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post #1 of 20 (permalink) Old 06-19-2008, 09:10 PM Thread Starter
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2 charged on Wall Street in mortgage meltdown

And so it begins:

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NEW YORK (AP) -- Two former Bear Stearns hedge fund managers were hauled into jail Thursday and charged with lying to investors about the collapse of the subprime mortgage market, perhaps signaling the start of a wave of prosecutions arising from the housing meltdown.
http://biz.yahoo.com/ap/080619/bear_...stigation.html

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post #2 of 20 (permalink) Old 06-19-2008, 09:15 PM
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Good news , now they need to crack the asses of those running fuel prices up .
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post #3 of 20 (permalink) Old 06-19-2008, 09:20 PM
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post #4 of 20 (permalink) Old 06-19-2008, 09:21 PM Thread Starter
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Originally Posted by thesource
Good news , now they need to crack the asses of those running fuel prices up .
Arrest Bernanke?

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post #5 of 20 (permalink) Old 06-19-2008, 09:22 PM
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Quote:
Originally Posted by 01WhiteCobra
Arrest Bernanke?
That idea doesn't sound half bad!
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post #6 of 20 (permalink) Old 06-19-2008, 09:38 PM
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Originally Posted by 01WhiteCobra
Arrest Bernanke?
What ever works as long as fuel drops about $1.25 a gallon .
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post #7 of 20 (permalink) Old 06-19-2008, 09:48 PM Thread Starter
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Originally Posted by thesource
What ever works as long as fuel drops about $1.25 a gallon .
Haha. I doubt you'll start seeing $1.25 on any gas sign unless they start pricing gas in quarts.

If you are interested in the effect of interest rates on commodity prices there is a wealth of information on this site:

http://ksghome.harvard.edu/~jfrankel/CP.htm

Quote:
The dominant macroeconomic explanation for the 2001-07 run-up in commodity prices had been strong real growth in the world economy.
But since August 2007 growth has slowed worldwide, yet commodity prices have accelerated (see graph)-- undercutting that theory.
Recent developments instead support the importance of declining real interest rates, as argued here. King Abdullah of Saudi Arabia, for one,
apparently believes that the rate of return on oil reserves is now higher if he doesn't pump than if he does. On April 12, 2008, he said
"Let them remain in the ground for our children and grandchildren..."

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post #8 of 20 (permalink) Old 06-19-2008, 09:51 PM
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Quote:
Originally Posted by 01WhiteCobra
Haha. I doubt you'll start seeing $1.25 on any gas sign unless they start pricing gas in quarts.

If you are interested in the effect of interest rates on commodity prices there is a wealth of information on this site:

http://ksghome.harvard.edu/~jfrankel/CP.htm
What you quoted is exactly why we need to be drilling right here in the US. I figure a strong commitment by the US to drill followed by tangible action (granting of well leases) would knock the bottom out of oil prices, and would scuttle a great deal of the supply control games being played.
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post #9 of 20 (permalink) Old 06-19-2008, 09:55 PM Thread Starter
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Originally Posted by mikeb
What you quoted is exactly why we need to be drilling right here in the US. I figure a strong commitment by the US to drill followed by tangible action (granting of well leases) would knock the bottom out of oil prices, and would scuttle a great deal of the supply control games being played.
Rate of return is global. If it doesn't make sense in Saudi land it certainly won't make sense in America. If your interest rates are lower than the rate of increase in oil prices you'll leave your stock in the ground.

If you can get a 5% return on your money in a year but you are pretty sure oil will increase 10% in a year (after adding in the cost of idle production)... do you pull it up now or wait for a year?

The decrease in demand is starting to show up I believe. We'll be at $110 before we're at $150... unless something catastrophic happens to the world in the meantime.

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post #10 of 20 (permalink) Old 06-19-2008, 10:04 PM
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Quote:
Originally Posted by 01WhiteCobra
Rate of return is global. If it doesn't make sense in Saudi land it certainly won't make sense in America. If your interest rates are lower than the rate of increase in oil prices you'll leave your stock in the ground.

If you can get a 5% return on your money in a year but you are pretty sure oil will increase 10% in a year (after adding in the cost of idle production)... do you pull it up now or wait for a year?

The decrease in demand is starting to show up I believe. We'll be at $110 before we're at $150... unless something catastrophic happens to the world in the meantime.
So what does oil need to be priced at to make money? Can we pump oil here and make money while the saudis sit on their oil and eat sand?
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post #11 of 20 (permalink) Old 06-19-2008, 10:05 PM
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Quote:
Originally Posted by 01WhiteCobra
Haha. I doubt you'll start seeing $1.25 on any gas sign unless they start pricing gas in quarts.

If you are interested in the effect of interest rates on commodity prices there is a wealth of information on this site:

http://ksghome.harvard.edu/~jfrankel/CP.htm

No not a $1.25 a gallon . $3.89 - $1.25 = 2.64 or even better an even $2.50 a gallon . I could live with that .
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post #12 of 20 (permalink) Old 06-19-2008, 10:06 PM Thread Starter
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No not a $1.25 a gallon . $3.89 - $1.25 = 2.64 or even better an even $2.50 a gallon . I could live with that .
Ah... I see.

You may get your wish.

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post #13 of 20 (permalink) Old 06-19-2008, 10:11 PM
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Originally Posted by 01WhiteCobra
Ah... I see.

You may get your wish.

Maybe but I doubt it . I know these assholes could make money at $2.50 a gallon . Hell it was under a buck for what seems like forever when I was growing up . The price might change a nickel in a years time and people would get all antsy about it .

Now days the mother fucker goes up $.20 from breakfast time to lunch time and nothing had fucking changed .
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post #14 of 20 (permalink) Old 06-19-2008, 10:12 PM
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What did I hear about China's price controls changing for the worse (for them, equaling a slow down of their consumption, in theory) and its effect on price of oil??

Anyone catch that? It was a blurb on NPR...

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
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post #15 of 20 (permalink) Old 06-19-2008, 10:21 PM Thread Starter
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Quote:
Originally Posted by mikeb
So what does oil need to be priced at to make money? Can we pump oil here and make money while the saudis sit on their oil and eat sand?
It really isn't a price point but a rate of return.

I'm sure the suppliers can make a lot of money with $80 a barrel oil.

But, up till now at least, as an oil producer, they are looking at it and saying... the best investment choice at the moment is my "black gold." Leave it in the ground and next year it will be worth much more than my rate of return at the bank. We'll sell it next year and make even more.

Couple that with low interest rates which drive the value of the dollar down it costs most $$$ to buy the oil.

Now, the producers are in a situation where they must decide was $140 the short term peak for now. Is it a better investment decision to ramp up production now and sell it fast before oil drops farther? WTI Cushing Spot was down $4.75 a bbl today. In terms of US demand that is worth almost $100MM.

You also have the Fed having to fight inflation along with high than wanted unemployment (two mutually exclusive items you can't fight both at the same time.) So people are starting to believe the Fed is done with easing and will start increasing rates. The value of the dollar goes up and can purchase more commodities (like oil) for each dollar.

Although I certainly respect people like T Boone Pickens, I think we'll see $100-110/bbl oil before we see $150/bbl oil unless something critical happens to the world in the next couple of months.

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post #16 of 20 (permalink) Old 06-19-2008, 10:22 PM Thread Starter
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Quote:
Originally Posted by barronj
What did I hear about China's price controls changing for the worse (for them, equaling a slow down of their consumption, in theory) and its effect on price of oil??

Anyone catch that? It was a blurb on NPR...
Yes, China raised the price of gas like 16% starting tomorrow. The theory would be this will hamper demand in China.

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post #17 of 20 (permalink) Old 06-19-2008, 10:27 PM Thread Starter
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Just remember there is plenty of gas in the world. You just have to know where to find it.



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post #18 of 20 (permalink) Old 06-20-2008, 09:59 AM
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Quote:
Originally Posted by 01WhiteCobra
It really isn't a price point but a rate of return.

I'm sure the suppliers can make a lot of money with $80 a barrel oil.

But, up till now at least, as an oil producer, they are looking at it and saying... the best investment choice at the moment is my "black gold." Leave it in the ground and next year it will be worth much more than my rate of return at the bank. We'll sell it next year and make even more.

Couple that with low interest rates which drive the value of the dollar down it costs most $$$ to buy the oil.

Now, the producers are in a situation where they must decide was $140 the short term peak for now. Is it a better investment decision to ramp up production now and sell it fast before oil drops farther? WTI Cushing Spot was down $4.75 a bbl today. In terms of US demand that is worth almost $100MM.

You also have the Fed having to fight inflation along with high than wanted unemployment (two mutually exclusive items you can't fight both at the same time.) So people are starting to believe the Fed is done with easing and will start increasing rates. The value of the dollar goes up and can purchase more commodities (like oil) for each dollar.

Although I certainly respect people like T Boone Pickens, I think we'll see $100-110/bbl oil before we see $150/bbl oil unless something critical happens to the world in the next couple of months.
I hear that shit from T Boone Pickens all the time. What do you expect the guy to say? Invest in pork bellies? He's an oil man, of course he thinks it is going to $1,000 a barrell and wants everyone else to think that too.

What defies logic about "leaving it in the ground" is that US interest rates have to come up very soon.
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post #19 of 20 (permalink) Old 06-20-2008, 12:07 PM Thread Starter
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Quote:
Originally Posted by AL P
I hear that shit from T Boone Pickens all the time. What do you expect the guy to say? Invest in pork bellies? He's an oil man, of course he thinks it is going to $1,000 a barrell and wants everyone else to think that too.

What defies logic about "leaving it in the ground" is that US interest rates have to come up very soon.
He is about to be a water man. I have to give the guy credit of being an visionary. Water will become the next "oil" in a few decades. He is already lobbying to get water pipelines from West Texas to D/FW to supply our water needs.

I'm with you on the interest rates. The Fed was trying to stave off a hard landing, which I think they did, and know they have to be concerned with inflation more than unemployment.

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