Can’t they just buy it from the suppliers when they need it? Just like many other items that are sold by markets, or publically regulated companies? Speculating on prices does not assure a steady supply. It only allows excuses for raising prices, based on fears of an interruption in supply. That’s not the same thing. Honestly, I don’t know why so many people here are defending commodity traders.
I don’t understand the question, I guess, or how it relates to my point. My point is that more people should NOT choose it as a career, because too many people are choosing it now, and it does not answer a need.
I don’t think there IS any other reason, besides making money, that people choose finance as a career. I suppose a more altruistic reason, would be to help others make money.
Yes, they can. But how does the supplier know how much to have on hand? And from where will he get it. He either has to drill for more and refine it or make sure that he can have his order filled on time and at a reasonable price, no? That’s what middle men help with.
Well, I’m sure most people choose not for a variety of reasons. But I’m sure that making money is among those reasons for even this who really enjoy finance. (Me, I would hate it.) But, you seem to agree that we need some people in the financial sector. You seem to also be of the mind that we have too many people in finance. I really don’t know. But like any other industry, if there were too many, I think a bunch of people would be fired. If they need more, a bunch of people would be hired. Can you share why it is that you assume that the finance sector is over staffed. And if you could, are we talking about 5%? 10%? 25%? 50%?
[QUOTE=Eric the Green]
Can’t they just buy it from the suppliers when they need it?
[/QUOTE]
Sure…but the suppliers will have to buy it from a large refinery, who will have to purchase large volumes of oil in anticipation of demand. They have to buy oil that they anticipate they will use not today, but a month from now…or 6 months from now…or a year from now…or 2 years from now. See, the oil has to be produced, which is another way of saying that wells need to pump the oil out of the ground, transported to a major hub, loaded on a ship, then transshipped to the refinery, stored, then processed into the various refined fuels (this is a simplification obviously). So…how much will you need 6 months from now? What things might effect the price 6 months from now? If I sell you oil today based on oil to be delivered 6 months from now, what happens if there is a revolution in Libya, say, during that time? If I sell you oil today that I produced 6 months ago, how do I know how much to produce? What if I produce X amount of oil today to see to you 6 months from now and you need X+Y…or you only need X-Y? Who takes the hit? If me, what if I go out of business and you need to get a new supplier, who would then have to produce oil (again, how much?) to sell to you on the spot 6 months from now?
What would happen without those speculators or the commodities market is your local retailer would have to go to the refiner and see what the price of gas is today. It might be cheap, if the refiner fucked up and produced a glut…or it might be hugely expensive, if they fucked up and didn’t produce enough. Or it might vary wildly because today, the guy who just pulled in the oil tanker happens to have a lot more or a lot less than is needed because there was a revolution in Libya, or the Iranians decided not to sell to the Europeans this month…or myriad other things that could impact how much oil was produced and at what price. You think the current swings are wild because you don’t realize what it would or could be like if people bought and sold things without speculators or a commodities market, and merely waited for a tanker to come into port before figuring out what the oil cost.
Other items ARE bought and sold in exactly the same way. Sheesh…don’t you ever buy orange juice or milk? And publicly regulated companies DO have fluctuations in price. Even public utility companies have fluctuations in price because they still have to speculate and buy coal or whatever they are using to produce the power, and prices fluctuate due to all sorts of things. Did you think they were magically able to predict the future and know what the price of that coal or natural gas would be 6 months from now? That the government has some sort of magical time machine to determine it? The reason that they don’t fluctuate as much (perhaps) is because in many cases the prices those utilities charge is fixed…which is simply another way of saying that the government sucks it up when prices shift and the coal or whatever costs more than they thought it would. We could do the same thing for oil/gasoline…China does. It would mean that companies would sell gas for a fixed price, and when the price fluctuates the government sucks it up and pays the difference.
They are defending them because they, unlike you, grasp at least the basics of why we have commodities traders, what their role is, and why things would be a hell of a lot worse if we didn’t have them.
I can help you out with that. Virtually everyone hear who is stating that economics is a science and not a scam are strong believers in keeping markets as free as possible. Most have modified their stands from being nearly pure free market types since 2008, for obvious reasons, but they still resist change … just as you say, inertia is tough to overcome.
I have long maintained that regulation is absolutely essential to prevent free markets from becoming unfree, as the wealthy inevitably use their wealth to influence governments to influence the playing field in their favor. What we are seeing right now is the end game in poorly regulated capitalism … the wealthy essentially own both of the major parties, leading to a capitalist oligarchy rather than a democracy. That’s an important reason change is being evaded. Most American voters FAVOR your ideas … the legislators do not hear them, only the wealthy donors who keep them in funds.
Whaaaaat??? I certainly can’t force them to lower their prices. Yes, I can ride my bike; that will do for short trips.
Like what, besides those I DID mention?
This seems to me the idea that we can change things by individual choice. That is false; my own choice in the market does not change what is available at what price. Rhetoric should be convincing if it points out solutions to problems that are already well-known and worked out, which most of them are, but are stalled because people are not getting behind them to balance the forces of the status quo interests on the other side.
Nothing has been explained here that I don’t understand, at all.
I already know. Just because someone replies to my assertions, by trotting out how and why things are already done a certain way, does not mean I don’t know all about that old, tired way.
Now you are just making assertions. Prove them. You haven’t talked about anything I’m ignorant of.
My point was that someone (you?) said that we don’t have a free market, so how can it be the problem. I just said, yes that’s right, it’s the free market policies and ideology that is the problem. I think that’s pretty clear, whether you agree or not. If you don’t, you are in favor of those policies. I am not.
Now who’s ignorant? The price for my electricity and water and gas do not fluctuate like the price of gasoline does. There are changes, but they must be approved, and they are not wild and do not almost double just because of what happens in Libya.
I already did. Oil is an established industry; it’s just easier to stick with the way things are done. But we need very much to change. Other countries are actually changing faster than we are, because their governments have more sensible people that ours, stuffed as it is with free marketers and Tea Partiers.
If you think we need to know all these details, then why don’t YOU supply them? If you are so well-informed, why don’t you know some of this stuff? I DO. I have given a few links. It may well be worth another thread to discuss all these details about cars, which I have done on other forums. This is a more general thread.
I don’t think it’s irrelevant to ask you, why do you have to ask me all these questions, if you are not just trying to obstruct. Again, if it’s so “simplistic,” why have our president and governor embarked well down that road? Why not think up solutions yourself to all these problems, instead of demanding them from me? The answers are pretty easy and clear.
I already explained why. My explanation is good enough for anyone willing to consider it. Their vested interest is in keeping the status quo. It is more “convenient” for them; they are used to it. They are like you; they prefer to ask skeptical questions rather than be on about the job. They are making money hand over fist doing things the old way.
The governor is doing pretty good. Yes, it could be faster. If coal plants are closed, that’s all to the good, and it has worked out quite well that we don’t depend on it in CA (yes I’m from there). Our utility gets all it needs without it.
I hear your point. Not sure what I can do about that though. Why would anyone say anything different about it? No-one has presented any principles of economics that are otherwise. Why is it up to me to provide all the “evidence,” as Shobam thinks? Appeals to “economics,” as if that means something, don’t convince me. Reciting how things work today does not convince me. Requiring me to say everything in the absolutely correct terms, even though people already know what I mean, does not convince me.
Of course they can’t. That’s the whole fucking point.
Being optimistic, it takes at least six months to get fuel from a well in Texas to a gas station in Ohio. And you are seriously suggesting that a gas station owner goes out, notices that his storage tanks are at 10%, and then buys more from the ownrs of the well.
That’s nonsense.
So then you will suggest that the refineries should just refine the same amount of oil to the gas station owner every week. That way there is a constant stream of produce moving through the system to keep him supplied.
But what do you think happens when a new copper mine offers the refinery twice as much per gallon for the fuel they are refining? Well, now the gas station has no fuel, because the fuel that was allocated to him has been sold to someone else.
Well, you say. The gas station owner should pre-pay for the fuel that he needs. He should estimate how much fuel he will need in six months time, and pay the oil refinery for that fuel ahead of time.
But how will the gas station owner know how much to pay for fuel in 6 months time? If the owner of the well thinks that lots of knew copper mines are going in and will need lots of gas to run their trucks, the well owner will want to charge more for the fuel in six months time. And if the gas station owner thinks that a competitor is going to find a big new well that will increase supply, he will want to play less.
So how the hell do these two players factor in all these multiple factors so they know how much to play for gas ordered today to be delivered in 6 months time? The oil drillers and gas station owners already have full time jobs drilling oil. They can’t possibly research lal the possible factors that will affect oil prices in 6 months time, can they?
That means that the oil drillers and the gas station owners will have to hire people to do that research for them. Ad the researchers for the gas stations can then negotiate with the researchers for the oil drillers and agree at the price to pay today for gas to be delivered in six months time.
That’s the only way that the system could possibly run efficiently, agreed
Except that this is fucking “speculation”.
Like what?
Can youname even two of the “many” items that are sold without any brokers or speculators acting as middlemen.
Just two. I bet you can’t do it.
Services can often be sold without brokers because the delay between the agreement and the termination of the contract is so short. But for goods that isn’t the case. The delay between when a cow fucks a bull and when the resulting calf starts producing milk is so long that it would be hideously inefficient to operate a market without any means of manipulating future supply. The same goes for the delay between the geological survey of a block of farmland a mine site and the production of a length of copper wire and any other item that you care to name.
Nothing will assure a perfectly steady supply. But looking at the example above, you ill hopefully understand why it is impossible to have even a vaguely steady supply without speculation.
We know, that’s the problem.
So you are seriously syang that the US economy could function with nobody at all working in finance. An economy with no loans, no share, no bonds etc?
Because that is what “people should NOT choose [finance] as a career” means.
Right.
So you told us that under your proposed system people won’t be in finance to make money.
And now you tell us that the *only *reason for people to be in finance is to make money.
Which means that under your system there will not be anybody in finance.
So your system entails an economy with no finance available from any source.
So you think that having fewer players in finance will make the economy *more *equitable, make the financiers *more *accountable and *reduce *financial profits.
How are these requirements for producing oil any different than natural gas, food, electricity, water, and a hundred other items we need, some of which are regulated as I propose commodity traders should be?
You admit that commodity traders are considering “a revolution in Libya.” That is so obviously bogus, that it betrays you to mention it. The revolution had nothing to do with supplies of oil. It was just an excuse. There were never ANY shortages of oil because of Libya, or because of worries over Iran this year, etc. There are no shortages of producers of oil. Refinery closings are another excuse that is used, I know; and demand in China, and so on. Yet no other commodity fluctuations seem to have this effect on prices at the store. Why is that? Because traders are bidding up the price so they can make money for themselves and the oil companies, that’s why. If shortages occur, prices can go up. They don’t need to go up BEFORE shortages occur.
If we don’t want shortages of energy, then we sure as hell better get on with the job of finding alternative, clean sources of energy, Because the old ones are running out and getting more and more expensive while the new ones are getting cheaper and cheaper.
Why is it then that gas prices fluctuate wildly and unfairly, and all the other prices do not? Answer me that one.
The government is not “sucking it up,” it keeps prices from wildly fluctuating. You don’t think I know what I have to pay for “gas” as opposed to “gasoline”? The utility company gets the money it needs without wild price flucuations based on fears of what might happen 6 months from now.
Which you haven’t explained at all, other than to recite the way things are done.
I am beginning to suspect you are just a free marketeer. If you are, why not just say so? Maybe because you already in your heart KNOW what a delusion it is. And a very harmful one at that.
People in this country today (unlike in pre-Reagan years) have to pay hugely unfair high prices for basic needs, and they don’t get enough in their paychecks to cover it. Something needs to be done about this, and it can only be done through the government.
And his answer was that no one should go into finance because doing adds no value. If the producer wants to speculate, that’s fine, but there should be no separate job of speculator. Because, as a speculator, it is in their best interest to constantly fearmonger so that they can get more money. The speculator has no reason to care about the longterm health of the market. It’s in the speculator’s best interest to create a bubble and then get out before the bubble bursts. It is in their best interest to gamble like this. Their own money is not really on the line.
I don’t know enough about the market to say if his opinion is accurate, but I do know I see a lot of people misrepresenting his position.
And I don’t see why accountants, buyers and estimators within the companies themselves can’t determine the needs of the company, and the customers determine their needs, and communicate with each other, without middle men, or at least not without regulated middle men, instead of by gamblers.
Experts have related these facts on TV and in the news media ad nauseum. I think the figure is that the percentage of US GDP has more than doubled in recent years. People are not going into finance because there is a need for it, but because opportunities opened up for people to get rich quick by gambling, thanks to eased regulations put into effect by free market politicians. If you think the reasons for things being as they are, is economic necessity (and thus we HAD to have the 2008 crash, etc.), I beg to differ. No, the reason is politics.
They aren’t any different. All those things are also traded by “speculators”
Seriously, are you unaware of the food futures market?
So it is all a big conspiracy. A conspiracy involving not just the US government, but the governments of the entire world, including Russia, China and North Korea. Because if even one of those countries refused to co-operate, they could corner the world market by selling the commodity at the real price, which you claim is well below the standard set in the US future’s market
All those governments are involved in a conspiracy to make money for Wall Street futures traders.
Do you relaise how batshit crazy that sounds?
Ummm, if the old ones are getting more expensive new ones are getting cheaper, then won’t it inevitably reach a point where the new ones are cheaper than the old? And if they are cheaper, won;t everybody buy them?
This seems to a be a problem that has an inbuilt solution and requires no tampering.
I see now you’re conflating two different things. One is Middle men", the other is “regulation”. If you’re arguing for a degree of regulation, I don’t think you’ll find much opposition. But middlemen actually help a company be more efficient. Particularly smaller companies. Without them, they’d have to assume a level of expertise that could be costly. And they’d incur risk—of not getting the supply they needed in time.
But you have to be careful what you wish for. As John Rockefeller created his behemoth company, he had just the idea you did. But for his company, the expensive and uncertain cost as shipping. So, he bought a railroad. And it worked. Now he not only knew what his costs would be and was able to keep them low, he could always guarantee that he’d get shipping capacity over competitors. This is what caused the government to break the company up. Anyway, just thought I’d share the story for its irony as it applies to this discussion.
I see your point, but surely there must be a need. Otherwise, why would companies keep hiring more and more people? I can see the incentive for the p[otential employee—he wants to make some of that good money. But why would the employer want to hire someone he does not need and part with the money he loves so much?
My own preference is more radical; get rid of them. But I’d settle for more regulation, like what occurs in industries regulated by public commissions.
Because the “need” I spoke of was the need in society, not the need of a trading company to hire a broker. The stock company’s “need” was to make money by gambling. That is not society’s need, which is to have more people going into more productive occupations.
[QUOTE=Eric the Green]
Whaaaaat??? I certainly can’t force them to lower their prices. Yes, I can ride my bike; that will do for short trips.
[/QUOTE]
You can choose not to purchase their products. If enough people do that then it will shift the supply and demand equation and force lower prices. Of COURSE you have choices. You could, for instance, purchase one of those electric cars you mentioned. After all, you want to have the government essentially force everyone to have to buy one, if they want a car…what’s the problem with you exercising your choice right now and getting one?
You of course have other choices you could make. As you note, you could ride a bike. You could walk. You could use public transportation. You could purchase a house close to your work and close to the store. Have you noticed that the Amish don’t use a lot of gasoline? You could take up a similar lifestyle. Your choices abound. And if enough people make similar choices it WILL ‘force them to lower their prices’. You’d know this if you understood the basics.
Like all the ones I mentioned that you are seemingly unaware of. If you want to have a discussion about why the price of oil and gas fluctuate and have been fluctuating lately then I’m happy to have such a discussion. There are a lot of factors that impact the price of gas you pay at the pump. Contrary to your assertions, they aren’t set arbitrarily by a bunch of speculators charging whatever they like and fucking the little guy.
You have individual choice. In addition, individual choices aggregate and cause real effects. That’s what The Market ACTUALLY IS. Prices aren’t set arbitrarily and at the whim of ‘speculators’. The status quo, wrt fossil fuel energy, is the status quo because it is and has been for quite a long time the most economical and cost effective. That’s why most people haven’t rushed out to get a all electrical vehicle, by and large…because it doesn’t make economic sense to do so from a cost to benefit perspective. As oil becomes more scarce the price rises because it costs more and more to both produce it AND to find new, exploitable resources. In addition, the US isn’t the only country using oil…many emerging nations ALSO want their share. THAT, combined with fluctuations in regional politics (like, say, the possibility of a shooting war in the Gulf between Iran and Israel, Iran’s decision not to sell to the EU, revolutions in Egypt and more importantly Libya, the ongoing dust up in Syria, the continued boil in Iraq, etc etc) plus disruptions on the refining side, and a bunch more things, are what impact the prices. OPEC’s decisions on how much oil to produce have a huge effect as well. It’s complex and complicated…your simplistic screed isn’t even the cartoon version of the reality.
Then either you have been dishonest in your posts and you have the lure behind the boat, hoping for some fish, or DeNile isn’t just a river in Egypt. I’m going with the second choice.
You don’t though. You THINK you have a good handle on this stuff, but your replies in this thread make it crystal clear that you don’t even have a nebulous grasp of the issues and factors involved in the discussion you are trying to have. That’s fine, and I’d urge you to back off of talking about any specifics and stay with the big picture, feel good rhetoric filled touchy feely discussion. I’d urge that because it’s clear you don’t have the foggiest what you are talking about when drilling down into your solutions to our problems. You might want to consider that the REAL progressives in the current progressive party might just know more about this stuff than you do, and have a clearer idea of what’s possible, probable, and effective wrt changes in policy. I know that a lot of this boards liberals know a hell of a lot more about this stuff than you do, and while their politics might be roughly similar, they are more practical about solutions because they DO understand at least the basics on this stuff. You might want to consider that. Or, continue to travel down the river DeNile…
Again? Seriously, I’m not just making assertions…that’s what YOU have been doing. I tried to start off this discussion by asking you pointed questions to try and get some details about your plans concerning why we ‘need a new progressive movement in America’, as well as your vague list of what needs to be done. It pretty quickly ran up against your ignorance of the deeper issues you brought up, and your misconceptions of even the most basic mechanisms for how this stuff works. Hell, even your concept of something like the ‘free market’, a really big picture idea, is flawed, as you seem to think we have some sort of laissez-faire free wheeling capitalist system without regulation or restraint that NEVER existed in the world, let alone in the US.
:rolleyes:… Perhaps you have noticed a few things that are obvious…such as the fact that the Middle East is a lot further than the place where the coal or natural gas comes from for your local utility? It’s also more abundant, as well as the fact that other countries around the world, especially those with emerging economies aren’t all bidding to purchase it. I mean, come on…at least make this hard! And these aren’t even scratching the surface as to why your electric bill varies less than the price of gas at the pump.
Also, the price of oil or even refined fuels have NOT ‘doubled’, and it’s not just because of what happens in Libya. Seriously…you do yourself no favors by posting stuff like this. It just makes you look even more ignorant.
No, you didn’t…you didn’t even dodge the question very well. So, basically you are back to a vast international conspiracy theory. That’s wrong too, of course, but it’s funny that you won’t even own up to that.
Do you have a cite that other countries are changing faster than the US wrt hybrid or electric vehicle sales? Because the last time I looked the US was the number one buyer of those vehicle types world wide, though that might be unfair since the EU as a whole might surpass us…I wouldn’t know, thus the request for a cite. Feel free to back that up.
Well, a couple of things here. First off, I’m not the one asserting we need a new progressive movement in the US, nor am I the one saying I have all the answers…answers that have eluded experts in the fields of alternative energy, economics, tax policy, regulation and the other host of things you’ve expounded on. YOU have…thus, the request for you to discuss some of those details. Secondly, I HAVE given you some details…so have others. You’ve mainly handwaved them away. If you don’t want to discuss this aspect of your claims anymore, I can certainly understand that and I agree with your reasoning…it’s clear you don’t understand this stuff, so you should probably retreat back to big picture, more generalized topics with more rhetoric and more bunnies jumping and leave the grimy details behind.
How about those brownouts and power shortages? Pretty neat, ehe? Here’s a news flash…It’s working ‘well’ because YOU GET A LARGE PERCENTAGE OF YOUR POWER FROM OTHER STATES WHO DON’T HAVE THE SAME RIDICULOUS REGULATIONS YOU DO (from memory it’s something like 20-30%, but I could be misremembering). It’s nice when you can go by those ideals, but then use someone else’s electricity (oh, and water), right?
Time will tell if the push for harsher emissions controls wrt automobiles will work out in California. Frankly, you guys aren’t doing so hot, economically (I have a lot of family who live there), and my guess is that you aren’t going to see a large percentage of CA roads being driven on by AEVs or even mainly hybrids anytime soon, regardless of the regs, except by the rich and well to do.
I’m not trying to convince you of anything, kimosabe. I think you are un-convince-able. I’m merely pointing out here that continued attempts to call economics and economics theory the ‘dismal science’ is laughable, when it’s clear you neither know nor WANT to know much about it, how it works, what it does or anything else.
