Abolish oil futures now
- Thread starter ronblack
- Start date
The boom in commodity prices has more to do with the death of the dollar than it does with the fact that futures trade on oil. However, since the majority of our oil comes from overseas, and oil is priced in USD, its natural that with a sinking dollar those people will demand more of them for the same product. Half a brain could figure that out..then you'd have to use the other half to figure out the rest of why its going up....and unfortunatly I'm still looking for that part of my own. 
Singapore or Hong Kong are both great examples of how to run an economy. Note I did not say a country or govt, but an economy.
They run economies well mostly by leaving it alone. They are able to do it that way because they are not "social democracies" HUGE POINT.
There are calls for developing "democratic institutions" in HK. When that happens it's going to be time to go short HK.
[edit] Hong Kong
The collapse of the Thai baht on July 2, 1997, came 24 hours after the United Kingdom handed over sovereignty of Hong Kong to the People's Republic of China. In October 1997, the Hong Kong dollar, which was pegged at 7.8 to the US dollar, came under speculative pressure since Hong Kong's inflation rate was significantly higher than that of the US for years. Monetary authorities spent more than US$1 billion to defend the local currency. Since Hong Kong has more than US$80 billion of foreign reserves, which is equivalent to 700% of M1 money supply and 45% of M3 money supply of Hong Kong, Hong Kong managed to keep the currency pegged to the US dollar despite the speculative attacks. Stock markets become more and more volatile; between 20 October and 23 October the Hang Seng Index dipped by 23%. Hong Kong Monetary Authority promised to protect the currency. On 15 August 1998, Hong Kong raised rates overnight from 8% to 23% and at one point, to 500%. While the Monetary Authority recognized that the speculative forces were taking advantage of the unique currency board system, in which the overnight rates would automatically increase proportionally when the currency is sold in the market heavily, which would in turn increase the downward pressure of the stock market and thus allowing the speculators to earn a large profit by short selling shares, the Monetary Authority started buying component shares of the Hang Seng Index in mid-August. The Monetary Authority and Donald Tsang, then Financial Secretary, declared war with speculators openly. The Government ended up buying approximately HK$120 billion (about US$15 billion) of shares of various companies, and becoming the largest shareholder of some of the companies (e.g. the government owned 10% of HSBC) at the end of August when hostilities ended with the closing of the August contract of Hang Seng Index Futures. The Government started to divest itself from the position in 2001 and made a profit of about HK$30 billion (about US$4 billion) in the process. Speculative actions against the Hong Kong Dollar and the stock market did not continue into September largely due to extraordinary reaction to speculators by the Malaysian authorities and the onset of the collapse of Russian bond and currency market, which caused massive loss to the speculators. The currency peg between the Hong Kong Dollar and the US Dollar at 7.8:1 continued to exist undeterred.
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from wikipedia
http://en.wikipedia.org/wiki/Asian_financial_crisis
Precisely why plunge protection teams are a good thing.
Yes, I aware of that. The fact that more fields are discovered imo only stipulates that fact that they are finite too.
The difference with metals is that they were and still are considered precious and that they are not burned and lost forever. Most gold and many other metals are used for permanent and/or recyclable goods. Oil is gone forever.
But isn't this in a timeframe orders of magnitude larger than that in which we burn it?
With 'not produced' I meant it to compare to eg. agricultural products. A field of corn will bear corn next year as well. A field of oil will be empty is 10-100 years.
Well, in fact my point is that this perception has not really hit home yet. When prices rise there is always talk of storms and delayed drilling, but never of the fact that in the end oil will be priceless.
Although I think that before oil hits 200 current US$ (probably in EUR or RMB by then) equivalents in 10 years, the world will have switched to other sources.
Thanks for insights btw,
Ursa..
I haven't watch Fox in years. Which part of what I said is not true??
John
Our President is elected by an electoral college. Not by direct popular vote. It's done that was so a few large states can't dictate who the president is. The 2000 election shows the wisdom of the guys who wrote the Constitution.
Europe has a disgusting history of tyrants, murderers becoming heads of state. Roman Emperors, Napoleon, Hitler and countless other lesser known raping and robbing the populace.
All Europe has known is war and in the 20th century they turned to America to save them.
All America has ever wanted was to be left alone but you Europeans can't keep your house in order and will always turn to us to help you.
Sometime over the next 20 years Russia will blackmail you over oil and gas and you will no doubt come crying to America to save you. I would guess that we will come to your rescue because we will have no choice.
John
Interesting that a European coined the term "America Alone" when referring to the only real enemy to Islamo-Fascism. Low birth rates + nanny state + unarmed citizenry mixed with Londonastan (and the same growing populations of hard-core Moslems everywhere else on the continent) is a scary thought indeed. Your non-defense spending may come home to roost.
It's not finite. Their is tons of oil yet to be discovered. The Earth's crust is on average about 40 miles thick and we have only drilled down around 5 miles or so. There has to be tons of Oil and Gas deeper down.
What makes you think that Oil is not constantly being produced even now. Do you think that just in modern times the processes that created Oil stopped? Those processes are still going on. New Oil is being produced by the Earth on an on going basis.
Besides, we won't be using oil for power within 50 years anyway. Our military already has the technology to produce free energy but it remains under lock and key. Why is it under lock and key? Is it to protect the "rich" oil companies" no. Its because the physics of free energy once understood is so simple and elegant that it is easily weaponized.
Producing a nuclear weapon is a huge industrial process. Producing a weapon based on free energy must be a very simple endeavor and its under lock and key because our society is not advanced enough to be trusted with it.
John