Big news in CNN Business - some folks are wondering if $130/bbl oil might be due to ... gasp... speculators! profiteers!
The article does have a nice walk-through on how futures markets work, and the "rationale" for their existence. The argument is that, done right, they make long term decision making possible, and smooth the ups and downs of markets out.
That's the argument.
No, no, the billionaires shriek; we're good, we're necessary, don't change a thing, it's all the fault of those other guys...
As they strip millions of dollars- a day- out of the market; without ever touching a barrel of oil; or in the food markets, a pound of rice.
As an ex- substitute high-school teacher (one of the things I've done in my checkered past to put coffee on the table) I'm sharply reminded of the lies told by the kids in class, when they're thinking no one can catch them.
"I always sit here, I have to, because of my asthma." Big innocent eyes.
"We never have homework on Thursdays, ask anyone."
"Teacher always lets us go to lunch 15 minutes early, because..."
Bullshit, all of it.
The people actually in the oil business are starting to get it- and they want the speculators out. "Beutel, from the consultancy Cameron Hanover and a former NYMEX floor trader, goes even further in blaming big-fund money. 'We want to see them out, they have no respect for our markets at all,' he said."
Oh, but how?? the regulators cry (all of whom come from the hedge-fund world) ... with big, innocent eyes.
While all their friends and relatives rake in the millions. (Which come, guess what- out of YOUR pocket. You think the middle traders absorb the increases?? Does the price at the pump go up every day?)
How- is incredibly easy. Revert to the rules from 2 years ago; today. Wait 3 months, and measure the impact. Who would suffer? Golly gee, a few billionaires would add only 10% to their pile in that time, instead of 30%. Nobody else.