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Reasoned, Relevant And Often Contrarian Commentary On Economics


October 24
I'm an electrical engineer and mathematician by training. My career has spanned diverse areas of expertise from being part of a team which designed the world's most powerful computers to corporate consulting around business transformation and information-based solutions to being a corporate sales and marketing executive in the information technology and business consulting space. I’ve led teams responsible for innovative and transformative solutions and been part of teams that helped set strategy for many of America's greatest companies. Two of my interests are econometrics, democratic finance and quantitative - qualitative analysis. Over the years I have developed risk-based models and trading systems meant to identify significant investment opportunities and periods of extreme risk. My blog is an outlet for another of my passions, writing. I generally consider myself a contrarian. Therefore, many of my rantings are meant to encourage people to question what they believe to be true. Terms of Use & Disclaimer: First off, I don't take anything on here too seriously and you shouldn't either. These are simply sardonic rantings of Bill, my alter ego, often meant to agitate for peaceful & nonviolent reform. This web site reflects the views of its authors. It is unaffiliated with any NASD broker/dealer. Statements on this site do not represent the views or policies of anyone other than its authors. The information on this site is provided for discussion purposes, comedic relief and entertainment only and are not investing recommendations. The authors may have positions in securities mentioned herein. Under no circumstances does this information represent a recommendation to buy or sell securities. While information discussed on this site was gathered from what are believed to be reliable sources, in no way is informational accuracy guaranteed. All information on this site may contain errors and omissions. Trading and investing involves high levels of risk. Always consult a licensed financial advisor or broker before making any and all investment decisions. Authors of this site and any sites which are fed by said site, including Open Salon and others, will assume no responsibility for the actions of the reader and user. Readers and users agree, as condition to accessing this site, to release and hold harmless this site's authors from all liability in connection with this site or any views posted on this site. All readers and users of this site agree that use of this site requires acceptance to the current Terms Of Use & Disclaimer and that current terms include any and all use and material from site inception. If you do not understand these statements in their entirety or do not agree to be bound by this current agreement, you must immediately discontinue use of this site. This Terms Of Use & Disclaimer may change at any time and it is the reader's and user's responsibility to review, understand and abide by any updates.

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APRIL 1, 2012 11:05AM

$4 Gas Is A Result Of Wall Street Manipulation Says Former Senator Byron Dorgan

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Senator Dorgan was the person Bill Moyers interviewed in our post last week.  The person who stood on the Senate floor 13 years ago and gave a speech on the impending doom by allowing Wall Street to run roughshod over our economy by deregulating it. 

If, by now, you follow financial markets and still don’t understand how financial firms are manipulating commodities, you are truly a dunce or deluded by your own ideological beliefs.   This is a topic we have hammered on since starting this blog.  In the beginning, when no one understood what was happening, it was easy for Wall Street to con the public.  But, over the last handful of years, the public has seen firsthand that Wall Street has inserted itself into the commodities supply chain.  Farmers, agri-processors, oil company executives, natural gas consumers, copper consumers, uranium consumers and other industrial commodities consumers have complained to the government that Wall Street is manipulating commodity prices.  These are buyers and sellers of commodities in the real economy, many of whom personally have used the commodities futures markets to conduct real business (you know, what these markets were set up for in the first place) for thirty or forty years.  No one in government ever listened. 

When the 2008 crisis hit and the world finally saw that JP Morgan, Goldman, Morgan Stanley and others were floating tankers of oil that they owned, when copper users were complaining that they couldn’t get supply because Wall Street firms were hoarding it in warehousing facilities, when natural gas clients in the real economy in New England were complaining that Wall Street was hoarding supply, no one in government said anything.   Well, except Bernie Sanders.  To say Wall Street is not the source of the commodity bubble is asinine.  Literally.   While we have no scientific method to ascertain the total price impact without forcing Wall Street to leave these markets, these firms have inserted themselves into the physical sale of commodities to extort their cut of the profits.  They have extended the supply chain.  If you don’t understand this, you don’t understand anything about what is going on in the world today.  This is a microcosm of how the global economy functions.   How finance has inserted itself into the underlying economy to distort and manipulate it in countless ways.   Globalization is fundamentally about American financial hegemony and the economic slavery of Americans and its trading partners.  That doesn’t even take into account the program trading, derivatives and other involvement that has pushed financial speculation up thousands and thousands and thousands of percent in the commodities markets. 

In this article the current CEO of Exxon is quoted as stating financial speculators add at much as 40% to the price of oil.  The recently retired CEO of Exxon has made similar statements over the last half dozen years.  Now, these are two men who are trained engineers.  They should clearly understand the scientific discovery process and should clearly be capable of some level of critical thought.  They have both operated in the commodities markets for thirty to forty years.   But, no one is listening.  Additionally, Fadel Gheit, most likely the only competent energy analyst I am aware of, even understands this as quoted in the article.  As does Janet Tavakoli, former quoted Goldman Sachs managers, agri-processors, etc who have commented and on and on and on about commodities manipulation.  You simply cannot insert yourself into the physical commodities  supply chain for profit and deny that you are impacting prices.  It is to deny that 2+2=4.

As we noted a very long time ago, it never mattered how much the dollar was worth, how much inflation we experienced, how much fundamental demand was in the market, or how much money was being printed, and even at times in our history, even when debt was monetized by the Federal Reserve, the price of copper traded in a band of 30-70 cents in the last one hundred years.  Copper still only costs 5 cents a pound to mine.  That is in U.S. dollars.   Regardless of whether you think dollars are worthless.  The price of copper then is equally worthless at only 5 cents a pound to mine.   Today.  Right now.  The cost of copper hit nearly $5 this cycle and is still close to $4 a pound.   The delta between production costs and market costs for consumers of copper is inefficiency.  That inefficiency in the supply chain for copper and all other commodities are being distorted as financial mobsters extort their cut.  It’s simple supply and demand.  It’s rudimentary math that a seventh grader could understand.   It’s commonly understood supply chain logistics.   When that supply chain is under stress, as it most certainly will be soon enough, Wall Street will take the shocks as a participant.  Something we have literally said at least three to four dozen times on here. 

This is exactly what happened with Enron.  This is exactly why energy prices skyrocketed in California and the west coast.  This is the same reason people died in heat waves because of Enron’s speculation in energy markets.  It’s how they were able to give the illusion of lack of energy supply that then caused brown outs.   That then caused unknowing politicians to state that California actually needed to build new power plants to deal with the lack of supply.  By manipulating supply by inserting themselves into the energy supply chain as energy traders.  It’s why the Enron executive team went to prison.  

Of course, the other option is that you can discount facts, reason, reality, basic math and truth and can believe Alan Greenspan who said, in support of Wall Street’s massive push into commodities, speculators added “liquidity” to futures markets.

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TL I was looking for you to say something optimistic. I have always found your posts to be sobering as compared to the doom and gloom of the cessationists.

Jokes aside there is going to be a blood bath in this country TL, everybody knows it and all the signs are there. The barometer is dropping and we are squarely n the path of a force 5 hurricane. These guys are all just trying to get as much as they can why they still can. The Times ran this headline about a year and a half ago: ‘Will the Federal Reserve Cause a Civil War?’.


At the same time they were running that I remember reading unverified intelligence estimates that it was about a year and a half away.
That comment above was meant to go on your other post but it could apply to this one too. We are drowning in the “liquidity”.
The founder of ZH may understand how financial markets work today and I respect that ability. (Although almost none of the commenters or guest posters clearly do not. Most are effing nuts, conspiracy theorists and the mob.). I certainly don't look to ZH for the most informed, reasoned future outcomes or any substantial understanding of social movements, psychology or economics. There are a lot of outright unfactual discussions on that site and on those comment boards.

You cannot say that there will be violence in this country. You don't have that future knowledge. The Soviet Union collapsed without any violence. You should consider incorporating flexibility into your thinking. Rigid analysis of future outcomes leads to faulty beliefs.

These statements you make about unverified intelligence reports, conspiracy and some of the other off the wall remarks have no basis in reality. It's just like that kook you cited who said he was going to be the next head of the Bank of Japan and he's Caucasian and a noncitizen. And, he believes HAARP caused the tsunami. That is outright fucking nuts. Just calling a spade a spade.

In times like this, the mind can run wild. But, it only exists in our minds. It's important to stick to what we know is true and not let the secrecy and lack of information turn us into part of the mob.
The Soviet Union did not have 400 million weapons floating around the country.

My boy has a new one out. He says they are going to produce evidence of Atlantis. Maybe he has been reading my posts. I retain the right to laugh at him, which I do, but at the same time I also take note that much of what he is saying has historical grounds to stand on. With me the jury's still out on Fulford. I suspect he is being backed by people in Russia and Asia that are at the very pinnacle of power. Time will tell.