Bubblicious and gamey

May 28, 2008

Finally someone hit the nail on the head about this bogus “oil crisis.”

“Record high prices without record low oil inventories, analysts saying that so much money flows into oil commodities that it gives the impression of shortages, when in fact no shortage exists. ”

“There it is in plain sight for everyone to see, exactly what I’ve been reporting for the past few years: Many individuals who are investing in oil and natural gas futures are going out in the media and trying to convince the American public that either we are out of oil or there is a serious supply shortage of crude against worldwide demand. The question is: Does it surprise you to discover that the US Senate investigated the rigging of the oil market by speculators in the summer of 2006 – and concluded that there was no supply and demand problem with oil? Did you know that their conclusion was that speculators were responsible for a 70 percent overcharge in the price of oil in the months leading up to the summer of 2006?”

“in Texas, under deregulation of our public utilities, our electric rates can be set using the futures market for natural gas, so the manipulation of the natural gas market spelled trouble for us. Consider this, by 2006, according to http://www.powertochoose.org, electricity rates for us had climbed to 15 cents a kilowatt-hour due to the high cost of natural gas. But, that was the exact same time period that Amaranth was proven to be manipulating the market and sending natural gas futures through the roof. Two months later the hedge fund collapsed and natural gas prices fell. Therefore, most Texans paid higher electric bills for Amaranth’s manipulation of the natural gas market.”

-Ed Wallace [Part 1] [Part 2]

Not to mention that California electricity rates spiraled out of control through artificial shortages engineered by Enron (“Welcome to Hell, Ken”) in the “dregulated” electricity market.

It is a fact gasoline prices at your local station are set today using futures prices as a benchmark. If you think that the gas you’re pumping into your car today was refined from oil bought and paid for at today‘s oil prices, you would be wrong, sir. It was refined from oil that was bought a long, long time ago at a much lower price. The actual profit they are making is a metaphorical slap in the face. Maybe we need that to wake us up to this Enron-style scamming that has become the US economy.

The prices at your local are quick to rise and slow to fall- so the oil companies get to skin you going both ways.

You may ask yourself, “Why doesn’t are gummint do something about it (instead of that numbskull OPEC lawsuit and ‘investigating’ unimportant but grandstand-worthy topics like steroids in professional sport)?”

Well, seeing as the state and federal governments are skimming a percentage, and today’s prices are at all-time record highs, it isn’t exactly in their best interest (as you’ve no doubt surmised, neither are we, the voting public).

If you ever harbored the illusion that when you fillerup you were getting what you paid for (cost of production) plus a reasonable profit, think again.

#I’m just a a paper tiger

I think it is best to close now with the following thought:

“We started as a society that worships hard labor and the basic business ethic of building value into the goods you create. How’d we get from there to worshiping Wall Street’s billion-dollar boys — who create nothing, build nothing, own nothing and deliver no goods, and yet can throw so much money into products made by others that they determine what we consumers will pay for those goods?”

[Hat tip]

UPDATE
More on this subject from a different source here.

“this has all of the ear marks of a speculative corner of the oil market by parties unknown.” –Jim of San Marcos

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The Bush League

May 23, 2008

The Incompetent Bunch


Karl brings it all home

May 22, 2008

Karl Denninger gives us a wrap-up (and more!) of how the fraud, corruption, and cover-up has been systemically implemented (and has been business as usual for awhile in our maturing bubblicious economy).

“We’re now seeing mainstream media articles on silly little inconvenient facts like:

  • Intentional understatement of price inflation….
  • Which leads to overstating GDP….
  • And screwing Granny in her COLA adjustment on Social Security….
  • And convincing people that unemployment is low (which it is not)….
  • And enticing people to buy government bonds (T-bills) at a negative rate of return….
  • While intentionally throwing hundred of billions of excess liquidity into the banking system so that your “best buddies” don’t have to fess up to their losses which….
  • Empowers Wall Street to blow bubble after bubble, while offloading their trash and costs into pension funds and ordinary people’s pockets so we will all eat it while at the same time they pocket billions in fees and bonuses.

“Never mind the cover up of all of this, where the lies just keep getting bigger and bigger as the compounding of fraud and theft snowballs just like 30% interest on a subprime credit card.”

Read the entire post from Wednesday here.

Captain Obvious here
Question: Social Security is clearly a Ponzi scheme- i.e. the people who invest earliest get part of their investment back, the last ones to “invest” don’t.

Was it designed that way?


“It’s their fault for being poor.” -some trust fundie


  • Bad bizness stories of the day

    May 22, 2008

    The winner is…. well, first let me say there are so many contestants, and narrowing it down to these three, which are diverse and telling, was difficult.

    Winner: Defective Moody’s Program Issues Billions of Erroneous AAAs

    “This begs the question that the so-called bug wasn’t a bug at all but a feature, that the model was designed (or tweaked) to produce ratings that conformed with S&P. After all, if an issuer got an AAA from S&P and wanted a second rating from Moody’s, it would kill Moody’s chance of ever rating similar paper for it to issue a markedly lower score.”
    [Nakedcapitalism]

    The culprit: a computer “glitch.” Heh. Uh-huh, you heard me right. Moody’s would never intentionally mislead anyone and can fully assure us that their methodologies were as scientific and rigorous as sprinkling holy water, waving the royal sceptre, and Moody’s would like to take this opportunity to sincerely promise it would never cum in your mouth. Swear to God.

    I suppose if this were the 50’s they coulda blamed this one on a dock strike.

    First runner up
    If you’ve been in Santa Barbara lately, did you happen to take notice of the spread of Bushvilles (a.k.a. Tangelovilles)?:

    “There are 12 parking lots across Santa Barbara that have been set up to accommodate the growing middle-class homelessness. These lots are believed to be part of the first program of its kind in the United States, according to organizers.”
    [CNN]


    Second runner up

    “The story of the foreclosure of Long Beach Democrat Laura Richardson’s Sacramento home is a tale of a real estate market gone sour. It is also an illustration of how far many candidates will go to seek elected office, even if it means quite literally mortgaging their own financial future.”

    “While being elevated to Congress in a 2007 special election, Richardson apparently stopped making payments on her new Sacramento home, and eventually walked away from it, leaving nearly $600,000 in unpaid loans and fees.
    [Capitol Weekly][Hat tip]


    The prevailing attitude investors have is ‘as long as he is making money, I’m making money-‘ but looking the other way while executives lied, cheated, and fudged numbers to guarantee their bonuses, tied into stock performance, is the root cause of today’s systemic failure.


    We’re entering a new era

    May 21, 2008

    And if we’re lucky, it’ll look a lot like the 70’s (if we’re not it’ll look a lot like the 30’s, but in color):

    “As inflation and interest rates have been kept artificially suppressed, the United States has been indentured to its volatile financial sector, with its predilection for leverage and risky buccaneering”

    “most great nations, at the peak of their economic power, become arrogant and wage great world wars at great cost, wasting vast resources, taking on huge debt, and ultimately burning themselves out.” [Marketwatch]

    When you factor in the lying and cheating of our government, the cheating and lying of Wall Street, the US and Canada Demographic Time Bomb, a dysfunctional healthcare system, a bankrupt social security system, retirement funds heavily invested in toxic securities, illegal immigration and the rule of law in general just ignored (via “selective enforcement”), a war with no end that’s cost us more than just our credit rating (remember, we’ve been borrowing to pay for it), inflation at all time high (as the article says, the stats being promoted throughout the media are fraudulent, and see We is bein’ robbed below), well, it is enough to make you just sick.

    We is bein’ robbed
    I guess we should have been smart enough to figure out the power of compounding interest works both ways, e.g. take inflation.

    When it’s high- as it is today- and if this double-digit trend sustains itself for just a few years, it can more than wipe out that gain you might have seen in your 401(k) over the last ten or twenty years pretty damn fast! It’s just sickening to consider that all this time we’ve been targeted because we foolishly believed we were a nation that believed in fair play.

    Looking for Happy News?
    Turn on the boob-tube, switch to any channel, and have some delicious Kool-Aid. It’s refreshing!

    Toasting
    Hell, even municpal bonds, once considered super-safe, but low-yield by investors, are starting to default. Even, in the case of Vallejo, CA declaring bankruptcy.

    Question for all of you
    Ultimately, who is accountable?

    Does it seem to you that everyone in a posiiton of power has been working really really hard to make sure they aren’t caught, or that no trail leads to them, when the random light is shined on them and theirs?


    He’s coming back empty handed?

    May 18, 2008

    What good is he then? [Bloomberg] Impeach the worthless sonuvabitch.

    He’s an ineffective tool, but he’s never really been our ineffective tool, has he?


    What the hell has gotten into people?

    May 13, 2008

    Check out this specuvestard smiling all the way to the poorhouse, insanely proud of his bass-ackward accomplishment. Hell, he’s posing and smiling with his entire family like he just won the lottery.

    What is wrong with this guy?

    Some people beam with pride when they’re in the (on-line) newspaper. You’d think he’s just pleased as punch at his fifteen minutes of fame. Is he part of a new and fashionable trend (no, not wearing flip-flops as a fashion ‘statement’)? Kinda. Sorta. Except his ‘family protrait’ is in remarkable contrast to the actual story:

    A California man who has defaulted on nine homes and expects banks to foreclose on all of them, forcing him into bankruptcy, says he now considers it a mistake to have invested in the real estate market.

    He certainly has a gift for understatement. WTF?

    The new trend he’s setting isn’t just serial foreclosure- oh no, he represents so much more than that. Reality has finally decoupled from ignominy– which is a sign of something… what that is exactly, I don’t know, but we should all assume for now it can’t be good.

    Dvorak speaks for all of us curmudgeons when he accurately portrays how financial institutions and even our own government have turned on us, its citizens, because they aparently see us as nothing but debt serfs:

    Fleecing the public
    Every single institution of public trust has decided to go all in and see what they can steal from a passive uncomplaining public made paranoid by government surveillance and the now seemingly permanent orange-alert status of the country over terrorism.

    Somewhere along the way it’s been deemed okay, and perfectly acceptable for US to live and work in this skimming culture called Amerika, where everybody wants a piece of you and me. Forget about creating something useful, tangible, which measurably improves life- that’s so 20th century. You’ll be taxed and zoned out of existence.

    Fees, taxes, taxes, fees- that’s the new model America, where a toll gets split myriad ways. Securities, insurance, food, gas, lodging, muni bonds, liars loans, ninja loans… everyone down the chain feels they are entitled to their vigorish.

    Our FIRE economy is based on the same sound principles and traditions as organized crime.

    And when one of the big fish aren’t feeling sated (can you say solvency boys and girls?), they unilaterally decide they are entitled to take a bigger bite and ‘tax’ or ‘fee’ us some more.

    Ouchy.

    Even Hanky Paulson stoppped just short of saying it was every American’s patriotic duty to stay put in their onerous, upside down mortgage(s), which they managed to come by either stupidly or fraudulently.

    The banks might be politically influential and connected enough (“it’s who you know”) to demand a do-over, and they will insist that the little guys eat shit. It’s become the American way, after all.

    In other words, if rape is inevitable, sit back and enjoy it like a man patriot should, I guess is what Hank Paulson is saying.

    Since the attackers aren’t going to get arrested anyway, I suppose there really isn’t a choice in that situation is there?

    Oh wait, yeah, there is: one can simply walk away – from the house and the poor analogy.


    Debt precipitated the crisis, but it will be systemic failure to manage the crisis that kills US.