Good News for Normal People

Prices of all commodities including grains, energy, and industrial metals are down as much as 46%. It's estimated that crude will be under $85 by end of week----right this second it just traded under $90 (88.70)--and so much of the commodities markets are nothing but high leverage speculation by huge funds that you will see more drops in what are fake prices. You will be reading a lot about "index funds" losing money and so on, keep in mind that a "bet" on an index is a bet on nothing. There is no such thing as a Dow Index or an S&P Index, taking positions of shit like this is just a bet; in a lot of cases this bet becomes an actual "hedge" or protection. So you protect a price by supporting it with nothing other than the belief that everything will work. I don't know what percent of commodities market are index hedges (there are a hundred indexes) and it may be that nobody does. Silver linings for the "folks" is that the prices of natural gas are plummeting (down from $11 to $6) and heating oil which means they can almost heat their home this winter. "Almost" is the operative word so far.

Answer to several questions regarding Indexes. If you go long 5,000 bushels of corn y0u have to take delivery of real corn on the date the corn contract expires. Same is true for oil and so on. Obviously you cannot take delivery of an "index" on something anymore than you can take delivery on an idea. Conversely, if you have shorted (sold) 5,000 bushels of corn you have to buy the actual corn before the contract expires so you can deliver actual corn. You could "roll the contract" forward, which can cost an arm and a leg. You cannot deliver an index or have a couple sent to your house because there ain't no such thing.

Last answer: of course the banks are hording our tax dollars and not lending them out. They're fucking bankers for Christ's sake, they only care about themselves. The only way to get real money out there is to build a bridge and buy all the necessary materials on the market and then hire real people and pay them real money. That way everybody in the chain get some money. Yes, socialism.

No comments: