Post by jeffolie on Aug 3, 2010 14:02:20 GMT -6
"..oil ETF...dropped 50% ...as crude oil climbed 11%."
"...As one Wall Street trader put it: "I make a living off the dumb money... index funds get eaten alive by people like me." Proof: Bloomberg data shows that "10 well-known funds based on commodity futures ... since inception ... have trailed the performance of their underlying raw materials ... The biggest oil ETF, the U.S. Oil Fund ... has dropped 50% since it started in April 2006, even as crude oil climbed 11%."
"...many ETFs are "stuffed with exotic derivatives," at risk of becoming "the next financial time bomb...Wall Street banks are transferring wealth from their clients to their trading desks."
==================================================================
Commodity ETFs: Toxic, deadly, evil
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- The warning screams at you: "Do Not Buy Commodity ETFs!" Yes, this Bloomberg BusinessWeek cover reads like National Enquirer or a flashing neon sign on the Vegas Strip.
And just in case you didn't get the warning, B/W repeats it twice more, on the cover: "Do Not Buy Commodity ETFs ... Do Not Buy Commodity ETFs." Then, as if afraid you still won't get it, they scream even louder: Commodity ETFs are "America's worst investment."
Shying away from alternative investmentsThe market's volatility has made brokerage firms wary of risky alternative investments, but Tony Montanari, from Capital Guardian Wealth Management, says high-net-worth clients, and especially their advisers, still want these more sophisticated investments.
Worst? Add toxic, deadly, evil. Commodity ETFs are rapidly becoming a malicious virus breeding chaos in the global markets pricing all commodities: food, farm lands, metals, oil, natural gas, livestock, water and other natural resources are the assets under commodity derivatives and their ETFs, pricing that's now controlled more by Wall Street speculators than the weather, adding wild swings in volatility and trillions in global derivative risks.
And once again the usual suspects, the Goldman Conspiracy of Wall Street Banksters, are in the lead.
Today, Wall Street is making a killing on commodity ETFs. And yet at the same time they are rapidly accelerating global market conditions that'll eventually kill the goose that laid their golden egg, those high-profit-generating commodity ETFs. But unfortunately this new ideology, Chaos Capitalism, is rapidly moving past economic pricing wars into military conflicts, a trend the Pentagon predicted years ago, an ever-increasing cycle of global wars over increasingly scarce nonrenewable commodities.
'Next financial time-bomb ... stuffed with derivatives'
In Bloomberg Markets' "ETFs Gone Wild," investors are warned that many ETFs are "stuffed with exotic derivatives," at risk of becoming "the next financial time bomb." In short, thanks to ETFs, Wall Street is already creating a dangerous new kind of global weapon of mass destruction -- a bomb primed to detonate like the 2000 dot-coms, the 2008 subprimes -- and detonation is dead ahead.
Vanguard founder Jack Bogle added: "It's insanity ... this is a case of Wall Street trying to capitalize on the worst instincts of investors." Actually both Wall Street and Main Street are incapable of avoiding their "worst instincts."
And if you're betting the trend you know Wall Street's immune to criticism, already adjusting its strategies to keep a steady supply of naïve, clueless investors buying their toxic commodity ETFs, "dumb money" investments that "make lousy buy-and-hold investments" for Main Street investors while making Wall Street traders filthy rich.
Commodity ETFs: Wall Street's newest casino scam
Why lousy? Because ETF managers are competing against Wall Street's elite traders. And the playing field's not level: "Professional futures traders ... make easy profits at the little guy's expense. Unlike ETF managers, the professionals don't trade at set times. They can buy the next month ahead of the big programmed rolls to drive up the price or sell before the ETF, pushing down the price investors get paid for expiring futures."
As one Wall Street trader put it: "I make a living off the dumb money... index funds get eaten alive by people like me." Proof: Bloomberg data shows that "10 well-known funds based on commodity futures ... since inception ... have trailed the performance of their underlying raw materials ... The biggest oil ETF, the U.S. Oil Fund ... has dropped 50% since it started in April 2006, even as crude oil climbed 11%."
The indictment's brutal: "Just as they did with subprime mortgage-backed securities, Wall Street banks are transferring wealth from their clients to their trading desks." One commodity trader adds: "You walk into a casino, you expect to lose money ... same with these products." Another: "Turning commodity futures into securities unleashed a much larger sales force, stockbrokers selling a product many of them didn't understand."
Commodity index ETFs now a lethal WMD threat to Earth's survival
But far more chilling is BusinessWeek's warning of future consequences. Remember Bill Gross's "New Normal?" As future returns drop, investors are chasing riskier deals, like commodity ETFs: "Passive buy-and-hold investors at one point in mid-2008 held the equivalent of three years of production of soft red winter wheat. Wall Street's success in attracting those buyers boosted demand for futures contracts, which helped determine what consumers would pay for baked goods. Wheat prices jumped 52% in early 2008, setting records before plunging again, and sugar more than doubled last year even as the economy slowed." Warning: Capitalism's competitive pricing model is dead.
And if all these warnings from the likes of Bogle, Gross, Bloomberg Markets and BusinessWeek seem a bit hysterical, remember how hysteria drove past bubbles: dot-coms in 1999, subprimes in 2007. Euphoria blinds investors to dangers lurking in every bubble. And today that risk is magnified as 21st century bubbles are blowing bigger, more powerful and more dangerous, adding the new risk of nuclear "food fights."
In "The Food Bubble: how Wall Street starved millions and got away with it," Harper's Magazine's Frederick Kaufman offers another powerful indictment: "The history of food took an ominous turn in 1991 ... Goldman's analysts went about transforming food into a concept," by creating "the Goldman Sachs Commodity Index." Other bankers invented more indexes. Money flooded in.
Suddenly Wall Street speculators ruled the commodity-pricing market. What used to be a hedge for farmers became just another way for Wall Street traders and their sophisticated algorithms to make easy profits off "dumb money." So profitable Goldman even "owns a global network of aluminum warehouses," says B/W, and my old firm, "Morgan Stanley chartered more tankers than Chevron last year."
New Capitalists of Chaos love tragedies, famine, poverty, war
Rolling Stone's McKenzie Funk adds another brutal critique in "Will Global Warming, Overpopulation, Floods, Droughts and Food Riots Make This Man Rich?" Funk focuses on Phil Heilberg, a former AIG commodity trader who is one of the new "Capitalists of Chaos." Heilberg is a self-proclaimed pure Ayn Rand capitalist hustling Africa, making "land grab" deals to control millions of acres and commodity rights in unstable nations.
Heilberg "makes no apologies for dealing with warlords: 'This is Africa ... The whole place is like one big Mafia, and I'm like a Mafia head.'" Don't like his bluntness? But he does express a very dark truth driving this new ideology: The "essential lesson in capitalism" is "that no one is actually in control." In this new Chaos Capitalism, there is no rule-of-law, democracy is dead, chaos and anarchy rule.
Capitalists of Chaos like Heilberg have a warped sense of the long-term, out beyond the micro-myopic brains of Wall Street's commodity traders whose algorithms limit thinking to milliseconds. He sees a fatal flaw in Wall Street's short-term brain.
The 2008 meltdown was the turning point: Wall Street's in "the death knell of the financial instrument, of the paper world" and "the rise of the commodity." Big investors demand hard assets. Proof: When Funk was in New York and London he met "leading investors who, like Heilberg, are stepping away from the paper world to make commodity plays."
And the new players include nations as well corporate giants: China, Russia, Australia, Kazakhstan, etc. A global land grab is on. And while commodity ETFs are making bankers and traders rich today, most know that soon the ETF business will go the way of a small farmer hedging the season's crop in a grain silo.
They also know that the "Food Bubble" they're collectively blowing will also explode, triggering wars across the planet, wars fought over ever-scarcer non-renewable commodities. That's why the new Capitalists of Chaos -- not just Heilberg and Goldman, but Monsanto, Exxon, China -- and their competitors are in the short race to buy up and hoard rights to hard assets, positioning themselves for global catastrophes dead ahead.
Commodity ETFs, new WMDs more lethal than terrorist nuclear bombs
Commodity-index ETFs are a global threat far more dangerous to the world than nuclear attacks from terrorist nations. Nuclear WMDs have the power to wipe out major urban areas killing tens of thousands instantly, like Japan in 1945, leaving massive scars across humanity for many decades.
And yet, as Funk puts it: "Heilberg's bet on chaos is beginning to play out on the streets." The toxic trail of commodity ETFs is already proving to be deadly, starving thousands worldwide, while the new Capitalists of Chaos only see incredible profit opportunities, as they make huge bets that they'll get even richer in the next round of catastrophes, disasters, poverty, starvation and wars.
Bottom line: Commodity ETF/WMDs are mutating into a toxic pandemic fueled (and protected by) the insatiable greed of banks, traders and politicians whose brains are incapable of giving up their profit machine, won't until it implodes and self-destructs. The Wall Street Banksters have no sense of morals, no ethics, no soul, no goal in life other than getting very rich, very fast. They care nothing of democracy, civilization or the planet.
They are in a race to become the richest man in the world, to control more assets, more commodities, more rights, more land, more money than Warren Buffett, Bill Gates and Carlos Slim combined. It's a contest and the other 6.3 billion humans on the planet are just profit opportunities (and collateral damage) in the dangerous high-stakes games played by the new Capitalists of Chaos ruling the world.
www.marketwatch.com/story/commodity-etfs-toxic-deadly-evil-2010-08-03?pagenumber=2
"...As one Wall Street trader put it: "I make a living off the dumb money... index funds get eaten alive by people like me." Proof: Bloomberg data shows that "10 well-known funds based on commodity futures ... since inception ... have trailed the performance of their underlying raw materials ... The biggest oil ETF, the U.S. Oil Fund ... has dropped 50% since it started in April 2006, even as crude oil climbed 11%."
"...many ETFs are "stuffed with exotic derivatives," at risk of becoming "the next financial time bomb...Wall Street banks are transferring wealth from their clients to their trading desks."
==================================================================
Commodity ETFs: Toxic, deadly, evil
By Paul B. Farrell, MarketWatch
ARROYO GRANDE, Calif. (MarketWatch) -- The warning screams at you: "Do Not Buy Commodity ETFs!" Yes, this Bloomberg BusinessWeek cover reads like National Enquirer or a flashing neon sign on the Vegas Strip.
And just in case you didn't get the warning, B/W repeats it twice more, on the cover: "Do Not Buy Commodity ETFs ... Do Not Buy Commodity ETFs." Then, as if afraid you still won't get it, they scream even louder: Commodity ETFs are "America's worst investment."
Shying away from alternative investmentsThe market's volatility has made brokerage firms wary of risky alternative investments, but Tony Montanari, from Capital Guardian Wealth Management, says high-net-worth clients, and especially their advisers, still want these more sophisticated investments.
Worst? Add toxic, deadly, evil. Commodity ETFs are rapidly becoming a malicious virus breeding chaos in the global markets pricing all commodities: food, farm lands, metals, oil, natural gas, livestock, water and other natural resources are the assets under commodity derivatives and their ETFs, pricing that's now controlled more by Wall Street speculators than the weather, adding wild swings in volatility and trillions in global derivative risks.
And once again the usual suspects, the Goldman Conspiracy of Wall Street Banksters, are in the lead.
Today, Wall Street is making a killing on commodity ETFs. And yet at the same time they are rapidly accelerating global market conditions that'll eventually kill the goose that laid their golden egg, those high-profit-generating commodity ETFs. But unfortunately this new ideology, Chaos Capitalism, is rapidly moving past economic pricing wars into military conflicts, a trend the Pentagon predicted years ago, an ever-increasing cycle of global wars over increasingly scarce nonrenewable commodities.
'Next financial time-bomb ... stuffed with derivatives'
In Bloomberg Markets' "ETFs Gone Wild," investors are warned that many ETFs are "stuffed with exotic derivatives," at risk of becoming "the next financial time bomb." In short, thanks to ETFs, Wall Street is already creating a dangerous new kind of global weapon of mass destruction -- a bomb primed to detonate like the 2000 dot-coms, the 2008 subprimes -- and detonation is dead ahead.
Vanguard founder Jack Bogle added: "It's insanity ... this is a case of Wall Street trying to capitalize on the worst instincts of investors." Actually both Wall Street and Main Street are incapable of avoiding their "worst instincts."
And if you're betting the trend you know Wall Street's immune to criticism, already adjusting its strategies to keep a steady supply of naïve, clueless investors buying their toxic commodity ETFs, "dumb money" investments that "make lousy buy-and-hold investments" for Main Street investors while making Wall Street traders filthy rich.
Commodity ETFs: Wall Street's newest casino scam
Why lousy? Because ETF managers are competing against Wall Street's elite traders. And the playing field's not level: "Professional futures traders ... make easy profits at the little guy's expense. Unlike ETF managers, the professionals don't trade at set times. They can buy the next month ahead of the big programmed rolls to drive up the price or sell before the ETF, pushing down the price investors get paid for expiring futures."
As one Wall Street trader put it: "I make a living off the dumb money... index funds get eaten alive by people like me." Proof: Bloomberg data shows that "10 well-known funds based on commodity futures ... since inception ... have trailed the performance of their underlying raw materials ... The biggest oil ETF, the U.S. Oil Fund ... has dropped 50% since it started in April 2006, even as crude oil climbed 11%."
The indictment's brutal: "Just as they did with subprime mortgage-backed securities, Wall Street banks are transferring wealth from their clients to their trading desks." One commodity trader adds: "You walk into a casino, you expect to lose money ... same with these products." Another: "Turning commodity futures into securities unleashed a much larger sales force, stockbrokers selling a product many of them didn't understand."
Commodity index ETFs now a lethal WMD threat to Earth's survival
But far more chilling is BusinessWeek's warning of future consequences. Remember Bill Gross's "New Normal?" As future returns drop, investors are chasing riskier deals, like commodity ETFs: "Passive buy-and-hold investors at one point in mid-2008 held the equivalent of three years of production of soft red winter wheat. Wall Street's success in attracting those buyers boosted demand for futures contracts, which helped determine what consumers would pay for baked goods. Wheat prices jumped 52% in early 2008, setting records before plunging again, and sugar more than doubled last year even as the economy slowed." Warning: Capitalism's competitive pricing model is dead.
And if all these warnings from the likes of Bogle, Gross, Bloomberg Markets and BusinessWeek seem a bit hysterical, remember how hysteria drove past bubbles: dot-coms in 1999, subprimes in 2007. Euphoria blinds investors to dangers lurking in every bubble. And today that risk is magnified as 21st century bubbles are blowing bigger, more powerful and more dangerous, adding the new risk of nuclear "food fights."
In "The Food Bubble: how Wall Street starved millions and got away with it," Harper's Magazine's Frederick Kaufman offers another powerful indictment: "The history of food took an ominous turn in 1991 ... Goldman's analysts went about transforming food into a concept," by creating "the Goldman Sachs Commodity Index." Other bankers invented more indexes. Money flooded in.
Suddenly Wall Street speculators ruled the commodity-pricing market. What used to be a hedge for farmers became just another way for Wall Street traders and their sophisticated algorithms to make easy profits off "dumb money." So profitable Goldman even "owns a global network of aluminum warehouses," says B/W, and my old firm, "Morgan Stanley chartered more tankers than Chevron last year."
New Capitalists of Chaos love tragedies, famine, poverty, war
Rolling Stone's McKenzie Funk adds another brutal critique in "Will Global Warming, Overpopulation, Floods, Droughts and Food Riots Make This Man Rich?" Funk focuses on Phil Heilberg, a former AIG commodity trader who is one of the new "Capitalists of Chaos." Heilberg is a self-proclaimed pure Ayn Rand capitalist hustling Africa, making "land grab" deals to control millions of acres and commodity rights in unstable nations.
Heilberg "makes no apologies for dealing with warlords: 'This is Africa ... The whole place is like one big Mafia, and I'm like a Mafia head.'" Don't like his bluntness? But he does express a very dark truth driving this new ideology: The "essential lesson in capitalism" is "that no one is actually in control." In this new Chaos Capitalism, there is no rule-of-law, democracy is dead, chaos and anarchy rule.
Capitalists of Chaos like Heilberg have a warped sense of the long-term, out beyond the micro-myopic brains of Wall Street's commodity traders whose algorithms limit thinking to milliseconds. He sees a fatal flaw in Wall Street's short-term brain.
The 2008 meltdown was the turning point: Wall Street's in "the death knell of the financial instrument, of the paper world" and "the rise of the commodity." Big investors demand hard assets. Proof: When Funk was in New York and London he met "leading investors who, like Heilberg, are stepping away from the paper world to make commodity plays."
And the new players include nations as well corporate giants: China, Russia, Australia, Kazakhstan, etc. A global land grab is on. And while commodity ETFs are making bankers and traders rich today, most know that soon the ETF business will go the way of a small farmer hedging the season's crop in a grain silo.
They also know that the "Food Bubble" they're collectively blowing will also explode, triggering wars across the planet, wars fought over ever-scarcer non-renewable commodities. That's why the new Capitalists of Chaos -- not just Heilberg and Goldman, but Monsanto, Exxon, China -- and their competitors are in the short race to buy up and hoard rights to hard assets, positioning themselves for global catastrophes dead ahead.
Commodity ETFs, new WMDs more lethal than terrorist nuclear bombs
Commodity-index ETFs are a global threat far more dangerous to the world than nuclear attacks from terrorist nations. Nuclear WMDs have the power to wipe out major urban areas killing tens of thousands instantly, like Japan in 1945, leaving massive scars across humanity for many decades.
And yet, as Funk puts it: "Heilberg's bet on chaos is beginning to play out on the streets." The toxic trail of commodity ETFs is already proving to be deadly, starving thousands worldwide, while the new Capitalists of Chaos only see incredible profit opportunities, as they make huge bets that they'll get even richer in the next round of catastrophes, disasters, poverty, starvation and wars.
Bottom line: Commodity ETF/WMDs are mutating into a toxic pandemic fueled (and protected by) the insatiable greed of banks, traders and politicians whose brains are incapable of giving up their profit machine, won't until it implodes and self-destructs. The Wall Street Banksters have no sense of morals, no ethics, no soul, no goal in life other than getting very rich, very fast. They care nothing of democracy, civilization or the planet.
They are in a race to become the richest man in the world, to control more assets, more commodities, more rights, more land, more money than Warren Buffett, Bill Gates and Carlos Slim combined. It's a contest and the other 6.3 billion humans on the planet are just profit opportunities (and collateral damage) in the dangerous high-stakes games played by the new Capitalists of Chaos ruling the world.
www.marketwatch.com/story/commodity-etfs-toxic-deadly-evil-2010-08-03?pagenumber=2