So the Most Probable Culprit, Most LIKELY Suspect in $150+pb Oil Is?

Your granny. HAH! Just as I thought. And she’s working a little money market mojo to pull it off.

If you’re wondering why driving to work has gotten so expensive, you might want to peruse your pension fund’s investments. That’s because speculation by institutional investors pouring money into the commodities market may be largely to blame for spiking oil prices, according to testimony on May 20 before the Senate Committee on Homeland Security & Governmental Affairs.
… The explosion in the number of financial players in the energy markets has occurred particularly in the past two years — also a period of soaring energy prices. That’s why speculators are now under fire from Congress and the public as potential culprits [, 5/15/08].
But in the hearing, Masters distinguished between traditional speculators and what he calls index speculators, or passive investors who enter the commodities markets as a long-term hedge against inflation. Commodities exchanges limit the number of positions an investor can take in the market, but Masters says the Commodity Futures Trading Commission has allowed unlimited speculation in these markets through a loophole. This so-called swaps loophole exempts investment banks like Goldman Sachs (GS) and Merrill Lynch (MER) from reporting requirements and limits on trading positions that are required of other investors. The loophole allows pension funds to enter into a swap agreement with an investment bank, which can then trade unlimited numbers of the contracts in futures markets.

Hmmm. Loopholes and little if any oversight. Sounds eerily like the recipe for a housing crash, all thanks to those sweet faced, gravel voiced queens of speculation, babes of the back room deal ~ grannies.

5 Responses to “So the Most Probable Culprit, Most LIKELY Suspect in $150+pb Oil Is?”

  1. Crusader says:

    Very true, and something I enjoy reminding folks of at work, when they grumble about the high gas prices.

  2. nightfly says:

    Goldman Sachs. Thanks Corzine! Again.

  3. The_Real_JeffS says:

    Commodities trading, eh? Interesting.

  4. Damian says:

    No, not “grannies”. Institutional investors.

  5. “Institutional”? Or “institutionalized“?

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