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upnorth

Speculation and the high price of Oil.

133 posts in this topic

You want to know what a short fishing trip is a costly endeavor? It has been a slow afternoon so I did some digging on Google and found this at the top of the list. It even quotes a report for the US Senate that didn't get acted upon. It is a bit of a long read, but pretty educational.

‘Perhaps 60% of today’s oil price is pure speculation’

by F. William Engdahl

Global Research, May 2, 2008

The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?

First, the crucial role of the international oil exchanges in London and New York is crucial to the game. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil—West Texas Intermediate and North Sea Brent.

A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex President, James Newsome, sitting on the board of DME and most key personnel British or American citizens.

Brent is used in spot and long-term contracts to value as much of crude oil produced in global oil markets each day. The Brent price is published by a private oil industry publication, Platt’s. Major oil producers including Russia and Nigeria use Brent as a benchmark for pricing the crude they produce. Brent is a key crude blend for the European market and, to some extent, for Asia.

WTI has historically been more of a US crude oil basket. Not only is it used as the basis for US-traded oil futures, but it's also a key benchmark for US production.

‘The tail that wags the dog’

All this is well and official. But how today’s oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of “paper oil.”

With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.

Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the “tail that wags the dog.”

A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”

What the Senate committee staff documented in the report was a gaping loophole in US Government regulation of oil derivatives trading so huge a herd of elephants could walk through it. That seems precisely what they have been doing in ramping oil prices through the roof in recent months.

The Senate report was ignored in the media and in the Congress.

The report pointed out that the Commodity Futures Trading Trading Commission, a financial futures regulator, had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation. The US Commodity Exchange Act (CEA) states, “Excessive speculation in any commodity under contracts of sale of such commodity for future delivery . . . causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity.”

Further, the CEA directs the CFTC to establish such trading limits “as the Commission finds are necessary to diminish, eliminate, or prevent such burden.” Where is the CFTC now that we need such limits?

They seem to have deliberately walked away from their mandated oversight responsibilities in the world’s most important traded commodity, oil.

Enron has the last laugh…

As that US Senate report noted:

“Until recently, US energy futures were traded exclusively on regulated exchanges within the United States, like the NYMEX, which are subject to extensive oversight by the CFTC, including ongoing monitoring to detect and prevent price manipulation or fraud. In recent years, however, there has been a tremendous growth in the trading of contracts that look and are structured just like futures contracts, but which are traded on unregulated OTC electronic markets. Because of their similarity to futures contracts they are often called “futures look-alikes.”

The only practical difference between futures look-alike contracts and futures contracts is that the look-alikes are traded in unregulated markets whereas futures are traded on regulated exchanges. The trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron and other large energy traders into the Commodity Futures Modernization Act of 2000 in the waning hours of the 106th Congress.

The impact on market oversight has been substantial. NYMEX traders, for example, are required to keep records of all trades and report large trades to the CFTC. These Large Trader Reports, together with daily trading data providing price and volume information, are the CFTC’s primary tools to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. CFTC Chairman Reuben Jeffrey recently stated: “The Commission’s Large Trader information system is one of the cornerstones of our surveillance program and enables detection of concentrated and coordinated positions that might be used by one or more traders to attempt manipulation.”

In contrast to trades conducted on the NYMEX, traders on unregulated OTC electronic exchanges are not required to keep records or file Large Trader Reports with the CFTC, and these trades are exempt from routine CFTC oversight. In contrast to trades conducted on regulated futures exchanges, there is no limit on the number of contracts a speculator may hold on an unregulated OTC electronic exchange, no monitoring of trading by the exchange itself, and no reporting of the amount of outstanding contracts (“open interest”) at the end of each day.” 1

Then, apparently to make sure the way was opened really wide to potential market oil price manipulation, in January 2006, the Bush Administration’s CFTC permitted the Intercontinental Exchange (ICE), the leading operator of electronic energy exchanges, to use its trading terminals in the United States for the trading of US crude oil futures on the ICE futures exchange in London – called “ICE Futures.”

Previously, the ICE Futures exchange in London had traded only in European energy commodities – Brent crude oil and United Kingdom natural gas. As a United Kingdom futures market, the ICE Futures exchange is regulated solely by the UK Financial Services Authority. In 1999, the London exchange obtained the CFTC’s permission to install computer terminals in the United States to permit traders in New York and other US cities to trade European energy commodities through the ICE exchange.

The CFTC opens the door

Then, in January 2006, ICE Futures in London began trading a futures contract for

West Texas Intermediate (WTI) crude oil, a type of crude oil that is produced and delivered in

the United States. ICE Futures also notified the CFTC that it would be permitting traders in the United States to use ICE terminals in the United States to trade its new WTI contract on the ICE Futures London exchange. ICE Futures as well allowed traders in the United States to trade US gasoline and heating oil futures on the ICE Futures exchange in London.

Despite the use by US traders of trading terminals within the United States to trade US oil, gasoline, and heating oil futures contracts, the CFTC has until today refused to assert any jurisdiction over the trading of these contracts.

Persons within the United States seeking to trade key US energy commodities – US crude oil, gasoline, and heating oil futures – are able to avoid all US market oversight or reporting requirements by routing their trades through the ICE Futures exchange in London instead of the NYMEX in New York.

Is that not elegant? The US Government energy futures regulator, CFTC opened the way to the present unregulated and highly opaque oil futures speculation. It may just be coincidence that the present CEO of NYMEX, James Newsome, who also sits on the Dubai Exchange, is a former chairman of the US CFTC. In Washington doors revolve quite smoothly between private and public posts.

A glance at the price for Brent and WTI futures prices since January 2006 indicates the remarkable correlation between skyrocketing oil prices and the unregulated trade in ICE oil futures in US markets. Keep in mind that ICE Futures in London is owned and controlled by a USA company based in Atlanta Georgia.

In January 2006 when the CFTC allowed the ICE Futures the gaping exception, oil prices were trading in the range of $59-60 a barrel. Today some two years later we see prices tapping $120 and trend upwards. This is not an OPEC problem, it is a US Government regulatory problem of malign neglect.

By not requiring the ICE to file daily reports of large trades of energy commodities, it is not able to detect and deter price manipulation. As the Senate report noted, “The CFTC's ability to detect and deter energy price manipulation is suffering from critical information gaps, because traders on OTC electronic exchanges and the London ICE Futures are currently exempt from CFTC reporting requirements. Large trader reporting is also essential to analyze the effect of speculation on energy prices.”

The report added, “ICE's filings with the Securities and Exchange Commission and other evidence indicate that its over-the-counter electronic exchange performs a price discovery function -- and thereby affects US energy prices -- in the cash market for the energy commodities traded on that exchange.”

Hedge Funds and Banks driving oil prices

In the most recent sustained run-up in energy prices, large financial institutions, hedge funds, pension funds, and other investors have been pouring billions of dollars into the energy commodities markets to try to take advantage of price changes or hedge against them. Most of this additional investment has not come from producers or consumers of these commodities, but from speculators seeking to take advantage of these price changes. The CFTC defines a speculator as a person who “does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes.”

The large purchases of crude oil futures contracts by speculators have, in effect, created an

additional demand for oil, driving up the price of oil for future delivery in the same manner that additional demand for contracts for the delivery of a physical barrel today drives up the price for oil on the spot market. As far as the market is concerned, the demand for a barrel of oil that results from the purchase of a futures contract by a speculator is just as real as the demand for a barrel that results from the purchase of a futures contract by a refiner or other user of petroleum.

Perhaps 60% of oil prices today pure speculation

Goldman Sachs and Morgan Stanley today are the two leading energy trading firms in the United States. Citigroup and JP Morgan Chase are major players and fund numerous hedge funds as well who speculate.

In June 2006, oil traded in futures markets at some $60 a barrel and the Senate investigation estimated that some $25 of that was due to pure financial speculation. One analyst estimated in August 2005 that US oil inventory levels suggested WTI crude prices should be around $25 a barrel, and not $60.

That would mean today that at least $50 to $60 or more of today’s $115 a barrel price is due to pure hedge fund and financial institution speculation. However, given the unchanged equilibrium in global oil supply and demand over recent months amid the explosive rise in oil futures prices traded on Nymex and ICE exchanges in New York and London it is more likely that as much as 60% of the today oil price is pure speculation. No one knows officially except the tiny handful of energy trading banks in New York and London and they certainly aren’t talking.

By purchasing large numbers of futures contracts, and thereby pushing up futures

prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy even more oil and place it in storage. A refiner will purchase extra oil today, even if it costs $115 per barrel, if the futures price is even higher.

As a result, over the past two years crude oil inventories have been steadily growing, resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices.

Compelling evidence also suggests that the oft-cited geopolitical, economic, and natural factors do not explain the recent rise in energy prices can be seen in the actual data on crude oil supply and demand. Although demand has significantly increased over the past few years, so have supplies.

Over the past couple of years global crude oil production has increased along with the increases in demand; in fact, during this period global supplies have exceeded demand, according to the US Department of Energy. The US Department of Energy’s Energy Information Administration (EIA) recently forecast that in the next few years global surplus production capacity will continue to grow to between 3 and 5 million barrels per day by 2010, thereby “substantially thickening the surplus capacity cushion.”

Dollar and oil link

A common speculation strategy amid a declining USA economy and a falling US dollar is for speculators and ordinary investment funds desperate for more profitable investments amid the US securitization disaster, to take futures positions selling the dollar “short” and oil “long.”

For huge US or EU pension funds or banks desperate to get profits following the collapse in earnings since August 2007 and the US real estate crisis, oil is one of the best ways to get huge speculative gains. The backdrop that supports the current oil price bubble is continued unrest in the Middle East, in Sudan, in Venezuela and Pakistan and firm oil demand in China and most of the world outside the US. Speculators trade on rumor, not fact.

In turn, once major oil companies and refiners in North America and EU countries begin to hoard oil, supplies appear even tighter lending background support to present prices.

Because the over-the-counter (OTC) and London ICE Futures energy markets are unregulated, there are no precise or reliable figures as to the total dollar value of recent spending on investments in energy commodities, but the estimates are consistently in the range of tens of billions of dollars.

The increased speculative interest in commodities is also seen in the increasing popularity of commodity index funds, which are funds whose price is tied to the price of a basket of various commodity futures. Goldman Sachs estimates that pension funds and mutual funds have invested a total of approximately $85 billion in commodity index funds, and that investments in its own index, the Goldman Sachs Commodity Index (GSCI), has tripled over the past few years. Notable is the fact that the US Treasury Secretary, Henry Paulson, is former Chairman of Goldman Sachs.

F. William Engdahl is an Associate of the Centre for Research on Globalization (CRG) and author of A Century of War: Anglo-American Oil Politics and the New World Order. He may be contacted at info@engdahl.oilgeopolitics.net

1 United States Senate Premanent Subcommittee on Investigations, 109th Congress 2nd Session, The Role of Market speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat; Staff Report, prepared by the Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs, United States Senate, Washington D.C., June 27, 2006. p. 3.

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I eluded to all of this in an earler post.

like I said when all this catches up with the speculators it will bilk billions out of US pensions and make enron look like a 3 year olds piggy bank.

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What is maddening the powers at be, politcal and special intrest groups or intvestment groups , have found ways to divert the attention away from the problem speculation and futurs market cause. They stand to profit so it is in there intrest to put out bogis solutions and causes.

Could it be, One solution is to drill more or go to recovering oil from shale, when it has been said it would take years and copious amounts of money recover this oil. This is a divertion tactic used by the ones that stand to profit if the speculating and futurs market goes unnoticed and unfixed. this divertion is also used by others to open the doore to more profits without effecting the price of oil one bit.

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Also, To those that read the report that "upnorth",graciously offers, this report was given in the year 2006 and look at where we are now. This to me is no coincidence it is a pretty good explanation how oil prices have increased.

It is time our senators and representatives recognise this and put legislation out there that will fix this. No more sweeping it under the rug

I am sure it will be vetoed but at least it will be in play for the next president that comes to office

Lets have a canidate that has the guts to use this as a platform. Rather than one that says drill or the other that says conserve and invest in alternatives, it not about that its how we are getting screwed by a market that is an entity on its own

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What is maddening the powers at be, politcal and special intrest groups or intvestment groups , have found ways to divert the attention away from the problem speculation and futurs market cause. They stand to profit so it is in there intrest to put out bogis solutions and causes.

Could it be, One solution is to drill more or go to recovering oil from shale, when it has been said it would take years and copious amounts of money recover this oil. This is a divertion tactic used by the ones that stand to profit if the speculating and futurs market goes unnoticed and unfixed. this divertion is also used by others to open the doore to more profits without effecting the price of oil one bit.

That is the "Wag the Dog" they are speaking of. I have been saying "Oil Shortage" is a crock of you know what for a long time. Cripes the the oil reserves are higher than they have been in over 8 years. Same with that the only way to lower the price of gas is to use less gas, we have been using less and the price has still gone up.

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After thinking about "wag the dog" I got what you were saying. I needed to get it down and talk it out to myself to get it to sink in and hopefully others will talk along.

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I think the high prices are intended to remain high as to make us do things that will make the corporate power centers tons of money. ANWAR, offshore, Shale. Its a scam to get tax payers to foot the bill for private companies to access energy sources.

Its kinda like corporate welfare. Same thing we did in the 70's.

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I had to laugh. I noticed while reading this post there is a banner on the right side "Who's to blame for $4 gas?" with pictures of a Middle-eastern fellow, the BP logo and GW.

Thanks for posting the article upnorth. I knew the speculators were driving up the price but I was fairly ignorant to the amount they have driven it up. That is amazing. Yet another example of how the common/working man is getting hosed frown

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Yea, its a scam as you say, I didnt no much about oil from shale and boy did they make it sound like its easy and a god send to get oil out of shale. That was laughable.

Saw report on what it takes to get the oil from shale from the mountains. For starters they have heat the shale up to 650 degrees while its still in ground. This takes enormous amounts of electricity to do this.

Then it takes 3 BARRALS OF WATER to 1 BARREL OIL to recover this commodity. This is in an area where water is scarce and is a nasecity to farmers, cattelman and cities all the way from east of Glacier national park down and west to Sacramento Califonia. Where are the gonna get the water for 100000000 barrells of oil a day thats 300000000 barrels of water a day used.

And they have yet not figured out how not to contaminate the ground water that is there...

Oil from shale located in the mountains will not be a feasble option unless they decide to just blow the tops off the mountains to get to the shale. It cost to much enviromentally and financially. Yea sure it maybe cost effective if oil prices rise to $200 barrell and the dollar gets stronger and inflation revearses by 20%

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The way things are with Speculation, drilling for oil, accessing shale oil or getting OPEC to pump more is just going to allow the speculators to buy more oil and make more money, it won't bring down the price this is not a normal supply and demand issue. Building more refineries is not going to help either. They need to close down those loopholes that were found that allow this to happen.

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Oil, enron, S&L banks, housing...

There are so many examples of scams or whatever you want to call it where the consumer and taxpayer get the shaft for the greed and neglegence of others. The govt comes in and fixes the problem after the money has been made and the buble bursts leaving you know who to pay the tab while the big shots walk away.

Ive said over and over the price, of oil and housing, is based on speculation, and the reason is that the government has allowed these complex accounting practices and trading practices to go on and on. They do not stop they just move to the next project. i wonder what theyll come up with next.

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After oil burst into flames the big investors need somewhere to put there money so my guese would be pharmaceutical research and development. Any other speculation where they will speculate

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Here is some fall out from the high prices. Below is an article from the Duluth News Tribune.

Quote:
High gas prices have crimped family vacations, made commuting expensive and led to grumbling at every fill-up.

Now, they’re making it more difficult for hundreds of senior citizens and disabled people around Duluth to get meals and companionship.

Officials involved with Meals on Wheels, a free program that arranges for volunteers to deliver meals to the homes of senior citizens and people with disabilities, say high gas prices are diminishing their ranks.

And that’s too bad, because about 360 people around Duluth look forward to the volunteers’ visits and food they bring, officials said.

In May 2008, the most recent month for which statistics are available, home-delivered food programs distributed 7,791 meals throughout Duluth, Proctor and Hermantown, according to Char Juntunen, project director for St. Louis County’s home-delivered meals programs.

Duluth Parks and Recreation director Kathy Bergen, whose organization contracts with the county to run the meal delivery program locally, said many Meals on Wheel volunteers are senior citizens themselves and are on fixed incomes.

“With the increase in gas prices, this has become a hardship for some of our drivers,” she said. “Some people can no longer just pay for the gas out-of-pocket.”

Juntunen said about 30 drivers are needed each week. Currently, there is no one to take one of the five routes on Fridays and recently, one volunteer drove four times in a week to cover routes no one else was available to fill. Juntunen also has had to deliver meals herself.

Juntunen said high gas prices are probably factoring in to the volunteer drop-off.

“That might’ve been the impetus for them to stop,” she said. “We are hearing comments about the cost.”

Juntunen said the meal-delivery programs — Meals on Wheels and another program that delivers a week’s worth of frozen meals at once — always need volunteers, but right now needs four more just to reach the break-even point.

“We’re scrounging for people all the time,” Juntunen said. “We’re overusing the ones we have.”

And St. Louis County isn’t alone in this problem.

Enid Borden, president of the Meals on Wheels Association of America, has been involved with the organization for 16 years.

“This is the worst I’ve ever seen it,” Borden said.

The Meals on Wheels Association of America conducted a survey in late May and found that almost half of programs nationwide have had to eliminate meal routes or consolidate meal services because of high gas prices. A full58 percent of programs across the county reported they had lost volunteers because of the expense of gas.

The problem is compounded by rising food prices, which Meals on Wheels must also grapple with.

“Everything’s just getting more expensive,” Borden said. “What do you do?”

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Not trying to downplay the situation but as tough as it seems I still don't think things are as bad as the double-digit inflation we experienced in the early '80s. The reason I say this is because when we experienced the price increases back then we also experienced serious nationwide (MN in particular) unemployment as well as dougle-digit rapid increases in loan interest rates. Remeber the 16% to as much as 20% interest on long term mortgages and nearly 20% unemployment in Minnesota?

I keep hearing about the housing situation and how the market has dropped soooo much at declines of 20% or more. Apparently my home was the only one that dropped faster according to reported statistics. Either that or the early '80s have been forgotten because I remember paying $36,000 for my home in 1982 only to have a real estate agent suggest a listing price of $18,000 just four years later. After completely remodeling the entire interior, upgrading the electrical, plumbing, and heating system, I managed to sell that home for $42,000 in February of 2000. Hardly a come back. I recall many homes that lost far more than 20% value. One in particular was a doctor's home that was listed for about 30% less than what he paid to have it built less than five years earlier.

And we thought that was bad but us youngen's don't know the half of it. Those of you that lived through the depression of the 1930's must certainly have memories of hardship. Our country's unemployment rate was over 20% and on top of that our bread basket was in the middle of the worst drought to hit the United States in recorded history, lasting nearly 8 years. We don't know what hardship is.

Bob

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upnorth, great work in finding and posting that oil speculation report. An interesting and educational read, for sure!

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Thanks stfcatfish!! We have been hearing from some for so long that all we need to do is drive less and the price will drop, only to now have it come out that some big time investors are driving up the prices, to their gain. I also read the report by Micheal Masters that pointed out a loophole exists to allow this and he has been trying to get Congress to close it.

Bob, I agree that we are not in a doomsday scenerio, but things are not all roses either. The media is always going to play up the human drama side of things like people losing there houses, it gets people to tune in for the late night news and sell commercial air time. People want to hear that all is good, but they are going to watch on the news time after time.

I also survived the 80s recession, lay offs, plant closings. So the chicken little things is not believable. But turning a blind eye to the fact that we are heading a little downhill and not trying to turn it around is not a good plan either.

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thanks Bob, a little perspective makes things a little clearer about how bad it is. We have lived through good times and want them to continue not believing that every year cant be a good year. I was just a kid in the 80's but I remember families with a mom at home everyday, 1 car and 1 truck in the driveway, a 16 ft tiller boat, no four wheelers, and a homemade fish house in the yard. Today we expect a truck, car, van, 19 ft boat, 20 ft fishouse, fourwheelers, snowmobiles, and no mom in the $160,000 house because she has to work fulltime along with dad to keep up on the payments. So if prices go up now a family that is already stetched thin financily will think it is a huge deal and have a harder time coping. It is priorities, as a society instead of saving for the future and living within in our means we live on the edge of bankruptcy and have no cusion to get us through the lean times. We want it all and want it now.

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I also remember gas lines, maximum and minimum purchase amounts for gas, and people cancelling vacations because they did not know if they would be able to get gas. I also remember news storys about lines going around the block because a new hotel was opening and people were applying for the jobs. Now they would worry about having enough employees. However, they have changed the way that the inflation index is calculated. If it was now calculated the same way it was in the 70's the inflation rate would be 11-12%. If they measured it the old way it would devistate Social Security and other entitlements.

I saw a news item recently that taked about the California retirement board and others investing in commodoties including oil. I think the value of their funds is up something like 68%. When this bubble bursts, I can just about hear the crying and the demands for bailouts now. I hope our congress gets it together long enough to get reign in this speculation.

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Changing the way we calculate it doesn't change the facts. We still enjoy cheap money, low unemployment, and the ability to move more than we did then. The average vehicle today sees at least about 20,000 miles per year. The average family didn't drive that much back then much less each vehicle. Driving just eight or ten miles to town was a weekly event if we were lucky and forget about going 50 miles, that was a yearly event maybe. Today it's nothing to jump in the car, drive ten miles to get a loaf of bread. The average person couldn't afford to live like that 30 years ago not to mention all the extras we have today like this PC that I am typing on.

Upnorth, I hope you didn't get the impression that I don't believe things are tough. Not even close but when one listens to the media, weather channel, etc, you'd think the sky was about to fall. It's a part of life and living. We (society) do a good job these days of embellishing it to our own personal gain rather than reality. Between the doomsday asteroids, comets, hurricanes, tsunamis, earthquakes, vulcanos, falling house values, rise in fuel costs, climate change, inflation, droughts, terrorists, or name it we aren't experiencing anything that hasn't been a threat to our existence since man's first steps. Nothing new, only played up a lot more than it used to be because now we've learned to turn profit by playing it up.

Bob

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I think society has become full of, how should I say, Drive by looky lues you know when someone drives by an accident to see if they can get a glimpse of what happen. I catch myself doing that and I force my way through. It has become almost enterainment, not in the good sence, for the media because they know it means veiwership. The doom and gloom sells. I think it sells because society wants confirmation that things arnt as good as we want it to be, rather than standing back and looking at we have and being gratefull for what we have.

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Quote:
Upnorth, I hope you didn't get the impression that I don't believe things are tough. Not even close but when one listens to the media, weather channel, etc, you'd think the sky was about to fall. It's a part of life and living.

Maybe a little bit, but then many have gotten used things being easy and that isn't so good either. Much of the housing issue is people buying what they can't truly afford. Home prices ran up to high too fast, folks were thinking they were going to solve all their money problems by investing in property. Things just went up too fast. I think the average is something like 4% per year or so of value, many double in 3 or 4 years. That can't be sustained.

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Good point Croixflats. Maybe we tend to think to much about what we don't have when we should be thinking and being greatful for what we do have. Just a thought.

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Good point Croixflats. Maybe we tend to think to much about what we don't have when we should be thinking and being greatful for what we do have. Just a thought.

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You got that right things just went up to in price to fast. I remember a while ago seeing reports on prices on homes in Califonia, a home that went for $98,000 here in the cities and one comperable out there went for $200,000. It didnt take long for us to catch up to the Califonia market.

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interesting watching the news channels today. Oil dips $5 and the analysts keep saying dont get excited oil will be $200 if Isreal attacks Iran, The dollar doesnt climb fast enough, or something else happens. Basicaly they say I want to keep making money on oil and do not want this bubble to burst so I am on TV telling investors to keep investing in the bubble. one guy did say that this may be part of a change in prices but he spoke last and only had a couple of seconds to get this point out.

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