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Posted: 28 February 2012 11:17 AM   [ Ignore ]
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I know that the financial crisis has been around long enough now for people to become numb to it but I just can’t get over how WS continues to do whatever it can to destroy everyone but themselves. The thing that has struck me most recently is the price of gas. Even though current supply and demand would naturally place gasoline at a below average cost, it keeps climbing. It does this for the simple reason that there exist these things called speculators. Something systemic is wrong when an economy can be determined by those who do not even have a productive role in society.

If you need proof that rich people suck in general, here’s a study… LINK

But really, do you need a study?

Cheers.  shut eye

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Posted: 28 February 2012 11:54 AM   [ Ignore ]   [ # 1 ]
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This is probably the single most important issue to those of in the middle class, the continuously rising price of gas. My fiends and I discuss this every morning! One is sold on the idea that if we build more refineries then the price should naturally go down, simple supply and demand. But it’s not that simple as you point out Traveler. According to the article below it’s those who invest in oil futures that arbitrarily drive the price of gas ever upwards and the U.S. consumes 25% of all refined gas. In our area it’s back up to $3.50 a gallon, and will soon go to 4. The article suggests, and I agree that we can individually cut consumption in several ways. In short, this problem will force us to make lifestyle changes that may be permanent. Hopefully this will impact the auto industry to create an alternative to the gas hogs they’ve been selling. I still can’t get over the need for those gas guzzling trucks here. Hell, nobody farms anymore and it costs $60.00 to fill them up. BTW truck sales are falling. Gee, I wonder why? Meantime the rich get…

useconomy.about.com/od/commoditiesmarketfaq/p/high_gas_prices.htm

Cap’t Jack

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Posted: 28 February 2012 11:57 AM   [ Ignore ]   [ # 2 ]
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Don’t know why that didn’t copy properly, damned I-pad! Here it is again:


http://useconomy.about.com/od/commoditiesmarketfaq/p/high_gas_prices.htm

Cap’t Jack

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Posted: 28 February 2012 12:21 PM   [ Ignore ]   [ # 3 ]
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We need the government to change capital gains to something like a 100% tax on profits over, say, 10% a year on any dealing.  That would stop the speculators from doing things like artificially driving up the price of oil and therefore gasoline.

Occam

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Posted: 28 February 2012 12:55 PM   [ Ignore ]   [ # 4 ]
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Occam. - 28 February 2012 12:21 PM

We need the government to change capital gains to something like a 100% tax on profits over, say, 10% a year on any dealing.  That would stop the speculators from doing things like artificially driving up the price of oil and therefore gasoline.

Occam

OK, color me economically challenged but how does increasing the tax on capital gains stop speculators from artificially driving up the price of oil?

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Posted: 28 February 2012 01:11 PM   [ Ignore ]   [ # 5 ]
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Oil is a commodity.Aren’t profits on trading oil futures subject to capital gains tax? And if so, wouldn’t a prohibitively high tax on profits take away the incentive to speculate? Although 100% is a tad extreme, even for this liberal.  cheese

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Posted: 28 February 2012 03:36 PM   [ Ignore ]   [ # 6 ]
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FreeInKy - 28 February 2012 01:11 PM

Oil is a commodity.Aren’t profits on trading oil futures subject to capital gains tax? And if so, wouldn’t a prohibitively high tax on profits take away the incentive to speculate? Although 100% is a tad extreme, even for this liberal.  cheese

That makes sense. And yes, 95% would be much better. I think it used to be around 95% for gains over a few million or so.

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Posted: 28 February 2012 03:46 PM   [ Ignore ]   [ # 7 ]
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Speculation is what anybody does who owns any stock in any way.  There is nothing wrong with speculation.  The problem is if someone is manipulating the price through “speculation”.  Apparently there is no evidence of this that has been found.  Although, I am suspicisious, as I think that someone may be profiting big time on the high price of oil, and I wonder if there may be some covert “encouragement” of the “speculation”. 

That being said, it is just another conspiracy theory without evidence, currently. If there is no covert manipulation, speculators are simply taking a risk by investing at the higher price (based on what they think will happen in the market), as I understand it.

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Posted: 28 February 2012 05:04 PM   [ Ignore ]   [ # 8 ]
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TimB - 28 February 2012 03:46 PM

Speculation is what anybody does who owns any stock in any way.

Well, I’m no finance guru by any means, but I think I disagree with this statement. I own stock (through mutual funds). I don’t consider it speculation. I consider it investing. I believe there is a difference. An investor expects a reasonable return over a long period of time. A speculator expects to strike it rich overnight.

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Posted: 28 February 2012 05:25 PM   [ Ignore ]   [ # 9 ]
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Found another site that shows by chart that the rise in gas prices is linked to the consumer price index and is adjusted for inflation. It’s a tad complicated for one with no economic background but it clearly shows the rise from 1919 ( 25 cents) to thee current price of $3.50 per gal, and going up I might add. We just got gas at an off brand station for $3.43 and the local BP is selling at $3.65. These prices fluctuate hourly I swear. BTW if you can wrap you head around this, a 1919 silver dollar in good condition sells for $40.00!


http://www.consumerenergyreport.com/2012/02/27/how-high-have-gas-prices-risen-over-the-years/

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Posted: 28 February 2012 07:17 PM   [ Ignore ]   [ # 10 ]
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FreeInKy - 28 February 2012 05:04 PM
TimB - 28 February 2012 03:46 PM

Speculation is what anybody does who owns any stock in any way.

Well, I’m no finance guru by any means, but I think I disagree with this statement. I own stock (through mutual funds). I don’t consider it speculation. I consider it investing. I believe there is a difference. An investor expects a reasonable return over a long period of time. A speculator expects to strike it rich overnight.

I agree. It’s one of those “instruments” that should not be legal IMO; like SELLING SHORT

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Posted: 28 February 2012 07:42 PM   [ Ignore ]   [ # 11 ]
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Well, I must say that I don’t see the problem, and I don’t think one can make a principled distinction between investing and speculating; at least not one that could be sharp enough to warrant this kind of opprobrium. Sure, a speculator takes on more risk and (usually) holds instruments for short time periods. So what? What’s the difference if I buy nails to sell tomorrow rather than buying nails to sell next year?

And short selling can provide a very valuable counterpoint to all the hype in the market: it’s the short sellers who typically work hardest to dig up dirt on companies, and expose shenanigans.

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Posted: 28 February 2012 08:39 PM   [ Ignore ]   [ # 12 ]
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But what if you contract to buy all the nails from the all the suppliers available, then when the contractors need them to build structures, you offer them at fifty times the price you paid?  You are speculating that they won’t glue their structures together, so that’s the risk, but otherwise you screw the buyers (unless they use screws) and make obscene profits.  I see that as a bit different from investing.

Occam

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Posted: 29 February 2012 04:54 AM   [ Ignore ]   [ # 13 ]
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Occam. - 28 February 2012 08:39 PM

But what if you contract to buy all the nails from the all the suppliers available, then when the contractors need them to build structures, you offer them at fifty times the price you paid?  You are speculating that they won’t glue their structures together, so that’s the risk, but otherwise you screw the buyers (unless they use screws) and make obscene profits.  I see that as a bit different from investing.

Ah, now you’re talking about cornering the market, which is different from ordinary speculation. (Ordinary speculation = betting that prices will rise over a short period of time).

I agree that there can be ethical—and maybe legal—issues with cornering the market, particularly on economically or politically necessary commodities. But VERY few speculators can even dream of such a move.

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Posted: 29 February 2012 06:35 AM   [ Ignore ]   [ # 14 ]
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I agree that there can be ethical—and maybe legal—issues with cornering the market, particularly on economically or politically necessary commodities. But VERY few speculators can even dream of such a move.


One of the major issues would be the various antitrust laws stemming from the Sherman Act. As to how this effects the futures market I don’t know, but it should fall under the Act. ALthough to get back on point, it appears that the oil companies, if not forming an out and out monopoly are controlling prices at least on the local level. And this year the price of gas has turned into a political football as the reps. (via Romney) are sniping at Obama blaming him for the increase. The dems. would do well to dispell this myth before the Summer begins and prices go up as usual. Early predictions are $5.00 a gallon and up.


Cap’t Jack

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Posted: 29 February 2012 06:45 AM   [ Ignore ]   [ # 15 ]
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dougsmith - 29 February 2012 04:54 AM
Occam. - 28 February 2012 08:39 PM

But what if you contract to buy all the nails from the all the suppliers available, then when the contractors need them to build structures, you offer them at fifty times the price you paid?  You are speculating that they won’t glue their structures together, so that’s the risk, but otherwise you screw the buyers (unless they use screws) and make obscene profits.  I see that as a bit different from investing.

Ah, now you’re talking about cornering the market, which is different from ordinary speculation. (Ordinary speculation = betting that prices will rise over a short period of time).

I agree that there can be ethical—and maybe legal—issues with cornering the market, particularly on economically or politically necessary commodities. But VERY few speculators can even dream of such a move.

I see your points Doug. And I confess I know little of what speculators can dream of, but I do find it discouraging that the same people who swear by a “free market” work to manipulate it in ways that make such a fundamental as “supply and demand” fail to work. Also, I think that some instruments are more inviting of cheating (cornering) than others. This may be why selling short has recently been banned in most countries (and in the US in some forms).

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