Black Friday
7 June 2008Friday was tough in world and US markets, no matter what measure you use. Despite their reliance on unreliable numbers, the US govt. still admitted to remarkably high unemployment figures, and oil took twice the largest jump per day of anything seen in decades. The equities markets responded with negative vigor.
Perhaps we’ve reached the point already when a serious conversation needs to be had about speculation in the energy markets. This is my polite way of saying: perhaps we should rid the energy markets of speculation by the vampires.
There’s nothing wrong with people in the actual market doing their best to hedge against future price increases (SW Airlines would be a great example), but one can honestly question whether we’ve now moved, in just a few weeks, from a time when the hedge etc. vampires are not just taking profit without contributing, but are actually endangering economic stability.
Kids in college learn that free markets generally increase stability; here, we have the opposite case. If the vampires drive inflation and threaten equity markets without contributing an economic good, it might be time to move to the next century in terms of market regulation.
By restricting market access in oil to those who actually use it, we would be doing the world a gigantic favor, when it was most needed. Everyone from the Saudis to the Bushes ought to get behind this one.
5 Responses to “Black Friday”
June 7th, 2008 at 9:14 pm
Mark – an elementary education in economic theory would be a good place for your to start before making such assinine comments as the one above…..
We have had epic bubbles in
-the equity market where the whole system was complicit
-the housing market where the whole system was complicit and the fed helped pile on
-the credit market where the whole system was complicit
And there was not one investigation while this stuff was occuring…and in fact alot of it was encouraged
The price of crude goes up because of supply and demand and lack of any coherent energy policy in the US, and there is constant commentary about bubble, manipulation, and speculation and constant calls for investigation; and of course we get it:
http://www.cftc.gov/newsroom/generalpressreleases/2008/pr5503-08.html
Well for those who think the price of crude is up for non-fundamental reasons, lets see where the price is in a few days after all the theoretical “specualtors” clear out due to this sort of stuff, and probably drive the price of crude below its normal market value in the process of hitting the exit button all at once…
ANd then we will be left with cold hard reality
Interestingly were the BLS left responsible for measuring the price of crude, they would probably say it is $20 a barrel because it is of better qulaity (somehow) and people are driving less and it has been subsituted out with walking which is free….
June 7th, 2008 at 9:51 pm
Congress Blames the Hedge Funds, Part IV: This Isn’t Complicated:
http://jeffmatthewsisnotmakingthisup.blogspot.com/2008/06/congress-blames-hedge-funds-part-iv.html
June 8th, 2008 at 9:19 pm
If I ignore the vituperation here, and try to sort out the basic point(s), it seems this writer believes that basic supply and demand are the only price drivers of oil prices today, and further thinks that speculators (even though they are not material?) will, for some strange reason, be “clearing out” in a few days, and that crude will reach its “normal market value” in that course of time.
Now there’s a bet that I’m happy to take.
No, speculators will not clear out in the near term, and no, we will not be seeing supply/demand pricing until at least after the US election; that’s my own suggestion.
June 8th, 2008 at 9:22 pm
Oh, and P.s. : I got my elementary education (for the little I think it was worth) at Stanford.
July 11th, 2008 at 3:27 am
I think the airline industry is agreeing with you at length; http://www.stopoilspeculationnow.com/site/page/sos_now_supporters