The Great Oil Swindle-How much did the Fed really know?

[babylonsister]

The Great Oil Swindle

How much did the Fed really know?

By Mike Whitney


30/05/08 "ICH" -- - The Commodity Futures and Trading Commission (CFTC) is investigating trading in oil futures to determine whether the surge in prices to record levels is the result of manipulation or fraud. They might want to take a look at wheat, rice and corn futures while they're at it. The whole thing is a hoax cooked up by the investment banks and hedge funds who are trying to dig their way out of the trillion dollar mortgage-backed securities (MBS) mess that they created by turning garbage loans into securities. That scam blew up in their face last August and left them scrounging for handouts from the Federal Reserve. Now the billions of dollars they're getting from the Fed is being diverted into commodities which is destabilizing the world economy; driving gas prices to the moon and triggering food riots across the planet.

For months we've been told that the soaring price of oil has been the result of Peak Oil, fighting in Iraq, attacks on oil facilities in Nigeria, labor problems in Norway, and (the all-time favorite)growth in China. It's all baloney. Just like Goldman Sachs prediction of $200 per barrel oil is baloney. If oil is about to skyrocket then why has G-Sax kept a neutral rating on some of its oil holdings like Exxon Mobile? Could it be that they know that oil is just another mega-inflated equity bubble---like housing, corporate bonds and dot.com stocks—that is about to crash to earth as soon as the big players grab a parachute?

There are three things that are driving up the price of oil: the falling dollar, speculation and buying on margin.

The dollar is tanking because of the Federal Reserve's low interest monetary policies have kept interest rates below the rate of inflation for most of the last decade. Add that to the $700 billion current account deficit and a National Debt that has increased from $5.8 trillion when Bush first took office to over $9 trillion today and it's a wonder the dollar hasn't gone “Poof” already.

According to a January 4 editorial in the Wall Street Journal: “If the dollar had remained 'as good as gold' since 2001, oil today would be selling at about $30 per barrel, not $99. (today $126 per barrel) The decline of the dollar against gold and oil suggests a US monetary that is supplying too many dollars.” Wall Street Journal 1-4-08

The price of oil has more than quadrupled since 2001, from roughly $30 per barrel to $126, WITHOUT ANY DISRUPTIONS TO SUPPLY. There's no shortage; it's just gibberish.

more...

http://www.informationclearinghouse.info/article20011.htm

[bluesbassman]

1. Forgive me if I don't hold my breath.

On edit, wouldn't it be great if they really did get to the bottom of this? We can only wait and see....

Nice catch Babylonsister!

[bullimiami]

2. since 2001. hey thats when bush blew up the middle east.

coincidence? i dont think so.
intended consequence? you bet.

[bhikkhu]

10. Here's a conspiracy theory, if one is wanted:

The EU surpassed the US a year or two ago in GDP (Gross Domestic Product). What might another country do if they wanted to knock us down to third? Oil drives GDP, and oil price hikes threaten GDP, as in causing a recession. If a foreign power was able to simultaneously manipulate the price of oil to punitive levels while securing for themselves an adequate supply, that could trigger a recession here and not there. The end result might be a permanent realignment, with the US in 3rd place.

[aquart]

3. I'm so slow. I totally failed to make that connection.

Thanks for putting this up. I needed it.

[chill_wind]

4. Thanks babylonsister. I've been banging on this topic all day.

US Oil Price Manipulation Investigation Underway- Fox In the Henhouse?

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3364377&mesg_id=3364377



I can't even get 5 recs on this last one:

CFTC Targets Shipping, Storage in Oil Investigation: "Prosecutions Possible."


http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3366027

Can someone go kick that one more time? It's pretty interesting.


Yesterday I posted this one:

Senate testimony from a hedge-fund manager/ insider

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3360517

I do find it hopeful that something may puncture the bubble-blister open pretty soon.

[pingzing58]

5. This theft will end and many investment bankers etc., will jump out their windows for stealing from

everyone in the world. That's why gasoline is cheaper in Mexico.

[Extend a Hand]

6. There have been shortages all over the world

the rich countries have priced out the poor countries. World wide rationing by price.
Mike Whitney is wrong on this one.

http://www.energybulletin.net/41245.html
http://www.energybulletin.net/37958.html
http://www.rferl.org/featuresarticle/2008/02/d4acbb85-3bcc-49ec-ba05-f7f07ab231e7.html
http://allafrica.com/stories/200802180453.html
http://www.tios.co.za/index.php?fSectionId=1014&fArticleId=vn20080206061116591C849175
High oil prices prompt a scramble for Africa
Fri 25 Jan 2008, 9:41 GMT
http://africa.reuters.com/wire/news/usnL14478684.html
http://www.welt.de/english-news/article2029412/Indonesia_raises_fuel_prices_nearly_30_percent_.html
http://news.bbc.co.uk/2/hi/africa/4338306.stm


There are many, many, more examples. The US is a rich and powerful country so we have been able to continue to buy oil -- at the expense of poor and developing nations.

[cojoel]

7. and if it all crashes down one day

then the hedge funds and investment banks will be beating a path to the Fed once again for another bail-out. Hopefully President Obama will say "no".

[Baby Snooks]

8. Peak Oil is real, the price per barrel is not....

If you read the recent statement by King Abdullah very carefully, the reality of peak oil is very clear. At some point, he avoided saying when, Saudi Arabia will stop exporting. But in between the lines his comments reflect a concern over the dollar. That accounts for some of the increase as the price per barrel adjusts to the eurodollar.

I tried to find the story that appeared earlier in the week but one analyst apparently stated that 20-30% of the price per barrel at this point is from speculation. Which means the price per barrel should still be around $90. In other words, $90 represented the adjustment to the eurodollar.

Only a fool or someone who's making a fortune believes there is not some manipulation going on. Enron returns.

[bhikkhu]

9. OIl drives the global GDPs.

Which have been steadily increasing, particularly in China and India.

The rate of oil production has been essentially flat for three years, and most of the new production coming on line in the next year or two will be offset by predictable declines in existing fields.

The EIA data is extensive and as good as it gets for documentation: http://www.eia.doe.gov/emeu/international/oilproduction.html

So if you have flat supply and increasing demand the first thing you get is some strain on inventories, which we have, and then contingency plans to secure future supply, which can also be called "speculation".

I don't really have an agenda on this, but I have followed the numbers for some time and what is behind oil price is not some global conspiracy but essentially geology, and a need to plan for a changing future. Looking at the numbers this is entirely predictable and entirely predicted, from the price of oil to the price of all commodities which require oil energy inputs (which is to say - all commodities). This is a good site also for research and review http://energybulletin.net/ .

[4dsc]

12. Let's face it, American's will not change...

Short of a worldwide depression, American's are not going to change their driving or shopping habit anytime soon. They would rather believe its some kind of conspriacy than accept the fact that peak oil is real and going to effect their future and their children's future in a way they aren't going to like..

[DCKit]

11. "Failed" does not begin to describe this pResidency.

Keep clapping Georgie, Tinkerbell isn't really dead.

[lildreamer316]

13. More Information:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=3360213&mesg_id=3360213