@Justinian I,

America's growth busted, too, during the roaring '20s. Though largely due to the mismanagement of the monetary supply by the tinkerings of the modern Federal Reserve system -- still in its infancy -- and further prolonged (not reversed, contrary to popular myth) by the onset of war in Europe and with Japan; even in the face of a slew of brand new government interventions, as proposed in the New Deal, America bounced back.

Now I am hardly trying to draw a parallel between modern China and a hundred year old America, China's economy is far too dependant on interventionism than America's economy possibly ever has been. My point is simply that one can not underestimate the ability of a nation to bounce back in the face of adversity. I do not believe in the notion of "too big to fail," but I do believe in the remarkable ability of the market to stabilize chaos even under the most extraordinary pressures, and even if it is to malicious end (such as filling the state's war chest). Even the Soviet Union lasted almost a century before its oppressive hierarchy could no longer bear its own weight.

As far as energy goes.. the prices are set by the banks. Every drilling dollar that goes into the ground has Finance strings attached. In ALL cases, banks are behind the operations. They levy and hedge pretty much everything. They own both sides of the coin. They control the midstream, the downstream assets, companies etc.

I have been raising money in the energy business now for going on 5 1/2 years. And I have had economic plans turned down by banks left and right, due to "only" having 20% returns on them.. Think about that.. most of us are lucky to get 3-4% returns these days.

And guess who has their strings on literally every bank.. the US government. They have 20% options on all the boards for all these banks. Even legislated laws to require banks to take loans with the strings on them..

So when you complain about oil and gas companies.. understand, that those are men and women who are trying to make a living. Just like autoworkers in Detroit.. or coal miners in West Virginia and Pennsylvania.. They actually make a living on a small margin of the investments.. most of the true profit is going to the banks... which are owned for the most part by the US government..

So cheap oil prices.. mean these "investments" in the oil companies drilling programs require that high rate of return to sustain teh profits teh government needs to sustain all these "give away" programs which generally support incumbents in office.

So, want to make a change.. send no one back.. One term and out. Re-elect people that actually want smaller government etc..

Anyhow.. I could preach all day on this.. but I gotta run!

Key.. you're preaching wivestales..

Energy = $$$

So no matter where it is found, it is generally purchased by consumers at the lowest possible point on a world stage. This speculation you speak of is myth. Oil is bought and sold at hubs. West Texas Intermediate with an set API sells for a price for each standard stock barrel of oil.

Generally the only changes to that are due to transportation of that energy.. (ie midsteam market places)

this speculation your referring to is called hedging. companies will hedge a portion of their production due to banks demanding it.

Banks control these prices to a very large degree, each back has it's own price deck. They are generally updated monthly etc..

If you look at historical prices for each MMBTU for oil/gas over the past 100 years, you will see market flux of prices higher in the winter than the summer. Thus, generally it is the bank's price deck to the oil and gas production companies that are set in place 3-4 years before the oil was ever delivered to the market that this hedging is occuring.

Generally banks always have outs for this sort of thing as well.. for instance if the product fails to deliver a set MMCF of gas or MMBO amount, the company can be seized (case in point Auroa Oil and Gas. they missed their projections by 500 MMCF on one day and the banks seized it. Ie billion worth of assets were seized due to defaults on a loan over a mear 40,000 USD.)

So, trust me, speculation is not the criminal activity here. Don't believe the hype. There is some short selling etc that occurs, but generally that sort of thing is easily negated by the sheer size of the energy market.  And generally those sellign short of loosing their asses and need cash to operate or loose their position in their companies to the banks..

Key...

Your reply only proved to me you know little about energy trading.

So lets do some quick 101 stuff with you (and at the least, will let the rest can follow along with us too) so bear with me if it seems to basic for you.. think we need to establish real common ground here.

So, lets get started shall we.

There are 517 petroleum basins in the world. of we we have only explored 220ish of them. Most of the other basins yet to be explored are deep water basins off shore.

To explore these basins, first, someone has to think they know where to start exploring for it. This is generally the exploration groups role. Wildcat wells, cores, analysis by reservoir engineers of the potential come into play here. This is truely cutting edge geology and geophysics at it's finest. The people that do this work are some of the smartest people on the planet. When i am in the room with guys like this I just shut up.. these people are "WAY SMART". Of course, your average wildcatter is some 70 year old guy, with a twinkle in his eye, and a hunch... generally pretty exciting and eclectic people when you see em at the conventions such as NAPE.

Now this sort of thing takes money. There are angel round investors that get involved at this stage. Generally hedge funds, and prospect funds get involved and they want as much of the piece of pie as possible at this point. The strings involved on angel round deals are mind boggling. But the industry does work.. and generally the percentages of the deals leave enough of a deal on the table these people are interested in continuing.. even one or two percent of a deal for the guys going out to find it is worth it. For instance, imaging if you could get a nickle of every $100.00 bucks Exxon made... The amount of dollars here to an individual or small start up, is intoxicating. I've been to this world the past 5+ years.. I can assure you, if I really told you how intoxicating, you wouldn't beleive me.

Anyhow.. so let's say that one of these hedge funds takes a look at a deal and says, ok, we are interested.. One of the devices these guys use to help assure that they dont loose everything, is to hedge a portion of the energy produced at a certain rate, so they can assure they get a certain return on these invested dollars. This is where the speculation comes into play. What these companies do is then set a sale contract up, based on the bank decks that various banks have. They will run these out 4-5 years. If you follow the NYMEX:NG price you will see that the futures will go out for many years.. that is due to this market demand. But, much of this market is being done for energy that hasn't even been developed yet.

So, now that there is basically an artifical basement set via hedges, the hedge funds etc will then release the drilling and development dollars and the exploration companies then basically get out there and begin drilling wells. It takes a one to three weeks to drill and develop the average well. This doesn't even include the gathering and processing systems to have finished crude to take and sell to the refineries. Again, the standard unit of measure here is the Stock Barrle of oil. It is traded thru hubs, such as the henry hub, or various city gates such as chicago or new york. But the one most people follow is the West Texas Intermediate price. It's basically the price of oil in Houston.

It works it way outward from there, throughout the world, and prices fluxuate accross the globe as eneregy is in demand by all the major countries in the world. China, India, Britian, France, Japan, Germany etc being the major inporters or that energy. This energy as it transits the globe is literally in a state of economic war. The victors are the countries with ports that the ships pull into. This is entirely a supply and demand business. Right now, the supply is less and less every day.. the easy to get fruit has been picked many many years ago. Saudi Arabia is long past it's peak.. as is most of the OPEC countries. They are being sucked dry, which is why they are trying to get every possible dollar out of hte ground while they can.

So, anyhow, as this energy enters ports, whether is it Houston, Tokyo or Hong Kong.. it must then be refined, and transported to the various markets. All these things, espeically NGL plants right now are massively expensive. So, again, teh banks are here, with their strings.. taking and soaking up every dollar they can. So, these "war" thing is total bunk that you mention. Would an owner of a ship worth a few billion that carriers 7 million barrels of oil worry about saving $1 per BO.. and possible risk loosing that investment in a war zone? think about it.. 7 million saved for the risk of billions? No, they wont. Thus, the only way to export that oil is if there is security in those areas.

This is where freedom of the seas comes in, and all world governments are involved. So again, to say speculation.. the governments generally own and control the banks.. and such as I presented above, the US government owns on average 20% of our contrie's banks.. either as a partner or in some cases the controllign party. So, free your mind right now. The truth is the governments of the world, through it's management of how it controls the "freedom of the sea" can manipulate the price of oil etc..

Ie.. anyone that is speculating... is risking generally everything based on what they think these governments will do...that or they have people on the payroll who will provide information or influence policy decisions..

Thus, your wars? Are literally a tool... is it the oil companies that are criminal here? They are essentially also pawns in this game.. The works in that industry are basically mom's and dads.. the people that own them are the stock holders, which generally are the 401k plans and IRA funds that own position in these companies..

Anyhow.. this is 101 stuff. .I can advance it more.. but, if you look at the framework presented here.. you will see why its a myth, this whole speculative market... these people know 4-5 years out what is going ot happen, and the only real fluxuations to the market, is simply a drive for supply and demand.. ie.. capitalism.

So.. Key.. you follow me.. are you ready to discuss this some more still?

Quote: We're just having problems discussing what is fully in speculative trading, where i believe the problem and fault lies.  The Oil and Gas companies fully know what speculative trading is, and do have their hands dirty inside of such.  After all, they're the one's sending the reports of all the problems in these other countries, which may effect supply.

You fail to realize the truth. I tried to present that. You do not understand the business like you think you do. I have raised 800 million in the past several years for oil and gas exploration. Have some faith I am not here to boost my ego, but to educate. As far as your comment on my education etc..There are few professors in the world that have my experience tbh. I wasn't even considering you would take that path. Thus I will overlook your attempt at trolling me. It would help if you read teh fact I was presenting 101 level stuff, and did ask you overlook. It was also provided as there may be other people who would want to follow along..

Thus, you seem hungry enough to discuss this further, so we can move into a few more advanced aspects of things.. but, I ask you to please keep it respectful.

Now, back to the topic, let me re-emphasize this:

- The ones that demanding and providing this hedging and speculation are banks, hedge funds or their derivatives. Exploration companies do not speculate. They are forced to hedge. It's part of the strings attached to the money. The strings are controlled by the banks, and regualted by governments. Some companies will try to minimize the need for hedges by going with various types of financing, such as mezzanine financing (see reference link below)..

- The price of oil once again is dominantly the result of the "energy war" where companies and countries are fighting for the best price they can get for energy. With China and India rapid expansion into the energy markets, this is really the major factor that is driving the price of oil atm. The fact they are also sitting on a vast amount of US dollars, to stablize their currency, also lends to this.. so multiple exchange rates of currencies, and other commodities also have a pretty significant impact. Much greater than speculators.

Now, that said, I am not going to devalue the impact the shorts can have on the marketplace.. but their effects are exactly that.. short lived. Anyone with a head on their shoulders will not respond to market action by the shorts, except perhaps to buy a devalued commodity. The market place as presented by the press is aimed at selling advertising. Don't kid yourself that they are presenting the whole truth and nothing but the truth.

Anyhow, when your ready for some 201 level stuff.. hollar.

http://www.investopedia.com/terms/m/mezzaninefinancing.asp

In the us

Truth?  Oh Nai...no no no no.  You don't have truth, you have individual perspectives.  You have your perspective, I have my perspective, doesn't matter what the actual truth of the event is.  Because we see a fire, one person says it was lit by a match, and the other says it was lit by a cigerette lighter.  The fire is the truth, but how it was set, is seen as to different objects.  That's perspective.  That's not truth. 

As for the markets, most of the crap hit the fan during 2008.  Between 2006-2007, there was a major push by every major conglamerate to buy up every other small company.  Mergers were happening every day of every hour for nearly 2  years.  Hell the company I was in, was bought out and merged with a bigger company, that bigger company sold out to a larger company.  We're now owned by proxie through Fidelity.  You know the insurance people.  They have their little chubby fingers in everything.  From banking.  To housing.  To oil futures.

2008 hit.  The housing bubble burst.  Unfortunately due to some dirty banking by idiot that had one of the largest pyramid schemes known to man, hit the front papers.  And then all hell broke loose.  Housing construction literally collapsed overnight, there was a small run on the banks as it turned out, all the construction being made was from bank loans, which the majority of construction company's could not pay off.  Banks foreclosed, many businesses went bankrupt.  The banks could not fully regain their losses.  Unfortunately what they did not foresee was that most of the labor at the time for manufacturing in the united states was housing manufacturing.  When those companies went out of business, they layed off their workers.  Those workers who were no longer earning profits, could no longer afford payments on their homes or rentals.  Guess what, they lost those homes to bank foreclosures.  All the sudden all those construction workers who were buying groceries or going out boozing up on the town, were no longer spending VAST fortunes of money....the impact hit the public sector like a tidal wave.  Other businesses that helped support those workers all the sudden had their cash flow crippled.  They too started to layoff workers, because the cash flow wasn't coming in....domino's.  Not the pizza, don't be stupid and funny.  Here's the bad news.  In 2009 the ectrical and gas company's decided to simutaniously raise prices of energy 40-60%.  This helped accelerate the foreclosures of many homes today because...nobody could afford to pay all the bills.  It's either have a house and freeze to death and not be able to use the stove to cook food...or move in with friends or family.  We'll get to that story later, on how well the grouped homes crisis is going.

And then sometime later....we had the unimaginable happen during the housing bubble crisis...we had a BLOWN OUT WELL.  Yes, The BP well blew out and we had one of the worst ecological disasters within territorial waters of the United States, worse than the Exxon Valdez oil spill, (which also had help shoot up the prices of oil, and the oil had already been purchased...so why would gas prices have shot up?  Because it was never delivered to port.)   Millions of gallons of oil lost to the sea, turning into tar balls, and oil sludge on our beaches and ocean floor.  Gas prices then went up pretty good, even though it was "nobody's fault".  After the report on the explosion, and finger blaming, Wall Street wasn't impressed and shot oil prices up to a high of $180 dollars per BARREL! WOOOOT!  Cause and effect.  Whatever bad thing happens, the price goes up...and usually stays up.  After all current gas prices are now locked just below $4.00 a gallon, of course if it's Diesel it's beyond $4.00 a gallon.  That's todays price by the way.   Oh by the way, after the well blew out, prices for food went up $2.00 for every item on the shelf on average.  Anything that was $1.00 in price went up to $2.50 to $3.00  .    Hell poptarts went from $2.99 a box to a whopping $5.99...and it's NOT EVEN A DAMN SEA FOOD ITEM...but a blown well, all those fishies sent ripples to the super market...and they had to make up the LOSS in seafood revenue, by raising prices of goods on all...other ...items.

So now we have millions of homes foreclosed on with no one living in them.  Construction work on NEW HOMES which usually leads the way to pull the country out of the recession is not working.  Because the banks aren't handing out loans to people anymore.  They decided to put a noose around the rest of america, for the stupidity of Construction Businesses who decided to treat houses as if they were Tradeable Commmodities.  That's right lady's and gentleman Houses were no longer a necessity as they once were.  They were like Orange Juice Futures and Oil Futures.  They had VALUE.  Hundreds upon hundreds of thousands...no....millions of dollars worth of value to them....

...well....not anymore.  Now their empty worthless pieces of trash that are now owned by...the banks.  And certain Real Estate Agencies trying to tell everyone, that Houses are like Gold, they increase in value always.  Well we turned that truth into a lie now didn't we    Perspectively speaking, Real Estate Agency's call it Home Equity and Home Value.  I call it ...worthless pieces of empty crap.  Speculatively speaking, according to Wall Street, houses were supposed to increase in value no matter who bought or sold the property.  Unfortunately federal law states that if you don't pay your property taxes each and every year, it's no longer your property, and is remanded back to the state, or federal government.  I bet many of you homeowners didn't know that piece of law.

So. Let's take a look at it.  Surpluss of housing.  Bank Foreclosures.  Increase in energy costs due to the misfortunes of a few historic events.  Food prices skyrocketing.

And the people right behidn the scenes in all these events...were...Speculative Traders.  Who reaped the most rewards...when the housing bubble burst.  When energy prices shot up.  When millions of workers were put out of jobs.  Well that would have to be the market traders.

Oh, you want to talk about China and India?

"What's behind the disconnect between strong corporate profits and a weak labor market? Several factors:

[Qoute from Key]

I percieve the problem to be The United States Government not passing legislation in illegalizing the use of Speculative Trading, which I believe is stopping the recovery for our country.  It was Housing Traders that created the Housing Market Crisis.  It was Oil Speculative Traders shouting OHMYGOD THERE IS A WAR, THE OIL IS IN JEAPOARDY LETS RAISE PRICES, and low and behold, the prices went up.  (THe prices locked as soon as Obama gave orders to have released 2 million barrels of oil a day for 30 days.)...the price went down a single nickel for gasoline at the pumps...and then froze.  Prices on the west coast have not changed, NOT changed for 5 straight weeks.  Chances are if those barrels were not released, price of oil would have been steadily going up and would be at $4.00-$4.50 right now nation wide [END QUOTE]

Key - I wanted to seperate this point you made and openly credit you for your comments. I think you are close to the mark, though I believe there is more that needs to be done. Some aspects of shorts are healthy to the economy, so to completely cut it out is actually a step back. But it is worth looking at further. There is a solution here.. it will take some time to figure it out though. Frankly, I would like to see some regulations on the lending, as much as I anything.. but, again, even that isn't the total solution.

In conclusion, that point you made is really thread worthy, even seperate from this, as it is not specific to the "US DEFEATS ITSELF" entirely..