One of the hottest things on Wall Street these days is speculating in commodities. The list of those who are speculating reads like a "Who's Who" of the U.S. bailed out banking giants: Bank of America, Citigroup, J.P. Morgan Chase, Goldman Sachs, Morgan Stanley and others.
Although commodities such as oil, wheat, corn, coffee, coco, cotton, gold and silver have hit the jackpot for banks, they are very risky because their prices can abruptly change. Just as real estate mortgages used to hit the jackpot for banks, what happens when some of these commodity prices suddenly fall sharply? Who bears the losses? Although for now bank bets aren't nearly as big as they were on real estate mortgages, there is no one but themselves to limit their speculation.
The 10 biggest U.S. banks now control 77% of the U.S. banking assets, a much bigger percentage than in 2008 when their collapse would have taken the global banking system with it. We Americans are now more vulnerable and more subject to being leveraged into another massive bailout.
But if another bailout is what they have in mind, the joke is on them. Unfortunately for the banks and their lobbyists, we don't have the money. We didn't have the money for the 1st bailouts either, and along with our military expenses, we are now wallowing in debt and in need of a bailout ourselves. Perhaps from their record profits and record bonuses, this time they could bail us out.
Dick
For more details, please see "Big Banks Cash In On Commodities," The Wall Street Journal, (6/2/11),
http://online.wsj.com/article/SB10001424052702304563104576359704074143190.html
1 comment:
This is some good stuff. I've done a fair amount of research on this whole crisis and I'd like to say that this is the first blog that I've come across that doesn't try to get off on instilling fear. Thank you for the analysis and compiled information... helps a lot.
One thing that I would hope to see you guys touch up on is the Upper Education costs skyrocketing. I guess trying to pursue an Education while trying to buy the last jug of water at the market isn't exactly reasonable huh...
I want to plan for my future, but I find it extremely difficult understanding what our country is up against. I'm indeed fearful and confused of what I should do as far as keeping a stable job in the event of a crash and fending for myself while I have no one else to fall back on. At this point I wouldn't consider the government to be at all reliable if there is a full collapse.
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