60 Minutes Story On Oil - One Of Wall Street's Greatest Ponzi Schemes
60 Minutes ran a story on the oil Ponzi scheme over the weekend. A Ponzi scheme that completely dwarfed the Madoff scandal. Yet government seems to care little. Why? Possibly because government is complicit. The script and video are located here. I would highly encourage everyone watch the video.
It's not an exaggeration to say that this blog was probably the biggest critic of the commodities scam over this cycle. And, we laid blame squarely on Wall Street, where it belongs. For years I have been saying that commodities were in the greatest of bubbles. Even well before this blog was created. All the while I listened to society become more and more taken by one of the greatest Ponzi schemes the world has ever seen. Even today, I hear the roar of the same loud mouths telling us oil is going to blow through its old highs as the commodity supercycle re-ignites. The only way the commodity cycle will re-ignite to anywhere near the prior levels is if we have sustained global conflict. That isn't likely since the state has the ability to end a war and what we know of humanity with the touch of a button.
If you don't understand the Enron scam, I would encourage you to do some research. Not in the failure of the company but how they removed transparency then proceeded to manipulate the energy markets thus sending prices skyrocketing, creating brown outs through the west coast of the U.S. and then blaming it on a lack of supply. They could blame it on anything they wanted to because no one could tell what they were doing. You can do just about anything you want without transparency. Just like Wall Street did with commodities. There never was a supply problem in the Enron Ponzi scheme. And, we wrote on here numerous times that the world had oil coming out of its ears while Wall Street pumped the price higher. People suffered under the yoke of Enron's financial manipulation. In fact, I believe quite a few deaths were attributed to elderly not being able to pay their energy bills. All because of financial manipulation.
Don't buy the psycho babble that the last fifty dollars of the oil move may have been attributed partly to speculation. This bubble in commodities was created ten years ago and big bets have been building in commodities ever since. It started with the deregulation of the energy markets. Deregulation that could not have been accomplished without the complicity of government to change the laws. China's economy has been growing at an incredible rate for decades. Oil was $10 just ten years ago. Why didn't oil respond for the prior twenty years of China's growth? China may have added $10-$20 a barrel to the price of crude but it didn't add the $137 increase we witnessed. In fact, given oil was $10 in 1998 and that included the entire world's consumption (including China), it is arguable China didn't add much of anything to the price of oil in the run to $147.
Wall Street had all of the elements it needed to create the greatest of Ponzi schemes. It lobbied (likely paid) government officials to deregulate the markets and thereby destroyed any transparency so that no one could see what they were doing. (Lack of transparency is a prerequisite to any such scheme.) They immediately started pumping reports they produced which showed how commodities were a great investment that was non correlated to stocks. Something that was key given we have been in an extended period of overvalued equities. The 2000 stock market collapse helped reinforce their scheme. They created derivatives galore to control and profit from the large swings in energy prices. They invested in energy businesses that would allow them to control the actual commodity. Then they pumped the China growth story and peak oil scam like there was no tomorrow.
In the end, any major Wall Street firm that profited by speculating in energy, actually took money from society. There was no wealth creation. They took money from you and from me and from that little old lady living on her Social Security. The same lady who froze to death because she couldn't pay her utility bill. They took from the single mother who had a minimum wage job and had to choose between paying her gas bill to get to work or putting food in her kid's mouth. They took money from the working poor in undeveloped economies unable to feed their children. What they did was heinous. But, there is no proof anyone did anything illegal. Of course, that is because Wall Street helped write the laws. Laws are simply an enforcement of the state's will not necessarily a definition of right and wrong.
The completely unacceptable point about all of this is we still have no transparency into the commodities markets. WTF is our government doing? Oh, I'm sorry. They created this mess. They knowingly created the environment for this to happen. And, after Enron imploded, they knowingly refused to reregulate the markets knowing what lack of transparency could do. Surely at the behest of Wall Street.
And, we wrote all of this while oil was still rising. Anyone who was pumping oil-related equities above $100 a barrel has probably irreparably harmed investors. How is that? I'll tell you how. I wrote on here quite some time ago that some point would mark the peak of oil prices - forever. And, that this cycle's peak could be that ultimate peak. Well, I'm now going on the record by saying I believe that statement has a very high probability of coming to pass. That, indeed, we have witnessed the all time peak in oil prices. That $147 will never be exceeded again. Ever. And, if you need a reason why, go back and read some of my prior posts. (Use the search box at the top of the blog. The other search box delivers erratic results. Update: I just checked and neither search box yields all of the results for any topic on the blog any more. I'll have to make sure all articles are indexed. I'll look into this in coming months. )
It's not an exaggeration to say that this blog was probably the biggest critic of the commodities scam over this cycle. And, we laid blame squarely on Wall Street, where it belongs. For years I have been saying that commodities were in the greatest of bubbles. Even well before this blog was created. All the while I listened to society become more and more taken by one of the greatest Ponzi schemes the world has ever seen. Even today, I hear the roar of the same loud mouths telling us oil is going to blow through its old highs as the commodity supercycle re-ignites. The only way the commodity cycle will re-ignite to anywhere near the prior levels is if we have sustained global conflict. That isn't likely since the state has the ability to end a war and what we know of humanity with the touch of a button.
If you don't understand the Enron scam, I would encourage you to do some research. Not in the failure of the company but how they removed transparency then proceeded to manipulate the energy markets thus sending prices skyrocketing, creating brown outs through the west coast of the U.S. and then blaming it on a lack of supply. They could blame it on anything they wanted to because no one could tell what they were doing. You can do just about anything you want without transparency. Just like Wall Street did with commodities. There never was a supply problem in the Enron Ponzi scheme. And, we wrote on here numerous times that the world had oil coming out of its ears while Wall Street pumped the price higher. People suffered under the yoke of Enron's financial manipulation. In fact, I believe quite a few deaths were attributed to elderly not being able to pay their energy bills. All because of financial manipulation.
Don't buy the psycho babble that the last fifty dollars of the oil move may have been attributed partly to speculation. This bubble in commodities was created ten years ago and big bets have been building in commodities ever since. It started with the deregulation of the energy markets. Deregulation that could not have been accomplished without the complicity of government to change the laws. China's economy has been growing at an incredible rate for decades. Oil was $10 just ten years ago. Why didn't oil respond for the prior twenty years of China's growth? China may have added $10-$20 a barrel to the price of crude but it didn't add the $137 increase we witnessed. In fact, given oil was $10 in 1998 and that included the entire world's consumption (including China), it is arguable China didn't add much of anything to the price of oil in the run to $147.
Wall Street had all of the elements it needed to create the greatest of Ponzi schemes. It lobbied (likely paid) government officials to deregulate the markets and thereby destroyed any transparency so that no one could see what they were doing. (Lack of transparency is a prerequisite to any such scheme.) They immediately started pumping reports they produced which showed how commodities were a great investment that was non correlated to stocks. Something that was key given we have been in an extended period of overvalued equities. The 2000 stock market collapse helped reinforce their scheme. They created derivatives galore to control and profit from the large swings in energy prices. They invested in energy businesses that would allow them to control the actual commodity. Then they pumped the China growth story and peak oil scam like there was no tomorrow.
In the end, any major Wall Street firm that profited by speculating in energy, actually took money from society. There was no wealth creation. They took money from you and from me and from that little old lady living on her Social Security. The same lady who froze to death because she couldn't pay her utility bill. They took from the single mother who had a minimum wage job and had to choose between paying her gas bill to get to work or putting food in her kid's mouth. They took money from the working poor in undeveloped economies unable to feed their children. What they did was heinous. But, there is no proof anyone did anything illegal. Of course, that is because Wall Street helped write the laws. Laws are simply an enforcement of the state's will not necessarily a definition of right and wrong.
The completely unacceptable point about all of this is we still have no transparency into the commodities markets. WTF is our government doing? Oh, I'm sorry. They created this mess. They knowingly created the environment for this to happen. And, after Enron imploded, they knowingly refused to reregulate the markets knowing what lack of transparency could do. Surely at the behest of Wall Street.
And, we wrote all of this while oil was still rising. Anyone who was pumping oil-related equities above $100 a barrel has probably irreparably harmed investors. How is that? I'll tell you how. I wrote on here quite some time ago that some point would mark the peak of oil prices - forever. And, that this cycle's peak could be that ultimate peak. Well, I'm now going on the record by saying I believe that statement has a very high probability of coming to pass. That, indeed, we have witnessed the all time peak in oil prices. That $147 will never be exceeded again. Ever. And, if you need a reason why, go back and read some of my prior posts. (Use the search box at the top of the blog. The other search box delivers erratic results. Update: I just checked and neither search box yields all of the results for any topic on the blog any more. I'll have to make sure all articles are indexed. I'll look into this in coming months. )
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