Commodities Bubble

Again another repost from April of 2008 and yet still very applicable. The commodities markets are heating up again due to a significant move out of the USD. These same principles need to be addressed and yet it's 3 years later. Someone needs to force the legislative and executive branches to account for this mess.

(April 2008 repost)


Bernanke is really putting his flawed logic to the test if he drops the banking rates again next Tuesday. From the beginning of his term as Fed chief there has been some inclinations as to his true positions on inflationary pressures and his seemingly controversial dismissal of their relevance in the broader market. His absolute commitment to accommodate and bow to big money's whims has been overlooked by many. Jim Cramer (Mad Money) virtually begged Bernanke to listen to the poor hedge fund managers and bank exec's during the CDO free fall from his MSNBC platform. Looking at Cramers record it would appear his greatest success is baldness and screaming. His investment house over it's entire existence is a woeful display of mismanagement and bad bets but since he had an associated level of success at a time when everyone was succeeding we now have to listen to him. When the hedges and banks mark to market indexing left them high and dry and they were stuck holding billions in questionable debt they had yet to unload to school teachers, metal workers, policemen, and the rest of us; they began screaming that the system that had brought them such success was now clearly flawed and could no longer be trusted. Instead of holding strong and governing the markets Bernanke has decided it's better to concede to the spectacle and tuxedo adorned monopoly men of Wall Street. He has consistently dropped rates and encouraged bailouts all while watching the dollar freefall to it's lowest levels ever against the Euro. He's watched as commodities have soared and has encouraged continued profiteering by lowering the inner banking rates and opening lending windows to non institutionalized banks. By doing so he can claim his trying to eliminate the credit crunch but all he's really doing is allowing the same individuals who ran the mortgage industry into a brick wall during their cash grab to turn their full efforts with an equal lack of restraint into the commodities market. Nobody could possibly believe that the cheap money made available by the Fed is going to collateralized debt, it's going straight into the commodities market and Bernanke keeps feeding the frenzy by discounting rates. The logic is absurd and clearly a man with the intelligence and experience of Bernanke is aware of exactly what's going on.

With an anticipated drop of .25% during next weeks meeting we can expect commodities are going to continue their rise. Oil and grain futures will continue to be used as a wealth driven tool as opposed to a hedge. If Bernanke chooses to take a stand and leave rates where they are, the sell off will be quick and prices will begin to realign themselves. Do we really need hedge individual fund managers to make billions in salaries at the expense of the many? Capitalism without restraint is oppression. Those who have bear a responsibility to act fairly and responsibly. Restraint, accountability, and compassion need to be returned to business. Our current success at any cost mentality is going to upend the very platforms we have used to achieve our current positions.


My question to Ben Bernanke is how much longer will you suffer that the least of those in this world suffer at the expense of significant profit lines for the few? Isn't your job Sir to protect the markets as a whole and not defend the few who are already positioned and protected? How many will be killed in food riots before you take a stand? You act as if you feel what you're doing is in the best interests of the world, but I contend that is only the case if your world doesn't extend past the platinum clubs of the Wall Street elitist's. It's time you either admit your true purpose or do the right thing. Leave the rates alone. Let the fat cats take care of themselves for minute while you care for those who you are truly positioned to serve.