This is good news! Once the government regulates those evil speculators (removes them) we will all have “low price shangrila”! It is amazing what government can do for the greater good when they put their mind to it! Ah, excuse me while I go puke.
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July 9th, 2009 at 10:35 am
Everyone in the market is a speculator in some way. Fortunately, the government won’t be able to stop the free market forces. These “evil” futures traders will likely migrate to other trading vehicles, possibly ETFs. Trends will still be there…
It is interesting to see a pop in UNG (EFT for front-end natural gas contracts) volume in the last couple of months…
July 10th, 2009 at 10:45 pm
It’s always a lot of fun to sit down one of these “speculation is to blame” types and ask them:
1) Are speculators “evil” when products that you want to buy cheaper, are in fact pushed down in price by “speculators”?
and…
2) Are speculators “evil” when products that you want to increase in value, are in fact pushed up in value by “speculators”
These are just kind of those inconvenient elements with regard to the whole “evil speculator” ideas, that end up coming in and ruining their whole thesis. Of course, the “evil speculator” thesis is blind and one-sided. But nobody ever asks questions like that when it matters….
July 16th, 2009 at 5:16 am
There are much more powerful interests behind high oil prices than specs. Russian state budget incl. military is designed for 60$+ oil prices. Gulf banks have some trouble, because of some groups, where liquidity dried up a bit (e.g. see http://www.ft.com/cms/s/0/be3469ae-6bd6-11de-9320-00144feabdc0.html?nclick_check=1 ). Presidents and chancellors certainly know, that those oil producers also buy any type of expensive things from e.g. Alstom or BA Systems. On the other hand lower prices are a short term stimulus, countering the current economic downturn.
So all in all politicians can have no clue what is better and should be glad to have functioning global markets, where no simple arbitrage is possible and no single producer or consumer can dictate the price, and leave the participants doing their job (e.g. taking risk nobody else wants to take). Dont re-invent the Politburo, where some guys tried to set the prices for 6 million goods…