So now that we have established, agreed, on the cause, why would you parade for margin rates to be increased as a solution?
doesn't sound very logical
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Crude Oil Drops 40%...
- Thread starter TT1
- Start date
So now that we have established, agreed, on the cause, why would you parade for margin rates to be increased as a solution?
doesn't sound very logical
I suspect Wallstreet institutionalized gearing to exacerbate cyclical swings in markets.
Bankers and their brokerage houses have the inside line on long-term credit trends, since they own the Fed.
When the bankers decree its time to drop the hammer, they position themselves accordingly and let highly geared speculators and investors drive price to extremes, at which point they unload.
After the cost-of-carry, I don't see how brokerages independant of Fed Member banks make money. Unless they've got a roladex of big swinging clients and trade inside. Not sure about that. Maybe client pays interest on their gearing? I trade fx, so unsure about equities.
Maybe Don Bright can tell us.
Bankers and their brokerage houses have the inside line on long-term credit trends, since they own the Fed.
When the bankers decree its time to drop the hammer, they position themselves accordingly and let highly geared speculators and investors drive price to extremes, at which point they unload.
After the cost-of-carry, I don't see how brokerages independant of Fed Member banks make money. Unless they've got a roladex of big swinging clients and trade inside. Not sure about that. Maybe client pays interest on their gearing? I trade fx, so unsure about equities.
Maybe Don Bright can tell us.
Quote from aboldoldtrader:
So now that we have established, agreed, on the cause, why would you parade for margin rates to be increased as a solution?
doesn't sound very logical
In the context of your prior post, your question here really raises a much larger issue regarding real solutions to our financial mess that no one in Washington DC wants to address.
A battle between, cost of capital vs price stability, inflation vs deflation, Japanese style interest rates vs Paul Volkers 1980 interest rates. I dont have the answers. I do know that the real solutions will be painful for the many and profitable for the few!
unless the cftc's commitment of traders report has changed in the past couple weeks there are a lot of specs in the market. i'd guess they are long since that is the way the market has moved. so an increse would probably hurt longs and cause a selloff.
but you have to remember that when you say the exchanges have "made enough money" that they are shareholder owned companies. their responsiblility is to maximize the shareholder's profit. it is not to try to figure out where the price of oil "should be" and adjust margins to try to get it there.
i will say that even though i've been in favor of the fed's rate cuts when you sit here and see the market go down while oil. the euro and gold go up (and vice versa) every day it would be great to see the fed hike 25pts next week and shaft all of the specs that seem to be converting their dollars to commodities.
but you have to remember that when you say the exchanges have "made enough money" that they are shareholder owned companies. their responsiblility is to maximize the shareholder's profit. it is not to try to figure out where the price of oil "should be" and adjust margins to try to get it there.
i will say that even though i've been in favor of the fed's rate cuts when you sit here and see the market go down while oil. the euro and gold go up (and vice versa) every day it would be great to see the fed hike 25pts next week and shaft all of the specs that seem to be converting their dollars to commodities.
Oil pros, can you help with my questions? Sorry if they seem amateurish - go ahead and answer anyway.
-I read this:
March 6, 2008
President Fails to Budge OPEC on Production
By JAD MOUAWAD
"OPEC on Wednesday rebuffed calls from President Bush to increase oil output, instead citing âmismanagementâ of the American economy as a major factor driving prices up.
-Please explain this "mismanagement" thing.
"Record prices are suddenly creating the sharpest tensions in years between the oil cartel and the United States, the worldâs largest oil consumer. Two days after the president called for more oil on the global market, OPEC members, meeting in Vienna, chose to leave their production levels unchanged, declaring that the market has plenty of oil already."
-Please explain how prices are so high if the market has plenty of oil?
-Can a cash settled mini oil contract affect the price of oil?
-What if 1 out of 7 people on earth trades oil online? Recall that 100,000 new brokerage accounts a week were opening in China at one point last year.
Can the proliferation of exchanges or other dealers and markets in oil increase oil prices?
-One of you mentioned that OTC trading of oil is bigger than SP500.
-Are you saying that it is so gigantic that the contracts have no bearing to the deliverable supply of oil? If "deliverable" is the wrong word for me to use - answer anyway - you know what I'm asking.
-Are you saying that the oil market is so big that it cannot be restrained in any meaningful way by Congress or other Agencies or US regulators? Note - my question is NOT whether it will go offshore. My question is just limited to oil contract trading generated in the US, for consumption in the US, where the contracts are cleared by US firms and the US payments system is use.
"The cartelâs president blamed financial speculators and American economic problems, which have helped lower the value of the dollar, for the high oil prices. After the meeting, oil prices settled above $104 a barrel, a record."
-Why is he saying speculators? If it's Chinese or other South Asians buying why didnt he say it's Chinese or other South Asians buying.
- Doesn't Carter Doctrine pretty much say that the US will go to war over oil and isn't that just what Bush did? However you answer, isn't oil nevertheless a strategic commodity?
In your views, is there any US national interest that should trump your interest in making a livelihood - in other words, put you out of business?
Thx.
-I read this:
March 6, 2008
President Fails to Budge OPEC on Production
By JAD MOUAWAD
"OPEC on Wednesday rebuffed calls from President Bush to increase oil output, instead citing âmismanagementâ of the American economy as a major factor driving prices up.
-Please explain this "mismanagement" thing.
"Record prices are suddenly creating the sharpest tensions in years between the oil cartel and the United States, the worldâs largest oil consumer. Two days after the president called for more oil on the global market, OPEC members, meeting in Vienna, chose to leave their production levels unchanged, declaring that the market has plenty of oil already."
-Please explain how prices are so high if the market has plenty of oil?
-Can a cash settled mini oil contract affect the price of oil?
-What if 1 out of 7 people on earth trades oil online? Recall that 100,000 new brokerage accounts a week were opening in China at one point last year.
Can the proliferation of exchanges or other dealers and markets in oil increase oil prices?
-One of you mentioned that OTC trading of oil is bigger than SP500.
-Are you saying that it is so gigantic that the contracts have no bearing to the deliverable supply of oil? If "deliverable" is the wrong word for me to use - answer anyway - you know what I'm asking.
-Are you saying that the oil market is so big that it cannot be restrained in any meaningful way by Congress or other Agencies or US regulators? Note - my question is NOT whether it will go offshore. My question is just limited to oil contract trading generated in the US, for consumption in the US, where the contracts are cleared by US firms and the US payments system is use.
"The cartelâs president blamed financial speculators and American economic problems, which have helped lower the value of the dollar, for the high oil prices. After the meeting, oil prices settled above $104 a barrel, a record."
-Why is he saying speculators? If it's Chinese or other South Asians buying why didnt he say it's Chinese or other South Asians buying.
- Doesn't Carter Doctrine pretty much say that the US will go to war over oil and isn't that just what Bush did? However you answer, isn't oil nevertheless a strategic commodity?
In your views, is there any US national interest that should trump your interest in making a livelihood - in other words, put you out of business?
Thx.
Trader5287
OPEC on Wednesday rebuffed calls from President Bush to increase oil output, instead citing âmismanagementâ of the American economy as a major factor driving prices up.
-Please explain this "mismanagement" thing.
"mismanagement"= Falling US Dollar.
For the most part Oil is traded World Wide in US Dollars. Lower Dollar equals less money for their Oil.
OPEC on Wednesday rebuffed calls from President Bush to increase oil output, instead citing âmismanagementâ of the American economy as a major factor driving prices up.
-Please explain this "mismanagement" thing.
"mismanagement"= Falling US Dollar.
For the most part Oil is traded World Wide in US Dollars. Lower Dollar equals less money for their Oil.