Lazy Susan
Ok, this is going to be a long one, but there’s a point to my rambling so stick with it.
Here’s something that just hit the tubes that has me all in a tizz.
View more documents from theoilman.
The crux of the issue lies in a process called Round Tripping, Round Trip Trading, or ‘Lazy Susans’ which involves a company selling something, in this case oil, to another company, and then buying it back immediately for the same price.
But why would anyone do such a thing? What’s the point. Well, there’s three ways this helps an organization cook the books.
- Both companies can show it as revenue to make it look like they’ve sold more than they actually did. Providing them with something nice to talk about with investors.
- Both companies can show it as an investment. Again, this all looks good on the balance sheet and to investors.
- Companies which aren’t meeting analysts forecasts can artificially inflate their numbers to meet fictional targets.
- Commodity markets are highly sensitive to trades, and activity like this will artificially inflate prices.
In this instance, they appear to taking advantage of all four of those benefits, but primarily it’s about artificially inflating demand.
The practice is forwned upon by investors and it’s Illegal in the US, although I can’t find any laws pertaining to it for the UK and Europe. None the less, I found this little snippet on the ICE investor relations website.
In addition to its robust platform which offers round-trip futures trading in an average of 3 milliseconds, ICE has delivered a number of tools to better accommodate the Russell Index trading community
I’ve included that quote to highlight the fact that ICE is proud of, and actively promotes it’s Round Trip Trading services, just in case they decide to say otherwise in the near future.
Ok, let’s get some perspective here. Economically, we’re in the shit. Big time. And all because a handful of companies were pissing around, inflating numbers and pretending there was money where there wasn’t. The biggest of which being AIG, acompany they said was ‘too big to fail’ and who’s imminent failing prompted the largest ever hand out of tax payers money across the globe, in the history of mankind. And it all went to fat fuck cunt faced cock sucking bankers who should all be forced to live buried up to their necks in human shit for the rest of their pointless fucking lives… if you ask me.
One important thing to note here: In 2006, the UK and the rest of Europe backed down to the ominously names John M. (fourth) Reich, director of the US Office of Thrift Supervision (OTS) who worked hard to prevent Europe checking up on the activities of major US corporations operating in Europe. In 2006…
Reich said he was working to ensure that the financial companies under his watch wouldn’t be burdened by added “regulatory scrutiny” in Europe. Among other things, he said the OTS designation meant U.S. companies operating in Europe could avoid testing “the qualifications of key personnel” and requirements to keep more cash and assets in reserve to cushion against losses.
At the time, the OTS had just one person to oversee several insurers, including AIG.
Anyhoot, then 2008 happened and it all went to shit, not least because our leaders here in the UK neglected their responsibility to oversee these organizations, despite the UK being the most experienced nation in the world at dealing with shit like that. The UK could have told the US that if AIG wanted to do business here, we would have to look at it’s practices. But we didn’t. We could have dodged a bullet. Instead, the UK government and the EU simply didn’t have the stones to do what they were meant to do.
And so here we are in 2009, with most of us still reeling from the blow that will never be felt by the majority of those responsible. And what’s changed? Absolutely fucking nothing. The people who took our money are back on their yachts quaffing champagne and furiously masturbating over child porn (I’m presuming they’re pedophiles since they’re pure evil). And we’re all skint again, but still somehow paying for someone else’s mistakes/follies/exuberant lives. Oh, but our governments have finally put a stop to all those credit derivative swaps that got us into this mess. Albeit way to late for it to make any fucking difference.
But instead of an imaginary economy built on imaginary money, we now have imaginary revenues and imaginary investments leading to imaginary profits caused by an imaginary demand in the most important and volatile market of all, energy. And look who’s behind all this! Royal Dutch Shell, Total and BP are but three of the companies playing fast and loose with our economies. In 2007 AIG held the number 6 slot in the Forbes Global 2000 ranking. As of 2007, Royal Dutch Shell is ranked #2, BP is ranked #5 and Total is at #19.
If AIG was too big to fail, I wonder how much this bunch of malcontents will cost us in the end.
In summary; Everyone knows this is happening, and our leaders have the motive and opportunity to step in and put a stop to it. But they wont because that’s not what governments do any more. Instead, in 2010 or 2011 we’ll be talking about the credit crunch with a fondness and nostalgia reserved for better times, while the terms ‘Round Tripping’ and ‘Lazy Susan’ take over the headlines and descend upon us mere mortals like a cloud of biblical locusts.
