mcadoo3312

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  • Bust, Bail, Repeat: The U.S. Enters into an Ever-Worsening Cycle
    I agree with your points luckychucky, but you are ironically guilty of bashing the name caller by calling him names.

    Nonetheless, there is every reason in the world to be negative. Investors intuitively prepare for the worst possible scenarios, so sentiment in our current situation should not be surprising.

    To me, it is worthless to point blame on what has been done in the past because it is over. It seems as if the Fed and Treasury have also come to that conclusion. Regardless of whether they caused this to happen, would you like for them not to clean up their own mess (via taxpayer dollars, an issue I understand is incendiary) and watch those American doomsday scenarios play out?

    I am not extatic with the Housing Bill because of its implications on our country's debt levels and related problems, but realistically I do not see they had any other alternative. The word "contagion" became commoditized with Bear Stearns, but without any intervention, do you truly think this situation would not have spiraled out of control, especially when you consider all of the factors going against us? With our debt levels so terribly high and other countries only increasing their surpluses, it would only be a matter of time that this disaster would denegrate our position as a global leader. They did what they had to do.

    People's expectations of instant relief are unrealistic. This mess is going to take time to unravel. Institutional intervention goes against free market theories, but what if the United States were the failure of this sorry episode that most free market individuals invite to signify the end of a downturn? Would you complain that the government should have done something? Probably.

    I am not saying everything is rosy and great, because it's not, but I do think these initiatives will help this country in the long run - with one asterisk. These officials need to verbally acknowledge the need to position this country to be an effective global leader in this new economic paradigm and follow through on it. Can this happen with partisan politics? Maybe, but if they do not make changes, all of these current initiatives are for not, and they will only compound our present troubles. Think more in the long term, not in the short term.
    Jul 24 10:35 am |Rating: 0 0 |Link to Comment |View article
  • How Big a Contribution Comes from Oil Speculation?
    Everyone is spending so much time trying to place blame on one individual cause for the rise in oil, they are missing the big picture. Oil is a non-renewable resource that has been decreasing in supply and increasing in demand, as we all know, for the past several years. More so, this trend is expected to continue, and get worse, in the future. So, supply and demand fundamentals tell us that oil prices have to get higher at some point. But, something literally has to drive the prices higher which is where the "speculators"... come in. There are several different kinds of speculators, but the index speculators are the ones that have come in to focus recently because of their enormous cash inflows into the commodities markets as a form of asset allocation. This is why we are also seeing a negative correlation between oil prices and the value of the dollar. Now, to the person that said why haven't all commodities increased; most have, but most of those commodities are also renewable, oil is not. The price fluctuations of goods that will continuously be able to be reproduced are based on more short term fundamentals. Regarding oil, massive amounts of trades have been placed based on the expectation that the price of oil HAS to go up at some point. The market has gotten ahead of itself with the aid of the cash inflows from speculators. Take these cash flows out of ALL of the markets, not just the NYMEX, and we will see a short term reversion of its price. The price of oil will gradually go back up, but not at the outrageous pace we have seen in past years.
    Jun 26 10:12 am |Rating: 0 0 |Link to Comment |View article
  • Upside to Oil Stocks?
    The supply and demand imbalances expected in the future give a reason why oil should be higher, but not necessarily as high as it has climbed - especially so rapidly. The flows of funds coming into (and staying in) the futures markets has been driving up the price based on these fundamental expectations. If these new entrants are forced to cash out, the upward price momentum gets its feet cut out from under it. Right now, oil prices are the hottest issue in an election year, and the candidates, as well as Congress and President Bush, have all given proposals to cool down the oil market. Even though the street has already been expecting a drop in oil prices, most stocks have still gone up. If oil falls based on enacted legislation, smart investors will capture gains in hope of buying the same solid companies back more cheaply in the future. In the long term, I agree with your theory, but in the short term, investors entering the energy market could be in for some pain.
    Jun 25 13:28 pm |Rating: 0 0 |Link to Comment |View article

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