Bill Eccles: June 2008 Archives

Traders in what, exactly?

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I just don’t get it. Those who are supposedly in the know say that traders and funds and stuff have nothing to do with the high price of oil. And yet the cost of oil has risen to five times what it was a few years ago. Is it suddenly worth five times what it used to be worth? Have the Saudis had a sudden labor shortage which has driven up their costs? Or have the world’s ships crews demanded millions to transport the stuff in a show of solidarity? Or is there anything else out there which has changed the price of production that I’m unaware of? Heck, has there been a single constriction of supply in the past few years?

I really don’t think there is, but I’ve been known to be wrong before. (It happens.)

So, if the cost of getting a barrel out of the ground to the refinery hasn’t really changed all that much, why are traders willing to pay more for those barrels?

I expect it has something to do with the news reports that I keep hearing and reading. Go ahead, Google for a news story about oil prices and note that every single frickin’ one of them has the words “worry,” “fear,” “anxiety” and their synonyms in them. That’s right, they’re not buying and selling oil based on reality, they’re trading based on their own insecurities. It’s not like OPEC is saying to the market, OK, folks, the price today is $200, take it or leave it. They’re a monopoly and could do that, you know, but instead they just say, What are you willing to pay us? and we, like idiots, outbid ourselves for the privilege of paying them more.

And if I’m more afraid than you are, I’ll pay more than you will.

(Stupid me.)

OPEC doesn’t think that supply is constricted. And you know what? I trust ‘em. After all, though demand in the world has increased, I don’t think we can realistically say that demand has increased so hugely in the past few years so as to make anybody think the Saudis are going to run out any time soon. Supply has kept up because OPEC has kept supply up. And, for that matter, there’s nothing that some rogue state, such as Iran, can do that the US and every other oil-consuming country wouldn’t do something about if they got uppity and plugged up the Persian Gulf. In short, demand and supply seem to be running pretty well together and it’s not likely to change a bunch.

So what are the traders afraid of? Well, pretty much anything. Their shadows. Spiders. Weak dollars. Things that go bump in the night.

Now, how do we fix this problem? First, stop trading futures. Right now. Put a halt to it. Sure, let the people with futures finish out their deals, but after that, no more! Second, if you aren’t an oil consumer with real refineries and big honkin’ boats or if you aren’t prepared to take delivery of the barrels you bought, you can’t buy the stuff, either. Sure, you can still buy those barrels and sell them later on, but you damned well had better take delivery of the stuff you bought. And there can still be a market with people screaming about buying and selling, but those are real barrels that they’ll be buying and selling and if there aren’t enough barrels to go around today, the price will go up. If there are too many people yelling about selling and not enough takers today, the price will go down. No fears. Just real oil which either is or isn’t there.

(Who invented this futures stuff anyway? I realize that in some markets, such as those associated with real variable supply and demand, such as agriculture, there’s a purpose. But until we’re trading iPod futures, oil futures don’t make any sense. Monopolies are different.)

Now, are these ideas probably stupid, unrealistic and ridiculous? I’m sure they are. But to the layman who doesn’t get to trade on my fears but has to pay whatever the going price is for an iPod, they make sense.

Portland (AP) - In a press conference today, Chicken Little reported that the sky is falling.

“Unequivocal evidence witnessed firsthand points to the possibility of a sudden Earthward trend in the sky’s location,” he said. When pressed further about the nature of the evidence, he revealed, “Though I have witnessed only one acorn’s transition from the sky to the ground, there is certainly the possibility that the entire sky will, indeed, fall.”

Traders reacted with fear, driving up futures. “With the possibility of the falling of the sky,” said Henny Penny. “We can certainly expect prices to edge north of $150 throughout the trading day.”

Other traders had similar reactions.

“We’re afraid,” said Cocky Locky, Ducky Lucky and Turkey Lurkey. “We expect that space between Earth and Sky will constrict, driving up futures rapidly.”

Foxy Loxy, reserve chairman, could not be reached for comment. It is widely expected that he will eat the traders for lunch, though, in an effort to keep futures in check.

Terry and I have been debating the merits of attending her 20th high school reunion which is to occur this August. She never really had a bunch of friends in high school whom she wants to visit with. If we went, it would be mostly for the purpose of seeing the one or two close friends she did have (whom we could visit any time, really) and for the purpose of showing people that she is a somebody (mother, pediatrician, wife) instead of the nobody that they expected her to become. (In spite of her being valedictorian…)

I thought my 20th reunion had already occurred without my knowledge and had made the question of going to mine moot, and that was a relief. After all, why would I want to spend an arm and a leg to take my family south for a meeting with a bunch of people whom I haven’t seen in 10 or 20 years and have been doing remarkably well having not seen? These are folks I’ve lost touch with, for the most part, and I’ve got new friends I can see weekly or even daily, who know me and not the 18-year-old me. These are people whom I ride bikes with, go to dinner and a show with, and have kids and economic/social status similar to mine. The folks from high school? Well, I’m sure they’re all just as different from their old selves as I am from mine, so why both going to meet up with people whom I probably won’t see for another 10 or 20 years?

But then I got an E-mail from a classmate (Hi, Patton!) saying, Hey, just catching up, our reunion is coming up in September, and have you heard about Facebook?

Yeah, I’ve heard of Facebook. It’s that teeny-bopper social networking site. Except that User Friendly mentioned it the other day and it’s not a teeny-bopper who’s depicted as using it. Hmm. Do real, adult-like people (people like Patton) use it? Patton said that he’d found and reconnected with some of our mutual friends that way, and, though he doesn’t promote “the establishment,” he recommended that I check it out.

So I did.

For several hours late last night. (That made sleep rather difficult, by the way. So now I’m kinda’ draggy this morning.)

I found Kieran, Jon, Stephanie, Jackie, Margaret, Ann Margaret, and many, many others whom I haven’t even tried to connect with. And Patton, too, of course.

So tell me: Why, if I’m so disinterested in my classmates, did I spend so much time trying to find out so much about my classmates? What is it that made me wonder what they’d been up to for the last 20 years? Why do I suddenly care?

Honestly I don’t know. But now, having seen some of the profiles of these folks… these adult versions of the kids I knew… it makes me even more curious! For some reason, now I really want to go to my reunion. I want to meet these new and interesting people. Heck, they were interesting when I was a kid; they look even more interesting now.

Yes, I know some of them probably haven’t grown up—no, “matured”—much in the last 20 years; instead, they’ve just gotten older. But some of them have, I’m sure, blossomed into world-changers. Some of them have become mothers and fathers. Many have gotten married. Some have gotten divorced. Some have even died—I’m sorry I won’t get to meet the adult versions of them. Some have done exciting things; some have done boring things.

And now I want to meet them all, to find out what has happened to a group of people connected by time and seemingly-randomly-drawn boundaries of a school district. To compare notes and see if we’ve learned anything about being adults, participants in society, valuable and interesting in some way beyond what that piece of paper we all got that day in May of 1988 said we were.

So I guess I’m all, like, Class reunion, here I come!

(Unless it really was in April.)

Article here

Another take:

Great. Another product that people will hold in high regard in spite of the fact that it is overpriced for what it does.

Or so says Consumer Reports.

Article here.

Another take:

I laughed until I realized that it wasn’t IKEA who was sending the inspectors to Syria.

I thought they’d probably have found furniture faux pas, but not nuclear material.

Article here.

Another take:

I’m guessing he won’t be buried in a Pringles Can. Unless, of course, it’s black and white and can be rented from the local grocery store.

Article here.

Another take:

Um, yeah. “Prompt.”

“Prompt” as in “We had our heads so far up our butts that we required a laxative to achieve movement in our cyclone response. And even then, it took us a while on the pot. Good thing we survived. Those peasants wouldn’t know what to do without us.”

So much said by one word.