# Should We Re-enact Glass-Steagall?



## hvactec (Sep 11, 2011)

The repealing of the Glass-Steagall Act was heralded as one of the greatest bipartisan achievements of our time. It was passed by an overwhelming majority by both Democrats and Republicans and signed into law by President William Jefferson Clinton on November 12, 1999.

The minority who spoke out against the repeal were ridiculed and dismissed. Their words ring out as an ominous reminder of our foolishness. Greed can never be self regulated. Conflicts of interest are inherently vulnerable to loss of objectivity. A system without checks and balances is always doomed to fail in the end. If it is not tended and pruned systemically from the get go, it will grow wild and ultimately unproductive in the end.

Commercial and investment banking were able to cross the invisible divide and create an intricate network filled with conflicts of interest, newly created classes of securities, and institutions that became too big to fail. With their rapid growth the SEC and other regulators were unable to keep up with the changing landscape. Conflicts of interest began to form within the regulatory and rating agencies which further reduced the objectivity and accountability of the industry. It was only a matter of time before another downturn would hit and the bubble would burst causing one of the worst financial catastrophes we have seen in eighty years.

Senator John McCain and Senator Maria Cantwell in 2009 proposed legislation similar to the original Glass-Steagall Act that would reinstate the separation between commercial and investment banking. However, fierce opposition from banks who would be directly affected by the legislation effectively nixed any chance the bill had for passage.  

The Dodd-Frank Act was an attempt to place additional protections for consumers, but not enough for adequate protection. It also failed to cut the size of institutions, which is the major factor in the crisis.

In Europe, stricter regulations are being called for in light of the global crisis and legislation is being constructed based on the original Glass-Steagall Act. This is significant because one of the original reasons for repeal is other countries ability to run their institutions without these restrictions

read more Should We Re-enact Glass-Steagall? - Chicago Civil Rights | Examiner.com


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## Claudette (Sep 12, 2011)

Yes.


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## MikeK (Sep 12, 2011)

yes!


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## Sallow (Sep 12, 2011)

*Yes!!*


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## whitehall (Sep 12, 2011)

Say what? "Cut the size of institutions"? You mean government control of corporations? Can you spell fascism?


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## Quantum Windbag (Sep 12, 2011)

Claudette said:


> Yes.





MikeK said:


> yes!





Sallow said:


> *Yes!!*



Three voices calling for less regulation in the financial sector.

My guess is that one of them at least doesn't know that is what they are doing.


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## theDoctorisIn (Sep 12, 2011)

Quantum Windbag said:


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I think perhaps you didn't read the OP very carefully.

Re-enacting Glass-Steagall isn't less regulation.


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## Mad Scientist (Sep 12, 2011)

Claudette said:


> Yes.





MikeK said:


> yes!





Sallow said:


> *Yes!!*


Yes. 

Glass-Steagall kept Deposit Banks and Investment Banks separate. Without it, banks were able to gamble with depositors money and that's what led to the Toxic Derivatives Scam.

Separate them back out and let the investment banks sink or swim on their own without Gov't bailouts.


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## Quantum Windbag (Sep 12, 2011)

theDoctorisIn said:


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Apparently you think (mistankenly) that Dodd-Frank is less restrictive than Glass-Steagal.


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## Sallow (Sep 12, 2011)

Quantum Windbag said:


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It's a lot less restrictive and does very little about "Dark Pools".


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## theDoctorisIn (Sep 12, 2011)

Quantum Windbag said:


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That's a laugh.


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## whitehall (Sep 12, 2011)

Keep in mind that the federal government couldn't even run an in-house post office without stealing stamps. The congressional caffeteria went broke when the government ran it. Fannie Mae collapsed while Barney Frank was telling Americans it was solvent. Do we want the fruit cake politician to run American corporations too?


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## Quantum Windbag (Sep 12, 2011)

Sallow said:


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Let me get this straight, you want me to believe that a law that was written to fix Enron and the other problems that came up in the financial market ended up being less restrictive than the law it replaced?


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## newpolitics (Sep 13, 2011)

whitehall said:


> Say what? "Cut the size of institutions"? You mean government control of corporations? Can you spell fascism?



That is not fascism. That is saving ourselves.


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## elvis (Sep 13, 2011)

we absolutely should reenact it.


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## newpolitics (Sep 13, 2011)

We just almost had a major depression allowed principly by deregulation, and you call regulation fascism? I don't understand the how you people that support deregultion can be so fucking stupid? You stick to your conservative agenda to point of complete stupidity. There is a doctrine in life that says something about being flexible and dynamic so that you respond to any situation with the best tactic. Sticking to an ideology simply for the sake of sticking to an ideology doesn't get you anywhere except full of bad ideas when the situation changes.


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## California Girl (Sep 13, 2011)

Yes.

However, we really need a global Glass-Steagall to put some kind of control over the system worldwide. It is not enough for the US, it requires international control. Otherwise, the banks will just move to whatever countries will allow them to operate without control and we would solve nothing.


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## Polk (Sep 15, 2011)

Mad Scientist said:


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Breaking apart commercial and investment banking wouldn't prevent the need for bailouts.


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## MikeK (Sep 15, 2011)

whitehall said:


> Say what? "Cut the size of institutions"? You mean government control of corporations? Can you spell fascism?


You've got it backward.  Fascism is corporate control of government, which is what we have going on now.  

That's why Glass-Steagall must be reinstated.


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## MikeK (Sep 15, 2011)

theDoctorisIn said:


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It's not that they haven't read it carefully.  The problem is they've been brainwashed and these backward concepts are imbedded in their minds.  

There is a reason why such propagandists as Glenn Beck, Rush Limbaugh, Sean Hannity, Bill O'Reilly, et. al., are multi-millionaires.


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## Dot Com (Sep 15, 2011)

yes


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## Polk (Sep 15, 2011)

Quantum Windbag said:


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Neither of those laws was written to fix Enron. You're thinking of Sarbanes-Oxley.


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## Quantum Windbag (Sep 15, 2011)

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I am at that, but Glass-Stegall still imposed fewer regulations than Dodd-Frank. The fact that it also allowed different types of banks to merge is not an ipso facto argument that it contains fewer regulations.


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## editec (Jun 7, 2013)

> Should We Re-enact Glass-Steagall?



Which rendition of it?

It's been modified many times.

And the world of finance in 2013 is way different than the world of finance of the 30s.


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## eagle1462010 (Jun 7, 2013)

YES

I've been saying that Graham Leahy Act needs to be REPEALED for a LONG TIME NOW.

The Glass-Steigal Act was A RESPONSE TO THE GREAT DEPRESSION.  Basically, a LAW TO SAY NEVER AGAIN.  

After it was taken away, the MARKET MANIPULATION WENT THROUGH THE ROOF and nearly created a 2nd Depression.

History has a HISTORY OF REPEATING ITSELF.

It needs to be back in place.  The Dodd-Frank law is a JOKE.


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## Dot Com (Jun 7, 2013)

it would be the preferred option but the banks own the U.S. Senate. Moreso since the rw'ers brought the _Citizens United_ case that solidified that the gov't is up for sale to the highest bidder domestic OR foreign


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## AmazonTania (Jun 11, 2013)

Why re-enact a law which generally had nothing to do with the financial crisis at all.

Glass-Steagall is generally drummed up by those who do not understand the direct causes of the financial crisis. And with so many people so ignorant in this country, we are only doomed to repeat the same mistakes.


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## Saigon (Jun 11, 2013)

I'd like to see better oversight of banking and financial trading. 

Probably new legislation is better and easier than updating Glass-Steagall, but I'd like to see all countries learn from the collapse.


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## Politico (Jun 11, 2013)

Won't happen because Americans are pussies. But yes.


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## Muhammed (Jun 11, 2013)

hvactec said:


> The repealing of the Glass-Steagall Act was heralded as one of the greatest bipartisan achievements of our time.


Bullshit. 

All of us who are not ignorant of history know that it was not repealed.


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## AmazonTania (Jun 11, 2013)

Muhammed said:


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That covers only 1% of us.


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## Billo_Really (Jun 11, 2013)

Absolutely.


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## Polk (Jun 17, 2013)

Muhammed said:


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GrammLeachBliley repealed the most substantive provisions.


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## Kimura (Jun 18, 2013)

Polk said:


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Yup.

Either way, the sheer amount of control fraud on Wall Street is mind boggling. I'd like to see Glass-Steagall brought back with a vengeance.


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## AmazonTania (Jun 19, 2013)

Polk said:


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Only two provisions were repealed. Those provisions had zero to do with the financial crisis.


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## Polk (Jun 20, 2013)

AmazonTania said:


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That's pretty clearly false. It repealed three whole subsections of U.S. Code. You're going to tell me those three subsections contained two provisions between them?


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## MikeK (Jun 20, 2013)

AmazonTania said:


> Why re-enact a law which generally had nothing to do with the financial crisis at all.
> 
> Glass-Steagall is generally drummed up by those who do not understand the direct causes of the financial crisis. And with so many people so ignorant in this country, we are only doomed to repeat the same mistakes.


Tania,

Do yourself a big favor and watch the very educational video available (for free) via the link in my signature line (below).  It starts off slow but gets better as it goes along.


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## MikeK (Jun 20, 2013)

Politico said:


> Won't happen because Americans are pussies. But yes.


I don't know about "pussies."  Complacent, apathetic, divisive, uninformed, distracted, and in some examples simply stupid, are more accurate descriptors.  The main problem is our government is almost totally corrupted by money.  That can be changed but things will need to get worse before the American people wake up, stand together, and execute a full-scale purge of those whores in the Congress who are working for the corporatocracy.  

It will take time, three or more election cycles, to replace the politicians in Congress with statesmen.  But once we can get federal and state elections financed with public money, completely eliminating private money from the process, we can build a Nation to be proud of again.  

Bush's outrageous performance pushed the American People in the direction of provocative discontent.  But the banks and finance industries promoted Obama whose job it is to maintain the corporatist status quo and the politically divided population while keeping the lid on, which is exactly what he's doing.

Barack Obama is a venomous pacifier.


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## AmazonTania (Jun 20, 2013)

MikeK said:


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I've already thoroughly debunked that video two years ago. Regardless of whether or not I agree, I always try to keep my reading and video collection as balance and I can stand.

Nonetheless, I can already tell you are confused about the role regarding Glass Steagall. Most people are.


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## AmazonTania (Jun 20, 2013)

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What sections are you talking about. Only Section 20 and 32 of Glass Steagall was removed. Whatever sections of the US Code you are referring to is probably just as unrelated to the problems as Glass Steagall was.


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## Polk (Jun 20, 2013)

AmazonTania said:


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That's simply not true. Those two sections are ones frequently pointed to as being ones that were problematic to repeal, the Gramm-Leach-Bliley repealed more than that.


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## AmazonTania (Jun 20, 2013)

Polk said:


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We are talking about Glass-Steagall, not other laws which are just as non-influential.


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## Polk (Jun 20, 2013)

I'm talking about Glass-Steagall. You're the one who thinks that those were the only two provisions because they are ones frequently discussed.


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## AmazonTania (Jun 20, 2013)

Polk said:


> I'm talking about Glass-Steagall. You're the one who thinks that those were the only two provisions because they are ones frequently discussed.



Gramm-Leach-Bliley only focused on two provisions of the Banking Act of 1933. I don't know which provisions you are talking about, but whichever they are they were repealed or replaced before or after this act. Nonetheless, you still have yet to name this provision.


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## Polk (Jun 20, 2013)

That's just not true. You're changing your wording now to "removed" so you can say provisions that were substantially repealed (16 and 21) weren't actually repeated because they're still technically on the books (but so substantively amended as to be meaningless).


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## Toddsterpatriot (Jun 20, 2013)

MikeK said:


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Yes, we must bring back Glass-Steagall because it prevented banks from making bad mortgage loans. Wait, what?

Never mind, it would have had zero impact on the crisis.
Bringing it back is a stupid idea.


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## Polk (Jun 20, 2013)

Toddsterpatriot said:


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Yes, I'm sure letting banks take consumer deposits and placing them on a roulette wheel had no impact at all...


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## Toddsterpatriot (Jun 20, 2013)

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I know, putting them on that "bad mortgage" roulette wheel was a bad idea.
How would Glass-Steagall have prevented those bad loans? 
Spell it out.


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## Polk (Jun 20, 2013)

Toddsterpatriot said:


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Because it's far more difficult to make them profitable. It only makes sense to issue these mortgages when you can package them into investment vehicles and sell them. That was much more difficult to do when you didn't have investment arms in-house.


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## AmazonTania (Jun 20, 2013)

Polk said:


> That's just not true. You're changing your wording now to "removed" so you can say provisions that were substantially repealed (16 and 21) weren't actually repeated because they're still technically on the books (but so substantively amended as to be meaningless).



You're playing semantic. All I have said was the Gramm-Leach-Bliley act only repealed two provisions of Glass Steagall. Much of Glass Steagall is still in effect. The Government agency which was created under Glass Steagall is still in effect.

According to you, the act repeal three sections of the U.S. Code. I'd like to know what those sections were, if you don't mind.


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## Toddsterpatriot (Jun 20, 2013)

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Banks sold mortgages under GS, packaged or not.


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## AmazonTania (Jun 20, 2013)

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You do understand that the investment/commercial banks who stayed separate got into just as big of trouble as the banks who merged, right?

Glass Steagall didn't make anything more difficult. It's a red herring. And people who do not understand the Banking Act of 1933, or the cause of the crisis will make these mistakes very often.


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## Polk (Jun 20, 2013)

AmazonTania said:


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You're the one that's playing semantics by dipping back and forth between "repeal" and "remove".

The three subsections repealed were 12 USC 78, 12 USC 377, and 15 USC 80.


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## Polk (Jun 20, 2013)

Toddsterpatriot said:


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Yes. However, it's was more difficult and thereby less profitable.


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## Polk (Jun 20, 2013)

AmazonTania said:


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They make these "mistakes" because those "mistakes" aren't mistakes at all. They are, in part, what caused the crisis. They're not allow sufficient to explain the crisis, but no set of factors is. The problem is that the list of "causes" coming from your side of the aisle bare no relationship to reality.


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## Toddsterpatriot (Jun 20, 2013)

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You're right, GS wouldn't have prevented these bad loans.
Look at what Countrywide did......what were they again?
Bank.....Investment bank.....something else.....?


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## AmazonTania (Jun 20, 2013)

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Repeal is the removal or reversal of a law. There is no dipping back and forth. For whatever reason, you seem to think my choice of words adds clout to your position.



> The three subsections repealed were 12 USC 78, 12 USC 377, and 15 USC 80.



How is 15 USC 80 repealed? It's still in the books... Aside from the fact that this has zero to do with the Banking Act of 1933 or 1935.

15 USC § 80a?3 - Definition of investment company | Title 15 - Commerce and Trade | U.S. Code | LII / Legal Information Institute


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## AmazonTania (Jun 20, 2013)

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These banks got in big financial trouble because they were heavily leveraged up with short term commercial paper and mortgage-backed securities. This was just as much of trouble with the merged banks and the ones which remained separate.

That is the reality. Glass Steagall wouldn't have prevented this. At all.


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## The Rabbi (Jun 21, 2013)

AmazonTania said:


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We had banking crises during GS. It didnt prevent anything other than banks making money, which people seem opposed to.  They also seem opposed to banks not making money.  Wish they could decide.

The issue is not deregulation, but regulation.  With deposits insured banks have little incentive to be prudent with depositors' money.  With bailouts as far as the eye can see they have no incentive at all.  Remove all the Depression era regulation of banks and let the market sort out good from bad.  It will punish bad players more effectively than any gov't agency.


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## Sallow (Jun 21, 2013)

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That's astounding.

Sure Glass Steagall would have prevented what happened.

Handily.

These guys knew what they were doing..and they knew it could go horribly wrong.

So they took out insurance with AIG.

And they knew if that failed..the government would have to come in to save their asses because of FDIC.

Add in we had an administration that fueled the housing bubble by dropping interest rates to zero, defunding regulators, populating those regulators with vulture capitalists and encouraging entrepreneurship. That last part is important because in addition to having people doing home improvements via what they thought was a cheap loan, you had people opening up first time businesses by taking out mortgages.

This was a perfect storm caused by  de-regulation.


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## Sallow (Jun 21, 2013)

The Rabbi said:


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You don't seem to know what happened during the depression.


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## The Rabbi (Jun 21, 2013)

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Wait.  So the issue was brought about by FDIC guarantees, which is regulation.  It was aggravated by Fed policy, which is regulation.
And the solution to the problem is more regulation?  Are you insane?


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## The Rabbi (Jun 21, 2013)

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Actually you don't seem to know what happened.  Ever.


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## Toddsterpatriot (Jun 21, 2013)

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*Sure Glass Steagall would have prevented what happened.*

GS would have stopped banks from making bad loans? How?

GS would have stopped Bear Stearns from funding a huge bond position with overnite loans? How?

GS would have stopped Lehmann from doing the same thing? How?

GS would have stopped Fannie and Freddie from buying trillions of dollars mortgages with taxpayers on the hook? How?

*And they knew if that failed..the government would have to come in to save their asses because of FDIC.*

FDIC was there under GS and is still there after 1999. Not sure what your point is.

*Add in we had an administration that fueled the housing bubble by dropping interest rates to zero, *

Rates didn't drop to zero until after the crisis.

*That last part is important because in addition to having people doing home improvements via what they thought was a cheap loan, you had people opening up first time businesses by taking out mortgages.*

People have always used HELOC to do home imporovements. Most small business start ups are funded with home equity and cc debt. Neither has anything to do with GS.


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## Sallow (Jun 21, 2013)

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Cute.

But no cigar.

Most of this was caused by "self regulation".

The people who were supposed to be minding the store..like S&P, FINRA and SEC completely dropped the ball.


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## Sallow (Jun 21, 2013)

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You answer your own questions with questions.

Before Glass Steagall it was banks making loans and freddie/fannie backing those loans.

After? It was anyone. It was a real wild west show. And financial companies were backing the loans. No one was doing due diligence..in fact the opposite happened. There were predatory lending outfits that LIED, in many cases, unknown to the client, about the ability to pay back the loan. In fact, firms like Goldman were pressuring these outfits for as many mortgages as they could get.

And unless you were living under a rock..you know that interest rates were dropping like crazy well before the crisis.

As for the FDIC? What do you think would have happened had the financial institutions failed to cover the poisoned issues? Eh?

Run on the bank.

What happens then?


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## Sallow (Jun 21, 2013)

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Well it seems I have a far handle on history then you, ace.

Which really says something.


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## Toddsterpatriot (Jun 21, 2013)

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*Before Glass Steagall it was banks making loans and freddie/fannie backing those loans.*

Right, Glass Steagall wouldn't have prevented banks from making bad loans. 
So it wouldn't have stopped the crisis. 

*And financial companies were backing the loans. No one was doing due diligence..in fact the opposite happened.*

Which part of GS would have force someone to perform this due diligence?

*There were predatory lending outfits that LIED, in many cases, unknown to the client, about the ability to pay back the loan.*

Which part of GS would have prevented these lies?

*In fact, firms like Goldman were pressuring these outfits for as many mortgages as they could get.*

That's awful! They couldn't do the same under Glass Steagall?

*As for the FDIC? What do you think would have happened had the financial institutions failed to cover the poisoned issues? Eh?*

Glass Steagall would have saved them?

You have some very strong feelings about the issue, your knowledge is lacking.


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## Sallow (Jun 21, 2013)

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Funny..you've agreed with each of my points..yet my knowledge in lacking.



Gotta love it.


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## The Rabbi (Jun 21, 2013)

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So the solution is more regulation?  Please explain how that's supposed to work.


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## The Rabbi (Jun 21, 2013)

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You're actually getting your ass handed to you because the mroe you post a) the more you show little grasp for what actually happened, and b) the more you argue against your own position on GS.


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## Toro (Jun 21, 2013)

Yes.


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## Toddsterpatriot (Jun 21, 2013)

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Each of your points was wrong.

You're a very confused person.


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## The Rabbi (Jun 21, 2013)

Toddster, it's part of being in the low information set.


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## Toro (Jun 21, 2013)

Banks shouldn't be trading with FDIC insured deposits. 

Even if the subsidiaries are bankruptcy remote entities, the government will be prone to bailing out these banks if they're big enough.


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## The Rabbi (Jun 21, 2013)

Toro said:


> Banks shouldn't be trading with FDIC insured deposits.
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> Even if the subsidiaries are bankruptcy remote entities, the government will be prone to bailing out these banks if they're big enough.



Get rid of FDIC insurance and you solve that problem without taxpayer subsidy.


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## Sallow (Jun 21, 2013)

Toddsterpatriot said:


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Then why agree?

Look up confusion, ace.

It doesn't mean what you think it means.


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## Sallow (Jun 21, 2013)

Toro said:


> Banks shouldn't be trading with FDIC insured deposits.
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> Even if the subsidiaries are bankruptcy remote entities, the government will be prone to bailing out these banks if they're big enough.



Bingo.


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## Sallow (Jun 21, 2013)

The Rabbi said:


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Well no..you don't.

Because prior to FDIC insurance..people lost their savings because private entities didn't have the means or inclination to pay them back when they were lost.

The Depression was a huge problem and the government as well as the financial industry was on the brink of collapse. Had FDR not taken the steps we might have become a very different country.


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## The Rabbi (Jun 21, 2013)

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So?  Banks can get insurance privately for their deposits.  Organizations can rank banks and consumer can make decisions for themselves as to the level of risk.  Etc. 
People invest in mutual funds and lose all their money today.  Why should a bank deposit account be any different from that?  Why should taxpayers be on the hook for decisions by banksters?  I am surprised to see a committed marxist like you arguing for the right of banksters to make lousy decisions up to and including fraud.


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## Toddsterpatriot (Jun 21, 2013)

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I haven't agreed with a single of your error filled points.


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## Staidhup (Jun 21, 2013)

With out sufficient oversight and regulatory procedures in place it makes no sense not to overturn the Gramm Leach bill. The primary argument in defense and support insuring passage of Gramm Leach was the accompanying part, regulatory and oversight, which was thrown back into committee to be swept under the rug.


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## Polk (Jun 21, 2013)

The Rabbi said:


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Never thought I'd hear someone argue we should bring back bank runs.


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## Polk (Jun 21, 2013)

Sallow said:


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It's an worse than knowing. Since you know that could happen, everyone is going to mob the bank to withdraw all their money at the first sign of trouble. Even if the bank itself is fund mentally healthy, it will still collapse under that strain.


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## Polk (Jun 21, 2013)

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Taxpayers are hooked for the decision in either case, realistically. If we got rid of the FDIC tomorrow and Wells Fargo collapsed, do you really think the response, by any government would be "sorry you don't have money to buy food, shouldn't have put your money in a bank"?


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## AmazonTania (Jun 21, 2013)

Sallow said:


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Glass-Steagall prevented Commercial Banks and Investment Banks from merging and each bank from taking on the roles and responsibilities of their opposing banks. AIG is not a bank, and never merged with any other entity. 

You don't have a clue what happened during this crisis, do you... So, just to clarify on what you do understand, lets go over:

Banks got in trouble because they bought short term commercial paper and were heavily leveraged in mortgage-backed securities.

How would have Glass Steagall prevented any of this?



> Add in we had an administration that fueled the housing bubble by dropping interest rates to zero, defunding regulators, populating those regulators with vulture capitalists and encouraging entrepreneurship. That last part is important because in addition to having people doing home improvements via what they thought was a cheap loan, you had people opening up first time businesses by taking out mortgages.
> 
> This was a perfect storm caused by  de-regulation.



Federal expenditures went up on all sectors of Government. There was no de-funding of regulators. When thousands of pages of regulation are added every year, that's not de-regulation.

I'm beginning to notice how people in this forum don't understand the difference between de-regulation, mis-regulation and no regulation.


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## AmazonTania (Jun 21, 2013)

Polk said:


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There are still runs on banks, and banks fail all the time. Probably even more now that there is Federal Insurance on Deposits. 

You may not know or understand, but the moment you put your money in the bank, you become a creditor of the bank. Being a creditor of any business does not obligate or entitle one to have their losses covered. Before deposit insurance, banks competed on soundness. They competed on interest rates. They competed on capitalisation. 

Banks no longer have to compete on these standards. Not because the public is ignorant, but because the public doesn't care. The public doesn't care because they believe their money is covered. They will put their money into any bank. The bank will do foolish things with it, and the people will be none the wiser. Chances are that your bank is probably doing risky things with your money right this moment.

What is even sadder is the fact that these people believe their deposits are actually safe. Poor saps.


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## The Rabbi (Jun 21, 2013)

Polk said:


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Because when a mutual fund collapses people are starving in the streets, right?

No.  People would change their behavior if there were no FDIC.  Banks would change their behavior too.  No one would put all his savings into one bank.  Just like no one puts all his savings into one mutual fund or stock (OK some people do but so what?).  Banks would work out private ratings and insurance and they would compete for customers not just on rates and toasters but also on safety.  The market would impose discipline in lending.  No more lending $130M on crappy loans just because everyone else is.
But I guess libs have limited imaginations.


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## Polk (Jun 21, 2013)

AmazonTania said:


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1. Bank failures are far more rare today than they were before the existence of FDIC. 
2. Banks still compete on the same functions they've always competed on.
3. There is no sound reason that the general public should need to understand the details of how a bank's balance sheet works.
4. Their deposits are safe to the extent the government is solvent. If the government is insolvent, then it doesn't matter where accounts are safe or not.


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## Polk (Jun 21, 2013)

The Rabbi said:


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That's an asinine comparison. People don't stick their liquid funds for daily expenses in mutual funds.


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## The Rabbi (Jun 21, 2013)

Polk said:


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1, So?
2. Wrong.
3.  Trust us.  We're from the gov't and know better than you do.  No thanks.
4. The liability those accounts incur make gov't insolvency more likely rather than less likely.  It also encourages the very bad behavior you are constantly harping on.


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## AmazonTania (Jun 21, 2013)

Polk said:


> 1. Bank failures are far more rare today than they were before the existence of FDIC.



This is false. Bank failures before the existence of the FDIC generally only happened during a recession. A recession ensued a financial panic, which resulted in a bank run, which ultimately resulted in a bank failure.

Today, banks are failing even when there no threat of an economic downturn at all. There were over 50 bank failures in 2012 alone. To say that bank failures are far more rare today is completely erroneous. 



> 2. Banks still compete on the same functions they've always competed on.



Some banks might, but the vast majority does not. The public just doesn't care. There is really no difference between competing banks these days. Interest rates are at historic lows, so there really isn't much of a difference between a few basis points when it comes to Time Deposits and Savings.

These days, the only thing banks compete on are fees on checking accounts and late fees on credit cards and overdraft features on accounts. That's about it.



> 3. There is no sound reason that the general public should need to understand the details of how a bank's balance sheet works.



T accounting is not so difficult to understand. And you really don't need to be an accounting expert to know the type of investments your bank is making. You should know what risky investments your bank is making before you decide to become a creditor. That is, if you actually care what happens to your money when you deposit into one of these banks.



> 4. Their deposits are safe to the extent the government is solvent. If the government is insolvent, then it doesn't matter where accounts are safe or not.



The FDIC wouldn't be able to insure the deposits of the Top 20 banks in the country if another financial collapse were to occur in the country.The FDIC simply does not have the funds to cover them all, let alone just one.


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## Dugdale_Jukes (Jun 21, 2013)

Did ending Glass-Steagall directly "cause" the collapse of 2008? No. 

Was ending G-S instrumental in the collapse? Absolutely. 

Ending the absolute barrier between commercial banking and investment banking fed into the collapse of 2008 in two ways:1. It exacerbated systemic risks, specifically by encouraging "too big too fail" (combining assets if not commingling funds)

2. It made banks functionally impossible to regulate. Under G-S investigators had clear walls and fences. After vaporizing the "wall" prohibiting commercial banking and investment banking under one corporate umbrella, regulation became a fog of conflicts made worse by patchwork regulations of 2009-2010. ​G-S was regulation at its best. No question about it. 

For example, G-S's FDIC regs allowed banks to lend double what they could lend  before. Equity capital requirements were relaxed to 10% from 20%, which  is one of the handful of regulations to directly increase competition  PLUS increase the flow of cash on Main Street. Which was at least partly  responsible for the longest period of financial stability in US  history.


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## Toro (Jun 21, 2013)

AmazonTania said:


> Glass-Steagall prevented Commercial Banks and Investment Banks from merging and each bank from taking on the roles and responsibilities of their opposing banks. AIG is not a bank, and never merged with any other entity.
> 
> You don't have a clue what happened during this crisis, do you... So, just to clarify on what you do understand, lets go over:
> 
> ...



Hard to say but banks like JP Morgan underwrote the structured products and kept the equity piece on their books.  They then insured that piece with AIG, which allowed them to underwrite even more crappy structured products to keep them on their books.


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## Toro (Jun 21, 2013)

AmazonTania said:


> Polk said:
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> > 1. Bank failures are far more rare today than they were before the existence of FDIC.
> ...








http://www.calculatedriskblog.com/2009/07/fdic-bank-failures-update.html

There were more bank failures in the 1920s during the booming "Roaring 20s" than at any time since The Great Depression.  This is because there was a rolling depression and collapsing commodity prices in the farm industry in the 1920s, which caused bank failures in rural areas.



> accounting is not so difficult to understand. And you really don't need to be an accounting expert to know the type of investments your bank is making. You should know what risky investments your bank is making before you decide to become a creditor. That is, if you actually care what happens to your money when you deposit into one of these banks.



Most investment professionals had no idea what were on the banks' balance sheets before the Financial Crisis.  If professionals don't know, how can members of the public?


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## The Rabbi (Jun 21, 2013)

The graph is misleading.  Many banks that would have failed pre FDIC got merged into stronger healthier banks in a forced merger.  That was especially so during the real estatemarket collapse after 1986.

Most people don't understand income, balance sheets, and cash flow statements in annual reports. But many do and give advice to those who dont.


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## AmazonTania (Jun 21, 2013)

Toro said:


> AmazonTania said:
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> > Glass-Steagall prevented Commercial Banks and Investment Banks from merging and each bank from taking on the roles and responsibilities of their opposing banks. AIG is not a bank, and never merged with any other entity.
> ...



That's great and all, but Glass Steagall wasn't designed to prevent that.


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## The Rabbi (Jun 21, 2013)

AmazonTania said:


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There were certainly MBS under GS.


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## AmazonTania (Jun 21, 2013)

Toro said:


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## Toro (Jun 21, 2013)

The Rabbi said:


> The graph is misleading.  Many banks that would have failed pre FDIC got merged into stronger healthier banks in a forced merger.  That was especially so during the real estatemarket collapse after 1986.



That may be, but bank failures weren't rare prior to the FDIC either.


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## Toro (Jun 21, 2013)

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Yes, but bank equity was higher, the quality of the MBS was higher and there was less MBS generally.


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## The Rabbi (Jun 21, 2013)

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Noq uestion you are correct on all three points.  But so what?  Those things were functions of the Fed keeping rates low and making mortgages and their bonds very lucrative.  With rising RE prices it seemed reasonable at the time (I guess).  But the culprit is not regulation or de-regulation but an overly accomadative Fed.  About like what we have now but on steroids.


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## Sallow (Jun 21, 2013)

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Um..yeah..it was.


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## Sallow (Jun 21, 2013)

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Ah so..you are playing games.

No interest in that.

Especially with a fool who hasn't a clue about the topic.


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## Toro (Jun 21, 2013)

AmazonTania said:


> Things were different then, as many banks didn't operate branch banks.  Rumours of problems creates bank runs. That's really never changed. My main focus of bank failures during the pre-FDIC era is centered around the cycles of booms and bust during the late 1800's. Any data on this?



I'm sure there is some around.  However, bank failures weren't rare.  

Milton Friedman said that the FDIC was a reason why the Depression ended because people began to trust the banking system again.  The ratio of deposits to currency collapsed in 1931 and 1932 as people pulled their money out of banks and, literally, stuck it in cans and their mattresses.  During the Depression, financial strength of banks didn't matter.  Stronger banks actually failed at a greater rate than weaker banks as panics and runs caused people to act irrationally and pull their money out on rumors.


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## Toro (Jun 21, 2013)

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I agree that the Fed was the biggest cause of the Financial Crisis.


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## Toddsterpatriot (Jun 21, 2013)

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No games, just pointing out your errors.
Your many errors.

You're right about one thing, you are a fool who hasn't a clue about the topic.


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## AmazonTania (Jun 21, 2013)

Sallow said:


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JP Morgan was an investment bank before it acquired Chase and has actually operated as a Commercial bank most the time it has been active. JP Morgan was still operating under it's sister company, Morgan Stanley, as an investment arm. So no, it wouldn't have prevented a thing.

The main banks at the heart of the crisis were pure investment banks which never set foot on commercial soil. Their problems were just as big as the pure commercial banks and the banks which did merge. We can imagine a scenario where the investment bank division combined with the commercial bank division to purchase risky assets which were underwritten. But most commercial banks don't have investment bank divisions, and bought mortgage securities as well.

I ask you again, how would have Glass Steagall prevented any of this from happening?


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## AmazonTania (Jun 21, 2013)

Toro said:


> AmazonTania said:
> 
> 
> > Things were different then, as many banks didn't operate branch banks.  Rumours of problems creates bank runs. That's really never changed. My main focus of bank failures during the pre-FDIC era is centered around the cycles of booms and bust during the late 1800's. Any data on this?
> ...



I don't dispute that bank failures were common. I am just point out that there is really no difference.  



> Milton Friedman said that the FDIC was a reason why the Depression ended because people began to trust the banking system again.  The ratio of deposits to currency collapsed in 1931 and 1932 as people pulled their money out of banks and, literally, stuck it in cans and their mattresses.  During the Depression, financial strength of banks didn't matter.  Stronger banks actually failed at a greater rate than weaker banks as panics and runs caused people to act irrationally and pull their money out on rumors.



People haven't trusted banks at any time before the pre-FDIC era. That hasn't changed, and is still pretty much the sentiment for this era. The only difference is that Credit Unions have substituted the big banks, despite the fact that they are not any safer.

As for ending the Depression. That's debatable.


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## Polk (Jun 21, 2013)

AmazonTania said:


> Polk said:
> 
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> > 1. Bank failures are far more rare today than they were before the existence of FDIC.
> ...



No, it's not. You have no idea what you're talking about. In fact, before the FDIC existed, there were more bank failure is good years for the economy than occur during recessions today. 

The highest annual number of bank failures during the current crisis: 157 (2010).
The highest annual number since the FDIC was created: 534 (1989).
The *lowest* annual number in decade before the FDIC was created: 498 (1928).

In the four years before the FDIC was created, there were over 1,000 bank failures per year and in those four years combined, 40% of banks in the United States failed.



> > 2. Banks still compete on the same functions they've always competed on.
> 
> 
> 
> ...



That's a feature of the current low (nominal) interest rate environment, not caused by the existence of the FDIC.




> > 3. There is no sound reason that the general public should need to understand the details of how a bank's balance sheet works.
> 
> 
> 
> T accounting is not so difficult to understand. And you really don't need to be an accounting expert to know the type of investments your bank is making. You should know what risky investments your bank is making before you decide to become a creditor. That is, if you actually care what happens to your money when you deposit into one of these banks.



I think you fail to realize what is and is not difficult for average people.



> > 4. Their deposits are safe to the extent the government is solvent. If the government is insolvent, then it doesn't matter where accounts are safe or not.
> 
> 
> 
> The FDIC wouldn't be able to insure the deposits of the Top 20 banks in the country if another financial collapse were to occur in the country.The FDIC simply does not have the funds to cover them all, let alone just one.



That doesn't really counter my point.


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## eagle1462010 (Jun 28, 2013)

RIGZONE - The Price of Oil, Speculation and the Election

If the oil market were functioning in an unfettered way, reflecting the true dynamics of supply and demand, there would be no reason for prices to be this high. To quote Sen. Bernie Sanders (D. Vt.) "The price of oil, while declining somewhat in recent weeks, was over $95 a barrel today. That's about $30 higher than two years ago. *The theory behind the setting of oil prices is that its price is determined by the fundamentals of supply and demand*. The fact of the matter is that there is more supply and less demand today than there was two years ago when gasoline prices averaged $2.44 a gallon" ('Stop oil Speculation Now' Huffington Post 6/15/11).

Perhaps even more succinctly and altogether applicable today were those words of truth uttered by the late* Leon Hess, founder and Chairman of Hess Oil, and indisputably one of the Grandees of oildom, before the Senate Committee on Government affairs on Nov. 1, 1990 (I repeat, 1990): "I'm an old man, but I'd bet my life that if the Merc (the New York Mercantile Exchange) was not in operation there would be ample oil at reasonable prices all over the world."*

The issue has only accelerated as highlighted in Senator Sanders commentary: *"Ten years ago, speculators only controlled 30 percent of the oil futures market. Today Wall Street speculators control more than 80% of the market."*

In effect oil is no longer priced, as it was in my trading days, on the basis of a "wet barrel." Those trading the market at the time were either the producers, or consumers or physical traders who took actual title to the oil and chartered vessels to deliver the oil to consumers around the world. Today oil is no longer priced as a wet barrel but rather as a financial instrument having little bearing on the underlying dynamics of supply and demand, being traded by myriad speculators most whom never have produced a barrel of oil, nor taken delivery, nor consumed a barrel of oil and in many cases have never seen a real oil well, or visited a refinery. Yet in large measure, their actions determine what we pay for a gallon of gasoline by buying and selling not "wet" barrels of oil, but financial instruments that well could be labeled "paper barrels."

In a report issued earlier this year by the St. Louis Federal Reserve Bank commenting " unprecedented growth in commodity index trading coincided with a boom in commodity prices; some have extended that observation into a conclusion that speculation by financial traders- and not supply and demand- drove the recent boom in commodity prices. This kind of argument is perhaps strongest in oil market, where large investment banks. Hedge funds and other investment funds have invested billions of dollars in oil futures over the past decade." The study wisely admonishes "Disentangling the true drivers of oil prices is a critical first step for allocating resources and designing good policy."

April 2011, in a bright and hopeful moment responding to the pernicious influence of oil futures trading on oil prices, the Obama administration amid fanfare announced the formation of the "Oil/Gas Pricing Fraud Panel." It was meant to be a call to investigate whether oil prices were a true reflection of market forces or whether they had been impacted by speculation or worse, manipulation. Regretfully and perhaps better said, irresponsibly, now more than a year and a half after its formation, nothing, nada has been heard from this august body.

Couple this with the ongoing dereliction of Commodity Futures Trading Commission (CFTC) and the administration policies policing and countering the malign impact of oil commodity trading on the futures exchanges has been both irresponsible and non-existent.

Consider that on July 27, 2009 the Wall Street Journal published the article, "Traders Blamed For Oil Spike" reporting that "The Commodity Futures Trading Commission plans to issue a report next month suggesting that speculators played a significant role in driving wild price swings in oil prices- a reversal of an earlier CFTC position. Well, now three years later we are still waiting for the report.

But the CFTC's ineffectuality goes further. According to the Wall Street reform act, Dodd-Frank, required the CFTC to impose strict limits on the amount of energy futures that could be traded by speculators by January 17, 2012. We are now nearing the end of September and the CFTC still has not imposed any limits whatsoever, clearly in contravention to the stated law of the land. To quote Senator Sanders musings this June past: "Last month, six senators and I held a meeting in my office with Gary Gensler, Chairman of the CFTC. Unfortunately I was very disappointed in both the tone of the meeting and the complete lack of urgency at the CFTC with respect to cracking down on oil speculators as required by law."

The issue of speculation, and possible manipulation of oil prices, other than lip service, is clearly not being addressed by this administration. It is an issue that touches virtually every American consumer where it hurts most directly, in paying for his day-to-day needs of gasoline, heating oil and on. It needs be high on the agenda of national discourse as another four years of neglect on this issue could be disastrous!

Couple this with CFTC inaction it becomes a broad condemnation of the Administration's inattention to an issue that impacts the pocketbooks of virtually every American

*Comments*

Before the Graham Leahy Act Commodities Speculation was controlled to a degree.  Not allowing the MASSIVE SPECULATION that occurred after the Traders were allowed to Trade Commodities on outside of SEC Control to LIMIT THE AMOUNT OF TRADES in *VITAL FUCKING  COMMODITIES THAT EFFECT EVERY PERSON ON PLANET EARTH.*

But hey, a bunch of WALL STREET GUYS got to make a lot of money...................

The REASON TO CONTROL THESE ASSHOLES is because of what they did that LED TO THE CRASH.  LED TO $4 A GALLON GAS, and LED TO 350% INCREASES IN COMMODITY PRICES.

Derivatives through the Roof and into OUTER SPACE.

The same DAMN BULL SHIT THAT BROUGHT ON THE GREAT DEPRESSION.

And the FINANCIAL GUYS SAY IT'S RIGHTEOUS.

FUCK OFF.  And I aint NO LIB.  This subject ticks me off.  As the Ass clowns who did this RUINED MANY AMERICAN LIVES.  People LOST THEIR HOMES, not because of they overburdened themselves with Debt, but BECAUSE THEY LOST THEIR FING JOBS AFTER WALLSTREET TANKED US.

You can go into it was the housing market BS, but ultimately the Markets SCREWED EVERYBODY TO MAKE A BUCK.  The Great American BUBBLE MACHINE.  And Americans paid for it AT THE PUMP, AND AT THE STORE.

The Markets were SUPPOSED TO BE ABOUT INVESTING in a business, and if the business is doing good you make money.  NOT TRADING THE DAMN THING 3000 TIMES A DAY TO DRIVE THE PRICES UP TO MAKE A QUICK BUCK.  Then pull the rug out and watch them TANK BECAUSE OF SPECULATORS.

ending current rant.  To you STOCK MARKET BS SUCK UPS, FO.


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## KissMy (Jun 28, 2013)

It is very telling when the entire Wallstreet banking & financial system melted down forcing their investors to withdraw funds from Madoff investment to cover their losses. Our financial system is more risky & makes less sense than a Ponzi scheme.


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## eagle1462010 (Jun 28, 2013)

HowStuffWorks "Commodity Futures Trading Commission"

Commodity Futures Trading Commission
In the United States, oil futures come in three major forms: contracts on crude oil, gasoline and heating oil. All three of these commodities are essential for the nation to operate and thrive. Unfortunately, the Commodity Futures Trading Commission (CFTC) was unable to do anything to stop manipulation of the market for the energy on which we're painfully dependent.
The CFTC was established by Congress in 1974 specifically to prevent speculation from artificially inflating the price of commodities. *Over time, its powers were slowly stripped. *The scope of the CFTC's power to regulate is limited to trading within the formal setting of the New York Mercantile Exchange (NYMEX). Traders on this exchange must file daily reports on exchanges so the commission can keep an eye on speculation. But speculators were able to make an end run around the CFTC's regulatory power, thanks to help from oil giant Enron.
*The year 2000 was a bad one for consumers as far as oil goes*. Prices remained low (less than $30 a barrel), but mechanisms were set in motion that would raise prices and vastly increase oil company profits. *That year, Congress (under lobby by Enron and other oil companies) removed the regulatory powers of the CFTC over American oil futures traded over the counter (OTC)* [source: Levin]. Enron had created specialized software that allowed futures to be traded OTC -- exchanges outside of the formal exchange markets. The software and what came to be known as the Enron loophole for OTC trading allowed futures exchanges without government oversight.
Also in 2000, a consortium of oil companies and financial institutions created the Intercontinental Exchange (ICE) in London to trade European oil futures, although the group was headquartered in Atlanta. Since the exchange was in Europe, the CFTC's reach didn't extend to it.
The CFTC gave up more regulatory power in early 2006 when it allowed the Intercontinental Exchange to install terminals in the United States [source: Engdahl]. Up to that point, only OTC speculators could trade outside of CFTC oversight. But once the commission allowed U.S. futures to be traded on ICE, rather than only on NYMEX, the CFTC lost its ability to regulate even formal exchanges.* Once traded on ICE, an American futures derivative fell out of the jurisdiction of the CFTC. *The convergence of the Enron loophole and the establishment of ICE meant the CFTC could no longer accurately police speculators who sought to drive up energy prices through futures speculation.
Whether it was speculators that drove up the cost of gas and oil is still debated. A July 2008 report by the International Energy Agency concluded that speculation had little to do with price increases [source: CNN Money]. But a report issued the following September contradicted the IEA report, pointing to correlations between the influx of money in oil futures markets and the rising cost of oil. *The price of oil doubled, tripled and eventually quadrupled in step with the increase from $13 billion to $260 billion in the market from 2003 to 2008 [source: U.S. Senate].*
In response to calls for better regulation of oil futures, Congress introduced the Consumer-First Energy Act in May 2008. The bill would have extended CFTC oversight to foreign markets, but the act died on the Senate floor the following June. After the bill was defeated, the argument over oil speculation changed focus. No longer was the debate over what caused oil prices to rise beginning in 2006, but how long the United States would allow speculation to continue.
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## eagle1462010 (Jun 28, 2013)

THE ENRON LOOPHOLE & AND OIL FUTURES TRADING AND PHIL GRAMM | Liberalscum Buster

The Commodity Futures Modernization Act of 2000 deregulated the market for energy futures. This is what is commonly referred to as &#8220;the Enron loophole.&#8221; It has led to malpractice and manipulation of these unregulated dark markets resulting in price spikes far beyond what the normal law of supply and demand would dictate.

Excerpt From The Star-Telegram:

The late, infamous Enron head, Ken Lay, realized in the eighties that he could make more money bidding up energy in the futures market than by actually creating and selling energy. But, under then-current rules, how much you could make swapping paper was limited. Fortuitously, Lay had excellent Texas political connections; and in November of 1992, the head of the Commodities Futures Trading Commission moved to exempt energy-derivative contracts and related swaps from any government oversight.

A vote was hurriedly put together before the Clinton White House would take over, and so Lay could finally start &#8220;dark&#8221; &#8211; unregulated &#8211; futures trading. The head of the CFTC was Wendy Gramm, wife of Texas Senator Phil Gramm; five weeks after she left, she became a board member of Enron in Houston.

Fast-forward to late 2000 and H.R. 5660, the Commodity Futures Modernization Act of 2000, sponsored by Republican Congressman Thomas Ewing of Illinois. That bill went nowhere, even though Tom Delay&#8217;s wife Christine was then working for a Washington lobbying firm, Alexander Strategies &#8211; which Enron had paid $200,000 to push through legislation for permanent energy deregulation in these &#8220;dark&#8221; markets.

Six months later came Senate Bill 3283, also named the Commodity Futures Modernization Act of 2000. This time around the sponsor was Republican Sen. Richard Lugar of Indiana, and now Phil Gramm was listed as one of the bill&#8217;s co-sponsors. Like it had in the House, this bill was destined to go nowhere until, late one night, it was attached as a rider to an 11,000-page appropriations bill &#8211; which was signed into law by President Clinton.

Now traders had an officially deregulated market for energy futures. Worse, that bill also deregulated many financial instruments &#8211; including the collateralized debt obligations that are at the center of today&#8217;s mortgage crisis, which may well cost us more than $1 trillion before it&#8217;s over.

Everybody Was Warned!

As USA Today wrote of this fiasco in January of 2002, &#8220;But, as a power marketer, [Enron] could buy enough energy-futures contracts in a region to create a virtual monopoly.&#8221; That&#8217;s right: As early as the winter of 2002, it was widely known that the 2000 Commodities Futures Modernization Act had created a monster, capable of running up energy prices outside of the normal law of supply and demand. Worse, our government had been warned this was going to happen. Representatives of the Federal Reserve, the Securities and Exchange Commission and the CFTC had already told Congress not to deregulate energy because &#8220;the market was ripe for manipulation.&#8221; Everybody was warned; that&#8217;s why this deregulation bill was stealthily inserted into that appropriations bill without a floor debate.

Phil Gramm&#8217;s office denied that he had anything to do with writing the section of that bill that actually deregulated energy. And yet Prof. Michael Greenberger, formerly a CFTC board member himself, said that Gramm&#8217;s wife Wendy, along with a few lobbyists and Wall Street attorneys, had rewritten it. When Robert Manor of the Chicago Times wrote about this situation on January 18, 2002, neither Gramm could be reached for comment.

Kill It Before It Multiplies

When Enron failed and took its private, unregulated energy exchange to the grave, another rose to take its place. The Intercontinental Exchange (ICE) was the brainchild of Morgan Stanley, Goldman Sachs, British Petroleum, Deutsche Bank, Dean Witter, Royal Dutch Shell, SG Investment Bank and Totalfina. In 2001 ICE purchased the International Petroleum Exchange in London; renamed ICE Futures, it now operates as an &#8220;exempt commercial market&#8221; under section 2(H)(3) of the Commodity Exchange Act. As the Senate hearings pointed out in the summer of 2006, &#8220;Both markets operate outside of any CFTC oversight.&#8221;

If you reread the quotes at the start of this story again, you find that many officials in the government warned against what would happen in a deregulated energy market, because it was so easy to manipulate. We already know this to be true thanks to Enron&#8217;s California misdeeds. And, as we pointed out last week, British Petroleum was busted for manipulating the propane market and fined over $300 million; and Amaranth Partners was caught manipulating the natural gas market, unconscionably causing the futures price for natural gas to raise every Texan&#8217;s electric bills. (It took two years for Amaranth to be exposed.) And yes, the manipulation happened in the new &#8220;dark&#8221; and unregulated exchanges, making it almost impossible to uncover. So it&#8217;s not a question of &#8220;if&#8221; some &#8220;theoretically possible&#8221; manipulation and distortion of the market will result from this bill, championed by Phil Gramm, his wife Wendy and Christine Delay&#8217;s employer, Alexander Strategies. The reason it is not theoretical is because we keep catching well-known companies doing it on a regular basis.

No Conscience in Congress?

All you hear daily is that the world has a severe shortage of oil, or you can buy only 200 pounds of rice at one time, or we will have a gasoline crisis this summer, etc. But it takes only a minute to find hundreds of quotes from highly respected oil and economic analysts, (not to mention CEOs of the major oil companies), that completely dismiss the claim of oil, gas or food shortages that have been headlining the news.

Even more troubling is that within months of the CFMA&#8217;s going into effect, we knew it had enabled easy manipulation of any energy market, but nothing was done to fix it. Nor was anything done when the Senate held its hearings on this matter in 2006, or in the House hearings last December.

Today we call this situation the &#8220;Enron Loophole,&#8221; but that&#8217;s untrue. It&#8217;s not a loophole: it was a new law passed in 2000 &#8211; and far more individuals than Ken Lay have used that law to line their pockets with hundreds of billions of American consumers&#8217; hard-earned dollars. That&#8217;s not my opinion, that&#8217;s direct testimony by numerous experts before both the House and Senate.

Professor Greenberger warned about our &#8220;New American Economy&#8221; far better than I could:

&#8220;Should we have an economy that&#8217;s based on whether people make good or bad bets? Or should we have an economy where people build companies, create manufacturing, do inventions, advance the American society and make it more productive? We are rewarding people for sitting at their computers and punching in bets. That&#8217;s not the way our economy is going to be built, and India and China, with their focus on science and industry and building real businesses, are going to eat our lunch, unless the American public wakes up and puts an end to an economy that praises and makes heroes out of speculators.&#8221;

Greenberger&#8217;s statement explains why Detroit and other American manufacturers suffer while Wall Street speculators make a fortune &#8212; and your rapidly shrinking checkbook pays for it, every time you buy food, fuel or feed.

All because there is no shortage of these goods, you&#8217;re just being told there is because it&#8217;s more profitable &#8211; for a few &#8211; that way.

© 2008 Ed Wallace

Everybody was warned; that&#8217;s probably why this deregulation bill was stealthily inserted into that appropriations bill without a floor debate.


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## editec (Jun 28, 2013)

I'm of the opinion that it's probably too late for that now.

The world of banking and finance has changed so dramtically from nationalistic to internationalistic, that I suspect there isn't any national regulations that the BANKSTERS cannnot get around.

We do not have control over wealth from nation to nation, so national regulations are going to fail.


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## eagle1462010 (Jun 28, 2013)

In a Government of LIES, TRUTH IS TREASON.

These people, like the scumbag GRAHAM, Fucked over ALL AMERICANS.  They lined their pockets, and got their daughters SWEET JOBS for POLITICAL FAVORS, and the MARKETS SCREWED EVERYBODY.

They drove up the PRICES OF HOUSING TO INSANITY, and then we wonder why SO MANY MORTGAGES ARE UNDER WATER TODAY.  Because the MARKET SPECULATORS ARTIFICIALLY DROVE UP THE PRICES  with FIAT MONEY, AKA DERIVATIVES and SCREWED EVERYONE.

Our Markets are way up again, but the ECONOMY ISN'T UP WITH IT.  Oh, we'll get the BS the jobs LAG BEHIND THE MARKETS routine, but it's a FALSE RISE via MARKET CASINO SPECULATION.

Vital COMMODITIES SHOULD BE UNDER STRICT CONTROLS WORLD WIDE in regards to the Markets.  But HEY, the ENRON LOOP HOLE WAS GOOD FOR AMERICA.

Investment bankers and those making a profit off  of it  would say so.  As every American pays for it at the pumps, and stores.


This is WHAT CAUSED THE CRASH, and I don't care what the EXPERTS SAY, such as DERIVATIVES ARE GOOD.  We know what they do when they aren't REGULATED.  They would SCREW THEIR OWN FAMILY TO MAKE A BUCK, and that SHOULD NEVER HAVE BEEN ALLOWED TO HAPPEN.

It was ILLEGAL TO SPECULATE VITAL COMMODITIES BEFORE 2000.  But hey.  Americans love spending all their money at the PUMPS SO WALL STREET SCUMBAGS CAN MAKE A BUNCH OF MONEY.

Isn't that right, you bunch of BOOT LICKING MARKET JUNKIES.


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## eagle1462010 (Jun 28, 2013)

editec said:


> I'm of the opinion that it's probably too late for that now.
> 
> The world of banking and finance has changed so dramtically from nationalistic to internationalistic, that I suspect there isn't any national regulations that the BANKSTERS cannnot get around.
> 
> We do not have control over wealth from nation to nation, so national regulations are going to fail.



I'd say you are correct.  They would simply speculate from Europe or elsewhere.  They already do that anyway, as stated in some of the articles I posted.  It would take a WORLD WIDE MOVEMENT TO DO THIS.

Yet, the U.S. could start this and push for other countries to do the same.  They followed last time  as we started this BS.  We allowed the speculators to F over the entire planet.

Check out RICE PRICES and compare them to the so called Arab spring.


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## Toro (Jun 28, 2013)

eagle1462010 said:


> In a Government of LIES, TRUTH IS TREASON.
> 
> These people, like the scumbag GRAHAM, Fucked over ALL AMERICANS.  They lined their pockets, and got their daughters SWEET JOBS for POLITICAL FAVORS, and the MARKETS SCREWED EVERYBODY.
> 
> ...



You made a mistake. You left a few words in lower case. 

And don't mind those who say that posters who use lots of caps are douchebags.


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## Toddsterpatriot (Jun 28, 2013)

eagle1462010 said:


> RIGZONE - The Price of Oil, Speculation and the Election
> 
> If the oil market were functioning in an unfettered way, reflecting the true dynamics of supply and demand, there would be no reason for prices to be this high. To quote Sen. Bernie Sanders (D. Vt.) "The price of oil, while declining somewhat in recent weeks, was over $95 a barrel today. That's about $30 higher than two years ago. *The theory behind the setting of oil prices is that its price is determined by the fundamentals of supply and demand*. The fact of the matter is that there is more supply and less demand today than there was two years ago when gasoline prices averaged $2.44 a gallon" ('Stop oil Speculation Now' Huffington Post 6/15/11).
> 
> ...



*To quote Sen. Bernie Sanders *

Why would you quote that Commie idiot?

*April 2011, in a bright and hopeful moment responding to the pernicious influence of oil futures trading on oil prices, the Obama administration *

The only time "bright and hopeful moment" and "the Obama administration" should be in the same sentence would be in a story about the end of the Obama administration.

*Yet in large measure, their actions determine what we pay for a gallon of gasoline by buying and selling not "wet" barrels of oil, but financial instruments that well could be labeled "paper barrels."*

Bastards! They buy a contract, the price goes up, they sell a contract, the price goes down.
So what are you whining about again?


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## eagle1462010 (Jun 28, 2013)

Whining about?  You are Fing Blind.

If you didn't see how the markets affected the prices up to the crash and even today you are a complete and utter idiot.

Or you are a SELF SERVING AHOLE who's making alot of money Fing over people at the pumps.

I've seen your posts before, saying the mountain of derivatives don't matter even after the data was over a THOUSAND TRILLION, and you say it's ONLY NOMINAL AND SHIT LIKE THAT.

That's a crock and you know it.  A lot of people out there disagree with you pal.  Your in the markets and don't mind screwing people over to make a buck, I'd guess.

None of this kind of BS caused the Great Depression......................

That's your type of attitude isn't it...................

It's all BULL and you know it.


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## eagle1462010 (Jun 28, 2013)

The Glass Steigal Act should be put back in place.

The Graham Leahy Act should be repealed.

Commodities need to regulated to stop Speculation on VITAL COMMODITIES.  Supply and Demand should control these Markets as it affects everyone on the planet.  After 2000 they SPECULATED to INSANITY.  Which caused the crash.  It caused the GREAT DEPRESSION.

Which is Exactly why the Glass Steigal Act should be put back in place.

That's my position.  PERIOD.  And I don't give a DAMN about those who believe what happened was just purely business and not the BULL we got.

Secondly, the Federal Reserve Needs to be taken out of the hands of the Bankers, and back into the hands of the Government.  It has been this way since Wilson.  It needs to end.


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## eagle1462010 (Jun 28, 2013)

We nearly had a SECOND GREAT DEPRESSION because of the AHOLES ON WALLSTREET.

They need to be FUCKING PUT ON A LEASH.


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## Toddsterpatriot (Jun 28, 2013)

eagle1462010 said:


> Whining about?  You are Fing Blind.
> 
> If you didn't see how the markets affected the prices up to the crash and even today you are a complete and utter idiot.
> 
> ...



*Whining about?*

Whining about!

*If you didn't see how the markets affected the prices *

Maybe you can show me?

Here's a hypothetical.
I buy 1000 oil contracts on the NYMEX.
That's 1,000,000 barrels.
Contract expires in August.
I never take delivery and I sell the contract before it expires.
What impact did I have on the price?
Show all your work.

Thanks in advance!


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## eagle1462010 (Jun 30, 2013)

How Wall Street Is Raising the Price of Gas - ABC News

ABC News&#8217; Mark Greenblatt Reports:
Every time you fill up your car with gas, your dollar ends up in the hands of  a wide range of interests from around the world. Some of your money goes to oil companies, some  of what you pay goes to refineries, and more still gets divided up by the gas stations you stop at.
What may surprise you, however, is what one of Wall Street&#8217;s top regulators has to say about who else you&#8217;re paying: speculators on Wall Street.
Bart Chilton, a commissioner at the Commodity Futures Trading Commission,  the federal agency that regulates commodity futures and option trading in the United States, said it&#8217;s time to look at home &#8212; in addition to overseas &#8212; when searching for the reasons why gas prices are on the rise.
&#8220;I&#8217;m fired up,&#8221; Chilton said. &#8220;I&#8217;m concerned and we have to look after consumers.&#8221;
According to Chilton, much of the problem is actually &#8220;made in the USA,&#8221; created by Wall Street traders who gamble on oil prices.
&#8220;There aren&#8217;t markets without speculation,&#8221; Chilton told ABC News. &#8220;It&#8217;s the excessive speculation we are concerned about.&#8221;
Chilton, who has served as commissioner since 2007, said far too few players control far too much of the market, allowing them to push the price of gas higher and higher.  Chilton and the CFTC are attempting to implement caps on the total positions speculators can take when trading in the oil futures markets.
Chilton obtained an energy research report from Goldman Sachs spelling out how much the Wall Street firm estimated speculators had pushed up the real price of oil sold to make gas, due to large bets in the markets.
Using the numbers from in the Goldman Sachs report, combined with current information from the CFTC, Chilton calculated how much speculation is driving up the price at the pump for the average consumer.
He shared calculations with ABC News for the first time.
By Chilton&#8217;s calculation, if you drive a car like a Honda Civic, you&#8217;re paying $7.30 more than you should every time you fill up &#8212; to Wall Street speculators.  If your car is a Ford Explorer you&#8217;re paying an extra $10.41.
For a Ford F150,  he says owners pay an additional $14.56 per fill up -or more than $750 a year.
For their part, industry groups representing Wall Street say there is no evidence their trading activities actually push up the price of oil.
Chilton isn&#8217;t doesn&#8217;t buy that argument.  He and the CFTC are currently attempting to implement new rules that would put limits on speculation.   In response, Wall Street is suing the CFTC attempting to get an injunction, which would allow everything to remain status quo.
&#8220;They don&#8217;t want these limits,&#8221; he said. &#8220;They want unbridled ability to speculate in these markets and that&#8217;s not good for consumers. It&#8217;s not good for markets. It&#8217;s not good for the economy.&#8221;


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## The Rabbi (Jun 30, 2013)

eagle1462010 said:


> We nearly had a SECOND GREAT DEPRESSION because of the AHOLES ON WALLSTREET.
> 
> They need to be FUCKING PUT ON A LEASH.



You need to fucking get a clue about how all this works.


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## eagle1462010 (Jun 30, 2013)

One trade doesn't jack up the price MR. Wallstreet.

Which is exactly why your example doesn't mean squat.

Before 2000 the TRADES WERE LIMITED to prevent Speculation.  The CFTC was ABLE TO LIMIT TRADING to prevent ARTIFICIAL INFLATION of Commodities such as oil.

Riddle me this.  If the HEDGED BETS would only make money via Supply and Demand, then why have PRICES GONE up up and away so many times WITHOUT SUPPLY INCREASING?  

You are simply enjoying the markets making money off the average joe, by trading away at commodities.

During the 2000's decade, PRICE OF GAS SKY ROCKETED and it wasn't by a FACTOR OF SUPPLY AND DEMAND.

Who made those prices RISE?  A FAIRY TALE MONSTER OR SOMETHING MR. WALL STREET.............


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## eagle1462010 (Jun 30, 2013)

Why is US Oil Consumption Lower? Better Gasoline Mileage? | Our Finite World

Consumption went down 20% during those times, but THE PRICE KEPT GOING UP.

Why the HELL DID THE PRICES GO UP?  FROM CLUELESS


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## The Rabbi (Jun 30, 2013)

eagle1462010 said:


> Why is US Oil Consumption Lower? Better Gasoline Mileage? | Our Finite World
> 
> Consumption went down 20% during those times, but THE PRICE KEPT GOING UP.
> 
> Why the HELL DID THE PRICES GO UP?  FROM CLUELESS



Youre not very smart, are you?


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## eagle1462010 (Jun 30, 2013)

Four US banks hold a staggering 95.9% of U.S. derivatives: The $600 Trillion Time Bomb That?s Set to Explode | Global Research

I hope none of these four companies pass gas again on their DERIVATIVES.  Oh, I know I know I know............It's ONLY A NOMINAL VALUE when we talk about DERIVATIVES holdings from 4 Banks that own nearly 600 TRILLION IN NOMINAL VALUE.

But it's no BIG DEAL RIGHT MR. WALLSTREET AND OTHERS.  They are just HOLDING THIS FICTIONAL PAPER BS.  No big deal at all even though these NOMINAL VALUES GO OUT OF THE SOLAR SYSTEM.

No big deal guys that they TRADE with only a SMALL FRACTION OF THEIR BETS.

This is ALL BS and YOU GUYS KNOW IT NO MATTER WHAT YOU TYPE.

Hey, by the way, What was Greece hiding before they crashed and why did GOLDMAN SACHS help them cook the books?  

That story turned out real well for Greece didn't it?


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## eagle1462010 (Jun 30, 2013)

Not very smart huh................................

I produce 2 million widgets.
Widgets are in high demand so I'm making a fortune.
People stop buying widgets.
Supply is up.
demand is low
SO WHAT DO I DO TO sell Widgets THAT NOBODY IS BUYING...............
In your STUPID MINDS if I RAISE THE PRICES OF WIDGETS they'll SUDDENLY SELL.............
And you people people call me stupid.

When Supply is high and Demand is DOWN PRICES SHOULD GO DOWN, but they DIDN'T.

Did your FAIRY GODMOTHER MAGICALLY RAISE THE GAS PRICES?  Or did Samatha of Bewitched twenkle her nose to cause the prices to go up?

You people KNOW the MARKETS DRIVE UP PRICES ARTIFICIALLY but don't give a DAMN.

It was the banks TOO BIG TO FAIL, THAT CAUSED THIS BS.


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## The Rabbi (Jun 30, 2013)

eagle1462010 said:


> Not very smart huh................................
> 
> I produce 2 million widgets.
> Widgets are in high demand so I'm making a fortune.
> ...



Banks drive up gas prices?  Wow.  Where do they teach this stuff?


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## eagle1462010 (Jun 30, 2013)

Historical Perspectives - Famous Bubbles | Dot Con | FRONTLINE | PBS

the bull market of the roaring twenties (1924-1929)

The raging U.S. stock market of the late 1920s was hailed by many as evidence of a "new era" of economic fundamentals. Proponents of this theory pointed to evidence such as the establishment of the Federal Reserve in 1913; Coolidge administration policies including the extension of free trade, anti-inflation measures, and the relaxation of anti-trust laws; and corporate improvements such as increased worker productivity and expanded research and development.

In reality, the driving factor behind both the inflation and the bursting of the speculative bubble was the expanding use of leverage (i.e., debt) by individuals as well as corporations. The decade was marked by an enormous expansion of consumer credit, which Americans used to finance purchases of new products such as automobiles and radios, which were created using new techniques of mass production that additionally helped to drive down prices. Consumers also used credit to purchase stocks, and as the stock market escalated, investors began to take advantage of margin loans provided by their brokers. Their primary targets were industries involving new technologies, such as the automobile, motion picture, and aircraft industries. Radio stocks boomed, rising by 400 percent in 1928 alone,7 and the stock market attracted an immense public following.

On Sept. 3, 1929, the Dow Jones reached its high for the year before the bubble began to deflate. Oct. 24, which became known as "Black Thursday," marked the beginning of the stock market's downturn, remembered as the "Crash of 1929." Almost 13 million shares were traded on that day as an unexpected panic affected the markets. Although the following Friday was quieter, the Dow fell by a record 38 points on Monday, Oct. 28, and another 30 points on the infamous "Black Tuesday," Oct. 29, when a record 16.5 million shares changed hands. Following the chaos of October, the market briefly rallied through spring 1930 before plummeting again during the early 1930s.

Greater fool theory
From Wikipedia, the free encyclopedia
The greater fool theory (also called survivor investing) is the belief held by one who makes a questionable investment, with the assumption that they will be able to sell it later to "a greater fool"; in other words, buying something not because you believe that it is worth the price, but rather because you believe that you will be able to sell it to someone else at an even higher price.[1]
It is similar in concept to the Keynesian beauty contest principle of stock investing.
Some consider it a valid method of making money in the stock market, particularly momentum investors; however, fundamental investors believe that market participants eventually realize that the price level is too outrageous (too high or too low) and the speculative bubble pops. The greater fool theory relies on market optimism and market momentum concerning a particular stock, an industry, or the market as a whole.
An alternative to the greater fool theory is value investing, or contrarian investing, which tries to discount, or even go actively against, the prevailing market psychology. Value investors such as Warren Buffett believe that it is corporate profits that are the normal returns from stock investments, and any higher return is possible only due to the greater fool theory.
A stock's price value is determined by judgments made based on earnings, revenue, balance sheets, and a company's future prospects. And many stocks pay dividends as a premium to ownership. Bonds pay interest and their prices fluctuate as a direct reflection of an interest yield on a given bond.

*PERHAPS I SHOULD CALL YOU PEOPLE FOOLS*

Just don't be the one stuck with the BS STOCKS at the end.


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## eagle1462010 (Jun 30, 2013)

The Rabbi said:


> eagle1462010 said:
> 
> 
> > Not very smart huh................................
> ...



MARKET SPECULATION.  Get your story straight.

I'll ask you again, why did the price of gas go up when I showed you how DEMAND WENT DOWN.


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## The Rabbi (Jun 30, 2013)

eagle1462010 said:


> The Rabbi said:
> 
> 
> > eagle1462010 said:
> ...



You showed no such thing.  This is why you are a dolt.


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## eagle1462010 (Jun 30, 2013)

Did Goldman Goose Oil? - Forbes

*[SIZE="4"Meanwhile the futures markets had gotten wacky. On June 5, with no news catalysts, oil futures spiked $5 a barrel, the biggest one-day jump since the outbreak of the first Gulf war. The next day, on no news, the price jumped another $10 to $138. Traders say that [COLOR="Red"]in the days leading up to the $147 peak on July 12 there was the smell of blood in the water. We just kept bidding the market higher, [/COLOR]one trader says.][/SIZE]*

15 DOLLARS A BARREL HIGHER IN 2 DAYS


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## The Rabbi (Jun 30, 2013)

eagle1462010 said:


> Did Goldman Goose Oil? - Forbes
> 
> *[SIZE="4"Meanwhile the futures markets had gotten wacky. On June 5, with no news catalysts, oil futures spiked $5 a barrel, the biggest one-day jump since the outbreak of the first Gulf war. The next day, on no news, the price jumped another $10 to $138. Traders say that [COLOR="Red"]in the days leading up to the $147 peak on July 12 there was the smell of blood in the water. We just kept bidding the market higher, [/COLOR]one trader says.][/SIZE]*
> 
> 15 DOLLARS A BARREL HIGHER IN 2 DAYS



This is relevant, why?


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## eagle1462010 (Jun 30, 2013)

Fuck Off Rabbi.

You will not answer the questions on WHY THE PRICES WENT UP when DEMAND WENT DOWN.

The last article showed a 15 Dollar a Barrel Jump in 2 Days.

Done by the Markets.

What have you shown other than trying to ditch me and my questions?

You know that this occurred and there is sufficient evidence out there to prove it.  I used to look at the graphs of this BS, watching trading SPIKES on oil.  When the TRADING VOLUME WENT UP, the BARREL PRICES WENT UP, and LOW AND BEHOLD my LOCAL GAS PRICES WENT UP.

Only a FOOL would say otherwise.

You know DAMNED WELL SPECULATORS DRIVE UP PRICES or they'd NEVER TRADE A DAMN THING.

Which is EXACTLY WHY THEY NEED TO BE PUT ON A LEASH IN VITAL COMMODITIES.

This SHIT was ILLEGAL BEFORE 2000.

That law allowed rampant speculation outside of REGULATORY CONTROL and they JACKED UP THE DERIVATIVES VALUES TO INSANE LEVELS in 8 years.

This caused the crash.  This caused our Gas prices to go up, and it HURT THE ECONOMY because Gas is a driving factor on everything.

Unless you have found a way to ship goods on water.


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## eagle1462010 (Jun 30, 2013)

The Rabbi said:


> eagle1462010 said:
> 
> 
> > Did Goldman Goose Oil? - Forbes
> ...



You haven't listened to anything.  Trading needs to be limited on VITAL COMMODITIES.

Which is why I posted this stuff.   This type of Trading occurred after the Graham Leahy Act.  It allowed Trading outside of Regulators, so they could speculate oil, and other vital commodities.


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## eagle1462010 (Jun 30, 2013)

https://upload.wikimedia.org/wikipedia/commons/b/b0/Crude_oil_prices_since_1861.png

Not good at posting the pics still, but who the hell cares anyway.

I've already shown demand was down by previous articles from 2004 and after, but PRICES WENT UP.

The graph on the above listed site shows how the ICE BRENT OIL MARKETS WENT THROUGH THE ROOF. Towards the crash.

Riddle me this...........Demand went down, yet prices sky rocketed.  

Was there another IRANIAN HOSTAGE CRISIS GOING ON LIKE WHAT CAUSED THE SPIKES IN THE LATE 70'S?

I didn't see one.  Yet prices JACKED UP.  And you people KNOW WHY THE FUCK IT HAPPENED.


----------



## The Rabbi (Jun 30, 2013)

eagle1462010 said:


> Fuck Off Rabbi.
> 
> You will not answer the questions on WHY THE PRICES WENT UP when DEMAND WENT DOWN.
> 
> ...



You dont have the slightest clue as to what you are jabbering about.  When gas prices go down do you blame greedy speculators?


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## eagle1462010 (Jun 30, 2013)

BS Rabbi.

I've shown article after article about the prices.

I've shown how that consumption went down while the prices SPIKED.

I've shown actual statements from traders who said, Traders smelled Blood in the Water and started a trading Feeding Frenzy on buying oil commodities that drove up prices.

I've shown how oil prices went up 15 Dollars a Barrel in 2 days because of the Markets.

You've shown NOTHING.

Notta, and refuse to answer my questions.  Except I don't know anything.

Why don't you answer those questions or contradict the sites posted?

Because you know they show the truth.

The markets drive up the prices by trading in LARGE VOLUMES.  Artificially driving up prices and you know it.

Which is exactly why the Graham Leahy Act should be REPEALED.


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## eagle1462010 (Jun 30, 2013)

Why Oil Prices Are So High

In 2013, oil prices started rising in January, earlier than ever. Iran kicked off the year by playing war games near the Straits of Hormuz. This was perceived as a potential threat to this strategic shipping lane. By February 8, oil reached $118.90/barrel. This sent gas prices to $3.85 by February 25. Since then, oil and gas prices have leveled off. Prices are expected to average $105 barrel for Brent crude oil in 2013.
This is lower than 2012's average of $112 per barrel. The EIA bravely forecasts the average price of oil will fall even more in 2014 to $99 per barrel. Why? U.S. pipeline capacity will be expanded, allowing greater supply. Demand will be only mildly supported by moderate economic growth in the U.S. The EIA forecasts growth to be at the low end of the healthy 2-3% growth rate. (Source: EIA, Short-Term Forecast)

*Reasons for High Oil Prices in 2012:*

Oil prices started rising much sooner in 2012 than they did in 2011. The price for WTI crude oil broke above $100 a barrel on February 13, 2012, two weeks earlier than in 2011. Rising oil prices drove gas prices above $3.50 a gallon that same week. Gas prices had already breached $3.50 a gallon on the East and West coasts in January.
By March, Brent Crude Oil (which is more expensive than WTI) peaked at $125 a barrel. It settled down to $95 a barrel in June, but rose $113.36 by August. Normally, oil prices drop in the fall and winter. *However, commodities futures traders were bidding up oil prices to offset what the Fed's expansive monetary policy*. They were betting the dollar would drop, which drives up oil prices. They were wrong about the dollar, but oil prices rose despite lower demand. (Source: Forbes, The Price of Oil Is the New Economic Spoiler, September 12, 2012)

People were concerned because gas and oil prices rose earlier than in the past.* However, less and less of oil prices are due to supply and demand. More and more of it is based on the expectations of commodities markets.*

Why Oil Prices Rose in 2011:

Crude oil prices reached a recent high of $113.93 on April 29, 2011. Prices had been increasing steadily since February 2009, when prices dropped to $39 a barrel. Prices hovered at a comfortable $70-$80 a barrel until late 2010. High oil prices translate to high gas prices. Petroleum is also an ingredient in fertilizer. This, combined with higher transportation costs, increases food prices. The forces driving high oil prices are similar to what happened when oil hit an all-time high in 2008.
The All-Time High Was $143.68 a Barrel:

Oil prices hit an all-time high of $143.68 a barrel in July 2008. This drove gas prices to $4.17 a gallon. Most news sources blamed this on surging demand from China and India, combined with decreasing supply from Nigeria and Iraq oil fields. However, even then this wasn't logical, since the economy was already in a recession. For more, see Gas Prices in 2008. (Source: BBC, Oil Price May Hit $200 a Barrel, May 7, 2008)
Supply and Demand Are Not Alone in Driving Up Oil Prices:

*The price of oil is driven by much, much more than supply and demand. This was proven in 2008. Thanks to the recession, global demand in 2008 was actually down and global supply was up. Prices rose, nevertheless. Oil consumption decreased from 86.66 million barrels per day (bpd) in the fourth quarter 2007 to 85.73 million bpd in the first quarter of 2008. At the same time, supply increased from 85.49 to 86.17 million bpd.*

According to the laws of supply and demand, prices should have decreased. Instead, they increased almost 25% in that time - from $87.79 to $110.21 a barrel. (Source: EIA. See Google Spreadsheet)

Commodities Trading Drove Up Oil Prices:

Why? Although the EIA pinned part of the blame on volatility in Venezuela and Nigeria, it warned of an influx of investment money into commodities markets. Investors were stampeding out of the falling real estate and stock markets. Instead, they diverted their funds to oil futures. This sudden surge drove up oil prices, creating a speculative bubble. (Source: EIA Short-Term Energy Outlook)
This bubble soon spread to other commodities. Investor funds swamped wheat, gold and other related futures markets. This speculation drove up food prices dramatically around the world. The result? Food riots in less-developed countries by people facing starvation. (Source: BBC News,Commodity Boom Continues to Roll, January 16, 2008; CNN, Riots, Instability Spread as Food Prices Skyrocket, February 18, 2008)

This explains why oil prices are lower today than they were in 2008, despite a healthier global economy and greater worldwide demand for oil. Today, there are many more outlets for investment funds. In 2008, the global markets were so risky and uncertain, investors turned from stocks, bonds and even housing to the U.S. dollar, gold and oil. In 2012, despite uncertainty around the eurozone crisis, investors had many more options. The stock market rose, the bond market was less risky, and even housing improved. Although the global market is still in slow growth mode in 2013, it is stabilizing, and that means oil prices shouldn't break the peak hit in 2008.

High oil prices are also driven by a decline in the dollar. Most oil contracts around the world are traded in dollars. As a result, oil-exporting countries usually peg their currency to the dollar. When the dollar declines, so do their oil revenues, but their costs go up. Therefore, OPEC must raise the price of oil to maintain its profit margins and keep costs of imported goods constant. (Source: USA Today,Oil Briefly Spurts Near $104 per Barrel, March 3, 2008)

However, OPEC doesn't want oil prices too high, or alternative fuel sources start to look good. OPEC has said its target price for oil is between $70-$80 a barrel. In 2008, Saudi Arabia announced it would increase supply. This was one reason prices started to drop. (See High Oil Prices Caused by Wall Street, Not OPEC) (Article updated March 11, 2013)


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## eagle1462010 (Jun 30, 2013)

lol

I get a negative hit from rabbi.  Calling me a Dunce.

LOL

Again, prove that the markets haven't speculated the prices................

[ame=http://www.youtube.com/watch?v=mTwjUE60HG4]Metallica The Unforgiven Lyrics - YouTube[/ame]

The Unforgiven.........................

Enjoy............because those who crashed the economy via the Markets are UNFORGIVEN.


----------



## eagle1462010 (Jun 30, 2013)

Causes of the Great Depression - Wikipedia, the free encyclopedia

Debt deflation

Total debt to GDP levels in the U.S. reached a high of just under 300% by the time of the Depression. This level of debt was not exceeded again until near the end of the 20th century.[19]
Jerome (1934) gives an unattributed quote about finance conditions that allowed the great industrial expansion of the post WW I period:
*Probably never before in this country had such a volume of funds been available at such low rates for such a long period.[20]*
Furthermore, Jerome says that the volume of new capital issues increased at a 7.7% compounded annual rate from 1922-29 at a time when the Standard Statistics Co.'s index of 60 high grade bonds yielded from 4.98% in 1923 to 4.47% in 1927.
*There was also a real estate and housing bubble in the 1920s, especially in Florida, which burst in 1925*. Alvin Hansen stated that housing construction during the 1920s decade exceeded population growth by 25%.[21] See also:Florida land boom of the 1920s
Irving Fisher argued that the predominant factor leading to the Great Depression was over-indebtedness and deflation. *Fisher tied loose credit to over-indebtedness, which fueled speculation and asset bubbles.[22]* He then outlined nine factors interacting with one another under conditions of debt and deflation to create the mechanics of boom to bust. The chain of events proceeded as follows:
*Debt liquidation and distress selling*
Contraction of the money supply as bank loans are paid off
A fall in the level of asset prices
A still greater fall in the net worths of business, precipitating bankruptcies
A fall in profits
A reduction in output, in trade and in employment.
Pessimism and loss of confidence
Hoarding of money
A fall in nominal interest rates and a rise in deflation adjusted interest rates.[22]
*During the Crash of 1929 preceding the Great Depression, margin requirements were only 10%.[23]* Brokerage firms, in other words, would lend $9 for every $1 an investor had deposited. *When the market fell, brokers called in these loans, which could not be paid back.* Banks began to fail as debtors defaulted on debt and depositors attempted to withdraw their deposits en masse, triggering multiple bank runs. Government guarantees and Federal Reserve banking regulations to prevent such panics were ineffective or not used. Bank failures led to the loss of billions of dollars in assets.[24]
Outstanding debts became heavier, because prices and incomes fell by 2050% but the debts remained at the same dollar amount. After the panic of 1929, and during the first 10 months of 1930, 744 US banks failed. (In all, 9,000 banks failed during the 1930s). By April 1933, around $7 billion in deposits had been frozen in failed banks or those left unlicensed after the March Bank Holiday.[25]
Bank failures snowballed as desperate bankers called in loans, which the borrowers did not have time or money to repay. With future profits looking poor, capital investment and construction slowed or completely ceased. In the face of bad loans and worsening future prospects, the surviving banks became even more conservative in their lending.[24] Banks built up their capital reserves and made fewer loans, which intensified deflationary pressures. A vicious cycle developed and the downward spiral accelerated.
The liquidation of debt could not keep up with the fall of prices it caused. The mass effect of the stampede to liquidate increased the value of each dollar owed, relative to the value of declining asset holdings. The very effort of individuals to lessen their burden of debt effectively increased it. Paradoxically, the more the debtors paid, the more they owed.[22] This self-aggravating process turned a 1930 recession into a 1933 great depression.
Macroeconomists including Ben Bernanke, the current chairman of the U.S. Federal Reserve Bank, have revived the debt-deflation view of the Great Depression originated by Fisher.[26][27]
Economist Steve Keen revived the Debt-Reset Theory after he accurately predicted the 2008 recession based on his analysis of the Great Depression, and recently advised Congress to engage in debt-forgiveness or direct payments to citizens in order to avoid future financial events.[28]
Some people have recently claimed that high levels of private debt may have caused the Great Depression.[29][30][31]


----------



## The Rabbi (Jun 30, 2013)

eagle1462010 said:


> BS Rabbi.
> 
> I've shown article after article about the prices.
> 
> ...



So when gas prices go down do you blame greedy speculators?


----------



## eagle1462010 (Jun 30, 2013)

Asking me a question when you refuse to answer mine.

Speculation has ups and downs, but when they drive a Barrel to 147  what choice does it have but to go down.

Or would you have it continue to go up so we could have 6 Dollars a Gallon Gasoline.

You still REFUSE to answer my questions.  You do not REFUTE ANY OF THE ARTICLES POSTED.  Notta, NILCH.

Even after showing INVESTORS themselves saying they drive the prices up.

Why is that?  You know the answer.


----------



## eagle1462010 (Jun 30, 2013)

Fed Puts Markets on Noticeossible Discontinuation of 24/7 Happy Hour | Smaulgld

&#8220;Hitler will send no warning- so always carry your gas mask&#8221; &#8211; British Ministry of Home Security poster circa the Sitzkrieg* (October 1939-April 1940)

The economy is already wearing an over sized Fed tailored suit and now the market is worried that the Fed might &#8220;taper&#8221; that suit.

Here is what the Fed has already thrown on for size:

Purchases of mortgage backed securities (MBS&#8217;s) and U.S. Treasuries (Treasuries)
QE1 $600+ Billion
QE2 $600 Billion
QE3 $480 Billion
QE3 + (infinity)$1 trillion+ annualized
QE infinity &#8220;tapered&#8221; to $65 billion per month =$780 billion annualized

As you can see, even if the Fed were to cut back their purchases they would still be buying a monumental amount of MBS&#8217;s and Treasuries as their war on the US dollar continues in a vain attempt to keep interest rate low.

When the Fed first launched QE1 and subsequent iterations, gold and silver soared in anticipation of future price inflation. It took three rounds of QE before the price of stocks and real estate finally responded. Since price inflation has remained nascent in spite of a couple trillion worth of QE, gold and silver recently nose dived (you can blame manipulation on the price declines but the markets would have snapped back if they didn&#8217;t believe the &#8220;look there is not inflation&#8221; narrative, but then how to explain the surge in the purchase of physical and gold and silver-I digress, gold and silver manipulation is not the subject of this post &#8211; see GATA for more on that topic)

One point is very clear- if you were worried about inflation when the Fed launched an unprecedented $600 billion QE program, you shouldn&#8217;t be any less concerned when the Fed after blowing over $2 trillion threatens to &#8220;taper&#8221; QE to just seven hundred or so billion a year. The &#8220;QE worked and there is no inflation&#8221; victory lap is a bit premature because there is no Fed exit.

If the Fed slows down bond purchases, not to mention stops them altogether, bond yields will increase, borrowing costs for home purchasers and the debt laden U.S. will increase and the stock market will most likely &#8220;correct&#8221; or crash. Notice what has happened to yields since the taper talk started &#8211; they are now at 14 month highs and that&#8217;s from just talk. The stock market and real estate market are still rolling along, but for how long?

If Fed actually tapered and interest rates rose and the stock market fell, the Fed would probably immediately reverse course and increase the size of QE -i.e open the bar back up 24/7 and start paying people to drink there.

The beneficiaries of Fed policy &#8211; the U.S. Government, too big to fail banks, the stock and real estate markets &#8211; are so used to the economy wearing such a big suit bloated with QE stimulus, they&#8217;d freeze to death without it. Axel Merk calls the seeming permanence of QE the &#8220;new normal&#8221;.

The first round of QE was extraordinary measure in 2008, but now it&#8217;s a permanent feature of the sluggish U.S. economy.

Stop Making Sense?

The Fed knows that things stop making sense when they stray too far from normal. The novelty of QE has worn off and the Fed is aware that if they keep it up too long the novelty becomes a joke and confidence in the dollar will be lost, so they talk taper and act like they are not going to wear the QE suit forever. But they know the markets now demand it and are dependent on it. Thus the Fed&#8217;s No Exit dilemma. At some point the Fed will either print one dollar too many and confidence will be lost, or they will print one less dollar and support for the economy will vanish.

The resolution of the Fed&#8217;s No Exit dilemma will come without warning, so have your gas masks ready at all times.

The road does not go on forever.


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> How Wall Street Is Raising the Price of Gas - ABC News
> 
> ABC News Mark Greenblatt Reports:
> Every time you fill up your car with gas, your dollar ends up in the hands of  a wide range of interests from around the world. Some of your money goes to oil companies, some  of what you pay goes to refineries, and more still gets divided up by the gas stations you stop at.
> ...



*By Chiltons calculation, if you drive a car like a Honda Civic, youre paying $7.30 more than you should every time you fill up  to Wall Street speculators.*

How does a Wall Street speculator, who bets the price is going down, collect $7.30 from you when you fill up your Civic?

Show me.


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> One trade doesn't jack up the price MR. Wallstreet.
> 
> Which is exactly why your example doesn't mean squat.
> 
> ...



*One trade doesn't jack up the price MR. Wallstreet.*

You're shitting me. My example was a guy who "controlled" one million barrels and never took delivery. He didn't raise the price? Thanks for admitting your earlier, ignorant, error.

*If the HEDGED BETS would only make money via Supply and Demand*

Hedged bets don't make (or lose) money. They're hedged.
Maybe you should go get a clue and then come back.
I'll be happy to discuss the issues when you aren't so completely ignorant.


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> Why is US Oil Consumption Lower? Better Gasoline Mileage? | Our Finite World
> 
> Consumption went down 20% during those times, but THE PRICE KEPT GOING UP.
> 
> Why the HELL DID THE PRICES GO UP?  FROM CLUELESS



It's true, you are clueless.


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> Four US banks hold a staggering 95.9% of U.S. derivatives: The $600 Trillion Time Bomb That?s Set to Explode | Global Research
> 
> I hope none of these four companies pass gas again on their DERIVATIVES.  Oh, I know I know I know............It's ONLY A NOMINAL VALUE when we talk about DERIVATIVES holdings from 4 Banks that own nearly 600 TRILLION IN NOMINAL VALUE.
> 
> ...



*What was Greece hiding before they crashed *

Greece spends way too much. Obama wants us to spend way too much.
That story is going to turn out real well for us, isn't it?


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> The Rabbi said:
> 
> 
> > eagle1462010 said:
> ...



*MARKET SPECULATION. Get your story straight.*

I gave you an example of speculation and you admitted it didn't jack up the price.
Get your story straight.


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> Fuck Off Rabbi.
> 
> You will not answer the questions on WHY THE PRICES WENT UP when DEMAND WENT DOWN.
> 
> ...



*The last article showed a 15 Dollar a Barrel Jump in 2 Days.

Done by the Markets.*

People in the markets bid up the price by $15 a barrel?

You're shitting me!


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> Why Oil Prices Are So High
> 
> In 2013, oil prices started rising in January, earlier than ever. Iran kicked off the year by playing war games near the Straits of Hormuz. This was perceived as a potential threat to this strategic shipping lane. By February 8, oil reached $118.90/barrel. This sent gas prices to $3.85 by February 25. Since then, oil and gas prices have leveled off. Prices are expected to average $105 barrel for Brent crude oil in 2013.
> This is lower than 2012's average of $112 per barrel. The EIA bravely forecasts the average price of oil will fall even more in 2014 to $99 per barrel. Why? U.S. pipeline capacity will be expanded, allowing greater supply. Demand will be only mildly supported by moderate economic growth in the U.S. The EIA forecasts growth to be at the low end of the healthy 2-3% growth rate. (Source: EIA, Short-Term Forecast)
> ...



*More and more of it is based on the expectations of commodities markets.*

Expectations of future supply?

You're shitting me.


----------



## eagle1462010 (Jun 30, 2013)

You can Fuck Off too Todd.

You are also ignoring the posts showing Demand down and Prices going up.

You ignore Investors having a Feeding Frenzy and driving prices up as normal business.

If you believe Speculation didn't bring a Barrel of oil up to 147 a Barrel when Demand was down 20% then I have some Ocean Front Property in Arizona for sale.

Wanna buy it?

I work in a Refinery.  Have for a decade.  I know a lot of very smart people who know a hell of a lot more than you do about this business.  And Fing know speculation drives up the prices.

While there are more reasons like the value of the dollar, which is the World's Reserve Currency, Speculation by trading VAST VOLUMES TO RAISE PRICES has happened and ................

Your example is ONLY 1 TRADE REGARDLESS OF THE SIZE.

Wall Street Traders make a lot of money buying Trading More, and can make a lot of money making a lot of trades.  

You are BS, and so are your Fing Market Fundamentals crap.

The only time our prices went up so fast was during the Carter Admin and the Iranian Hostage Crisis.  Nothing else compares, and I showed that graph.

Yet the dollar a gallon price EXPLODED IN TANDUM WITH THE MARKET INCREASES up to the crash in 2008.

After the crash the price of a gallon of gas dropped significantily.  WHY THE HELL DID THAT HAPPEN IF THE MARKETS DON'T MATTER FOOL.

You know the markets drive the prices in a lot of ways.  and you aren't producing any articles to counter what I'm saying.

Even after showing Investors saying the same damn thing I've been saying.

This occurred because of taking regulation off trading Commodities after the Graham Leahy Act.  Which again I posted a while back.


----------



## eagle1462010 (Jun 30, 2013)

Toddsterpatriot said:


> eagle1462010 said:
> 
> 
> > Four US banks hold a staggering 95.9% of U.S. derivatives: The $600 Trillion Time Bomb That?s Set to Explode | Global Research
> ...



No shit.  Who the hell said I like Obama?  This OP is about regulating the Markets and bringing back Safe Guards that prevent Wall Street from Raping us to make a quick profit.

Look at every Recession and you'll see a Bubble created by these Aholes.  Whether it be Y2k, the Dot.com, or Enron.

Another thing you haven't mentioned a thing about the ENRON LOOP HOLE.  Which I'm specifically targetting  here.


----------



## eagle1462010 (Jun 30, 2013)

Toddsterpatriot said:


> eagle1462010 said:
> 
> 
> > Why Oil Prices Are So High
> ...



No shit again.  So they speculate the price, trade the hell out of it, and prices go up WITHOUT A DAMN THING HAPPENING.

Which is why before 2000 they couldn't do this shit.  They could be limited on the number of trades so they couldn't JACK UP THE PRICES.


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> You can Fuck Off too Todd.
> 
> You are also ignoring the posts showing Demand down and Prices going up.
> 
> ...



*You are also ignoring the posts showing Demand down and Prices going up.*


World demand went down? Show me.

*I work in a Refinery.  Have for a decade*

More oxygen, less fumes. You'll sound less stupid.

*The only time our prices went up so fast was during the Carter Admin and the Iranian Hostage Crisis.  *

Maybe you can explain why?


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> Toddsterpatriot said:
> 
> 
> > eagle1462010 said:
> ...



Bubbles happen. Look at history.

You think regulation can stop it? LOL!

*Another thing you haven't mentioned a thing about the ENRON LOOP HOLE.*

Please, let's focus on this for a while. I'd love to see your feelings on this topic.


----------



## Toddsterpatriot (Jun 30, 2013)

eagle1462010 said:


> Toddsterpatriot said:
> 
> 
> > eagle1462010 said:
> ...



*No shit again. So they speculate the price, trade the hell out of it, and prices go up WITHOUT A DAMN THING HAPPENING.*

Nothing happened? Market expectations changed. What do you think that means?

*they couldn't JACK UP THE PRICES.*


----------



## The Rabbi (Jun 30, 2013)

eagle1462010 said:


> Toddsterpatriot said:
> 
> 
> > eagle1462010 said:
> ...



So oil prices didnt go up prior to 2002?

Damn, s0n.  You're one stupid git.  I'm sorry others are making more than you make working 3rd shift at Hardees but that's how it is.
You go on iggy with your friends.


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## eagle1462010 (Jul 1, 2013)

Historical Crude Oil prices, 1861 to Present

This is a chart showing the historical price per barrel of oil since 1861

I've already done this on this thread before, aka showing a link.  The prices spiked only after the Iranian Hostage Crisis, and steadily SPIKED again after 2002.  Again, this being during a time that CONSUMPTION WENT DOWN.

Which I posted proof of earlier.  Demand went down after 2004 because the PRICES WERE GOING UP UP AND AWAY.  Yet the PRICES STILL ROSE TO RECORD LEVELS.

I've asked these DOLTS TIME AND TIME AGAIN TO EXPLAIN WHY THIS HAPPENED, and they haven't answered anything on it.  Because they know the Damn answer.

I WILL NOT BACK DOWN ON THIS SUBJECT.  I'm no Dang LIB, and believe in Capitalism.  However, you have to DRAW A LINE IN THE SAND SOMEWHERE.  You don't allow the Speculators to FUCK OVER YOUR NATION FOR GREED.  Which is exactly what the hell they did.

They say I don't know anything after posting article after article on the subject.  They haven't posted JACK SQUAT.  The Markets are now a CASINO FROM HELL, and Margin LOANS are now APPROACHING THEIR 2008 LEVELS IN LOANS.  

If the Feds pull the QE's or give an interest rate adjustment, then the Stocks will tank again, and HERE WE GO AGAIN.

Vital Commodities such as oil, were regulated before 2000.  PERIOD.  After 2000, the TRADERS SEEING BLOOD IN THE WATER traded the hell out of Futures driving up the Price of Oil, while ACTUAL DEMAND WAS GOING DOWN.  PERIOD.

Rabbi, can take a long walk off a short bridge.

Market Traders would sell their own Fing kids to make a Buck.  And they are selling the Future of our Economy to make a Buck.

All of them, who HELPED NEARLY GIVE US A GREAT DEPRESSSION, should be Fing Tarred and Feathered.  

But they are TOO BIG TO FAIL NOW.  We should have LET THEM GO UNDER AND NOT BAILED OUT ANY.  Even though the Bail Outs were a JOKE ANYWAY.  Or should I put up the SCOTUS verdict on that subject?  9 TRILLION IN near 0% loans from the Federal Reserve.  The Big 5 didn't need a dang Bail Out at all, as they just hit the enter button at the Federal Reserve anyway.

Finally, when you screw over the people of our country to make a BUCK YOU ARE A FING SCUMBAG.

But that is just my opinion.  The real question is what's going to happen with the current BULL MARKET when REALITY HITS.


----------



## Toddsterpatriot (Jul 1, 2013)

eagle1462010 said:


> Historical Crude Oil prices, 1861 to Present
> 
> This is a chart showing the historical price per barrel of oil since 1861
> 
> ...



*The prices spiked only after the Iranian Hostage Crisis, and steadily SPIKED again after 2002. Again, this being during a time that CONSUMPTION WENT DOWN.*

Show world consumption went down.


----------



## eagle1462010 (Jul 1, 2013)

Jesus man, I showed evidence of that earlier.


----------



## eagle1462010 (Jul 1, 2013)

Why has US Oil Consumption Steadily Fallen since 2004?


----------



## eagle1462010 (Jul 1, 2013)

Explain the spike at 147 a barrel.
While consumption didn't spike.
While Supply was available.


----------



## Toddsterpatriot (Jul 1, 2013)

eagle1462010 said:


> Why has US Oil Consumption Steadily Fallen since 2004?



Show *world *consumption went down.


----------



## eagle1462010 (Jul 1, 2013)

CFTC Charges Oil Traders in 2008 Speculation Scheme | FDL News Desk

The Commodity Futures Trading Commission charged one trading house and two individuals for illegally manipulating oil prices during the price spike of 2008, when oil reached $147 a barrel, by creating the appearance of a shortage to drive up the benchmark for crude. While the action covers oil trading in 2008, the connection to today, where speculation is seen as a primary cause for higher gas prices, is unmistakable.

The CFTC complaint alleges that the traders carried out the scheme in January and March 2008.

By mid-January they had accumulated 4.6m barrels of physical oil, or two-thirds of oil available for delivery against the February WTI futures contract. In March they bought 6.3m barrels, equal to 84 per cent of oil available for delivery against the April contact.

The regulator alleged that Parnon Energy, a US oil trader, together with its Swiss and UK affiliates Arcadia Energy (Suisse) and Arcadia Petroleum, made more than $50m from the scheme in January and March 2008 [...]

The buying created the impression of a shortage and pushed up the price of WTI futures on the New York Mercantile Exchange. Ahead of their move in the physical market, the traders allegedly bought large amounts of futures and other financial instruments that would profit from a price rise.

They wanted to lull market participants into believing that supply would remain tight, the CFTC said. They knew that as long as the market believed that supply was tight and getting even tighter, there would be upward pressure on the prices of WTI for February delivery relative to March delivery, which was their goal.

The employees at Arcadia/Parnon, James T. Dyer and Nicholas J. Wildgoose, were former BP traders, notes Brad Johnson of Think Progress. The CFTC has emails where the traders describe their scheme to make a shitload of money and then dump the trades on the market in an inevitable puking. Theres more from the New York Times. The penalties could rise to as much as $150 million, on top of recouping the $50 million in profits from the scheme.

Sen. Maria Cantwell, who has doggedly chased this issue for years, said in a statement that
This is exactly what we expect the CFTC to be doing Consumers have felt the impact of manipulation weve seen in the electricity, natural gas and oil markets. I expect the CFTC to be aggressive in policing these markets and standing up for consumers who are getting gouged at the pump.

This is exactly the kind of case that Attorney General Eric Holder is looking into as part of a working group the President asked him to convene, focused on fraud in the oil and gas markets. Yet despite this action by the CFTC, and despite the fact that rampant speculation exists in the market today, the House GOP budget would cut funding for the CFTC by 15%.

*comments*

1.  I checked the charts on World consumption and they slightly rose.
2.  Supply was more than sufficient during this time.
3.  Here's an article, with Holder in it pfffft, going after companies who manipulated prices by holding oil contracts.    

BTW you know that oil trading on Brent Oil has recently set records on Trading haven't you?  The most contracts ever traded on oil Futures in History.  Amazing isn't it...................

I'm looking world wide for the reason why..................Did a major oil player or OPEC just reduce production or something.................Well...................  Yet the markets are trading it like hell.........

Hope they all lose their ass on it.


----------



## eagle1462010 (Jul 1, 2013)

Speculation explains more about oil prices than anything else | McClatchy

WASHINGTON  Feel like you're being robbed every time you fill the gas tank? Not sure who to blame? Try Wall Street.

That's not the conventional explanation, but it's the one the facts point to. Usually analysts say today's high prices stem simply from "supply and demand." They mean demand for oil and gas is rising and supplies aren't keeping up, so people bid up their price. But global and U.S. supplies are plentiful and demand is stable, so that's not it.

Then the analysts say it's because the market's afraid Middle East turmoil will interrupt oil supplies, so nervous buyers are bidding up prices to ensure they lock in a contract for oil now, just in case it's scarce later. There's probably some truth to that, but after five months of turmoil, there's been no significant impact on Middle East oil supplies, even as prices have see-sawed, so that's not credible either.

Here's what's credible: Some 70 percent of contracts for future oil delivery are now bought by financial speculators  largely big investment banks and hedge funds  who never take control of the oil. They just flip the contract for a quick profit.

Only about 30 percent of oil contracts are bought by a purchaser that actually intends to use the oil, such as an airline. That's according to the Commodity Futures Trading Commission, which regulates trade in those contracts.

"I'm convinced ... that speculators are actively manipulating (prices)," said Michael Greenberger, a University of Maryland law professor who in the 1990s headed the CFTC's trading division.

"It's harder and harder for any reasonable observer to dismiss the role of excessive speculation in this market," said Michael Masters, a professional Wall Street investor who knows how this game works. He's testified before Congress repeatedly that speculators are pushing prices up well beyond what supply and demand would warrant.

They both point to a $15 weekly swing in oil prices in early May and $5 a barrel moves on oil prices in a single day  with no obvious change to supply or demand.

Exxon Mobil Chief Executive Rex Tillerson noted Thursday in testimony before the Senate Finance Committee that this year's oil prices don't make any economic sense, though that's not quite how he put it. He said that current fundamentals and production costs would dictate oil in the range of $60 to $70 a barrel. That's at least $43 cheaper than this year's highs of $113 a barrel reached on April 29 and May 2.

But Tillerson declined to opine about the role of speculators, saying only that the price of oil "will be wherever it will be."

Hundreds of billions of dollars are being made through this speculation  both in the regulated futures market and on the larger unregulated over-the-counter swaps market, where private bets about the movement of oil prices take place. It's producing lots of new billionaires on Wall Street and driving oil company profits through the roof.

*And it's punishing everyone who drives.
*
"The sheer volume of new capital coming from hedge funds, financial traders and other long-term passive investors  interests that mostly buy oil futures to turn a quick profit  is creating artificial demand and driving up the price for consumers," said Sen. Maria Cantwell, D-Wash., in a statement accompanying a letter she and 16 other U.S. senators issued Thursday. They, like Greenberger and Masters, urge the CFTC to impose rules limiting speculators' ability to do this.

Masters and Greenberger advocate a return to limits that prevailed for much of the past century. Those limits effectively reined in speculation to about 30 percent of the oil market.

"We need some speculation. We need enough to provide grease for the wheels of the hedgers, but not so much that they drive price formation," Masters said.

A McClatchy review of two decades of data compiled by the CFTC documents the boom in speculative trading amid rising prices. In the 1990s, the ratio of speculative trades to trades made by commercial users of oil was tilted heavily toward users of crude. But from 1991 forward, the big financial players such as Goldman Sachs and J.P. Morgan Chase won exemptions that freed them from limits on how much they could speculate in futures markets.

They became classified as commercial traders, as if they were an airline hedging price risks in jet fuel. The big banks needed to invest in futures contracts to hedge bets they made in the unregulated swaps market. And the government, in the tenth year of Reagan Republicanism, was happy to reduce regulations on markets. Oil "swaps" increased from $13 billion in the 1990s to more than $313 billion in July 2008 at oil's peak price, Greenberger said .

In mid-2006, CFTC data began distinguishing Wall Street's trades from industrial users, calling the strictly financial ones "non-commercial." Suddenly, the record shows that speculative trades raced past commercial trades.

Prior to the 1990s, speculators made up about 30 percent of the futures market. In the latest reporting period, the ratio on May 3 stood at 68 percent speculators to 32 percent users of oil. Meanwhile, the volume of total reported trades has grown five-fold since 1995, underscoring the impact of speculation on futures markets.

"It tells me that there are more speculative positions than there has ever been in history, particularly in the energy sector, I don't mean only crude oil," said Bart Chilton, a CFTC commissioner who thinks excessive speculation is at least part of the cause of soaring oil prices. "In all of the energy sector, we've seen a 64 percent increase in speculative positions since the (oil price) high of 2008."

While those numbers are stark, the numbers on supply and demand make it clear that the high prices aren't coming from there. There is no shortage of oil stocks by historical standards. There's an estimated 3 million to 4 million barrels per day (bpd) of excess oil production capacity in the world today. That's much more than when supplies were tight in 2008.

U.S. oil production, too, continues to grow. It rose from 4.95 million bpd in 2008 to 5.36 million bpd in 2009, followed by 5.5 million bpd last year  even with the BP disaster in the Gulf of Mexico. The Energy Information Administration forecasts U.S. production to hold at that level this year and rise again next year, to 5.54 million bpd.

U.S. crude oil stocks on April 29, the date oil peaked this year above $113 a barrel, stood at 1.768 billion barrels, according to the EIA. That's about 700,000 barrels more than in July 2008, when oil prices hit all-time highs.

And that's plenty to meet U.S. needs, because consumption isn't growing.

The U.S. consumed 20.68 million barrels per day in 2007. Then came the financial crisis, and consumption dipped to 19.5 million bpd in 2008. Last year the number was 19.5 million bpd. This year's projection is 19.28 million bpd.

*So if supplies are plentiful and consumer demand isn't rising, why are prices?*

Could it be that refineries aren't able to produce enough gasoline? No. Refiners are running their plants at below cruising speed, and they've got lots of room to produce more if consumers need it. The latest data from EIA on the rate at which refineries are utilized showed a rate of 79.8 percent in February. That's 20 percent below full-blown production, and it hasn't been that low since 1986. If demand for gasoline were soaring, these plants would be cranking at a higher rate.

The American Petroleum Institute, the oil industry lobby, disputes this last example, noting that gasoline production continues at near record levels despite the low refinery utilization rates.

"The amount they're squeezing out of the barrel (of oil) has gone up significantly," said John Felmy, the group's chief economist.

Asked if excessive speculation is to blame for high prices, Felmy said no. He said growing economies such as China and India are gobbling up oil and that global energy data shows the price is "pretty consistent with fundamentals," and that "it really tells the tale of a tight market."

That's not what the Paris-based International Energy Agency said Thursday. It forecast flat global oil demand this year. It dialed back its projection for growth in consumption to 1.3 million bpd, less than half last year's growth of 2.8 million bpd.

The report said, "Our own estimates for global oil demand show a marked slowdown, with preliminary March data suggesting near zero annual growth for the first time since summer 2009."

All that leads a growing number of analysts to one conclusion: This year's high prices for oil and gasoline, and their plunges of late, are driven largely by financial speculators making trillions by trading in oil futures while ordinary consumers feel burned.

While the evidence of speculation is increasingly obvious, the facts haven't yet been acknowledged enough to force corrective regulatory action.

"The history of this is there is always something going on in an opaque fashion that you only find out about after an investigation has been launched," Greenberger noted.

President Barack Obama last month ordered the creation of an interagency task force led by Attorney General Eric Holder to determine if price gouging or market manipulation is occurring. But he stopped short of ordering a full-blown investigation with additional government resources.

"My view is that the Justice Department should be actively organizing and driving an investigation that will strain the resources of some of these agencies," said Greenberger, himself a former Justice official. "Just playing 'footsy' with this investigation is a tragic waste of resources."

Justice Department spokeswoman Alisa Finelli insisted that by bringing together state and federal authorities, the task force "enhances our ability to take a comprehensive approach in monitoring and sharing information about the oil and gas markets to determine whether or not there is evidence of illegal activity. "

Meanwhile, 17 U.S. senators, led by Cantwell, say the CFTC should act now.

"American consumers are getting gouged at the pump while speculation on Wall Street runs rampant. Today the CFTC must ... crack down on excessive speculation and provide relief to American consumers," she said.

Read more here: Speculation explains more about oil prices than anything else | McClatchy


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## The Rabbi (Jul 1, 2013)

Toddsterpatriot said:


> eagle1462010 said:
> 
> 
> > Why has US Oil Consumption Steadily Fallen since 2004?
> ...



He's a broken record, unable to respond to your question because it falls outside his pre-arranged script.


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## eagle1462010 (Jul 1, 2013)

lol

pre arranged script.

If you think we went to 147 a barrel because of world market conditions in 2008 you are FOOLS.

Let's just throw a watermelon off the Empire State Building and Bet on it all the way down Jacking up it's CPI all the way down, when it's worth nothing after it hits.   Someone's gonna get stuck with the Worthless Watermelon when it hits the pavement.  

Someone is gonna lose, and hey they paid their Margins all the way down.  Now they got to pay for being stuck with the watermelon, but no ones buying.  Tough luck Leahman Brothers..................


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## Toddsterpatriot (Jul 1, 2013)

eagle1462010 said:


> Speculation explains more about oil prices than anything else | McClatchy
> 
> WASHINGTON  Feel like you're being robbed every time you fill the gas tank? Not sure who to blame? Try Wall Street.
> 
> ...



*Here's what's credible: Some 70 percent of contracts for future oil delivery are now bought by financial speculators  largely big investment banks and hedge funds  who never take control of the oil. They just flip the contract for a quick profit.*

You understand that speculators both buy and sell oil contracts, right? Probably not.
You understand some speculators think oil will rise, some think it will fall, right? Probably not.

*Then the analysts say it's because the market's afraid Middle East turmoil will interrupt oil supplies, so nervous buyers are bidding up prices to ensure they lock in a contract for oil now, just in case it's scarce later. There's probably some truth to that*

Thanks for playing.


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