Hot Money Chases New Shiny
Interesting article here. Suggests that deregulation allowed BSers (beginning with Goldman Sachs) to make enormous, market-moving bets, based on the false premise that said traders are simply serving as middle men for folks who need oil to run/hedge their businesses, rather than the apparent truth, which is that this has been lip service to masive speculation.
Regulators had long classified a private Swiss energy conglomerate called Vitol as a trader that primarily helped industrial firms that needed oil to run their businesses.
But when the Commodity Futures Trading Commission examined Vitol's books last month, it found that the firm was in fact more of a speculator, holding oil contracts as a profit-making investment rather than a means of lining up the actual delivery of fuel. Even more surprising to the commodities markets was the massive size of Vitol's portfolio -- at one point in July, the firm held 11 percent of all the oil contracts on the regulated New York Mercantile Exchange.