George Soros Ought To Know

I didn’t get much support two weeks ago when I said that oil prices were being driven higher by speculators. But this morning, George Soros, one of the world’s greatest speculators, agreed with me.

“Speculation… is increasingly affecting the price,” he said. “The price has this parabolic shape which is characteristic of bubbles. You can also anticipate that [the bubble] will eventually correct but that is unlikely to happen before the recession actually reduces the demand. The rise in the price of oil and food is going to weigh and aggravate the recession.”

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0 Responses to George Soros Ought To Know

  1. Morgan Warstler says:

    What you said Jon, was that Iran was storing oil in tankers because there was NO DEMAND.

    You were wrong of course. Iran and Chavez are trying to tie up supplies to keep prices high because they themselves are in on the speculation.

    The POINT is our enemies are weaponizing oil. Stick to the point Jon, stick to the point.

  2. Fentex says:

    Iran is certainly making hay while the sun is shining, and that’s a thoroughly sensible thing for them to do. There doesn’t seem any need to ascribe more motive than profit to that though.

    Though I don’t imagine any Iranians sleep would be bothered by discomfort they cause the U.S.

  3. commonsguy says:


    You failed to provide a link to your lengthy quoted passage in that previous post, where you made your claims regarding Iran and Venezuela. Allow me:

    Based upon a Google search of the passage, this seems to be the original source of your quote. There are only two hits, and one seems to quote the other.

    I’m not saying this report is incorrect. However:

    1. It’s curious that, for an original reporting site purportedly with all sorts of customers, there’s only 108 links worldwide pointing to its home page, and 0 links to the article in question.

    2. It’s curious that the author fails to provide any citations whatsoever for his claims. I can see maybe some of the claims being from confidential sources, but all of them?

    3. It’s curious that the author’s primary claim to fame is having been a money launderer.

    As a rumor, it’s fine, but I’m dubious as to its quality.

    Do you have any other sources, besides this one?

  4. JR says:

    Jon, I’m not sure you saw my attachment in response to your summer reading. It’s Congressional testimony on pension and endowment speculation in commodities.

    And the banks and brokers have figured out how to provide leverage and put themselves and the financial system in further danger.

  5. Morgan Warstler says:


    I got the email forwarded from a well known wall street anti-crime unit. Its the kind of source I generally buy into. It was what I mentioned in a previous thread, Statfor talks about it as well.

    Could it be wrong? Sure. Do I wonder if Iran’s shitty crude doesn’t have many refineries? Sure. Do I think it sounds more cogent than Jon’s assertion there is a glut of oil and prices are based on speculation? Yes.

    The point is, the price of oil is largely being affected because other economies are coming online. It won’t zoom on forever, other economies – even with huge populations, are still fundamentally limited by their GNP. BUT, we are in fact running out of oil.

    My own particular theory is that Western Oil companies should be encouraged by US and Chinese interests to pump as fast as possible in Iraq. I think China & India should be our allies in all things energy. We should work together to reduce our personal consumption and use our buying power to screw OPEC and speculators, who I view in league with each other.

  6. Danny Kenny says:

    This whole debate is honestly ridiculous. Absolutely EVERYONE is talking about whether oil is a bubble or not, and everyone has their own opinion on it. Is it speculators (sure, but everyone is a speculator, even if you just hold dollars, you are speculating that they will go up, regardless if you think so or not)? Is it supply/demand (there is more demand than supply and prices of commodities are extremely elastic, depending mostly on the marginal increases/decreases in supply/demand)? Could there be a war in Iran? Could Pakistan fall apart? What about Peak Oil (will we ever find enough oil to replace what we’re consuming? Probably not.)? Is demand going to go down when the recessions start affecting demand (yes)?

    There are so many factors right now affecting the price of oil. I agree that it has gone parabolic, and is probably too high. But I think this has more to do with people wanting to hold hard assets, and get the hell out of paper money. It’s becoming clearer by the day that central banks are losing control of the financial system. Even in a deflationary environment, which is what is happening with credit destruction occurring faster than money creation (don’t be fooled, currencies are depreciating and deflating at the same time, due to credit risk and a lack of trust in the system), hard assets do well because of the uncertainty.

    Bottom line, Soros really is making a vacuous statement here. It is pretty obvious speculators are driving up the price. The more important question to ask is WHY? Why do people want to invest in a commodity that is above it’s ‘fundamental’ price, whatever that is? It is a sign of a lack of trust in the whole system. If you hold financial or paper assets, and the system collapses, you are left holding an empty bag, if even a bag at all. If you own oil, or futures contracts on oil, you have staked a claim in a useful commodity that someone will want, and that has use. Paper currencies and ‘financial assets’ don’t do anyone any good when no one will accept them.

  7. rhb says:

    CNN reported today a remarkable drop of 4% in the amount of automobile travel for the month of April. Newspapers tout articles and blog posts that teach frugality and conservationism strategies. Could it be that despite all the talk at the elevated levels of high commerce and party politics that the real American character is starting to reassert itself. You know the one that conserves resources, and shares with neighbors, and makes its own clothing, and cooks, cans, and stores its own garden grown produce. The one that really isn’t so far back in memory that we can’t retrieve its spirit and prove that self reliance tops dependence on the market place every time. The market place makes us fat. Tells us we will be free if we just spend more to make more. It seems to me that more I read across the blogosphere the more I see this independence and sharing of ideas. A sharing that will lead us towards a sustainable economy that can be right here right now right in front of us.

  8. Rick Turner says:

    It’s going to be hard to get oil out of the Middle East if we nuke Iran…

  9. Tomas says:

    I have recently seen a lot of articles regarding the $200/barrel price in the near future, but today I have come across this:
    The main points of the article are:
    * The consuption in the US is on the decline due to the financial crisis and rising gas prices.
    * The consumption of China is on the rise, but the rise is not that steep and the total consumption of China is only about 1/3 in comparison to the US, i.e. all added together the total demand does neither increase nor decrease.
    * There are several large new oilfields to be open in 2008
    * Up to 60% of the currrent oil price can attributed to speculation.
    (I have also read somewhere that this way the banks can compensate for the losses caused by the hedge fund/mortgage crisis)
    Any thoughts on this?

  10. Jon Taplin says:

    Morgan- I think I basically agree with your post here. We are in a world of peak oil, but certainly the price rise is being fueled by traders looking for a “self-fulfilling prophecy” when so much of the rest of the market is tanking and the dollar is so weak.

    I also agree that all industrial nations, even Russia have an interest in getting as much oil out of the ground at the cheapest price possible, while we figure out the alt. energy business.

    Where you and I differ is that I think invading countries that have oil in the mid-east actually raises prices and destabilizes the business platform that allows investors to put money into drilling.

  11. Morgan Warstler says:

    Well since we’ve already invaded and set up shop… I think it’s much better for us to work with China and India to use iraq’s oil to off-set OPEC’s strengths.

    The Iraqis are for it. China and India are for it. we are for it. It’d be nice if the left stopped hoping we’d side with Chavez and Iran. Obama is not going to do that, I wish to jesus he’d say so.

  12. Jon Taplin says:

    Morgan- Please don’t misinterpret what I said. You know I don’t think the Invasion of Iraq was a benefit. All I’m saying is we need to make the transition to alt fuels as quickly and as painlessly as possible. Tom Friedman has a good post on this this morning.

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