Ironically, Sanctions Success Strengthens Iran’s Strait of Hormuz Trump Card
Military strategists appear to have missed a foreseeable outcome in their efforts to pressure Iran.
Read more...Category Archives: Commodities
How Coal Brought Us Democracy, and Oil Ended It: Lessons from the New Book “Carbon Democracy”
Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller
Long before politicians mewled helplessly about the power of “Big Oil”, carbon-based fuels were shaping our very political, legal, intellectual, and physical structures.
Read more...Chris Cook: Libor and Oil Market Manipulation – Rage Against the Dying of the Light
By Chris Cook, former compliance and market supervision director of the International Petroleum Exchange
A generation of markets is dying and the era of the Middleman is coming to an end. The ‘Bezzle’ – as J K Galbraith described financial misbehaviour in a boom, revealed by a bust – is now coming to light.
Read more...Another MF Global? Customer Accounts Frozen at Futures Broker PFGBest (Updated)
Another blow to what credibility is left in the futures brokerage business in the US may have come in the form of the failure of midsized commodities and foreign exchange broker PFGBest, which claimed to have roughly $400 million in customer assets. Although details are sketchy, the firm was may have been falsifying bank records; the founder of the firm tried but failed to kill himself.
Customer accounts were put on hold today and the firm is being liquidated. Per the Wall Street Journal (hat tip Deontos):
Read more...Oil Regulators Wimp Out on Requiring More Transparency
A Wall Street Journal article tonight (hat tip Joe Costello) has the whiff of disinformation about it. It dutifully reports that oil regulators have retreated in a serious way from requiring more disclosure of oil market transaction. The article never offers an explanation for the change in stance and focuses attention on actors who are highly unlikely to be the moving force.
Read more...Wolf Richter: Manna for Bankrupt Cyprus
In Greece’s chaotic wake bobs the listing Republic of Cyprus, soon to be the fifth Eurozone country, out of seventeen, to get a bailout. By June 30. Only last year’s €2.5 billion loan from Russia has kept it afloat. It’s economy is shrinking, unemployment is at a record, and real estate is collapsing after a phenomenal bubble and a nationwide title-deed scandal that has taken down the banks. But Cyprus has something—and it’s huge—that no other troubled Eurozone country has.
Read more...The Real Bombshell in the MF Global Post Mortem
The report that John Giddens, the bankruptcy trustee in MF Global, released Monday is thorough and confirms many of the observations made in journalistic accounts of the firm’s collapse, particularly regarding inadequate risk and accounting controls, JP Morgan’s aggressive posture greatly increasing the liquidity squeeze. But a stunning revelation that comes early in the account and is central to the failure of the firm does not get the emphasis that it warrants.
Read more...The Intensifying Debate Over Food Security
One of the troubling ideas that seems to have gained traction is that nations should not care overmuch about the needs of their citizens and should accept market outcomes.
Read more...Les Leopold: How Wall Street Drives Up Gas Prices
By Les Leopold, the author of The Looting of America: How Wall Street’s Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It. Cross posted from Alternet
Gasoline prices have been falling in recent weeks, but they’re still close to their five-year high after climbing steeply for three years. For every penny increase at the pump, $1.4 billion per year leaves our collective pockets, creating a drag on the sluggish “recovery.” Where does it go and what caused the price explosion at the pump?
Read more...Finance as Wealth Transfer Mechanism: An Interview with James Galbraith
James Kenneth Galbraith is currently a professor at the Lyndon B. Johnson School of Public Affairs and at the Department of Government, University of Texas at Austin. He is also a Senior Scholar with the Levy Economics Institute of Bard College. His latest book is ‘Inequality and Instability: A Study of the World Economy Just Before the Great Crisis’ (also available on Kindle).
Interview conducted by Philip Pilkington.
Philip Pilkington: Let’s start with the obvious question that the book raises. Namely, why studies on inequality have, until this point, been so poor. You point out in the book that the studies that have been done have been competently researched but that they simply don’t have access to the correct types of data etc. Could you talk a little about this (without getting too technical, of course) and maybe speculate a little about why this important issue has been sidetracked by the economic profession?
Read more...Latest Award of Frederic Mishkin Iceland Prize for Intellectual Integrity: Promontory Financial Whitewash of MF Global’s Risk Control
We normally limit our awards of the of Frederic Mishkin Iceland Prize for Intellectual Integrity to academic work, since the economics discipline seems increasingly to hew to the James Carville theory of motivation: “Drag a hundred-dollar bill through a trailer park, you never know what you’ll find.” However, we’ve been unduly narrow in considering who might be deserving of this recognition, so we are bestowing the award to Promontory Financial for its work on MF Global.
Read more...Memo Show Corzine Ordered Raiding MF Global Customer Account of $200 Million
We know America is a hopeless kleptocracy, but if Corzine does not go to jail, given the revelation that he approved the raiding of a customer account of $200 million, it means that no one in the officialdom is interested in keeping up the pretense that we have a functioning regulatory and judicial system.
The revelation per Bloomberg:
Read more...Chris Cook: Spikes and Speculation in the Oil Market – Flash Crash Part Deux?
By Chris Cook, former compliance and market supervision director of the International Petroleum Exchange
Cui Bono from High Prices?
If there is one thing that the history of commodity markets tells us it is that if producers can support and manipulate prices in their favour, then they will.
Read more...Satyajit Das: “All Feasts Must Come to an End” – China’s Debt & Investment Fueled Growth (Part 1)
By Satyajit Das, derivatives expert and the author of Extreme Money: The Masters of the Universe and the Cult of Risk Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives – Revised Edition (2006 and 2010)
The re-emergence of China has dominated recent economic and political discourse. The Chinese economy is forecast to expand by around 60% in the period between 2007 and 2012, compared to around 3% for developed economies. While China’s rise is important, its drivers are frequently misunderstood and poorly analysed.
China’s economic structure is deeply flawed and fragile. The Chinese growth story may be ending. As an old Chinese proverb, probably apocryphal, holds: “There is no feast that does not come to an end.”
Read more...Chris Cook: The Ghost of Enron Past Explains Oil Market Manipulation
By Chris Cook, former compliance and market supervision director of the International Petroleum Exchange
I outlined in my recent post my view that the oil market price has been inflated by passive investors whose attempts to ‘hedge inflation’ actually ended up causing it, and have allowed oil producers to manipulate and support the oil market price with fund money to the detriment of oil consumers.
But there has always been a missing link – precisely how has this manipulation been achieved?
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