HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » Forums & Groups » Main » General Discussion (Forum) » One of the many ways we'r...

Mon Sep 24, 2012, 04:17 PM

One 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.

29 replies, 2818 views

Reply to this thread

Back to top Alert abuse

Always highlight: 10 newest replies | Replies posted after I mark a forum
Replies to this discussion thread
Arrow 29 replies Author Time Post
Reply One of the many ways we're screwed. (Original post)
Saviolo Sep 2012 OP
a geek named Bob Sep 2012 #1
Saviolo Sep 2012 #2
a geek named Bob Sep 2012 #3
Warren DeMontague Sep 2012 #22
SheilaT Sep 2012 #4
a geek named Bob Sep 2012 #5
Saviolo Sep 2012 #7
a geek named Bob Sep 2012 #8
progressoid Sep 2012 #15
a geek named Bob Sep 2012 #16
progressoid Sep 2012 #18
a geek named Bob Sep 2012 #19
progressoid Sep 2012 #20
a geek named Bob Sep 2012 #21
progressoid Sep 2012 #23
a geek named Bob Sep 2012 #24
LanternWaste Sep 2012 #27
a geek named Bob Sep 2012 #29
JNelson6563 Sep 2012 #6
a geek named Bob Sep 2012 #9
JNelson6563 Sep 2012 #11
a geek named Bob Sep 2012 #12
mbperrin Sep 2012 #14
a geek named Bob Sep 2012 #17
mbperrin Sep 2012 #25
a geek named Bob Sep 2012 #26
unblock Sep 2012 #10
HopeHoops Sep 2012 #13
RagAss Sep 2012 #28

Response to Saviolo (Original post)

Mon Sep 24, 2012, 04:23 PM

1. so make the switch to EV or bio-diesel, or hydrogen...

 

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #1)

Mon Sep 24, 2012, 04:28 PM

2. Not the switch that needs to be made

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...

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Saviolo (Reply #2)

Mon Sep 24, 2012, 04:29 PM

3. by making that switch, you remove their power over you

 

at least a little bit

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Saviolo (Reply #2)

Thu Sep 27, 2012, 06:51 PM

22. Because addicts are always at the mercy of the dealer. Always.

The answer is not to find a better dealer. The answer is to stop the addiction.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Saviolo (Original post)

Mon Sep 24, 2012, 04:36 PM

4. $1.50 increase on the barrel

increases the price at the fuel pump by how much?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to SheilaT (Reply #4)

Mon Sep 24, 2012, 04:38 PM

5. about 3 extra pennies

 

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #5)

Mon Sep 24, 2012, 05:06 PM

7. That adds up

When you consider it was caused by one person in about half an hour, and affected the world oil price.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Saviolo (Reply #7)

Mon Sep 24, 2012, 05:08 PM

8. oh jebbers christmas

 

3 cents won't break many people...

Are we really going to play repetition of alarming first statements?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #8)

Thu Sep 27, 2012, 05:41 PM

15. Lucky for you.

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.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to progressoid (Reply #15)

Thu Sep 27, 2012, 06:21 PM

16. sounds like a slippery slope argument... n/t

 

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #16)

Thu Sep 27, 2012, 06:25 PM

18. Hmmm

nope.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to progressoid (Reply #18)

Thu Sep 27, 2012, 06:32 PM

19. Could I ask an imposition of you, and ask you to

 

further develop your answer?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #19)

Thu Sep 27, 2012, 06:34 PM

20. I was going to ask the same of you.

Where's the slippery slope?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to progressoid (Reply #20)

Thu Sep 27, 2012, 06:37 PM

21. glad to oblige...

 

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.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #21)

Thu Sep 27, 2012, 07:04 PM

23. Funny thing is, we've been going down an actual slope.



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.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to progressoid (Reply #23)

Thu Sep 27, 2012, 07:07 PM

24. then maybe we should change tactics...

 

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.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #8)

Fri Sep 28, 2012, 11:08 AM

27. I'm not aware of too many people who purchase merely one gallon of gas..

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.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to LanternWaste (Reply #27)

Fri Sep 28, 2012, 01:00 PM

29. okay, let's try this...

 

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...

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Saviolo (Original post)

Mon Sep 24, 2012, 05:06 PM

6. Public floggings would put a fast stop

to that kind of shit. And all property confiscated & donated to the poor.

Fucker.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to JNelson6563 (Reply #6)

Mon Sep 24, 2012, 05:09 PM

9. what a wonderfully nuanced strategy

 

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #9)

Mon Sep 24, 2012, 07:39 PM

11. I'm nothing if not subtle.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to JNelson6563 (Reply #11)

Mon Sep 24, 2012, 09:11 PM

12. Why not just take the guy out into a field and shoot him?

 

public flogging and confiscation of all of his worldly goods would most likely make a committed enemy.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #12)

Thu Sep 27, 2012, 05:18 PM

14. I'll be happy to take him, shoot him, anyone else he's trained, and anyone

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?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to mbperrin (Reply #14)

Thu Sep 27, 2012, 06:23 PM

17. mbperrin... I wouldn't want to visit the sins of the father on the kids

 

I figure we could make it look like a mugging gone bad...

Reply to this post

Back to top Alert abuse Link here Permalink


Response to a geek named Bob (Reply #17)

Thu Sep 27, 2012, 07:23 PM

25. Well...okay, but you are a better person than I am.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to mbperrin (Reply #25)

Thu Sep 27, 2012, 07:27 PM

26. Thnak you good sir/madam...

 

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Saviolo (Original post)

Mon Sep 24, 2012, 05:12 PM

10. it's mind-boggling to me the companies themselves don't have tighter controls.

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.

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Saviolo (Original post)

Tue Sep 25, 2012, 12:21 PM

13. Spiking the punch, eh?

 

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Saviolo (Original post)

Fri Sep 28, 2012, 11:49 AM

28. ...oh well, just read my sig line.

Reply to this post

Back to top Alert abuse Link here Permalink

Reply to this thread