There's been an overbearing amount of noise pushed out about "sub-prime" lending and the "meltdown" of the mortgage industry. But, there seems to be very little logical thought given to this at a personal level. It's easy to toss out examples on the excessive side of the equation. But likely for every one person that should never have qualified for a loan there are thousands who legally and ethically did due to their amount of available net cash flow. You know net cash flow its that amount of money you have after taxes and bills and expenses each month.
We've all seen the analyst on television, the talking heads that spout all of the reasons why the system melted down pointing fingers at each other instead of looking at the root causes of the issue. Let me enlighten you all here. People don't pay their bills when they don't have the money to do so or are pressed into a situation where they have to make hard choices. You know like between the food bill and the light bill. If the talking heads would back up from the forest and look at the trees its as simple as this. The average cost of basic essentials that most people need to exist in this country (food, gas, etc) went up in cost over an 18 month period rather dramatically. About 300% for gasoline and about 45% for food. Now did any one's base pay go up 20%? Well if you worked on Wall Street yes, it probably did but for the rest of us it did not.
Now ask yourself this question? What happened in the world to SUDDENLY cause the cost of production for fuel to increase that much? Hmmm...... Nothing. The reason for the sudden cost of gasoline at the pump was due to financial managers who bought and sold futures contracts deciding that the "market would bare the cost." Thereby artificially inflating the value of oil until the cost of production actually rose. After speaking to several oil industry analysts it became very clear that even at its highest price in the almost $150.00 a barrel range oil or rather the cost to produce a barrel of oil never exceeded $65.oo a barrel to produce. Now figure that the sudden rise in cost actually came from the money on finished product (diesel, gasoline, etc) needed to "mine" the raw product! So the range between $65.00 a barrel, times a percentage for company profit (let's use the old college theoretical 30% or $19.50 a barrel) so the actual cost retail should have been $ 84.50 a barrel or about $ 1.87 a gallon (wholesale). Now why are we talking about this now? Well, if you have been watching the major financial players in the commodities markets are once again at it and this time they have TARP funds to use. You know those monies lent to them from the Federal government. You know YOUR TAX DOLLARS and they are manipulating the markets again. Oil has been swinging between $38.50 and $54.00 a barrel for the last six months. After speaking with industry analysts about it they are formulating that the cost of production for oil currently is about $32.00 a barrel on the established fields and $35.00 a barrel on the new fields that they started when oil was so high. So, if we use the model as above oil but average the two costs together so oil should be about $43.00 a barrel which would make gasoline about $0.78 a gallon (wholesale). Now of course these simple examples do not inflate the cost for the middlemen in the business but simply adding another 30% to each cost does not drive gas up to $4.33 a gallon at its high nor does it make it $2.00 a gallon as it is now. Even adding in federal fuel taxes it does not make it there. So, start watching the players in the commodities markets the actual buyers and the sellers .... you will become very enlightened very quickly.
So I ask you this. If water was treated in the same manner as oil and one day you woke up and your water bill went from $20.00 a month to $500.00 a month simply because "the market will bare it". What would you do? Rampant speculation in one market caused a trickle down or rather a cascading explosion to occur which has effected every corner of our lives. The saying goes "Its all about the money. Follow the trail of the money and you will find the cause for the effect." Speculation without the ability to take the product and use it for your own business consumption is unethical. Its immoral when it causes distress to innocent people. It should be illegal when its done with public monies (your tax dollars). Tell the Government to stop unethical, illegal and immoral speculation.
We've all seen the analyst on television, the talking heads that spout all of the reasons why the system melted down pointing fingers at each other instead of looking at the root causes of the issue. Let me enlighten you all here. People don't pay their bills when they don't have the money to do so or are pressed into a situation where they have to make hard choices. You know like between the food bill and the light bill. If the talking heads would back up from the forest and look at the trees its as simple as this. The average cost of basic essentials that most people need to exist in this country (food, gas, etc) went up in cost over an 18 month period rather dramatically. About 300% for gasoline and about 45% for food. Now did any one's base pay go up 20%? Well if you worked on Wall Street yes, it probably did but for the rest of us it did not.
Now ask yourself this question? What happened in the world to SUDDENLY cause the cost of production for fuel to increase that much? Hmmm...... Nothing. The reason for the sudden cost of gasoline at the pump was due to financial managers who bought and sold futures contracts deciding that the "market would bare the cost." Thereby artificially inflating the value of oil until the cost of production actually rose. After speaking to several oil industry analysts it became very clear that even at its highest price in the almost $150.00 a barrel range oil or rather the cost to produce a barrel of oil never exceeded $65.oo a barrel to produce. Now figure that the sudden rise in cost actually came from the money on finished product (diesel, gasoline, etc) needed to "mine" the raw product! So the range between $65.00 a barrel, times a percentage for company profit (let's use the old college theoretical 30% or $19.50 a barrel) so the actual cost retail should have been $ 84.50 a barrel or about $ 1.87 a gallon (wholesale). Now why are we talking about this now? Well, if you have been watching the major financial players in the commodities markets are once again at it and this time they have TARP funds to use. You know those monies lent to them from the Federal government. You know YOUR TAX DOLLARS and they are manipulating the markets again. Oil has been swinging between $38.50 and $54.00 a barrel for the last six months. After speaking with industry analysts about it they are formulating that the cost of production for oil currently is about $32.00 a barrel on the established fields and $35.00 a barrel on the new fields that they started when oil was so high. So, if we use the model as above oil but average the two costs together so oil should be about $43.00 a barrel which would make gasoline about $0.78 a gallon (wholesale). Now of course these simple examples do not inflate the cost for the middlemen in the business but simply adding another 30% to each cost does not drive gas up to $4.33 a gallon at its high nor does it make it $2.00 a gallon as it is now. Even adding in federal fuel taxes it does not make it there. So, start watching the players in the commodities markets the actual buyers and the sellers .... you will become very enlightened very quickly.
So I ask you this. If water was treated in the same manner as oil and one day you woke up and your water bill went from $20.00 a month to $500.00 a month simply because "the market will bare it". What would you do? Rampant speculation in one market caused a trickle down or rather a cascading explosion to occur which has effected every corner of our lives. The saying goes "Its all about the money. Follow the trail of the money and you will find the cause for the effect." Speculation without the ability to take the product and use it for your own business consumption is unethical. Its immoral when it causes distress to innocent people. It should be illegal when its done with public monies (your tax dollars). Tell the Government to stop unethical, illegal and immoral speculation.
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