Commodities trade is over
 

Maybe this happened way too late, but the oil scandal has ended. It may hover up and down in the lower 130's, high 120's until the dollar gains some power, (Which won't happen until the admin. change), but the investment portion has ended. Oh well, the damage is done though...

What is this "investment portion" you refer to and what has brought about its end?

Investors, both big and small, are beginning to take a second look at commodities as a long term investment. When compared to stocks and bonds, commodities (oil, natural gas, corn) do not represent a true asset class. They were never meant to be something the average investor would buy and hold for appreciation.

As it relates to the investment portion, the "easy" money has been made and collected in commodities. For much of the first half of the year, oil was seen as a currency play for large investors (banks, hedge funds). Now, a different set of circumstances exists. Banks, needing cash for their balance sheets, have begun cashing in on their commodity gains.

There are several reasons for the liquidation, but the most reasonable is that investors, much as they did in 2000, have come to the realization there is no reason oil should be at the levels it reached. High oil prices create inflation and that can cripple the world's economy. Why create a global recession?

Certainly, there has been demand destruction and that is best seen in the airline industry. Capacity cuts prove high oil hurts the economy. The belief that supply will be increased through drilling has also forced a second look at high oil prices. Negotiations with Iran haven't hurt either.

One of the first signs of a recession is supposedly a decline in oil prices after a sharp rise...

I would be willing to bet that oil has a long way to fall before a recession would hit, besides how much of a recession would it be at 50 dollars a barrel.

None because then we could start getting those SUVs back out on the road and put some of those auto workers back to work...screw those Prius's...(said with barely a concept of how the economy works)

so if oil drops back to say $100 a barrel or less does that mean all those furloghed will go back to work soon?

No I don't think so.....I think this oil situation has given sufficient cover for the execs of our company's for the bad decisions and greed they still make and wont let go of.....

The industry has had 3 years to address this issue and did nothing but sucker punch the public with stupid fees and devalue our worth so the CEO and VP could continue to collect their bonus checks...

The employees are not there to pay the bills...the customers are.

Who said the oil runup is over? Scandalous???

The last time I checked, the likely winner of the next Presidential election isn't exactly pro-oil or pro-drill friendly. And the current political party in power of Congress has done nothing to help us out since its runup except to accuse the oil companies of price gouging.

All it is going to take is one hurricane, one terrorist attack of an oil field in the middle east -- anything, and oil prices are going to spike again.

Let's be realistic here -- unless we 1. increase production of oil, 2. convince the American public to drive less or convert over to not-as-convienent sources of energy and get developing nations to do the same, 3. reign in the loop holes associated with oil trading; oil prices are going to remain high.

-Fatty

Oh no it's not, just exercising some options and contracts. Go long on oil, go long....

I find that statement interesting. APC is an apolitical forum; I'll assume that it doesn't matter WHICH bozo wins. Both are talking additional deficit spending, however, at a faster and higher rate.

Most would argue that the largest problem with the dollar is the cheap cost of money, and that monetary policy is a function of an independent, party neutral federal reserve bank. Clearly, money needs to become more expensive to increase the value of the dollar, but this will also exacerbate the mortgage crisis and the liquidity problems plaguing lenders.

In other words . . . I don't really think who wins the White House is going to have any real impact on the dollar's value, with the caveat that whomever wins and expands entitlements more (re: increases the country's ever-expanding deficit and debt) will only hasten the dollar's devaluation.

IMHO. Hell, if I believed this line of reasoning, I'd do like George Soros, bet against the dollar, and make a billion bucks hoping for America's downfall and comeuppance!

1. i'm not sure what the original author was getting at, but i think the current administration deserves a lot of blame for talking down the dollar (the impact of this is being felt in rising prices, including the price of oil). i have a lot of respect for a lot of things this administration has done, but they started talking down the dollar from day 1.

2. the chair of the fed is an appointee. it's a stretch to call him apolitical. i'm not saying he hasn't acted objectively, i'm just saying that it's not unreasonable to think he may feel some political accountability.

3. we can either get the pain over with or prolong a long dull pain: by keeping interest rates low, we may be softening some of the economic blow - but we're letting inflation fester. we're going to have to pay for it sometime... i say let's get it over with.

4. no question, our nation's out of control spending (the bulk of which is indeed entitlements) is dragging us down - it results in higher borrowing costs, slower economic growth and higher inflation. i'm not sure either candidation will solve the issue, and it may even grow worse than it has been under current administration...

I think if this down trend in oil happened in early June, the number of scheduled furloughs would be lower. Unfortunately, I think the down turn came too late to make an immediate difference. Airlines have already made their schedules for the fall. I suppose they could add flights if needed, but I don't see that happening.

One reason oil has begun to crack is because many feel the global economy is now headed into a recession. Lower oil prices are great, but a recession, no matter how limited, can't be good for the airlines. One of Larry Kudlow's guest on Friday night said he believed oil was going to $60 because of a global recession.

I guess we have to take the good with the bad.

Seatbelts on and have the flight attendants strap in...this summer and fall will probably be the roughest economically I've experienced in 21 years of drawing breath. It's going to be interesting. Great Depression? Hopefully such things are impossible in our 'regulated' financial system. But bad? Certainly.

People to blame for the current state of the economy are many and widespread; in some ways we need look no farther than ourselves (ourselves, citizens)—although there are certain poor financial decisions that have been made by the regulators and leaders of our economy.

With respect to the dollar...the Great Depression was arguably caused by the Fed being very concerned about inflation—much more than stability, that is—and severely tightening Federally-backed credit right as a big downturn hit. The current Fed does not seem to have much concern for inflation and indeed writes significant blank checks to the rest of the Federal government (and even to private industry - see Bear Stearns) as far as loans are concerned.

Wall Street banks got greedy - that's really a major part of the problem, combined with a complete and utter lack of effective commodities regulation (and the SEC majorly dropping the ball on keeping a step ahead of the cheaters).

This minor crisis will pass...the *real* financial crisis, one that WILL bankrupt the Republic, will happen twenty years from now, and will be related to Federal healthcare spending and, to a lesser degree, FICA/SS/etc.

Oddly enough, those who scream "free market!" when life is good and their portfolios are appreciating are also the first to scream for government intervention when things aren't so hot.

Just some thoughts. There will be recovery—but it won't happen right away. The downturn in oil prices may help the airlines in the short term, but other economic problems remain.

drivel deleted

I just heard on the radio this morning that economists are now predicting further sluggish economic growth, but no recession. The last I heard the economy was still growing at about 1%. So any talk of the "current recession" is political.

There isn't a recession, as defined by technical terms..........

It is an election year....so the media and politicians have been throwing the term around.

Is it? How is the rest of the world compared to our 1%? We are a 'global economy' after all. Other than the dollar being weak and the rest of the world buying 'quality' products from us (Think Cat, Bucyrus, Deere, Case, etc.), how are we not in a recession? 1 in 501 households got a foreclosure notice in June. Ford has 6 months inventory in the truck division. Even Starbucks closed somewhere in the 'hood of 600 stores. Get ready. We're just in phase 1. Phase 2 is where the auxillary businesses of phase 1 take a dive. Reduced air travel. Fine. There go hotels, rental cars, marginal theme parks, etc. Auto? Parts manufacturers for new cars are gone. Housing? Developers close on surplus of houses and land unable to be sold. Big box stores are crushed due to limited surplus income due to fuel. That house in the suburbs is now as expensive as the loft in the city! Heard borrowing against a 401k is at an all-time high (think it was Clark Howard, someone who know a bit about money).

Bottom line, the average consumer will be behind for years to come. The airlines won't come back in full force. What's done is done. I call it 'self-regulation'.

if thats the case id hate to see what a real recession would do to the airlines. i really hope this is the worst of it.

An Energy Sarbox - WSJ.com

The reason why this is such a bad idea.

We can thank Nixon for taking us off the gold standard and having the dollar backed by something real. Whats it backed by now? Really nothing. Only 4% of the money out there is in actual paper and coin form. The rest are just numbers in computer systems. See a scenario thats wrought with peril in THAT set-up?
You have a Federal Reserve, a private company, that just "prints" money at will (not good for dollar valuation) whenever the govt wants more for more overspending, then charges the govt interest on that borrowed money. Doesn't take a genius to see that the govt isn't going to foot the bill for that unbelievable interest so we as the American taxpayer are. Its a vicious circle.