Re: Covered Call Strategy... makes sense?
lubow
>> strike price greater than what you had paid for the stock while keeping
> the
>> stock through the expiration date. Guaranteed, even if the stock price
>> declines, you will make money off the call.
-- Lubow
>
> What an idiot. Of course you ALWAYS make "guaranteed" money
> on the calls and puts THEMSELVES by WRITING either calls and puts
.>
> ---
> William Ernest Reid
> Post count: 1160
You're an idiot. I'll take that back. Bill, you gotta be a nut case. Most
likely a delusional self loathing nut case that needs meds in the worst way.
Besides a nutcase and a liar Reid has to be the only person in all those
newsgroups that's universally hated by anyone who reads his nonsense. But I'm
not the only one who calls this self loathing psychotic an idiot. Tell us once
more what Mama Reid thought of you, Bill. Did she think you were a moron or
just a common piece of crap? It must have been insulting when your own mom told
you what she thought of you because you're not a moron. Just a disturbed old
man whose only thrill in life, besides domestic vodka, is insulting the families
of total strangers.
Crazy people say the craziest things department:
>
> I remember once at work, this guy comes running into my
> office all excited, said he just found a magical way to make
> a lot of money with NO RISK. The strategy was--you guessed
> it--WRITING COVERED CALL LEAPS AGAINST CERTAIN
> STOCKS.
Office? who the hell gives an office to an temporary c coder? Yep. Bill never
amounted to anything except rising to be a nobody who through the magic of the
internet is a somebody, at least a somebody in what's left in his inebriated
excuse for a brain.
Bill alleged to be a "job shopper." What's a "job shopper?" Effectively, a
euphemism for a guy who always gets fired. A guy who is on a first name basis
with the clerk at the unemployment office. Now why would anyone want to fire
such a stable, debonair guy like Bill Reid?
Let's put it another way... would anyone want Reid working in their office?
BWHAHAHA!
True story according to Reid: Reid is such a lunatic that on one of the many
times he was fired he complained that NYSE listed firms can't fire anyone.
Yep.. Reid said that right here! to use Pres. Reagan's words, "What a
looney-tunes."
Now let's talk about Reid's other profession, Ferrari Mechanic... Yep... someone
taught Bill the difference between a tappet and a whippet and that qualifies
this picture of stability with such an exalted job title. How many bottles of
domestic vodka did it take for you to come up with that crazy story, Bill?
Reid is not only a "job shopping" c coder (in his "own" office no less), a
Ferrari Mechanic, but he's -- get this -- a psychologist! Yep.. that's what
this delusional lunatic says. I can't make this up... But wait there's more!
Reid has a courtroom implanted in his head! Yep.. that's where he sues everyone
who tells him he's a nut job supreme. Sort of a courtroom on the Bizarro
Planet.
Now, Bill, here's your chance. You have attacked my father and my children.
When are you going to start attacking my wife? I think this may be foreign to
you but some of us males like ADULT FEMALES.
lubow
full of Reid.
I promise not to cross post in Kubrick again.
"kelpzoidzl" <kelpz...@gmail.com> wrote in message
news:89b9ae7b-baf6-4485...@p10g2000prf.googlegroups.com...
On Aug 28, 12:50 am, "lubow" <lu...@lubowindustries.com> wrote:
> >> The only "sure" way to profit is writing a call against stock you own at a
> >> strike price greater than what you had paid for the stock while keeping
> > the
> >> stock through the expiration date. Guaranteed, even if the stock price
> >> declines, you will make money off the call.
>
> -- Lubow
Please stop crossposting to the Kubrick group. Have some consideration
Bill Reid
lubow <lu...@lubowindustries.com> wrote in message
news:48b658db$0$23216$ec3e...@news.usenetmonster.com...
> >> The only "sure" way to profit is writing a call against stock you own
at a
> >> strike price greater than what you had paid for the stock while keeping
> > the
> >> stock through the expiration date. Guaranteed, even if the stock price
> >> declines, you will make money off the call.
> > What an idiot. Of course you ALWAYS make "guaranteed" money
> > on the calls and puts THEMSELVES by WRITING either calls and puts
> .>
> > ---
> > William Ernest Reid
> > Post count: 1160
>
> You're an idiot. I'll take that back.
"No, I'll put it back. No, I'll take it back. No, I'll put it back. No,
I'll take
back. No, I'll..." - "Lowbrow", displaying the same brilliance he uses to
predict oil prices: "they're gonna go down, unless there's a hurricane, then
they'll go up".
> Bill, you gotta be a nut case.
By "nut case", do you mean somebody who is not well-acquainted with
reality?
> But I'm
> not the only one who calls this self loathing psychotic an idiot. Tell us
once
> more what Mama Reid thought of you, Bill.
Last time I talked to her a few days ago, she said she loved me and was
very proud of me. Do you have some more recent information on the topic?
Oh, and again, by "nut case", do you mean somebody who is not
well-acquainted with reality?
> Did she think you were a moron or
> just a common piece of crap?
Last time I talked to her a few days ago, she said she loved me and was
very proud of me. Do you have some more recent information on the topic?
Oh, and again, by "nut case", do you mean somebody who is not
well-acquainted with reality?
> It must have been insulting when your own mom told
> you what she thought of you because you're not a moron.
Last time I talked to her a few days ago, she said she loved me and was
very proud of me. Do you have some more recent information on the topic?
Oh, and again, by "nut case", do you mean somebody who is not
well-acquainted with reality?
> Just a disturbed old
> man whose only thrill in life, besides domestic vodka, is insulting the
families
> of total strangers.
Well, I wouldn't really call you a "stranger". After all, I've got your
address, a complete autobiography going back to elementary school,
such as it is (a lot of it is laughably self-contradictory, as you well
know),
and I'm unfortunately well-acquainted with your behavior, which includes
constant lying and libel and personal attacks when your many mistakes
are pointed out (such as the one you made above, describing "covered
calls" as "sure" way to make money).
You're a piece of idiotic lying libelous loser garbage, and anybody who
raised you and would associate with you KNOWING how you behave
MUST be pure trash just like you. So anybody that knows you call
people child molestors just because they point out your mistakes on
a Usenet discussion group that continues to associate with you is
both an IDIOT (you're a DANGEROUS person to be in contact with)
and a total ASSWIPE without a moral compass.
Right? Doesn't that make sense? I mean, what kind of trash
would raise or talk to a piece of trash like you?
> Crazy people say the craziest things department:
BWHAHAHAHAHAHAHAHAHAHAHAHA!!!!
But you Usenutz is funneeeee, mostly because YOU DON'T GET
THE JOKE BECAUSE YOU ARE THE JOKE!!!
> > I remember once at work, this guy comes running into my
> > office all excited, said he just found a magical way to make
> > a lot of money with NO RISK. The strategy was--you guessed
> > it--WRITING COVERED CALL LEAPS AGAINST CERTAIN
> > STOCKS.
>
> Office? who the hell gives an office to an temporary c coder?
Oh, great, here it comes. This just gets more beautifully insanely
twisted as we go along. "Lowbrow", the liar who has constantly bragged
about running some kind of "job shop" for programmers or something,
IS ABOUT TO INSULT ALL COMPUTER PROGRAMMERS!!!
But the even greater thing is, I'M NOT A "PROFESSIONAL"
COMPUTER PROGRAMMER, I'VE NEVER HELD THAT JOB
TITLE OR HAD A "JOB" WHERE THAT WAS MY RESPONSIBILITY,
AND I'VE POSTED THAT FACT DOZENS OF TIMES OVER THE
YEARS!!! "Lowbrow" is now going to slam me for doing something
THAT I'VE NEVER DONE, but in the process INSULT THE
PROFESSION OF TEN OF THOUSANDS OF DECENT
HARD-WORKING EDUCATED INTELLIGENT PEOPLE!!!
Witnesseth:
> Bill alleged to be a "job shopper." What's a "job shopper?" Effectively,
a
> euphemism for a guy who always gets fired. A guy who is on a first name
basis
> with the clerk at the unemployment office.
YOU CAN'T MAKE THIS STUFF UP!!! I mean, "Lowbrow" can, but
YOU, the perhaps non-existent non-INSANE Usenet reader, could not
make up a guy as whacky as "Lowbrow"!!!
> Let's put it another way... would anyone want Reid working in their
office?
No, I'd want a guy who, when I pointed out he made a mistake, lied to
hundreds of people that I was a child molestor...
> True story according to Reid:
BWHAHAHAHAHAHAHA!!!!
Nothing you've written or will write is "true", you freak! You just make
this crap up as you go along, and it doesn't even make any sense!!!
Witnesseth:
> Reid is such a lunatic that on one of the many
> times he was fired he complained that NYSE listed firms can't fire anyone.
"MADNESS!!!" - the doctor dude from "Bridge Over The River Kwai",
the only good movie made by David Lean
> Yep.. Reid said that right here!
Go ahead and post the proof of that lie!!! You've obviously stalked me
back to at least 2003 using the Google(TM) Groups search, find the post
where I said that, or any of the insane crap you are asserting as "real".
Oh, and again, by "nut case", do you mean somebody who is not
well-acquainted with reality?
> to use Pres. Reagan's words, "What a
> looney-tunes."
Is this another of your many stories about how you met a famous person?
> Now let's talk about Reid's other profession, Ferrari Mechanic...
BWHAHAHAHAHAHAHAHA!!!!
Well, at least he doesn't go on to insult all fine hard-working Ferrari
mechanics (one of the few really honest mechanics I know, one of the
few that doesn't just lie and rip off their customers, was a Ferrari
mechanic)...but what's the fixation on this "Ferrari mechanic" thing,
anyway? I mean, explain it to me, because I guess I really can't
fathom the "mind" of this senile old lunactic, why this is so important
to him...
> Yep... someone
> taught Bill the difference between a tappet and a whippet and that
qualifies
> this picture of stability with such an exalted job title.
Actually, I think everything I "learned" about auto mechanics I read in
these things called "books"...you should try reading one sometime,
you might learn something...
> Reid is not only a "job shopping" c coder (in his "own" office no less), a
> Ferrari Mechanic, but he's -- get this -- a psychologist!
I'm starting to detect a fixation on the word "office" here, coupled with
the word "own"...here, let me help the old guy out a little: I WAS laid off,
along with 99.9% of the workforce, from a VERY famous (actually more
like "infamous" because of the magnitude of the company's collapse)
wholly-owned subsidiary of a VERY famous NYSE-listed company,
and at THAT company I shared a very large "private" office with a
woman who worked as a sales trainer...but she actually was in the
office only about four days a month because she did most of her
work at remote locations around the country and world, so it was
kind of like my "own" office about 85% of the time (and the other
15% of the time was no problem because I liked her and we used
to have a lot of fun and laughs when she was in town)...
> Yep.. that's what
> this delusional lunatic says.
Oh, and again, by "nut case", do you mean somebody who is not
well-acquainted with reality?
> I can't make this up...
Oh yes you can, because you just did!!! You make up just about
everything you say, you're a GIGANTIC LIAR!!!!
> But wait there's more!
Oh goodie!!!
> Reid has a courtroom implanted in his head! Yep.. that's where he sues
everyone
> who tells him he's a nut job supreme. Sort of a courtroom on the Bizarro
> Planet.
Well, that's not that fun, I don't even know what to say...except that when
I DO sue people, it's for egregious transgressions of the law against me...
> Now, Bill, here's your chance. You have attacked my father and my
children.
> When are you going to start attacking my wife?
I'll repeat myself:
"You're a piece of idiotic lying libelous loser garbage, and anybody who
raised you and would associate with you KNOWING how you behave
MUST be pure trash just like you. So anybody that knows you call
people child molestors just because they point out your mistakes on
a Usenet discussion group that continues to associate with you is
both an IDIOT (you're a DANGEROUS person to be in contact with)
and a total ASSWIPE without a moral compass.
Right? Doesn't that make sense? I mean, what kind of trash
would raise or talk to a piece of trash like you?"
Remember, I ALWAYS advise people with your libelous behavior patterns
to share your behavior, SHOW YOUR LIBELOUS HATE-FILLED POSTS,
to their "trusted" family members, "friends", and MOST IMPORTANTLY,
a LAWYER, and GET THEIR BEST ADVICE AS TO WHETHER THEY
SHOULD CONTINUE TO POST.
If your "wife" (who may be as imaginary as the rest of your fantasy
autobiography) has SEEN the horrorible things you have written about
people on Usenet, and she supports you anyway, SHE IS COMPLETE
AND TOTAL GARBAGE JUST LIKE YOU, AND OBVIOUSLY A
DESPERATE AND HIDEOUSLY UGLY WOMAN INSIDE AND
OUTSIDE TO HAVE TO BE WITH A DANGEROUS MONSTER OF
A LOSER LIKE YOU WITH YOUR HORRENDOUS CANCER-AMPUTATED
FACE.
Happy now? Obviously, we all know that if you have shared your
posts with your presumably-imaginary "son the lawyer in THREE
states", and his best advice to you was to continue to post libel
because "venue" would attach to your domocile AFTER YOU
REPEATEDLY DIRECTED THE LIBEL TO AN INDIVIDUAL LIVING
IN ANOTHER STATE (the idiotic "Greyhound" defense), HE HAS
TO BE THE STUPIDEST LAWYER THAT EVER CHEATED HIS
WAY PAST THE BAR SINCE JOE BIDEN!!!
> I think this may be foreign to
> you but some of us males like ADULT FEMALES.
Well, maybe some do, but apparently you don't, since after posting
HUNDREDS OF TIMES that only child molestors post to alt.tv.buffy-v-slayer,
you felt some deep compulsion to follow through on that obsession of
yours and start posting to the group in your last few days alive...
And since the show got cancelled a few years ago and it's
basically a dead group as a result, you're just about the most-frequent
poster here...congratulations, you've managed another mark of distinction
in that failed miserable life of yours!!! You can put that trophy right
next
to calling into a TV show and running a stock-picking contest with
eight whole participants on Usenet, your previous greatest
accomplishments!!!
---
William Ernest Reid
Mason Barge
"Bill Reid" <horme...@happyhealthy.net> wrote in message
news:Vzzuk.21645$Mh5....@bgtnsc04-news.ops.worldnet.att.net...
>
> lubow <lu...@lubowindustries.com> wrote in message
> news:48b658db$0$23216$ec3e...@news.usenetmonster.com...
>
>> >> The only "sure" way to profit is writing a call against stock you own
> at a
>> >> strike price greater than what you had paid for the stock while
>> >> keeping
>> > the
>> >> stock through the expiration date. Guaranteed, even if the stock
>> >> price
>> >> declines, you will make money off the call.
>
Errr .... what if the stock gaps down? You could blow right through your
stop loss and lose a bundle.
And if it explodes upward, you lose the entire gain above the strike price
of the call.
Amateur. It's just one of many hedges. And like all hedges, it
statistically costs you a small percentage.
kelpzoidzl
> "Bill Reid" <hormelf...@happyhealthy.net> wrote in message
WHY IS THIS STILL COMING TO KUBRICK GROUP
Bill Reid
On Sep 10, 1:51 pm, "Mason Barge" <masonba...@comcast.net> wrote:
> "Bill Reid" <hormelf...@happyhealthy.net> wrote in message
> news:Vzzuk.21645$Mh5....@bgtnsc04-news.ops.worldnet.att.net...
> > lubow <lu...@lubowindustries.com> wrote in message
> >news:48b658db$0$23216$ec3e...@news.usenetmonster.com...
>
> >> >> The only "sure" way to profit is writing a call against stock you
own
> > at a
> >> >> strike price greater than what you had paid for the stock while
> >> >> keeping
> >> > the
> >> >> stock through the expiration date. Guaranteed, even if the stock
> >> >> price
> >> >> declines, you will make money off the call.
> >
> > Errr .... what if the stock gaps down? You could blow right through your
> > stop loss and lose a bundle.
That's what I tried to tell the moron...
> > And if it explodes upward, you lose the entire gain above the strike
price
> > of the call.
> >
> > Amateur. It's just one of many hedges. And like all hedges, it
> > statistically costs you a small percentage.
EXACTLY...you sir, have crytallized the concept perfectly...and
for actually knowing what you're talking about, prepare to be stalked
and harrassed by "Lowbrow" endlessly...
> WHY IS THIS STILL COMING TO KUBRICK GROUP
WHY CAN'T YOU LEARN TO USE GOOGLE(TM) GROUPS
PROPERLY, OR JUST GET A REAL NEWS ACCOUNT???!!!??
(also note you should put a question mark (?) at the end of a
sentence beginning with WHY)
Just to repeat from the stocks group (and for this one, the "Buffy"
group):
Criminy, YOU, of all people, must be able to understand that
there are INSANE people in the world, and in the last few years
many of them have stopped carrying on conversations with
lamp-posts, and started harrassing people on the Internet.
There's a whack-job named "Lowbrow" that's been stalking
me all over Usenet for about a year now; today he forged a
post with my name on it in this group. You previously asked
him to leave, he said he would, BUT ONE OF THE BEHAVIORS
OF YOUR HARD-CORE USENUT IS THAT THEY NEVER
KEEP THEIR WORD, IN THE SAME WAY THAT THEY ARE
PATHOLOGICAL LIARS.
Look, try telling him again, maybe more forcefully this time;
it probably won't work, but don't complain if you don't try. Here
is some additional information that may help in "persuading"
him:
Michael Lubow
Home address:
385 West Neck Road, Lloyd Harbor NY 11743
And you might try contacting the District Attorney of his
presumed home county, as I have, since his behavior violates
New York State's "cyberstalking" law (but you don't have a "case"
or actual "standing" against him, nor do you have any legitimate
TOS violation for his ISP, Verizon):
Lloyd Harbor, Suffolk County, New York
Suffolk County
Address: 300 Center Drive County Center Riverhead, NY 11901-0000
Phone: (631)852-1400
Fax: (631)853-4818
District Attorney:Thomas Spota
---
William Ernest "A Job For One Who's Of Job Age...The Police" Reid
gh
>
> WHY IS THIS STILL COMING TO KUBRICK GROUP
I don't know. Maybe it's not OT because Kubrick did stock trading on the side?
I stopped following the misc.invest.stocks group years ago, there are
more loonies there than have ever participated here.
G
Harry Bailey
> On 2008-09-10 20:50:13 -0400, kelpzoidzl <kelpzoi...@gmail.com> said:
>
>
>
> > WHY IS THIS STILL COMING TO KUBRICK GROUP
>
> I don't know. Maybe it's not OT because Kubrick did stock trading on the side?
> I stopped following the misc.invest.stocks group years ago, there are
> more loonies there than have ever participated here.
>
> G
Yes, he was fascinated with hedging, enthralled by its maze-like
structures, intrigued by its predatory Machiavellianism of calculated
cleverness, so much so that he constructed a giant instance of one on
the back lot of a film studio to lethally entrap an example of such
insular, predatory dementia: Jack Torrance. Oh yeah, and oil will be
back at $70 within three months as looney speculative capital is
bailed out by the Fed and rushes back to paper deposits ...
Wordsmith
Everything that is solid melts into fourth-order simulation,
Padrillard.
W ; )
Harry Bailey
Third order, numbnut.
And in case you haven't noticed, oil has fallen by another $12 since
the above post was written 4 days ago. Today it will likely fall below
$90 ie. the opposite to what was happening 3 and more months ago when
spec capital was escaping from stocks (after its prior escapt from
property) into commodities (artifically pushing up their prices to the
point that actual demand for the underlying commodities, from oil to
gold, collapsed). Now spec capital has nowhere left to go, except DOWN
(taking the economy with it), as yesterday's crash confirms yet again
amidst the continuing bank meltdown.
But what would an obnoxious, sniggering, and racist couch potato like
you know about anything?
Wordsmith
> On Sep 12, 9:16 pm, Wordsmith <wordsm...@rocketmail.com> wrote:
>
>
>
>
>
> > On Sep 10, 11:58 pm, Harry Bailey <unhomedivis...@yahoo.com> wrote:
>
> > > On Sep 11, 5:12 am, gh wrote:
>
> > > > On 2008-09-10 20:50:13 -0400, kelpzoidzl <kelpzoi...@gmail.com> said:
>
> > > > > WHY IS THIS STILL COMING TO KUBRICK GROUP
>
> > > > I don't know. Maybe it's not OT because Kubrick did stock trading on the side?
> > > > I stopped following the misc.invest.stocks group years ago, there are
> > > > more loonies there than have ever participated here.
>
> > > > G
>
> > > Yes, he was fascinated with hedging, enthralled by its maze-like
> > > structures, intrigued by its predatory Machiavellianism of calculated
> > > cleverness, so much so that he constructed a giant instance of one on
> > > the back lot of a film studio to lethally entrap an example of such
> > > insular, predatory dementia: Jack Torrance. Oh yeah, and oil will be
> > > back at $70 within three months as looney speculative capital is
> > > bailed out by the Fed and rushes back to paper deposits ...
>
> > Everything that is solid melts into fourth-order simulation,
> > Padrillard.
>
> > W ; )
>
> Third order, numbnut.
Not in my universe, youngster.
> And in case you haven't noticed, oil has fallen by another $12 since
> the above post was written 4 days ago. Today it will likely fall below
> $90 ie. the opposite to what was happening 3 and more months ago when
> spec capital was escaping from stocks (after its prior escapt from
> property) into commodities (artifically pushing up their prices to the
> point that actual demand for the underlying commodities, from oil to
> gold, collapsed). Now spec capital has nowhere left to go, except DOWN
> (taking the economy with it), as yesterday's crash confirms yet again
> amidst the continuing bank meltdown.
>
> But what would an obnoxious, sniggering, and racist couch potato like
> you know about anything?
When, oh when, have I said anything racist? Only in your
demented mind. Like most paranoids, you feel everyone
who's not in line with your politics 100% is out to get you.
W : )
Harry Bailey
> On Sep 16, 1:09 am, Harry Bailey <unhomedivis...@yahoo.com> wrote:
>
>
> > On Sep 12, 9:16 pm, Wordsmith <wordsm...@rocketmail.com> wrote:
>
> > > On Sep 10, 11:58 pm, Harry Bailey <unhomedivis...@yahoo.com> wrote:
>
> > > > On Sep 11, 5:12 am, gh wrote:
>
> > > > > On 2008-09-10 20:50:13 -0400, kelpzoidzl <kelpzoi...@gmail.com> said:
>
> > > > > > WHY IS THIS STILL COMING TO KUBRICK GROUP
>
> > > > > I don't know. Maybe it's not OT because Kubrick did stock trading on the side?
> > > > > I stopped following the misc.invest.stocks group years ago, there are
> > > > > more loonies there than have ever participated here.
>
> > > > > G
>
> > > > Yes, he was fascinated with hedging, enthralled by its maze-like
> > > > structures, intrigued by its predatory Machiavellianism of calculated
> > > > cleverness, so much so that he constructed a giant instance of one on
> > > > the back lot of a film studio to lethally entrap an example of such
> > > > insular, predatory dementia: Jack Torrance. Oh yeah, and oil will be
> > > > back at $70 within three months as looney speculative capital is
> > > > bailed out by the Fed and rushes back to paper deposits ...
>
> > > Everything that is solid melts into fourth-order simulation,
> > > Padrillard.
>
> > > W ; )
>
> > Third order, numbnut.
>
> Not in my universe, youngster.
A fantasy one, as always.
>
> > And in case you haven't noticed, oil has fallen by another $12 since
> > the above post was written 4 days ago. Today it will likely fall below
> > $90 ie. the opposite to what was happening 3 and more months ago when
> > spec capital was escaping from stocks (after its prior escapt from
> > property) into commodities (artifically pushing up their prices to the
> > point that actual demand for the underlying commodities, from oil to
> > gold, collapsed). Now spec capital has nowhere left to go, except DOWN
> > (taking the economy with it), as yesterday's crash confirms yet again
> > amidst the continuing bank meltdown.
>
> > But what would an obnoxious, sniggering, and racist couch potato like
> > you know about anything?
>
> When, oh when, have I ...
<snipped self-obsessed irrelevant droolings of solipsistic dimwit. Is
it any wonder the US is taking The Fall?>
The Sound of Raining Bullshit
by Richard Seymour
Hank Paulson tells us that the system is sound. The Daily Telegraph is
sure that the chimera known as the "free market" is still "our best
hope". Anatole Kaletsky of The Times believes that the fundamentals
are sound and that the worst of the crisis is to be spent outside the
'real economy' in the surreal financial sector. And, as a special
treat for British workers, the governor of the Bank of England says
that his Monetary Policy Committee is now "firmer in its belief that a
period of muted economic growth is necessary to dampen pressures on
wages and prices and return inflation to target." Yes, you read that
correctly! They're keeping interest rates high to beat the shit out of
wages and depress the economy, right in the middle of a global
downturn, right when deflation is the vogue threat. Ten'll get you
five, this is driving a further wedge right into the heart of a
government that is already collapsing before our eyes. A few days ago,
the good governor directly intervened in policymaking by warning the
government not to raise spending on public services for fear that this
would reduce the credibility of the government's fiscal rules on
borrowing in the eyes of investors. Well, isn't he sweet?
First thing. I hate to remind everyone, but this crisis is rooted in
the fundamentals. Take an example. One reason why hedge funds aren't
hurting so much today is because the credit default swaps on the
Lehman Brothers securities brokers soared in value over the last few
days before it declared bankruptcy. Why is that? A credit default swap
(CDS) is, essentially, insurance taken out on debt you are owed if you
think the borrower might default. You then might insure the CDS by
taking out a further, derivative, CDS on that, if you think the
institution providing the first CDS might itself default. The CDS will
end up on the market like everything else, being bought and sold,
generally by hedge funds because of their more secure position. The
value of the CDS will increase as the company on whom the original
protection was taken out becomes more and more likely to default on
its debts. So, those who retained investments in Lehman Brothers
despite the warning signs (such as George Soros), got burned, but most
hedge funds, adhering to catholic investment doctrine, actually
withdrew before the climax anyway, and probably even made something
from Lehman's collapse. So far, it just looks like the conventional
story: the rich man's betting club collapses on itself, with some
winners and losers, and the challenge is to prevent the whole thing
from "spilling over into the real economy".
But, of course, what caused Lehman Brothers to default on its debts
was its exposure to the subprime market, and this is where we get down
to those fundamentals. Lehman Brothers brokered in securities - to a
large extent, mortgage-backed securities (MBS). A single MBS might
consist of thousands of mortgages bundled together, which can be
bought and sold on the market at extraordinary profit for as long as
there is a boom. The subprime MBS market was always risky, but when
the MBS market was worth trillions, having doubled between 2001 and
2003, it looked much more attractive than it does now. And at any
rate, in order to generate more value out of relatively sluggish
economic growth, many companies turned to the riskier investments
because of the promise of greater rewards. But what caused the
massively inflated value of the MBS market in the first place also
contributed to the stock market bubbles we have seen before and after
the 2000-1 recession. Households with incomes depressed on account of
the clobbering of labour unions and of neoliberal policies designed to
repress wages, had to rely on relatively inexpensive credit to meet
their needs. As house prices went up, they could use their homes as
collateral for increasing indebtedness. Without the staggering amount
of private debt built up by US households through the 1990s and 2000s,
the system would have collapsed much earlier, because there would not
have been sufficient demand to sustain it. But that debt also provided
the basis for a stupendous stock market bubble, and with it a
massively inflated MBS market of the kind that tempted poor old Lehman
Brothers to sin. The story of the collapse of Lehman Brothers is a
story of weak fundamentals. The weaknesses of the 'real economy', far
from originating in the financial sector, were conducted into the
financial sector and then amplified.
Second thing. The news can't talk sensibly about this, because they
can't talk about class. They implicitly favour the capitalist purview
in their focus, but they cannot directly address the issues involved.
That is why no one relying on the papers and the television for
enlightenment is going to have a clue what is going on. You receive
one staccato bulletin after another - it's Black Monday in New York,
Oh Shit Tuesday in Tokyo, Nuclear Dawn Wednesday in Moscow... You get
human interest, dramatic footae, soft focus interviews, political
soundbites, wonkery, etc., and if you put it all together, you still
walk away befuddled. In fact, the best explanation you are likely to
end up with is that some banks made some horribly bad bets on
mortgages for poor people (and, therefore, what? - poor people
shouldn't have mortgages?). To talk realistically about this crisis is
to talk about what has happened to wages and profits for thirty years,
the contours of class struggle and the associated political projects
(socialism, social democracy, neoliberalism, etc), as well as the
basic mechanism of exploitation behind that. To talk realistically
about the issues raised by this crisis is also to talk about class,
and particularly the impact on working class people. You can't
understand why those who gain most from the system suffer least when
it fails, while those who gain least suffer most unless you at least
mention the fact that there is such a thing as highly concentrated
class power in the society. You certainly can't understand the
government and Bank of England's decision to restrict consumption in
response to the crisis without seeing a preemptive strike against the
bargaining power of labour (this obsession with wage pressures). This
conflict of interests, this class struggle, is expressed a little bit
more openly in the German media because the unions there are building
up for a big fight to seriously enhance take-home pay and have the
resources to combat the dominant narrative about the threat of
inflation. One could go on, but at every point where an issue like
this comes up, the news media tends to become curiously cryptic.
But just because the media doesn't recognise the very distinct working
class interests that arise at this juncture doesn't mean that they
aren't going to make themselves felt in a very serious way. This
menacing climacteric, with a global economic downturn dovetailing with
intensified inter-imperial competition and looming climate chaos,
raises all sorts of political questions. In the short term, it demands
a clear formulation of what kind of programme we would actually need
from the government in contrast to what we're actually getting; in the
medium-term, it raises the question of how we are to express our
interests politically when the official party of organised labour is
busily waging the class war on behalf of capital; and, in the long
term, it adds grave import to the much more fundamental questions
raised by the anticapitalist movement. Can we continue to live with
this system, given its obvious perils and injustices, or do we have
the means to build an alternative kind of society? But who would ask
such a question when the system is sound and the free market remains
the one and best hope?
Harry Bailey
That was quick! Oil today, one month since the above, is now trading
around $70 (a 50 percent fall in less than three months), as the
world's 9,000 secretive hedge funds, desperate for some liquidity as
all those junk derivatives they hold undergo continuing meltdown, sell
off their spec oil futures to close off their exposures ...
John Briggs
We don't know how much was down to speculation - the growing worldwide
recession probably has more of an effect. Shipping rates are plummeting -
were the hedge funds buying futures in cargo-carrying?
--
John Briggs
Harry Bailey
The huge increase in oil prices up to July was the result of excessive
speculation ie an oil bubble (repeated in other commodities including
gold, silver, and platinum, the prices of which have also fallen
significantly since July) as spec capital fled from stocks, property,
and deposits. Yes, underlying oil demand in the 'real economy' began
declining in response to the bubble (as also previously occured in the
property markets), but such a decline in price as we are witnessing is
not due to such decline (OPEC have reduced production in response to
falling demand, while oil inventories have risen), but to responding
panic selling by the spec funds.
Some background analysis:
‘Perhaps 60% of today’s oil price is pure speculation’
by F. William Engdahl
Global Research, May 2, 2008
The price of crude oil today is not made according to any traditional
relation of supply to demand. It’s controlled by an elaborate
financial market system as well as by the four major Anglo-American
oil companies. As much as 60% of today’s crude oil price is pure
speculation driven by large trader banks and hedge funds. It has
nothing to do with the convenient myths of Peak Oil. It has to do with
control of oil and its price. How?
First, the crucial role of the international oil exchanges in London
and New York is crucial to the game. Nymex in New York and the ICE
Futures in London today control global benchmark oil prices which in
turn set most of the freely traded oil cargo. They do so via oil
futures contracts on two grades of crude oil—West Texas Intermediate
and North Sea Brent.
A third rather new oil exchange, the Dubai Mercantile Exchange (DME),
trading Dubai crude, is more or less a daughter of Nymex, with Nymex
President, James Newsome, sitting on the board of DME and most key
personnel British or American citizens.
Brent is used in spot and long-term contracts to value as much of
crude oil produced in global oil markets each day. The Brent price is
published by a private oil industry publication, Platt’s. Major oil
producers including Russia and Nigeria use Brent as a benchmark for
pricing the crude they produce. Brent is a key crude blend for the
European market and, to some extent, for Asia.
WTI has historically been more of a US crude oil basket. Not only is
it used as the basis for US-traded oil futures, but it's also a key
benchmark for US production.
‘The tail that wags the dog’
All this is well and official. But how today’s oil prices are really
determined is done by a process so opaque only a handful of major oil
trading banks such as Goldman Sachs or Morgan Stanley have any idea
who is buying and who selling oil futures or derivative contracts that
set physical oil prices in this strange new world of “paper oil.”
With the development of unregulated international derivatives trading
in oil futures over the past decade or more, the way has opened for
the present speculative bubble in oil prices.
Since the advent of oil futures trading and the two major London and
New York oil futures contracts, control of oil prices has left OPEC
and gone to Wall Street. It is a classic case of the “tail that wags
the dog.”
A June 2006 US Senate Permanent Subcommittee on Investigations report
on “The Role of Market Speculation in rising oil and gas prices,”
noted, “…there is substantial evidence supporting the conclusion that
the large amount of speculation in the current market has
significantly increased prices.”
What the Senate committee staff documented in the report was a gaping
loophole in US Government regulation of oil derivatives trading so
huge a herd of elephants could walk through it. That seems precisely
what they have been doing in ramping oil prices through the roof in
recent months.
The Senate report was ignored in the media and in the Congress.
The report pointed out that the Commodity Futures Trading Trading
Commission, a financial futures regulator, had been mandated by
Congress to ensure that prices on the futures market reflect the laws
of supply and demand rather than manipulative practices or excessive
speculation. The US Commodity Exchange Act (CEA) states, “Excessive
speculation in any commodity under contracts of sale of such commodity
for future delivery . . . causing sudden or unreasonable fluctuations
or unwarranted changes in the price of such commodity, is an undue and
unnecessary burden on interstate commerce in such commodity.”
Further, the CEA directs the CFTC to establish such trading limits “as
the Commission finds are necessary to diminish, eliminate, or prevent
such burden.” Where is the CFTC now that we need such limits?
They seem to have deliberately walked away from their mandated
oversight responsibilities in the world’s most important traded
commodity, oil.
Enron has the last laugh…
As that US Senate report noted:
“Until recently, US energy futures were traded exclusively on
regulated exchanges within the United States, like the NYMEX, which
are subject to extensive oversight by the CFTC, including ongoing
monitoring to detect and prevent price manipulation or fraud. In
recent years, however, there has been a tremendous growth in the
trading of contracts that look and are structured just like futures
contracts, but which are traded on unregulated OTC electronic markets.
Because of their similarity to futures contracts they are often called
“futures look-alikes.”
The only practical difference between futures look-alike contracts and
futures contracts is that the look-alikes are traded in unregulated
markets whereas futures are traded on regulated exchanges. The trading
of energy commodities by large firms on OTC electronic exchanges was
exempted from CFTC oversight by a provision inserted at the behest of
Enron and other large energy traders into the Commodity Futures
Modernization Act of 2000 in the waning hours of the 106th Congress.
The impact on market oversight has been substantial. NYMEX traders,
for example, are required to keep records of all trades and report
large trades to the CFTC. These Large Trader Reports, together with
daily trading data providing price and volume information, are the
CFTC’s primary tools to gauge the extent of speculation in the markets
and to detect, prevent, and prosecute price manipulation. CFTC
Chairman Reuben Jeffrey recently stated: “The Commission’s Large
Trader information system is one of the cornerstones of our
surveillance program and enables detection of concentrated and
coordinated positions that might be used by one or more traders to
attempt manipulation.”
In contrast to trades conducted on the NYMEX, traders on unregulated
OTC electronic exchanges are not required to keep records or file
Large Trader Reports with the CFTC, and these trades are exempt from
routine CFTC oversight. In contrast to trades conducted on regulated
futures exchanges, there is no limit on the number of contracts a
speculator may hold on an unregulated OTC electronic exchange, no
monitoring of trading by the exchange itself, and no reporting of the
amount of outstanding contracts (“open interest”) at the end of each
day.” 1
Then, apparently to make sure the way was opened really wide to
potential market oil price manipulation, in January 2006, the Bush
Administration’s CFTC permitted the Intercontinental Exchange (ICE),
the leading operator of electronic energy exchanges, to use its
trading terminals in the United States for the trading of US crude oil
futures on the ICE futures exchange in London – called “ICE Futures.”
Previously, the ICE Futures exchange in London had traded only in
European energy commodities – Brent crude oil and United Kingdom
natural gas. As a United Kingdom futures market, the ICE Futures
exchange is regulated solely by the UK Financial Services Authority.
In 1999, the London exchange obtained the CFTC’s permission to install
computer terminals in the United States to permit traders in New York
and other US cities to trade European energy commodities through the
ICE exchange.
The CFTC opens the door
Then, in January 2006, ICE Futures in London began trading a futures
contract for
West Texas Intermediate (WTI) crude oil, a type of crude oil that is
produced and delivered in
the United States. ICE Futures also notified the CFTC that it would be
permitting traders in the United States to use ICE terminals in the
United States to trade its new WTI contract on the ICE Futures London
exchange. ICE Futures as well allowed traders in the United States to
trade US gasoline and heating oil futures on the ICE Futures exchange
in London.
Despite the use by US traders of trading terminals within the United
States to trade US oil, gasoline, and heating oil futures contracts,
the CFTC has until today refused to assert any jurisdiction over the
trading of these contracts.
Persons within the United States seeking to trade key US energy
commodities – US crude oil, gasoline, and heating oil futures – are
able to avoid all US market oversight or reporting requirements by
routing their trades through the ICE Futures exchange in London
instead of the NYMEX in New York.
Is that not elegant? The US Government energy futures regulator, CFTC
opened the way to the present unregulated and highly opaque oil
futures speculation. It may just be coincidence that the present CEO
of NYMEX, James Newsome, who also sits on the Dubai Exchange, is a
former chairman of the US CFTC. In Washington doors revolve quite
smoothly between private and public posts.
A glance at the price for Brent and WTI futures prices since January
2006 indicates the remarkable correlation between skyrocketing oil
prices and the unregulated trade in ICE oil futures in US markets.
Keep in mind that ICE Futures in London is owned and controlled by a
USA company based in Atlanta Georgia.
In January 2006 when the CFTC allowed the ICE Futures the gaping
exception, oil prices were trading in the range of $59-60 a barrel.
Today some two years later we see prices tapping $120 and trend
upwards. This is not an OPEC problem, it is a US Government regulatory
problem of malign neglect.
By not requiring the ICE to file daily reports of large trades of
energy commodities, it is not able to detect and deter price
manipulation. As the Senate report noted, “The CFTC's ability to
detect and deter energy price manipulation is suffering from critical
information gaps, because traders on OTC electronic exchanges and the
London ICE Futures are currently exempt from CFTC reporting
requirements. Large trader reporting is also essential to analyze the
effect of speculation on energy prices.”
The report added, “ICE's filings with the Securities and Exchange
Commission and other evidence indicate that its over-the-counter
electronic exchange performs a price discovery function -- and thereby
affects US energy prices -- in the cash market for the energy
commodities traded on that exchange.”
Hedge Funds and Banks driving oil prices
In the most recent sustained run-up in energy prices, large financial
institutions, hedge funds, pension funds, and other investors have
been pouring billions of dollars into the energy commodities markets
to try to take advantage of price changes or hedge against them. Most
of this additional investment has not come from producers or consumers
of these commodities, but from speculators seeking to take advantage
of these price changes. The CFTC defines a speculator as a person who
“does not produce or use the commodity, but risks his or her own
capital trading futures in that commodity in hopes of making a profit
on price changes.”
The large purchases of crude oil futures contracts by speculators
have, in effect, created an
additional demand for oil, driving up the price of oil for future
delivery in the same manner that additional demand for contracts for
the delivery of a physical barrel today drives up the price for oil on
the spot market. As far as the market is concerned, the demand for a
barrel of oil that results from the purchase of a futures contract by
a speculator is just as real as the demand for a barrel that results
from the purchase of a futures contract by a refiner or other user of
petroleum.
Perhaps 60% of oil prices today pure speculation
Goldman Sachs and Morgan Stanley today are the two leading energy
trading firms in the United States. Citigroup and JP Morgan Chase are
major players and fund numerous hedge funds as well who speculate.
In June 2006, oil traded in futures markets at some $60 a barrel and
the Senate investigation estimated that some $25 of that was due to
pure financial speculation. One analyst estimated in August 2005 that
US oil inventory levels suggested WTI crude prices should be around
$25 a barrel, and not $60.
That would mean today that at least $50 to $60 or more of today’s $115
a barrel price is due to pure hedge fund and financial institution
speculation. However, given the unchanged equilibrium in global oil
supply and demand over recent months amid the explosive rise in oil
futures prices traded on Nymex and ICE exchanges in New York and
London it is more likely that as much as 60% of the today oil price is
pure speculation. No one knows officially except the tiny handful of
energy trading banks in New York and London and they certainly aren’t
talking.
By purchasing large numbers of futures contracts, and thereby pushing
up futures
prices to even higher levels than current prices, speculators have
provided a financial incentive for oil companies to buy even more oil
and place it in storage. A refiner will purchase extra oil today, even
if it costs $115 per barrel, if the futures price is even higher.
As a result, over the past two years crude oil inventories have been
steadily growing, resulting in US crude oil inventories that are now
higher than at any time in the previous eight years. The large influx
of speculative investment into oil futures has led to a situation
where we have both high supplies of crude oil and high crude oil
prices.
Compelling evidence also suggests that the oft-cited geopolitical,
economic, and natural factors do not explain the recent rise in energy
prices can be seen in the actual data on crude oil supply and demand.
Although demand has significantly increased over the past few years,
so have supplies.
Over the past couple of years global crude oil production has
increased along with the increases in demand; in fact, during this
period global supplies have exceeded demand, according to the US
Department of Energy. The US Department of Energy’s Energy Information
Administration (EIA) recently forecast that in the next few years
global surplus production capacity will continue to grow to between 3
and 5 million barrels per day by 2010, thereby “substantially
thickening the surplus capacity cushion.”
Dollar and oil link
A common speculation strategy amid a declining USA economy and a
falling US dollar is for speculators and ordinary investment funds
desperate for more profitable investments amid the US securitization
disaster, to take futures positions selling the dollar “short” and oil
“long.”
For huge US or EU pension funds or banks desperate to get profits
following the collapse in earnings since August 2007 and the US real
estate crisis, oil is one of the best ways to get huge speculative
gains. The backdrop that supports the current oil price bubble is
continued unrest in the Middle East, in Sudan, in Venezuela and
Pakistan and firm oil demand in China and most of the world outside
the US. Speculators trade on rumor, not fact.
In turn, once major oil companies and refiners in North America and EU
countries begin to hoard oil, supplies appear even tighter lending
background support to present prices.
Because the over-the-counter (OTC) and London ICE Futures energy
markets are unregulated, there are no precise or reliable figures as
to the total dollar value of recent spending on investments in energy
commodities, but the estimates are consistently in the range of tens
of billions of dollars.
The increased speculative interest in commodities is also seen in the
increasing popularity of commodity index funds, which are funds whose
price is tied to the price of a basket of various commodity futures.
Goldman Sachs estimates that pension funds and mutual funds have
invested a total of approximately $85 billion in commodity index
funds, and that investments in its own index, the Goldman Sachs
Commodity Index (GSCI), has tripled over the past few years. Notable
is the fact that the US Treasury Secretary, Henry Paulson, is former
Chairman of Goldman Sachs.
F. William Engdahl is an Associate of the Centre for Research on
Globalization (CRG) and author of A Century of War: Anglo-American Oil
Politics and the New World Order. He may be contacted at
in...@engdahl.oilgeopolitics.net
1 United States Senate Premanent Subcommittee on Investigations, 109th
Congress 2nd Session, The Role of Market speculation in Rising Oil and
Gas Prices: A Need to Put the Cop Back on the Beat; Staff Report,
prepared by the Permanent Subcommittee on Investigations of the
Committee on Homeland Security and Governmental Affairs, United States
Senate, Washington D.C., June 27, 2006. p. 3.