Old Wizard

Economic Recovery? Commodity Charts Don't Think So

The thought advanced daily by many pundits is that we will not have a recovery until the consumer comes back. This article and some of the comments illustrate that this prescription is very simplistic. The first question to be asked is if the consumer comes back will it create american jobs that are decent paying. The idea that giving money to the folks on the low end of the wage scale who spend more of their money on goods will create more economic activity has large negative unintended consequences. The great majority of what they buy other than food is made overseas like China and job creation will be at the extremes of the wage continuum, further weakening the middle class and making China stronger. Of course the agile speculator will exploit the commodity market and the trader that is adept enough to understand will make money, but if the bubble breaks or if we don't understand the negative implications of the unintended consequences of a buck shot give away of money not focused on real job creation, will the USA be better off. I'm for making money by employing capital to generate new products and services that keeps this country healthy and stable. For this reason, I believe that commodity purhasers should have to put up at least 50 cents on the dollar and maybe even 80 cents on the dollar. The crash of 1929 occured when stock purchases required only 10 cents on the dollar. We should learn from the lesson of the past. Those of us who believe that as long as we understand the rules of the gamble and profit by it, even if the country's economy goes down the drain, must believe that there is a better place to live than the USA.

Oil Futures: It's Not Manipulation, It's Stupidity

This discussion is like so many we have these days, it doesn't get to the root of the problem. I'm not naive enough to believe in the morality or ethics of traders or anyone when it comes to making money. I am also skeptical about gov. regulators who for the most part come from the same institutions that are big traders or players of the commodity markets. As with all speculators the object is to risk as little of your own money in order to make a windfall. This is the housing speculation story and looking back in history the story of the stock market in1929. A simple law that commodity trades must require that at least 70% of the value of the amount of commodities bought is required from the buyer in cash would fix the problem. As long as speculators need only put up 5 cents on the dollar to buy and big hedge funds, pension funds, harvard endowment, etc are playing they can play the cmmodity markret like a fiddle and sing and dance their way to making a bundle while the ordinary consumer gets to live the dirge.