General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsOne of the many ways we're screwed.
This news is a little old, but this is the first I've heard about it. It's hard to believe that this could happen, but... then again, it's not so hard to believe.
Here's the story:
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7862246/How-a-broker-spent-520m-in-a-drunken-stupor-and-moved-the-global-oil-price.html
To paraphrase, a brokerage employee during a drunken blackout state traded so much money on oil futures that it changed the price of oil globally. One man, while incoherently drunk.
Some excerpts (emphasis mine):
It was 7.45am on June 30 last year when the senior, longstanding broker for PVM Oil Futures was contacted by an admin clerk querying why he'd bought 7m barrels of crude in the middle of the night.
By 10am it emerged that Mr Perkins had single-handedly moved the global price of oil to an eight-month high during a "drunken blackout". Prices leapt by more than $1.50 a barrel in under half an hour at around 2am the kind of sharp swing caused by events of geo-political significance. Ten times the usual volume of futures contracts changed hands in just one hour.
By the time PVM realised the trades were not authorised and swiftly began to unwind the positions, losses of exactly $9,763,252 had stacked up.
Mr Perkins' trading stopped for a few hours, but in the early hours of the morning, he returned to the oil market via his laptop. He placed an incredible $520m in orders through ICE Futures Europe, where traders can buy or sell crude oil for future delivery and bet on whether prices will go up or down. The first trade was at 1.22am was at $71.40 per barrel and the last trade at 3.41am was at $73.05. During this period, Mr Perkins gradually edged up the price by bidding higher each time, until he was responsible for 69pc of the global market volume.
Mr Perkins told investigators that he has "limited recollection" of the entire episode, claiming he had placed the trades during a drink-induced stupor.
Having admitted to an alcohol problem and received treatment, Mr Perkins was banned from trading for five years and hit with a £72,000 fine, reduced from £150,000 because of potential financial hardship.
Let's put that into perspective. $1.50 increase on a barrel of oil means that some people had to decide between filling their car to go to work or eating that week. Did people their jobs because they couldn't afford the gas to get to them? Did people die because they couldn't afford oil to heat their homes. This one man pushed oil prices up -globally-.
I'd say he deserves a harsher punishment than what is indicated in the article, but the problem is systemic. Brokers and corporations all have their collective twitchy finger on the same button. But no, they want to be deregulated further. They want no oversight. They want the inmates to run the asylum.
a geek named Bob
(2,715 posts)Saviolo
(3,282 posts)It's not so much the oil that's a concern. It's that one person at a brokerage firm has the ability to change the global economy while drunkenly incoherent. And there are tons of people with that power, each, individually.
How do we know they're not drunks, or crazy, or depressed...
a geek named Bob
(2,715 posts)at least a little bit
Warren DeMontague
(80,708 posts)The answer is not to find a better dealer. The answer is to stop the addiction.
SheilaT
(23,156 posts)increases the price at the fuel pump by how much?
a geek named Bob
(2,715 posts)Saviolo
(3,282 posts)When you consider it was caused by one person in about half an hour, and affected the world oil price.
a geek named Bob
(2,715 posts)3 cents won't break many people...
Are we really going to play repetition of alarming first statements?
progressoid
(49,990 posts)Three cents won't break you. I've seen people cry at the pump because they couldn't afford the gas to get to work. I once paid the extra $1.55 for a woman's gas because she had accidentally over-pumped and had no way to pay those few pennies.
Every cent counts for a lot of America. And if we just sit back a say, it's only 3 cents, the Wall Streeters, drunk on more than booze will continue to fuck the rest of us until there are no cents left.
a geek named Bob
(2,715 posts)progressoid
(49,990 posts)nope.
a geek named Bob
(2,715 posts)further develop your answer?
progressoid
(49,990 posts)Where's the slippery slope?
a geek named Bob
(2,715 posts)Every cent counts for a lot of America. And if we just sit back a say, it's only 3 cents, the Wall Streeters, drunk on more than booze will continue to fuck the rest of us until there are no cents left.
From
http://www.nizkor.org/features/fallacies/slippery-slope.html
Description of Slippery Slope
The Slippery Slope is a fallacy in which a person asserts that some event must inevitably follow from another without any argument for the inevitability of the event in question. In most cases, there are a series of steps or gradations between one event and the one in question and no reason is given as to why the intervening steps or gradations will simply be bypassed. This "argument" has the following form:
Event X has occurred (or will or might occur).
Therefore event Y will inevitably happen.
progressoid
(49,990 posts)Certainly I don't think they will completely bleed us dry. Nor does the blame belong only on Wall Street. But a few pennies here and a few more there, multiplied by thousands of people over decades adds up.
That's me on that pale blue line. Like many Americans, I work harder today than I did twenty years ago and I make less. So, yeah - that's a slope I been on for a long time and I'm getting sick of it.
a geek named Bob
(2,715 posts)1.) start up linked local currencies
2.) more local foods
3.) cheap energy
Those would make it tougher for the FIRE guys to bleed us.
LanternWaste
(37,748 posts)3 cents most likely won't break too many people if that figure is alone and absolute. Yet I'm not aware of too many people who purchase merely one gallon of gas...
However, I do understand that we often attempt to minimize or trivialize those things which, when looked at collectively, become figures with a gross aggregate of billions world-wide to better reinforce our own opinions.
a geek named Bob
(2,715 posts)3 pennies added to 4 dollars.
3/400 = .75 percent raise.
That's pretty much random background noise.
Somebody getting rich off background noise doesn't stoke my fires...
JNelson6563
(28,151 posts)to that kind of shit. And all property confiscated & donated to the poor.
Fucker.
a geek named Bob
(2,715 posts)JNelson6563
(28,151 posts)a geek named Bob
(2,715 posts)public flogging and confiscation of all of his worldly goods would most likely make a committed enemy.
mbperrin
(7,672 posts)who might be carrying his DNA.
I'm a tad bit disgusted that a drunk can waste more money in a night than most people will earn in a lifetime.
We don't hesitate to get rid of mold in the bathroom. Why give more consideration to this more-costly fungus?
a geek named Bob
(2,715 posts)I figure we could make it look like a mugging gone bad...
mbperrin
(7,672 posts)a geek named Bob
(2,715 posts)unblock
(52,236 posts)sure, i think the government should impose more regulation because companies have demonstrated a willful negligence in terms of self-monitoring, but take a at this situation, or better yet, the bofa debacle.
bofa lost BILLIONS due to a trades that never should have happened.
that means, simply put, bofa could have spent, literally, A BILLION DOLLARS on internal oversight, software and personnel and practices that prevent unauthorized trades and so on, and come out ahead.
trading companies continue to know these risks and yet they continue to fail to spend anything REMOTELY like this to prevent them.
not saying they should spend that much, hell, maybe $50 million or so is way more than enough. point is, they have no excuse not to spent whatever it takes. yet they don't.