How much of the 'bailout' money is showning up in the commodities market-OIL?

[Badgerman]

since the almost trillion dollars have been funneled into the financial sector, three things have gone up. The salaries of those in the financials, the stockmarket, and OIL contracts. There is evidence that some of the money the financials got was in turn direected into the purchase of financial stocks, this was an implied useage as it would buoy the assets line of those companies. the increase in salaries is argued that it is necessary to either keep good people on, or to lure good people from other companies. Now as to the oil, the squeezing by OPEC does not account for any of the increase above about $50/bbl. The additional, to present increase to nearly $70 is openly pure speculation. In a time of cash strapped and credit strapped economy the question has to be asked: Where is the speculation miney coming from? The only obvious source is the huge capital injections into the financials.

Now looking at each of those a little closer. The salaries issue just stinks, period! The very people whose greed, and corruption brought on the financial disaster the world finds itself in, are the very last people that logic would dictate deserve searching for, keeping, and giving payraises. One simply has to keep to oneself any wishes as to the future longevity of thses people.

The re-investment of the monies in order to bolster the equity value of the financial companies is, of course, nothing more than exactly the same Ponzi they played to get to the disaster. But at least to Obama's and his trusted financial guru Geithner they are being consistent: They trust these fellows to act in a consistent manner, and they are, they know the Ponzi model inside and out, and so let them continue to play.

I cannot say that I see any direct evidence in the form of a public admission that these guys are speculating on oil futures, but I can fins no other source of monies in such large amounts as are needed to play this particular game...only the bailout funds seem to fit the bill.

All of this they will argue is going to cheer up the public, raise their confidence and cause them to once again spend like drunken sailors. And the immediate signs are that is what is happening. However, at the same time consumer credit is shrinking in proportion to the jobless rate, which is now 9% and right on track for double digits by the end of summer. Further total wages have actually decreased leaving even less consumer funds than there were before.

If the administration, and it may be to late to pull this off, does not inject, (at least half the amount they put into the financials), into construction of a new electrical grid, alternative energy construction and research, mass transit systems, schools, water, sewer and repair of the nations highways...the joblessness will worsen, and in a year or less the financial companies will be in the same or worse shape they were in last year.

I am quite open to rebuttal of any or all of this, but knee-jerk sychophants regurgitating party(either party) talking points can save there fingers the trouble.

We are sliding downward, whether more slowly or not is completely irrelevant...when falling off high cliffs slowing the fall by bouncing off rocks does not prevent the eventual terminal effects of landing.

[Hannah Bell]

1. makes sense: gov't gives them your money, they put it into oil futures to take

more of your money.

[AllentownJake]

2. What the banks aren't lending the money at reasonable interest rates?

I'm shocked. Fucking shucks, who would have thought the guys who developed financial frauds against the American people would do it again?

[Occam Bandage]

3. Simpler, less conspiratorial explanation:

Signs of worldwide economic recovery suggests future growth, especially in the industrial sectors in Asia. Industrial growth means increased oil consumption. A linear growth in oil demand results in an exponential growth in oil price, given that oil supply is effectively capped by technological limitations.

[truedelphi]

6. Sometimes there are two scenarios working at once.

Ask Kucinich about it. He saw banks trying to gobble up the utilities in his home city way back in the 1980's. Nothing to suggest that banks are less commodity minded now a days than back then.

[Occam Bandage]

7. Sometimes.

And sometimes the simplest explanation is correct.

[truedelphi]

9. Oh yeah right -

Just the other day some money people were sitting around the teak table in their financial headquarters.

"Let's put some money where Jim Rogers is putting his money - into commodities like oil and platinum and gold."

"No we shouldn't do that! Why it would be betraying the trust of the good American people who helped Bail us out. Why should we make their lives tougher than they would be without our interfering. And for Pete's sakes, do we really need larger bonuses?"

[Occam Bandage]

12. A declaration of motive is not evidence of anything,

to say nothing of evidence of that particular cause of a near-doubling in the price of oil.

[Badgerman]

10. No 'conspiracy' expressed or implied. They continue to play PONZI...

My observations are not meant to imply any sort of conspiracy. These people have always played one game, that is all they know, they are simply continuing the game with trillions of 'new' money.

[Occam Bandage]

11. Regardless. Supply/demand is all that's necessary to explain it. nt

[BeFree]

16. Oh?

So the demand was responsible for $140 a barrel oil just a few months ago?

And how does that jive with the idea that all storage capacity is used up? That tankers are sitting offshore waiting to be unloaded?

All your theories fly in the face of usual business practices to maximize profits. Chavez, down in Venezuela, is happy to see the price of his stocks rising daily. Do you think he's not pushing the price higher?

[truedelphi]

17. I am quite pleased to meet someone on this board who is smarter

Economically speaking, than Jim Rogers.

Rogers is the one who, afteryears of buying up before the price is too high, has moved his whole family to Asia. And since the entire Pacific Rim and Asian nations are gobbling up resources like there is no tomorrow, he is telling everyone that now is the time to buy up commodities.

And of course, since you are smarter, people are listening to you and NOT buying up the commodities.

[Hannah Bell]

19. us economic activity down something like 6% each of last two quarters, world economic activity down

similarly.

sure, supply & demand.

[girl gone mad]

18. Simpler only in the sense that it ignores quite a bit of known information.

For example, we KNOW that Government Sachs has increased their net long positions in commodities over 300% since they were gifted TARP money.

Last week’s Petroleum Status Report stated: "Total products supplied over the last four-week period has averaged nearly 18.3 million barrels per day, down by 7.3 percent compared to the similar period last year." In other words, the US Oil Cartel produced 1.5M barrrels LESS per day than last year, creating a 10.5M barrel product deficit on the busiest driving week of the year. Not only that but imports were down 650,000 barrels a day, causing the US another 4.5M barrel deficit of oil for the week. This data is for the week that ended Friday, May 22nd, a week when massive amounts of fuel are transferred to retail gas stations who get ready for the biggest driving weekend of the year and despite having the head start of a 15M barrel shortfall in supply, the total drawdown of product was just 5.4M barrels for the week. Imagine how much oil we’d be swimming in if we didn’t EXPORT over 1.8M barrels PER DAY.

America is, in reality, swimming in oil, despite the KNOWN FACT that speculators like GS are paying to store oil in tankers offshore and around the world in order to create the impression of high demand in this shrinking global economy. Iraqi Oil Minister Hussain al-Shahristani said last week: "We don’t think it’s a wise economic decision to produce oil from secure underground fields and then pay to store it in floating tankers. Future generations can benefit from it better than we can, if we don’t need it." The suppliers KNOW they are selling us more oil than we need and they KNOW the speculators are sitting on it. We are being conned out of 16M jobs worth of money again by the same scum we had to bail out when their last con game got busted. Try that for simple.

[truedelphi]

4. Great article. One point though -

it is far more than a trillion.

The original Bailout was seven hundred billion. But an almost equal sum had been handed over to certain banks and financial firms between Aug 2007 and Sept 2008, a handover that the media ignored.

So count that as 1.4 Trillion.

Then the government went ahead and purchased the Toxic Assets, and experts still quibble over whether that was a 2.1 trillion handover, or up to 3.8 trillion.

Plus we simply gave many banks monies - some tens of billions here to Bank Of America, some tens of billions there to Goldman Sachs. Other banks as well. AIG ALONE HAS RECEIVED OVER 150 BILLION. AND AIG SERVES AS A PASS THROUGH, SO THAT THE BANKS/FINANCIAL INSTITUTIONS IT DEALT WITH COULD HAVE THEIR LOSSES ON DERIVATIVES MADE GOOD.

THE TOTAL THAT NAOMI KLEIN MENTIONS THESE MANEUVERS COSTING US NOW STANDS SOMEWHERE UNDER TWELVE TRILLION. BETWEEN ELEVEN AND HALF TRILLION AND TWELVE. OF COURSE, THAT INCLUDES BUFFING UP THE SYSTEM SO THAT THE FDIC ASSURANCES MEAN SOMETHING, AS WELL.

Unfortunately for those of us that believe a trillion is REAL money - there is very little in the way of oversight. Other than the fact that we should "trust" Bernanke, Geithner, Summers Rubin etc.

[Badgerman]

5. You're absolutely correct, I used the lesser amount because to many cannt graspt the real quantities

Scary! Both the amounts of monies involved, and the numbers of people who cannot fathom the problem.

[truedelphi]

8. I do that too, try to use a lesser amount so that those who

Would be skeptical won't turn off at once.

People who don't understand are so proud of their not understanding. Why, not understanding makes one human and more likeable.

Even Obama has started using this as his talking point - why when he began running for the Presidency back in 2007, only two huge matters were on his plate - Afghanistan and Iraq.
He goes on to say that the financial system crashed, and he just wasn't expecting that.

Most of us realize that no presidential candidate would ever really think about some silly little thing like the ECONOMY! <sarcasm intended>

[Statistical]

13. If you could prepay all your gas for next year @ $2.75 per gallon would you?

That is what an oil future essentially is. Locking in the price of a product at slightly more than current market value in anticipation it will be even higher.

So if BP (or shell, or chevron) was offering a prepaid card. 100 gallons of gas for $2.75 good until December 2010 would you take it?

Now if gas prices stay below $2.75 you will lose money. On the other hand if gas rises to $3.00, $3.50, $4.00 you still pay $2.75 per gallon.

Companies are anticipating that oil will rise as economy recovers. Maybe not to $150 but certainly not $50. By buying futures they lock in a price and become oil neutral.

[Badgerman]

14. Now 'hedge' that contract and use it to finance the contract ... PONZI - Derivative same game! n/t

[Statistical]

15. Where do you get this stuff.

You can't hedge it unlimited. Their are margin requirements for future contracts.

On the other hand you could buy some of those cards $275 card for 100 gallons of gas put it on a 0% credit card for 12 months.

Next summer if gas is $3.50 a gallon you could sell the cards for $320 each, use the funds to pay off the credit card and keep the profit.

OH NOES. PONZI.

If PONZI the new boogey man. Anything anyone doesn't understand financially is PONZI.

[Hannah Bell]

20. you can depending on your venue.

[Badgerman]

21. Ponzi is, as Ponzi does or if it quacks etc denial works in politics, not economics. n/t