do that well, they profit handsomely. If they do that badly, they lose their shirts. I have no problem with that because other forms of economies have very cumbersome methods of rationing subject to corruption.

The speculators who look at other speculators to trade without fundamental information are bad because they magnify the fluctuations without informing the market with information about the real world. They create booms and busts so I agree with you death penalty or equivalent can be good but the line between the two groups are not clear-cut so enforcement will be a problem.

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

Ah! A very astute and well informed observation.I suppose there is no way to eliminate entirely the age old practice of Carpetbagging,and you are correct to point out that it is wrong to condemn people who are doing their jobs as best they can under conditions that must be difficult even in the best of scenarios.

[-] 1 points by grapes (3317) 2 months ago

I have heard of how ridiculously some centrally planned economies allocated goods and services so yes, our market-based system has definite problems such as avoiding the magnification of booms and busts but we do not need to fill out applications, keep track of rationing coupons, or pay bribes to get goods and services transferred to a new place. The price signal does most of that work.

When I want to drive to a new state, I do NOT want to deal with the Federal Bureau of Allocation to pre-arrange the transfer of foods and drinks to that state before I start off. The speculators, traders, and store managers decide if I would starve there or not with my financial wherewithal.

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

I am aware of those tales of woe-I've a good friend who grew up in East Germany.He has an inexhaustible supply of hilarious anecdotes.Hilarious to those who never had to contend with all that.The way things are,as a person whose ability to buy or sell in markets is strictly limited,I am a completely marginalized person.I guess my situation is analogous to a person who lives under a planned economy.I must admit I wish I had more freedom in economic terms,because it takes away or reduces my other freedoms.It took many years for me to figure out just what the economic function of myself and the millions of other people like me actually is.

[-] 1 points by grapes (3317) 2 months ago

Freedom is actually mostly a matter of alignment of desire with reality. The important question to answer is whether you are happy with your perceiving yourself to be marginalized or not. I seldom feel bored but younger folk easily get bored doing exactly what I do.

In a museum when I saw someone staring at a sculpture for half an hour taking notes, I said to myself, "How boring!" Later on in life, I discovered that a sculpture could indeed take half an hour to be examined in detail, graded on different aspects, and evaluated by various criteria. I was not "free" - I was captured and locked up. However, I was free.

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

LOL-struggling with prosaic difficulties such as how to mow the lawn when you have no money to purchase gasoline is my idea of boring.No matter,really-the lawn goes native and life goes on.It pisses the neighbors off though,because the deer think the people are gone,and invade everyone's gardens.Lots of Irish Spring is needed then!

[-] 1 points by MattHolck0 (1733) 2 months ago

not sure how workable infowars will be

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

I used to enjoy Alex's colorful commentaries in spite of the Bircherism.I could not stand the climate science denial so I stopped listening 4 years or so ago.

[-] 1 points by MattHolck0 (1733) 2 months ago

no climate denial

lots of villain posing as racists

[-] 1 points by trashyharry (2896) from Waterville, NY 2 months ago

Or posing as people who are posing as racists? IDK-I don't go to the forum there.All I have to do is visit the locals to get my fix of right wing ding.

[-] 0 points by turbocharger (1491) 2 months ago

Interesting analysis.

[Removed]

[-] 1 points by MattHolck0 (1733) 2 months ago

consumer confidence

why do I need to buy stuff ?

[-] 2 points by grapes (3317) 2 months ago

You buy gasoline for driving your car, perhaps. If you have received cheaper gasoline after a fill-up of your car's gasoline tank, you will have money left over to buy other things. That fuzzy warm feeling of having more money in your pocket is consumer confidence. You will be a bit more inclined to buy yourself a cappuccino which leads to the coffee shop's needing a bit more labor and materials such as coffee beans.

Repeating this over hundreds of millions of U.S. consumers can prompt job creations at the coffee shops, coffee bean importers, coffee bean growers in tropical countries, natural gas fracking and coal mining operations (for electricity for brewing), oil companies (for producing diesel fuel for ships to move the coffee beans), etc. The lowered oil price can make some families of workers happier with jobs to do, foods on the table, a movie perhaps, a smile on the face of the child getting a new backpack or pair of shoes, etc. - all in all, a splendid prospect!

If you can do all of these things mentioned above yourself, you do not need to buy stuff. I doubt that you can so you need the mutual cooperation of the money economy to help you do them through others worldwide.

[-] 1 points by MattHolck0 (1733) 2 months ago

if the population had more money the economy would exchange more goods and services ?

[-] 2 points by grapes (3317) 2 months ago

More spendable money enables but does not mandate more exchange of goods and services. Giving many many billions dollars worth of 0-0.25% interest rate credit to the banksters did not perk up the U.S. economy for years although a case can be made that it prevented catatrophic implosion of the debt markets and therefore warded off a Panic.

The banksters abused the idea of money and credit for their own private gains and nearly drove the world's economy to Oblivion through the worldwide distribution of the financial weapons of mass destruction, the financial derivatives.

Money economy can reach beyond capitalistic economy to organize economic activities. Evidence includes the trade with many non-capitalistic economies. Corruption of money by the creating authorities destabilized the juggernaut which would crush many peoples' livelihoods and lives.

The good news is that if the peoples do not realize that they are being crushed (by crushing them gently enough), nothing bad will happen so everything will be fine. It is a little bit like extracting a nerve from a badly rotten tooth can stop the pain.

[-] 1 points by MattHolck0 (1733) 2 months ago

tree tea oil can cure a tooth infection

[-] 1 points by grapes (3317) 2 months ago

Unfortunately, there is only one way to end a debt bubble - by the destruction or repudiation of bad debts. There is no "tree tea oil," but "codeine."