Goldman. They buy and run the price up, storing it on tankers.

Then make one of their “oil is going to $XXX and bring the oil back to the market while shorting it, and make money on the way down on any oil they didn’t sell to the suckers who bought into the $XXX hype.

That is what they did with mortgage derivatives. Sell them and make huge profits and then short them for the fall when that happened.

Goldman uses markets all around the world. They can sell in Tokyo while buying here to keep an illusion going. JP Morgan likewise.

But, they do often take delivery. Remember in Testimony in Congress when oil was $145? The testimony was that Morgan Stanley was the largest owner of heating oil in New England and had huge storage facilities they held it in until the winter when they sold it at high prices to homeowners heating with heating oil.

Not just crude is being stored on those tankers. Diesel is another product that is being stored on tankers. China is storing oil on tankers. Without real transparency, we can’t get a good, clear picture of what the banks and others are doing or what is and isn’t being done with government approval to make bank balance sheets look better.

There is so much wheeling and dealing by “banks” in oil and other markets that there is no way they should even be called banks.

JanPaul

EVERYONE should watch the documentary “the smartest guys in the room” the Enron story.

I generally am against government regulation and am pro free markets but you cannot allow unchecked trading when dealing with a Utility like oil and electricity. The players today work in tandem and with extreme leverage to corner the market where in the short term there is no price elasticity - people simply must buy electricity and oil at any price. In the ancient times one country would do this to another country and it would be a cause for war. Today companies do it to other companies and the consumer suffers and industry suffers. The futures market was supposed to smooth cost projections for manufacturers but its the opposite, price swings in oil are crazy.

Related Posts:

• I was reading an article on how the bank bailout worked.
• As long as there is a belief that we are stabilizing and ‘turning the corner’ the market will march higher.
• Nov 2, 2010 is only 291 days away!
• GEITHNER asked, “Is Wall Street Crisis simply PURE GREED?”
• Dubai is a small place but a large metaphor.

Leave a comment