And we as consumers in a VERY phockked up economy , one that requires thegovernment to buy stocks at a tune of $85 billion EVERY month - Why are we paying $3.50 for gas when we are swimming in oil ! This is the WORST time to be keeping oil prices intentionally high . How about letting the economy recover, THEN price gougeconsumers at the pump....This is a seriously effed up policy the Obama admin is running..I get it that we need to go green, but you do that when people can afford to, not when the country is hooked on " free stuff " from our President....truly unreal
I'll respond to both you and dunrunnin2. In 2008 oil went from $147 to $33 in the collapse of Wall Street. The price of oil has nothing to do with supply/demand, it has everything to do with the ability of traders to manipulate the price. Without credit, Wall Street can't speculate so prices collapse back to reality, the genuine price based on real supply and demand, not that of a trader rolling futures forward month to month. Oil has become just another asset class that is inflated through speculation and leverage.
As for dunrunnin2 if he thinks the Fed has no influence on Washington and that they don't control Washington, he is mistaken. If you control the money, you control the country. Congress can't spend without the Fed buying the debt. Once the government gave up the right to print currency to a private central bank, it gave up control over governing. No one even cares what Washington does anymore but every move and word from the Fed is what matters. Dunrunnin2 may want to check on the holding treasury has in stocks. The Fed's money is buying stocks, oil futures, you name it and the government does buy and own stock.
If you would like to know what the real price for stocks or oil are or what real interest rates are, do an experiment where the Fed steps away from the markets all together for 6 months. I guarantee you stocks and oil would fall at least 50% and interest rates would more than double. We have a central bank supplying the money to buy financial assets for which there are no real buyers. The problem is that Wall Street is now dependent on the Fed, there is no incentive to fix anything or create real growth. Why would you when you can receive welfare from the Fed?
Markets and prices are completely distorted by the Fed. The fear of the Fed stepping aside sends shock waves through the markets and prices tumble. So what is the real price for oil, $147, $33 or $90? I say it is closer to $33 when Wall Street isn't speculating in oil.
Nice post. I would have to argue that price of oil does have something to do with supply and demand, and the supply and demand for the dollar has it's effects on the price.
But it also wouldn't be fair to let the OP go without saying that the $85 billion the Fed buys each month is mortgage and Treasury debt. Not stocks.
Just in case you have forgotten what happened in 2008/2009. The government does buy stocks when they bail out banks or GM. They exchange money for preferred shares and common shares but make sure they never exceed 79.9% ownership. Remember the Citibank deal? It was the same with AIG, FRE and FNM. GM was a real beauty because Obama wiped out bondholders. They never saw their day in court, no bankruptcy claims allowed because the bondholders were the very banks that just got bailed out.
Government to Take Larger Ownership Stake in Struggling Citigroup
The Treasury Department and Citigroup announced a new plan Friday in which the government will take ownership in a larger portion of the company's stock. Washington Post reporter Binaymin Applebaum explains the move.
JEFFREY BROWN: Call it Citigroup rescue attempt, take three. This time, the federal government -- that is, U.S. taxpayers -- will take a larger ownership stake in the company.
First in October, and then again in November, the government made investments totaling $45 billion to prevent Citigroup's failure, but the company's fortunes and stock value have continued to decline.
Today, the Treasury Department and Citi announced a new plan in which the government will convert up to $25 billion of its loan money into common stock. In effect, the government will now own up to 36 percent of the company, making it the largest shareholder.
1) guess that whole GM thing was just mis reported
2) look at the balance sheet
3) So the president appoints the fed chief but the fed is not the government...how does that work? Didn't know the President was technically working in the private sector.