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The Global Oil Scam: 50 Times Bigger than Madoff
- Thread starter Lorenzo
- Start date
I would also like some help with the authors logic - before i dismiss it.
lets say there are 100 pounds of widgets in the world with 10 being made and 10 breaking every month.
And those widgets can be traded.
If someone buys a contract and some one sells it - how does that cause the price to go up
Does more open interest really mean prices go up? Don't the traders have to reverse the trader at a later date?
Secondly how does the cost of that contract get incorporated into the price of the contract?
lets say there are 100 pounds of widgets in the world with 10 being made and 10 breaking every month.
And those widgets can be traded.
If someone buys a contract and some one sells it - how does that cause the price to go up
Does more open interest really mean prices go up? Don't the traders have to reverse the trader at a later date?
Secondly how does the cost of that contract get incorporated into the price of the contract?
Quote from piezoe:
Landis. I am developing more and more respect for you.
LOL!
One must also take into account that in the Spring of 2008, Israel was asking the United States for two things:
1.) Bunker busting bombs.
2.) Permission to fly over Iraqi airspace.
The Israeli's wanted to take out Iran's main nuclear facility in Natanz and they were in contact with George Bush and the State Department in regards to this mission.
Bush denied Israel permission to fly over Iraqi airspace and the "mission" never got off the ground. And for awhile there, there was no communication between the Israeli government and our own State Department . . . so the Bush Administration was uncertain as to whether or not the Israeli's would go it "alone" and on their own.
For all of Bush's tough bravado, he certainly "whiffed" on this one, in my opinion.
In any event, this "situation" undoubtedly played into the surge in crude oil as the futures rallied from $110 to $147 non-stop.
Quote from PlusMinus:
Things are never as easy to explain as people like to believe. Landis thanks for the added insight on pension funds.
From 2003 to 2008, investment in index funds tied to commodities grew by 20-fold, from $13 billion to $260 BILLION!
And if you are Calpers (California's Pension Fund) and you manage $242 billion in assets, it's not that big of a deal to commit $1.1 billion into commodities swaps contracts via an investment bank in order to get exposure to the energy markets as an inflation hedge.
Here's some interesting statistical info via a CFTC report from Sept. 2008
http://www.scribd.com/doc/5883840/CFTC-Report-September-2008
"Of the total net notional value of funds invested in commodity indexes on June 30, 2008, approximately 24% was held by "Index Funds," 42% by "Institutional Investors", 9% by "Soveregn Wealth Funds", and 25% by "Other" traders."