TPS

Couple of informative pieces from Bloomberg on the current state of the oil market. My link My link2

Nice!

Aren't you already on record as saying we should let the tax cuts expire? I'm pretty sure you've said that a few times, yes? And since you already know, why play the game? No doubt the long run deficit issue requires both. I'm the only hard-headed person here? It's ironic that I'm the one defending the Reagan republican link....Bartlett was THE original supply-sider.

Just sayin' that you can't squeeze enough blood from those turnips to fill the deficit gap.

So making sure that the bottom 40% who aren't paying federal income taxes pay some tax will fill the shortfall? Let's see, they get 12% of ALL income, so your saying if we somehow get them back to paying some federal income tax all will be solved? It can't be that the top 20% share has increased to over 50% of all income while their tax rate has declined? Ps. It's pretty hilarious that the pendulum has swung so far right that all of you now arguing against one of Reagan's supply-side gurus in Mr. Bartlett....

I picked those two years because 2001 is the year just prior to the cuts AND the stock market didn't do well so you can't use the cap gains argument that gg always brings in; I chose 2006 because it has a comparable unemployment rate AND it gives a couple of years for the tax cuts to really kick in and provide an impact. The personal revenue shares for each year are 9.7% and 7.9% respectively, a -1.8% difference. Corporate revenues helped offset that a bit. The deficit as a % of GDP was -0.3% in 2001 and -3.3% in 2006. The increased deficit of course came from a combination of lower revenues and increased spending. Overall, for the 3% differential, lower revenues contributed 1% and increased spending 2%. It doesn't change the conclusions: 1. personal tax cuts reduce personal tax revenues measured as a share of gdp (for relatively comparable periods, the personal tax cuts generated almost 2% less revenue). 2. There is no hoser's law. There is a lot of movement around the average, and with $15 trillion gdp, 1% change means $150 billion impact. IMO, If there is some "dynamic" that prevents taxes from exceeding 20% of gdp, it's probably a political barrier--the public reacts at the polls.

All you guys can do is come up an attack when the facts don't support YOUR beliefs. You believe in the Laffer curve and hauser's law--the data contradict. The studies from the original OP contradict. Please provide some facts to back up your beliefs then. Btw, as for more facts, please find a post where I've come out in support of Obama. You want to link me with supporting Obama as a way to discredit. Please provide some facts instead of attacks. When was the last time you posted something substantive as opposed to an ad hominem attack? At least magox tries to back up his claims with data.

Stay away from the green dyed crayons...

A few responses, since we've gone over this ad nauseum... Let's compare 2001 the year before the tax cuts began and 2006 a few years after they had a chance to impact. Unemployment was 4.7% for 2001 and 4.6% in 2006 (this answers crayonz); the DOW was higher in 2006 than 2001 (to compare apples and apples). The on-budget deficit was -$30 billion in 2001 and -$434 billion in 2006--a $400 billion difference for the mathematically challenged. You guys are forced to constantly come up with ways to deny the facts because you are stuck on the ideology that supply side worked, when all it did was create huge deficits under republican presidents. Seems to me you guys need to do some esplaining...

All you have to do is look at the period from 2000 to 2008 (I'll ignore the recession) to debunk hoser's law. Revenues as a % of gdp ranged from a max of 20.6% to a min of 16.1%--that 4.5% swing means lost revenues on average amounted to $600 billion, and most of the loss was due to the Bush cuts in personal taxes. On-budget revenues (which excludes SS) swung from an $80 billion surplus in 2000 to an average $500 billion deficits from 2002-2006, as the Bush tax cuts took effect. But, if it fits your ideology, you can ignore the facts....

Let us pray...and hope the injury bug takes a holiday this season...

Of course, the mindset is "making money" regardless. But you don't think there's a difference between risking your own money vs risking someone else's?

This is how you reacted the last time you were wrong. "You're dumb. I'm a trader. I know what I'm talking about." Yes, I just happened to get lucky to find something really quickly that "proved me right"--as you stated, and I'm still ignorant... Btw, I'm not trying to explain to you what a swap dealer is, I'm trying to explain to you that the list you linked to is based on the old two category format of commercial or non-commercial, and swap dealers were counted as commercial in that old format. A simple question: is a swap dealer a user or producer of oil? There is a reason the CFTC changed the reporting format, which you can't seem to understand. Only one of the new four categories covers users/producers, and they represent less than 20% of the market. You can stick to the old format that you linked to, but you would be wrong to conclude anything about the size of commercial interests from that data. Things have changed.

Check the Kelly interview on BB.com. Kelly said Bruce called him and was all excited. There was no reason for him to be a part, but he is excited about the acquisition.

That's hilarious! You cite a study by academics to support your argument. Isn't that ironic. The Irwin and Sanders articles (they also published one for the OECD) were debunked by several other studies, in particular one by Better Markets which was linked in posts here at least a year ago. As for the data you provide... As you'll note in the actual data the quantity of contracts from actual producers/users amounts to no more than 20% of the open interest. What you don't understand is that Swaps dealers are considered "hedgers" and therefore, not speculators--they are included in the commercial interest category of your chart; despite the fact that all of their trades are related to "financial investments," not actual use. Initially the CFTC granted (position limit) exemptions to the big bank swap dealers (goldman et al) because the banks argued they were hedging exposure to investors who bought the swaps--the banks bought futures contracts to back their swap agreements. Eventually this became the rule. So Mr Genius, the chart that you linked to only has two categories of traders, which is the old format. If you look at the actual breakdown, users/producers make up about 30% of the commercial interests from you table; the rest of the commercial interest category are swap dealers listed as commercial traders. Read this, you might learn something...Definitions If you can't figure out that ACTUAL commercial interests make up less than 20% of the market after this then you are hopeless. Better yet, I'll help you out with the pertinent points:

As GG likes to say, it's the same **** that's gone on for years. However, I doubt they behaved this way before they incorporated.

Maybe you should try the ACTUAL data from the CFTC--there's more detail--instead of some secondary source like you posted. Check and see how much of the NYMEX market for crude (Code 067651) is made up of actual commercial interests, then tell me how financial players don't influence prices. Can't wait to see how you spin this one... And I'm not denying that the underlying S&D is the most important factor. What's happened is that asset allocation toward commodities, especially oil, is creating greater distortion. Do they add a permanent 15%? No. They cause prices to overshoot for longer periods and they create more volatility. CFTC COT ACTUAL data And in case you missed it, here's the data that Bernie Sanders released which shows holdings of crude futures at the height of the 2008 bubble. Check the largest holders. Yes, someone is blinded by ideology here... Sanders' leaked data

Yes, yes, yes...I don't understand how market works.... Who is pricing in the risk? Who is creating the premium? Oil companies, Wall STreet banks, ETF investors, swap dealers??? I guess that means Goldman Sachs, the oil CEOs, Fed researchers, et al don't understand markets either? We are fortunate to have you here, the one person who truly does understand markets.... Dude, all you have said is that expectations influence today's price--possible outcomes in the future influence decisions and prices today--duh. That's what traders/investor/specualtors do--they make bets today about what might happen in the future. Though it seems your spin is that it's only commercial interests who can influence prices? Are you really saying that financial bets don't influence futures prices? So you disagree with GS, the ceos, and a whole slew of researchers? Oil is a financial asset now. It became a "generalized (open to a broad spectrum of investors) financial asset" beginning around 2004. By the most conservative estimates--again from Goldie, oil CEOs, et al--financial bets have added a 15% premium to oil prices.

"Higher" not high. And speculators are fine as long as they don't dominate markets, unlike current markets. That was meant for 3rd.

Meanwhile gasoline demand is down 7.2% over the last 12 months, oil inventories are rising, and the Saudis say they will meet any "real" increase in demand, which isn't currently the case. My link

I wonder if Mario had the veal chop?

This is about what I said in the paper I wrote 7 years ago. The only possible replacement at this point would be a true international currency which is what the SDR was supposed to be, but the US made sure it would not supplant the $. While an international currency could be used as a unit of account (pricing global commodities for example), you need a highly liquid currency with broad financial markets to meet the store of value function--especially when there is a flight to global safety. As for your second point, while I made that same point in the old paper, here's the argument I made in a presentation Friday: Financialization of commodity markets now makes it possible for anyone to bet on commodity prices. Financial interests have flipped the futures market, and now dominate price determination in the short run (position limits had constrained financial interests to 20% of the market historically, but through innovations and deregulation they now represent 80%). The quantity of money flowing in from non-commercial (financial) interests really took off around 2004 via swaps, ETFs, ETNs, ETPs, etc. This has allowed the recent dollar-oil relation to emerge. If you look prior to 2004, you can't find a trend in the correlation between oil prices and the dollar--there were periods of negative correlation and periods of positive correlation. Since 2004 the correlation has averaged -0.82. The second necessary component is a widespread belief that the FED is debasing the dollar via QE1-?. Combine the two and you get this "financial fad." Traders have it programmed in--when the dollar falls, oil rises, or vice versa. Oil has become an alternative to gold in this way too. The difference and problem is that oil prices are subject to underlying demand and supply at some point, so these guys will get burned once in a while like last May's drop. The $ was steady, but the oil price bubble created a glut which popped fairly dramatically that first week of May 2011. Btw, regarding the price of oil post, the most recent and best study I've seen (published last month by Fed researchers) measured the impact from financial interests at 15% of the price. It's a Wall Street tax.

Ok, just want to say "I was wrong Stevie." I did not think you would end up signing here, because given your attempts to gain attention, I figured you would go to a bigger market. Good on you!

Gee, the part of investment spending which has not recovered--housing and structures. Wonder why? As for consumers, real expenditures are back to the level they were at in 2007--5 years later. However, as someone who works in finance, you must know that debt financed expenditures drive growth. Household debt is still contracting, and has been since 2008--the number one factor keeping growth down. Also, state and local governments are contracting, which offsets some of the federal government stimulus. So, businesses are investing in equipment, they aren't building new structures, and won't until capacity gets back to 81-82%.

I don't disagree with any of your micro points. There are a lot of issues that will make it difficult to create a sustainable recovery. My argument is about the macro effect of government deficits and how they sustain private sector surpluses. It's a matter of simple accounting. The reason households and businesses are net savers right now (improving their balance sheets) is because the government sector is running a deficit. The fact that the government spends more than it takes in taxes means the private sector and international sector are accumulating the bonds the government issues. In 2010, the total government deficit (includes state and local) was $1.556 trillion. Of that, households accumulated $535 billion in assets (they were net lenders); businesses accumulated $541 billion; and the international sector accumulated $480 billion. Again, it's accounting. The fact that government spends more than it takes in taxes means private sector incomes and assets are increasing. This is why businesses are accumulating and hoarding cash. As businesses and households decide to start saving less and spending more, then the economy will pick up, their surpluses will fall, and the growing economy will generate more tax revenues and there will be less spending--the government deficit will fall as the private sector starts to save less (spend more). Then there's the international sector and China...