Blog Entry

People on Wall Street really are stupid!

Posted on: July 15, 2008 3:55 pm

I'm sure most people who know me, know I don't blog very often. Back at the end of April I posted a blog asking if people on Wall Street were stupid. Reading today shows that the answer to that question is YES! Here is some of what I wrote in April:

The topic of interest to me today? The price of gas. I doubt I will find many people here who don't think the price is too high. As of this morning, the cheapest gas I can find is $3.59/Gallon. That is just rediculous. I read articles on saying that due to the weak dollar, investers are putting money into commodities like gas and oil as a hedge against inflation. I am not an economics expert, but this seems to be a really stupid way to think. Let's see, I am worried about inflation, so I am going to contribute to running up the price of gasoline. Now ordinary folks like myself have to spend more on gas, giving me less money to spend on other things. Well this is going to hurt the overall economy because I am not spending as much on stuff I don't really need as I used to so manufacturers and store owners will suffer. Additionally, to get products to the store, you need what? Trucks! Last I checked trucks use fuel to run them. Price goes up, well heck now it costs more to get stuff to the stores. You think retailers are just going to take a lower profit margin? Nope, the price of food and clothing, and other stuff will have to go up to cover this new expense. Prices go up, last time I checked that was called inflation. So much for that hedge against inflation.

Reading on that oil prices dropped $6.45 per barrel based on comments made by the Fed Chairmen. Here is some of the article:

On Tuesday morning, Federal Reserve Chairman Ben Bernanke warned that high energy prices have helped to limit the purchasing power of U.S. households. High energy costs will remain a drag on the U.S. economy for the rest of the year, Bernanke told the Senate Banking Committee Tuesday.

That could result in businesses pushing a greater percentage of their high fuel and commodity costs through to consumers, he warned.

Immediately following Bernanke's speech, prices dropped more than $9, sinking below $136 a barrel, before recovering some.

"There's more demand destruction than people first perceived," said Neal Dingman, senior energy analyst at Dahlman Rose & Co. The weakened dollar, which Bernanke named as one of the reasons Americans can't spend as much, has been blamed for much of crude's runup.


Investors have been buying oil and other commodities to hedge against inflation, but that behavior may be changing as many begin to see it weighing on demand.

Amazing, it took comments from the Fed Chairman that essentially state the same thing I did 3 months ago before they got it. I thought these guys were supposed to be smart!
Category: General

Since: Aug 16, 2006
Posted on: July 18, 2008 6:15 am

People on Wall Street really are stupid!

October of 1987, wasn't that when the stock market dropped drastically in one day, causing a bunch of panic? That was a big one day event, and if you chart that period, it looks really bad, but if you pull back that chart to look at say 1980 - 2008, you would barely notice the drop. Hopefully you are correct though, and the bubble for oil will pop, just like the housing market, and .com stocks did. When something is selling for much more than it is actually worth, eventually it will go to a normal level.

Since: Sep 23, 2006
Posted on: July 17, 2008 7:49 pm

People on Wall Street really are stupid!

There will be another oil glut....the Market is feeling the heat right now, people are driving way less.

Witch says October is the time where it all comes to a head, a crash if you will....does ANYBODY remember october 1987?

Since: Sep 10, 2006
Posted on: July 16, 2008 5:48 pm

People on Wall Street really are stupid!

I think you misunderstood me Mikey, i am not for socialism (yet ;-)). I am just against the way that that some of us, mainly the those running big buisnesses, care only about how much money they can stuff in their pockets at the expense of the common people. Everyday in this country the rich keep getting richer at the expense of middle class and lower class, and frankly they don't care. But in the end  I think they will, as they are now learning, but it may end up being a little too late as the driving up of gas prices is causing our buisnesses to sell off to foreign countries, as well as things like our toll roads and toll bridges, even our banks are selling our loans off to foreign countries.

The same is going on with those who are in gas speculation, and that were in soy speculation earlier. These people have driven up the price of oil to stuff money into their own pockets, but are hurting the common people. These people are not socially responsible. However, they will soon realize that they can earn billions and billions of dollars, but it will mean nothing when each dollar is worth very little in the global market because they have drivent he price of the dollar down to little. These people need to understand that capitalim needs to not neglect social responsibility, however, it seems that in today's America it does.

Since: Aug 15, 2006
Posted on: July 16, 2008 11:42 am

People on Wall Street really are stupid!

brnelson, There are a few making it rough for everyone else but it usually straighten itself out.  But what the europeans hate about us is that over 90% of our population is consider middle class not 30 to 40%.  Socialism is not the answer, the redistribution of wealth will only do one thing, take money out of mine and your pockets to pay for those who don't won't to work.  You can say anything you want but look at the tax shelters the Rich have and those will not go away.  Why would a politician take money out of his pocket when he can just tax the middle class a little more? 

No, what needs to happen and I heard this is being stalled somewhere in congress, by both parties, is that those speculators need to have to actually take delivery of the oil they are bidding on.  Right now they drive up the price but they do not have to take delivery of the product first, they sell it to the oil companies and they take delivery.  IF you had to take delivery before you resold it, it would drive the speculators out of the market and then the price would drop. 

As for trucking I have noticed a significant drop in the number of trucks on the interstate the past couple of months, and who can blame them.  when it is costing $1000.00 to fill up that will hurt a lot of small businesses.  Hopefully, with the President asking congress to allow offshore drilling again and the building of new refineries then the prices will start a downword plunge and we will see reasonable price gas once again.  But mark my words if a certain party gets in the white house you will see prices that will sky rocket and you think the problems lies with the Republicans?  Let's hope we won't have to find out about the other side, it could be devastating.

Since: Sep 10, 2006
Posted on: July 16, 2008 3:47 am

People on Wall Street really are stupid!

Section, unfortunately we are seeing capitalism at its worst, which is what i think Europeans call Capitalism that neglects social responsibility, which is one of the reasons that America is so hated in this world. I think the whole gas price situation is a great example of captitalism that neglects social responsility because there are people out there who are getting rich at the expense of the regular people getting poor through raising up the the cost of oil the speculation share holds. But hey, what do those people care? they are getting richer, while everyone else is getting poorer.

However, they are just now realizing that all though they are getting more money through the rising cost of oil speculation, that each dollar they earn is not worth as much as it once was, because of this prices of oil will most likely come down over time and I bet we will once again see 2 dollar oil, which I have been more than ok with because for about 10 or 15 years gas prices seemed to hoover around a dollar and never rose with inflation, which caused us to use more oil. So yeah, to me I will be happy for oil to be 2 dollars again.


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