Berkeley CSUA MOTD:2008:May:22 Thursday <Wednesday, Friday>
Berkeley CSUA MOTD
2008/5/22-23 [Politics/Domestic/California, Politics/Domestic/911] UID:50024 Activity:nil
5/22 (
        Good post re current events in commodity, treasury, and stock markets.
        To summarize:
        - The Fed balance sheet is contaminated with CDOs
        - Money is going into commodities rather than Treasuries
        - Rates are going up
        Several more points:
        - Expect the commodity bubble to drive inflation in the near term.
        - The commodity and equity bubbles will sweep up excess credit from
        bad banking practices.  The subsequent blow-up (occurring over
        3-12 months for the undesired chaotic crash, or 1-10 years for a
        controlled descent) will efficiently sop up this cash.
        - Guess who loses their bux on:
          (1) The building up of the commodity bubble
          (2) The reduction of said bubble
        Excellent radio segment (.mp3) which talks about "giant pool of money"
        and where it goes (guess where this money is going now)
        \_ What's the difference between a CDO and a mortgage backed
           \_ MBS = Pool of mortgages.  One structure is rated (e.g., all
                    shares from an MBS are given a single rating, i.e., AAA).
              CDO = Pool of MBSs.  Structure is sliced into different levels,
                    each of which may have a different price and rating.
                    each of which has a different price and rating.
                    The lower tranches will have the lowest rating and eat any
                    losses first, but have the highest yield.
                    losses first, but advertise the highest yield.
              MBS and CDOs are both asset-backed securities (ABS).
              Now go listen to the MP3 and find out how Joe Schmoe was raking
              in $1M/year.
        \_ Funny how this guy rants and rails about Congress and does not
           mention the word "President Bush" even once. Where is our nations
           leadership during this time of financial crises? Oh, and what you
           call a "commodities bubble" I call the market functioning normally
           to get supply and demand in balance. Do you have any evidence that
           excess oil is starting to pile up anywhere? Copper? Coal? If
           prices are "too high" shouldn't that be happening?
           \_ He's a Republican who is likely to vote Democrat in November.
              Here's his anti-Republican rant from four days ago:
              "Commodities bubble" =
                (a) Hedge on the stock and bond markets
                (b) Huge pool of money needs to go somewhere
                (c) Certainly there is a supply/demand factor to commodities
                (d) Hedge on strength of U.S. economy, financial system, dollar
              He rants and rails?  Okay.  Good thing I'm here to summarize!
2008/5/22-23 [Politics/Domestic/California, Politics/Domestic/President/Clinton] UID:50025 Activity:low
5/22    Bill Gross on underreporting the CPI and what it means for
        the little investor:
           \_ Ah so it started with the Carter administration. See,
              Democraps are evil!
              \_ It actually started with Clinton, but that doesn't change
                 your basic premise. Politicians of both parties lie all
                 the time.
        \_ LIES. The Bureau of Labor Statistics doesn't lie. The
           government doesn't lie. Why would it lie?
       \_ Ron Paul has been saying this for years and people say he's
          some sort of crazy racist.

          \_ Non sequitur often?
             \_ Oh it's sequitous. Here these directly question CPI:
                \_ What does race have to do with inflation?
          \_ Ron Paul IS a crazy racist, irrespective of what he has to
             say about the CPI.
2008/5/22 [Science/GlobalWarming, Politics/Domestic/California] UID:50026 Activity:high
5/22    We brought together the heads of big oil.
          See that big head over there? Yeah, he runs Shell. That one?  That
        runs ExxonMobil. Mr. Big oil, we're here to talk about the high price
        of gasoline.  How could it have possibly gotten this high?
          Let me tell you what we've done here in congress.  We told you that
        drilling in ANWR is off limits.  We told you that drilling off the
        coast of Florida and California is off limits.  We told you, Mr. Big
        oil, that there wouldn't be any new leases for drilling in the Gulf
        while China and Venezuela and even Cuba pursued these leases and have
        just signed 100-year leases on the oil in the Gulf of Mexico.  We here
        in congress have promised, as all three presidential candidates have
        also promised, to introduce and pass in the next term a cap and trade
        legislation bill that will increase the price of gasoline according to
        the EPA by an additional $1.50. Some people say it could be as high as
        $5 additional per gallon.
          We have said that we're shutting down oil fields in Colorado.  We
        won't let you develop shale oil fields in several Western states.  And
        yesterday we passed legislation that would let us sue OPEC with the
        full understanding that they'll never retaliate.  Yes.  We have allowed
        environmental attorneys to sue you big oil fiends for future possible
        destruction of Alaskan Eskimo village which legal experts believe is
        the same strategy used to bring down big tobacco.  We're especially
        proud of our recent action to protect the polar bear and their habitat
        which just happens to be where the future oil deposits happen to be
        located.  We told you that you're making too much money and that we're
        looking at seizing any money that we consider windfall profits.  Yes.
        We have allowed you to drill in some very small areas in Alaska while
        simultaneously creating very generous environmental laws which have
        tied up the very production we authorize through years of litigation
        after you spent the money on buying and setting up equipment.  We told
        you through our policies that we would not allow you to build a new
        refinery in over 30 years.  In fact, this great country, under our
        tutelage, has even reduced the number of operational refineries by half
        since 1982.
          We have even told your potential competitors in the nuclear and
        hydroelectric industries that we would send the environmental lawyers
        after them if they even dared think about building a new plant or a new
        dam. We've refused to fund or allow the deployment of coal-to-oil
        technology which has been around since the 1930s. We've told you that
        you have to make different blends of gasoline, let states like
        California dictate what unique gasoline blends you have to make for
        them. We will not reduce our federal gasoline tax. We won't even
        consider reducing it for the summer months.
          So Mr. Big oil, tell me why exactly are gas prices so high?
        \_ This guy is barking up the wrong tree. Prices are high because
           demand is high, due to economic growth in India and China. The
           US cannot possibly pump enough oil to satisfy worldwide demand
           increases, in fact, we cannot even make a dent in it. What
           grandstanding politician are you quoting?
           \_ This is essentially what the hearings on gas prices are. -op
              \_ Yes, we agree. I guess this guy (Glenn Beck?) has a point
                 on the nuclear and hydro issues.
           \_ No, demand is not driving the price. Speculation is.
              \_ Wow you're stupid.
              \_ Should I bother showing you why you are wrong, or is this
                 an ideological belief of yours that is not subject to debate?
                 \_ Go ahead and show me, because I've seen the charts
                    that show current usage versus supply. Usage now is
                    about 12% higher than it was a decade ago. Sure,
                    that's higher. Not enough higher to create the crazy
                    high gas prices we are seeing now as production hasn't
                    dropped. Also, the low dollar is making gas seem expensive
                    to us, but if you adjust for inflation (use real dollars)
                    gas prices are not even at historical US highs. In
                    short, people are buying oil because they are worried
                    about supply interruptions and because they perceive
                    that the price will always rise. This creates a
                    self-fulfilling prophecy. The DOE has 3 oil-price
                    profiles and only one of them (worst case) has oil
                    prices rising from here over the next decade. If you
                    look at supply versus consumption versus price on a
                    graph you will see that consumption is indeed driving
                    oil prices higher, but most of it is speculation. You
                    think oil prices have gone from $60 to $130 per barrel
                    in a year because of an increase in *consumption*?!?! -dim
                    \_ (BP usage data)
                       This is the most recent good data I can find, which
                       shows more like a 20% increase in demand. Are you
                       laboring under the illusion that a 12% increase in
                       demand (with no increase in supply) should only lead
                       to a 12% increase in price? The truth is, prices should
                       obvious that gasoline demand is pretty inelastic
                       meaning that people don't use it much less just because
                       the price goes up. Also, your factoid about the dollar
                       is not really true: gasoline is now at an all time
                       inflation adjusted high. It might perhaps not be true
                       if you use some oddball deflator factor. Look at
                       oil priced in Euros. Speculation does not increase
                       the consumption of oil, in fact, it will decrease it.
                       If your theory about speculation is correct, oil
                       prices should collapse real soon now, right?
                       \_ The truth is, dimitrious has a linear mind
                          ding ding ding!
                          \_ More of he doesn't understand the non-linear
                             nature of cost with inelastic demand:
                       \_ No, I never said that 12% = 12%. The curve, if you
                          look at it, has a certain slope/shape that does
                          not match the reference at present.
                          \_ What curve are you looking at? I am curious what
                             your reference for this statement is.      -dim
                          \_ Where do you see a supply-demand curve for
                             oil consumption? I would be interested in your
                             source for this.
                       increase as much as needed to clear the market. It is
                       \_ You could say this about real estate recently,
                          too and yet that was driven by speculation more
                          than by actual need for housing.
                          \_ Not every increase in price is due to a "bubble."
                       \_ You could say this about real estate recently,
                          too and yet that was driven by speculation more
                          than by actual need for housing.
                       \_ Bzzt. In 1981 it was $3.29/gallon in today's
                          \_ Not all price increases are "bubbles."
                       \_ Bzzt. According to the DOE in 1981 it was
                          $3.29/gallon in today's dollars. I found a chart that
                          says $3.17 with an all-time high in 1918:
                          Regardless, the point is that prices have been just
                          as high in the past. This is not ground-breaking.
                       \_ Speculation increases the *PRICE* not the
                          *CONSUMPTION* which we already established is
                          just a bit higher than before.                 -dim
                       \_ I think they will eventually decrease a lot from
                          current level, yes.
                          \_ I moved your comments out of line. you're welcome  -dim
                             \_ *********FUCK YOU***********
                                Worry about your own fucking posts, dick.
                                \_ Stop putting yours in the middle of others.
                                   Makes it really hard to read.  Or are you
                                   too stupid to organize your thoughts?  -dim
        \_ This guy is wrong about oil shale and coal gasification, too:
           He is wrong about most things.
           \_ Your story is from before congress changed things.
2008/5/22-23 [Recreation/Dating] UID:50027 Activity:low Entry has been invalidated. Access denied.
2008/5/22 [Uncategorized] UID:50028 Activity:nil
        Jackie Johnson is hot. 10 stars.
2008/5/22 [Politics/Domestic/President/Bush, Recreation/Travel/Nola] UID:50029 Activity:nil 88%like:50031
5/22    Time to abandon New Orleans
2008/5/22 [Industry/Startup] UID:50030 Activity:nil
5/21    Can someone explain options, futures, and derivatives in
        a few paragraphs?                       -stock market dumb
                                                 \_ if you cant figure this
                                                    out or figure out enough
                                                    to ask a more specific
                                                    question, you are "dumb"
                                                    not "stock market dumb".
                                                    or lazy.
        \_ No. Economics is hard. Figure out what day it is first.
        \_ My understanding of these terms is as follows:
           1. Option - a contract that gives you the right to buy a
              particular quantity of a particular thing at a particular
              price at a particular time in the future. You have the
              "option" to buy the thing, but you aren't required to
              buy it.
           2. Future - a contract that requires you to buy a particular
              quantity of a particular thing at a particular price at
              a particular time in the future.  You have to buy the thing
              at the price no matter what.
           3. Derivatives - options, futures, &c. are generally called
              derivatives b/c their pricing is derived from the fair
              market value of the thing that they cover.
           Wikipedia has a decent discussion of these terms if you are
2008/5/22 [Recreation/Travel/Nola] UID:50031 Activity:nil 88%like:50029
5/22    Time to abandon New Orleans []
2008/5/22-26 [Reference/Law/Court] UID:50032 Activity:nil 80%like:50055
5/22    r kelly trial commencing:
        \_ fuck rap and hip-hop
2008/5/22-23 [Uncategorized] UID:50033 Activity:moderate
5/22    So when faced with facts about the rising costs of oil our
        resident Chicken Little chooses to delete the thread. Why am I
        not surprised.
        \_ I will let you post after you stop trampling my posts,
           \_ You can't handle the truth.
Berkeley CSUA MOTD:2008:May:22 Thursday <Wednesday, Friday>