so when goldman does a study and determines that there is $27 of speculation premium in oil they just dont know what they are talking about?
The mortgage market has not been "fine" for fifty years, is not fine now, and will not be fine at all until the gov't gets out of the business of creating an artificial marketplace. The crash would have happened regardless of subprime and securitization and etc etc etc because there is simply no market mechanism for lending money for 30 years at 4%. All the speculation did was adjust the timing of the inevitable.
I agree with that. The artificial put + an influx of capital that had a social agenda rather than a financial/economic one.
under normal circumstances, i would agree with you. but with the fed flooding the market with money, i do not.
again, i agree with you (wow, twice in one day). the problem is, however, that the speculators which would normally take the risk are operating in a market where the Fed has essentially minimized or eliminated the risk. and therein lies the issue.
Are they saying that if speculators were out of the market oil would be $27 lower? Does that mean that current price of oil - $27 is the right price? Or did they make up a study to divert attention from themselves? Or are they trying to generate commissions: buy oil, now sell oil, now buy it again... I bet there is a premium to stock prices because of day traders and speculators, etc. Also in housing prices too. If there wasn't a speculator willing to bet on a security then the risk premium in these securities would be insanely high.
Holy crap, is this actually a debate? The future price is determined entirely by speculation. Then the oil comes to market - it doesn't make a difference if someone bought the oil future at $1000 or $10 - a physical buyer must now be found. Nearly all oil is refined and used upon delivery - storage changes are negligible. So speculators only control the future price and are not storing oil to impact the spot price. If that basic concept is too complex then just consider that oil was generally in backwardation during all the recent run-ups and strong forwardation during the collapses. Yeah there are a few other factors involved but if you can't grasp the fundamentals then any further discussion is superfluous. If you don't understand trading then please go rant with the sheeple on some other forum.
Right. But the answer to the issue isn't more trading regs on oil, an oil trading "tsar" to arbitrarily decide who can trade or how much, etc. But those are the kinds of things that usually happen when the Fed is the real instigator and politicians want a scapegoat.