What a $200/Barrel World Looks Like

Yes, I would hope so. I know Henry (It is Blodget, not Blodgett, by the way). He writes for Slate and a bunch of business publications now. Once again, give me SPECIFICS about this scenario you are talking about. What exactly does what Henry Blodget did with tech stocks have to do with the price of oil? Throwing out unrelated things doesn't make a point, Boom. I've heard of all the Robber Barons, Michael Milken, Ivan Boesky and lots of other people guilty of security fraud. With that out of the way, explain how Goldman, or anyone else, is driving up the price of oil (not soaring demand and the oil-producing countries limiting how much they pump) and once you can explain that, explain how they are making money illegally from it.

Sorry. The tech bubble in the late 90s, early 2000s, isn't even remotely related to what is going on in the world oil market right now. Oil is a tangible commodity. Tech stocks without earnings weren't.

Either way, "Did you ever hear of Henry Blodget?" isn't an answer. Say something substantiative, please.

 

Boom, once again, those are completely unrelated, and your post didn't make a point.

What Henry got called on was what was incredibly prevalent on Wall Street during the late 90s. There is supposed to be a church and state between equity analysis and investment banking... kind of like the wall that is supposed to exist between ad and edit in journalism. That wall eroded to the point that equity analysts were being called upon to help the investment banking businesses by putting buys on stocks they normally wouldn't have recommended, and issuing higher price targets than they should have. Eliot Spitzer, as an AG, made Henry a whipping boy for this because Henry was brash and had made his name on the highest profile stocks -- the eBays and Googles.

But this was going on up and down Wall Street and it wasn't anything people didn't know. No one was buying anything based on the recommendations of Henry Blodget or any other equity analyst. The worst was probably Jack Grubman, the telecom analyst at Smith Barney. Henry was a lamb compared to what guys like that were doing. Henry was mostly a young guy who at first got caught up in the tech hype and got addicted to seeing his name in the headlines. He realized he could make a name for himself by predicting outlandish price targets, but by and large, he really believed in at least SOME of the Internet stocks he was hyping. And if you had listened to him at one point and loaded up on Amazon.com stock (what first put him on the map), you would have made good money by riding the wave and selling at the right time.

After he moved to Merrill, and the pressure to live up to his lucky streak made him cut corners, Henry was shilling for the investment bankers. But EVERYONE was doing it. He was was just singled out.

All of that said... Again... That is a very clear case of something that was happening at one point in time (something the SEC has addressed) and it really only applied to equities -- stocks. The investment bankers wanted to take companies public. And they were promising the companies they were trying to woo the business from that their research side would hype the stocks, as a way to get the business. It was when the wall between investment banking and what is supposed to be independent research eroded.

It has NOTHING to do with the world oil market today. There is no investment banking when it comes to oil. Oil isn't a publicly traded company, it is a commodity. And it is a fixed supply commodity, being controlled mostly by a handful of oil-producing countries.

I can spell out the supply factors in the oil market and I can spell out what is happening to worldwide demand. I have over and over again. And it amply explains why the price of a barrel of oil has been increasing and is going to continue to increase.

Now please, explain how Goldman Sachs is manipulating the oil market and how anyone is making money illegally from it?

 

Boom, I am *begging* you to short trade oil futures contracts. And do it in the ballsiest way possible. On margin, going REALLY short...

Oil was near $10 a barrel a few years ago and has steadily increased by dribs and drabs. It is at $135 a barrel now.

I will bet it tops out somewhere over $200 a barrel within the next two years, but what do I know?

So I am *begging* you to go short on it. In fact, I think you should be betting on $50 a barrel by this time next year. Think about all the money you are going to make. They are just manipulating the price artificially, as you say, so this can't last. It will drop back down to $50 in no time. PLEASE, trust your George Soros tea leaves on this one... You'll make a fortune!

 

Boom, once again... What does that have to do with the price of tea in China? I know what Goldman did. They hedged in the mortgage markets to limit their losses. And when the subprime market collapsed, they were protected in a way that firms like Bear Stearns weren't. Since they were exposed nearly equally to the subprime market as they stood to gain by hedging, it stands to reason that they weren't manipulating anything. Either way, they were on a path to break even. The best guess is that someone actually foresaw the collapse and took out insurance to protect their institutional clients. Because Goldman didn't make a fortune on this. They merely survived.

Now for the 100th time. What does that have to do with an analyst you seemed to allege is trying making predictions to drive up the price of oil somehow? And how do his predictions actually make the prices come to fruition? And can you REALLY manipulate a market as vital to economies as the world oil market this long and keep driving up the price indefinitely? I mean, first it was $50 a barrel. Then $70. And $90. And then $100, and everyone freaked out. And then $120. And now $135 and the futures market having naturally built in a long-term scenario that suggests prices are going much higher. When does this artificially induced bubble pop? Wasn't 2005, 2006 or 2007. Not going to be 2008.

So who is the guy or guys (other than the Saudi Arabians, the natural answer) who are somehow duping people into paying $135 a barrel for a commodity that market factors make only worth $50?