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Author Topic: Oil Speculators and Long Term Price Stability  (Read 771 times)
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WhiskeyGirl
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« on: August 07, 2009, 04:11:23 PM »

Do speculators help or hinder long term price stability?

Would the world be a better place if people trading actually had a real inventory of goods?  Or, is it a better place because people trade goods on paper?  Speculate without having skin in the game?

Quote
Big oil speculator defends practice in Washington - August 07

Posted: Aug 7, 2009 02:07 PM CDT

Updated: Aug 7, 2009 02:47 PM CDT

NEW YORK (AP) - John Hyland's funds control billions of dollars that flow in and out of energy markets, making him one of the biggest oil speculators in the world and also oneof the biggest potential targets for federal regulators.

Quote
The U.S. Oil Fund allows anyone to participate in energy markets without having to find a place to stash a 42-gallon barrel of oil or other commodities like natural gas. Shares of the fund closely track the daily value of energy commodities on the New York Mercantile Exchange and the fund buys those contracts with money from shares.

Who pays for all the profits these funds make?  Does the money come out of thin air?  A printing press?  Sour deals included in the TARP?

Quote
"I'd just get rid of them," said hedge fund manager Michael Masters, a vocal critic of oil speculation who also will address the commission on Wednesday. "They don't really serve much of a purpose. They're not trading on supply and demand."

Many traders back those comments and for months have said the current price of oil cannot be justified by the fundamentals.

"Why should Americans pay higher prices so Goldman Sachs can have a passive index product that drives up the price of crude and benefits oil producers?" he said.

The influx of speculators has fundamentally changed the way oil is traded, and people need to understand that, Masters said.


read more here - http://www.kmph.com/Global/story.asp?S=10867185&nav=menu612_2_1

I think the same applies to other commodities.  What not promote long term price stability and supply?

How many starve on the globe every time the price of grain goes up?  How many struggle to heat their home or get to work?

How would the world be different if Goldman Sachs had disappeared last year along with Lehman?

Would the nation be richer?  Less debt?
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