Oil, the FED, and economics...

sick of this crap wrote:

there I am done ranting...

Correct me if I'm wrong, but isn't a rant usually more effective if you know what you're talking about?

Instead of having your emotions take over, think about how to profit. I lost big today too, but keep a disciplined mind and you will come out on top. Don't think of a down market as a bad thing. Think of it as an opportunity.

I do know what I am talking about, I have a finance/ economics degree and am working on a graduate economics degree....

you are correct though there are things I PERSONALLY can do to mitigate my losses (which like yours are large) and thats fine, im not overly worried about those at this point. I am worried that this economy is about to crash though (in the next 5-10 years) especially dependent on who is the next president and seeing as 3 of the 4 remaining candidates literally do not have a clue about financial/ economic issues, i am very worried.

your right i have let my emotions take over...but its like watching a train wreck in slow motion, three years in advance.

I wouldn't go into oil on these boards. You will be hammered and told you are an idtiot because you do not understand simple supply and demand. The truth is that there are things that do not make sense. Also today I found it intersting that the exec for Shell said that $35-$65 a barrel would be adequate for a profit while the other companies said around $90. Either way that is a lot better than the $133 as of today that SPECULATION has brought about. I agree we need to stop the speculators who are the ones who are running up the prices because it is not all because of a weak dollar and simple supply and demand.

PaavoNW wrote:

Don't think of a down market as a bad thing. Think of it as an opportunity.

Agreed. It's kind of funny to watch people react to every recession as if our entire economic system is on the brink of collapse. There will always be recessions. They are becoming less frequent and less severe, but we will never eliminate them completely. The business cycle will continue and we'll all survive it.

Sorry about that last comment, it came across way more critically than I intended...

I agree that some of this country may be headed towards some rough times. However, I simply would look into securities with exposure in countries other than the U.S.

ahhh the mindless rants of a graduate school student... the knowitall worthlessness of the country.

This is a nice post. Don't let the haters get you down brother. I would like to calm your fears just a bit though. The Fed perhaps acted a little slowly in beginning the rate slashing last fall, but they caught up and the rate is probably where it ought to be right now. The US economy has lots of things working against it right now, but it will come back. Don't worry.

You are 100% correct about the speculators driving up the cost of oil though. Supply and demand play a role as does the weak dollar, but this recent run up is due primarily to those damn speculators. It's going to take a robust DOW and S&P 500 and unfortunately housing market PRICE INCREASE to get those speculators away from oil. I've long said that once the markets get going that the speculators would leave oil, and I still believe that to be true, but the more I think about it, the more I realize that REAL ESTATE INVESTORS and OIL AND GOLD SPECULATORS are of similar minds -- they want BIG gains NOW. Some real estate investors and oil speculators will jump to stocks when the market looks strong, but a lot of them like to be either in oil OR real estate, or both if both are good. Right now real estate is still down, so they are all in oil.

I'll admit I have the same hope for oil speculators that you do -- that the bubble bursting will come quickly so that many of them lose their shirts. Got a big trip coming up, and it looks like I'll be spending more than $4 a gallon the whole way there and back.

So far Congress has done and said the following:

-No drilling in the ANWR,

-No drilling off the coast of Florida and California, we're not getting any new 100-year leases to drill in the Gulf while China and Venezuela and Cuba are going in.

-Congress, as well as all three presidential candidates, said there's a cap and trade legislation that will increase the price of gas according to the EPA by $1.50 a gallon.

We're shutting down oil fields in Colorado,

-We won't develop shale oil fields in western states.

-We pass legislation that let us sue OPEC. I'm sure they're not going to retaliate.

-We have allowed environmental attorneys to sue the oil companies for possible future destruction of an Alaskan Eskimo village. We also have protected the polar bear and its habitat right where the oil deposits are located.

-We're talking about seizing windfall profits.

-We have allowed them to drill in small areas in Alaska while creating very generous environmental laws that have tied up the very production because the oil companies are in court. We've also not allowed anybody to build a new refinery for 30 years. In fact, we've cut our operational refineries in half since 1982.

-We won't develop coal-to-oil

-We're telling the oil companies which blends they have to make.

I wonder why gas is so expensive? Could it be we are driving our own oil based economy into the crapper without allowing the development of other forms of energy. Thank you environmental terrorist.

...hurricane season starts in 10 days. we haven't had one in the gulf of mexico in several years now.

My brother - a well known economist and Wall Street investment manager - (and a former four minute miler to boot) called me this morning with a few points:

1. There is a debate raging in investment circles today about whether the high prices are due to fundamentals (supply and demand) or to speculation pressure. No doubt is that both are contributing, but getting the proportions right is what those of his ilk gets paid to do. He is conservative in his investment style - meaning that when it comes to commodities - the efficiency of the market will dictate that fundamentals rather than market activity is more likely the cause.

2. The weak dollar is a problem. Those paying with stronger foreign currencies aren't in our own colored perception, paying 130 bucks a barrel. The Fed (and the administration) must shore up the dollar and quit printing so much money.

3. The original poster is to be applauded. Most don't understand economics - particularly liberals who view econ as merely a redistributionist zero sum game - so the rant is welcome.

sick of this crap wrote:

I do know what I am talking about, I have a finance/ economics degree and am working on a graduate economics degree....

you are correct though there are things I PERSONALLY can do to mitigate my losses (which like yours are large) and thats fine, im not overly worried about those at this point. I am worried that this economy is about to crash though (in the next 5-10 years) especially dependent on who is the next president and seeing as 3 of the 4 remaining candidates literally do not have a clue about financial/ economic issues, i am very worried.

your right i have let my emotions take over...but its like watching a train wreck in slow motion, three years in advance.

And there you lost all reasonable credibility. Paul is not a remaining candidate.

really? wrote:

sick of this crap wrote:

I do know what I am talking about, I have a finance/ economics degree and am working on a graduate economics degree....

you are correct though there are things I PERSONALLY can do to mitigate my losses (which like yours are large) and thats fine, im not overly worried about those at this point. I am worried that this economy is about to crash though (in the next 5-10 years) especially dependent on who is the next president and seeing as 3 of the 4 remaining candidates literally do not have a clue about financial/ economic issues, i am very worried.

your right i have let my emotions take over...but its like watching a train wreck in slow motion, three years in advance.

And there you lost all reasonable credibility. Paul is not a remaining candidate.

Maybe he's referring to Bob Barr.

It was a good rant.

oh waaaaaaaaaaaaaaaaaaa

gas is $10/gal in germany. welcome to the future, shortpants.

really? wrote:

And there you lost all reasonable credibility. Paul is not a remaining candidate.

Well, technically Paul is still running...although with only a 0.000001% chance of getting the nomination as things currently are. I agree Paul is a little out there on some things but I think he has a better understanding of the economy than the others...I would not want his gold standard or the complete abolition of the FED immediately, but I appreciate his creative thoughts on the issues and his understanding of the heart of the matter....

rather than the others: " we will cut the gas tax!!!! vote for me" --- please, anyone that has ever taken a class in economics knows this will not work, (even if they do follow through on their promise)

Cross your fingers and pray that McCain dies of a heart attack before the election.

Bigsissypants wrote: So far Congress has done and said the following:

-No drilling in the ANWR,

-We have allowed environmental attorneys to sue the oil companies for possible future destruction of an Alaskan Eskimo village. We also have protected the polar bear and its habitat right where the oil deposits are located.

-We have allowed them to drill in small areas in Alaska while creating very generous environmental laws that have tied up the very production because the oil companies are in court.

...

Thank you environmental terrorist.

You're welcome.

We know you, and much of the country, would just as soon completely f*** up every last acre of the nation just to prolong your oil habit another year or two before ultimately finding yourself in the same place, out of oil. Same as any addict will sell his own sister into slavery for another couple weeks of meth or junk. Because all that matter is that you feel good now, right? f*** the future!

not easy being green wrote:

You're welcome.

We know you, and much of the country, would just as soon completely f*** up every last acre of the nation just to prolong your oil habit another year or two before ultimately finding yourself in the same place, out of oil. Same as any addict will sell his own sister into slavery for another couple weeks of meth or junk. Because all that matter is that you feel good now, right? f*** the future!

Well, as much as I think drilling would be fruitless at this point in the grand scheme of things, it would sure have been nice if the left-leaning bureaucrats had allowed us to build a refinery or two, some nuclear reactors, and develop Rocky Mountain oil shale and clean coal technologies to mitigate this predicament to begin with. There is plenty of blame to go around on both sides of the aisle.

By the way, you do realize that we consume the exact number of barrels of oil per day now as we did some 20 years ago right? The exact same. Consumption has not increased, despite growth in the population and the economy, because we have become much more efficient in our use of energy. And you can thank the free market and technological innovation for that cute little factoid, the same technological innovation that will ultimately get us out of the current mess, unless some self-motivated bureaucrats implement overzealous and onerous regulation, which I'm quite certain is the direction we are headed in.