Saturday, June 07, 2008

Bubble Governance Measures

Here's the real reason I'm not sanguine about imminent collapse.
The Commodity Futures and Trading Commission (CFTC) is investigating trading in oil futures to determine whether the surge in prices to record levels is the result of manipulation or fraud. They might want to take a look at wheat, rice and corn futures while they're at it. The whole thing is a hoax cooked up by the investment banks and hedge funds who are trying to dig their way out of the trillion dollar mortgage-backed securities (MBS) mess that they created by turning garbage loans into securities. That scam blew up in their face last August and left them scrounging for handouts from the Federal Reserve. Now the billions of dollars they're getting from the Fed is being diverted into commodities which is destabilizing the world economy; driving gas prices to the moon and triggering food riots across the planet.

For months we've been told that the soaring price of oil has been the result of Peak Oil, fighting in Iraq, attacks on oil facilities in Nigeria, labor problems in Norway, and (the all-time favorite)growth in China. It's all baloney. Just like Goldman Sachs prediction of $200 per barrel oil is baloney. If oil is about to skyrocket then why has G-Sax kept a neutral rating on some of its oil holdings like Exxon Mobile? Could it be that they know that oil is just another mega-inflated equity bubble---like housing, corporate bonds and stocks-that is about to crash to earth as soon as the big players grab a parachute?

There are three things that are driving up the price of oil: the falling dollar, speculation and buying on margin.
When the regulators are invoked to cool the out of control chain reaction in the reactor core, not only here in the colonies, but simultaneously in the imperial homeland, it doesn't mean that the cavalry is coming to save the day for you and I, oh no. Rather, it means that the quest to extract remaining collateral value from the middle and the bottom has become excessively frenzied to the detriment of too vast a swath of the top. Governance stability is at risk. Things could still very well spiral out of control, however, efforts are being made to bring them back under control which means you may still have enough time to get your own act together and prepare you and yours for the clampdown. It's coming. I just don't think it's coming next week or that TPTB want it to come anytime between now and the election.