Posted on 10/21/2009 6:06:30 PM PDT by SeekAndFind
Wall Street is up to its old tricks again.
One year later, one of the key excesses that led our consumer-based economy into an historic downturn is being abused in the exact same way that got us $147-a-barrel oil last summer. Worse, many in the media are again getting the facts wrong on oil prices and demand—
Forget what Cambridge Energy Research Associates reported on Oct. 13. By its calculations oil demand actually peaked in 2005 among the industrialized members of the Organization for Economic Cooperation, while in the U.S. alone oil usage has dropped by 2 million barrels a day compared with 2005. But remember these facts: As of this writing, U.S. supplies of refined distillates, including diesel, heating oil, and aviation fuel, are at a 25-year high. We have 29.56 million more barrels of oil in our inventories than we had the same week a year ago, and refined gasoline on hand is up 16.37 million barrels for the same period. And this does not include the 125 million barrels of oil that the Secretary General of OPEC says are being held offshore in tankers.
Skewing in Public In fact, the market is skewed by the high inventories of refined products. Last week, the Energy Information Administration showed that refinery utilization rates fell by over 4%, to 80.9%, yet oil jumped $2 a barrel on the news that our gasoline inventories fell by 5.2 million barrels.
That was the dark side of the futures market making its move: Oil should have fallen just because, according to the American Petroleum Institute, refinery crude runs fell by 511,000 barrels per day (validating that 4% drop in utilization). In short, refineries determine oil demand, and in that week demand for more oil was off substantially—yet the market bid crude up.
(Excerpt) Read more at businessweek.com ...
Great Post!!!
parsy, who hopes everyone on FR reads it.
The first premise is wrong - which only casts doubt on everything else he says. The house bubble and subsequent bust had little connection with oil, speculating or otherwise.
I'm so old I can remember when "sound as a dollar" meant just about the opposite of what it's come to mean.
bwhahaha.. ohhh dear....
Scary, I said almost the exact same thing that this article said to my wife today. My take is that this stock rally is losing steam. This market will run a little as 3rd quarter GDP will show growth, and that will be pimped by wallstreet to the max. But it is all false growth. There is no underlying increase in demand. It is all the result of false stimulus (first time home buyer credit and cash for clunkers) and cost cutting.
The 4th quarter is going to be brutal. The housing credit is going away and cash for clunkers is gone. Walmart is projecting a terrible holiday season and is already discounting prices showing there is no demand. The result is investors will see this rally stall near the end of the year.
Then wallstreet will look around to see where they can make the fast buck. Stocks are stalled because there is no growth. Bonds and Treasuries are worthless because interest rates are near zero. So wallstreet will pimp the commodity market, especially oil, with unbridled speculation, just like last year when oil went to $145/barrel and gas was $4.50 a gallon. To them it worked before, so it will work again.
Wallstreet wont care if it tanks the economy and sends us into a double dip recession, just like they didn’t care that it sent us into a great recession last fall. They only care about making money. They will make it on the run up, then short it late next year as the bubble pops and they make even more money and the fall down.
The only good thing that could happen is if the economy does go into a double dip recession, that will hurt the dumbcrats for re-election. Who knows, that may be wallstreets intent to get back at 0zer0.
Conservatives point at big government, and rightly so, but Wall Street is not an innocent victim of the bad economy.
Check out this quote:
“As Washington irony goes, this is a new high-water mark: They’ve printed money to save our financial institutions, claiming it’s there to stimulate a recovery. Yet much of that newly minted money is being used against consumers and small business owners.”
“Conservatives point at big government, and rightly so, but Wall Street is not an innocent victim of the bad economy.”
Precisely...there’s plenty of blame to go around. Greed abounds in ALL sectors, including the GOP.
Most of the stock market isn’t small investors, it’s institutions (mutual funds, pension funds, sanctimonious self-righteous fascist ‘ethical’ investing funds, foreign governments).
“Most of the stock market isn’t small investors, it’s institutions”
That’s so true. These people floor me. They play Craps with other people’s money, hold their shareholders and employees hostage to shake down a bail out & stimulous money, than use that taxpayer money to jack up oil prices, further hurting the economy as a whole.
I don’t know who exasperates me more, the soulless executives who put us in this mess, or the people who defend their actions on the basis of “free market” sloganeering.
Unless the folks who were heavily invested in mortgage-based securities started hedging their positions by buying oil futures.
Given that this apparently actually happened ... are we supposed to trust anything you have to say?
What I was gettin’ at is, the money in mutual funds comes from small investors, all of whom have a stake in NOT having their assets siphoned away in the form of fees, taxes and such imposed by the federal gov’t in order to “protect” the economy.
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