How I made a fortune in Crack Spread Swaps on the NYMEX

I'm lying.

I've done no such thing.

But lying is the cornerstone of contemporary journalism, so don't blame me if I'm trying to play by the rules.

I couldn't tell you if my life depended on it what a "Crack Spread Swap" is. Back in the day the NYMEX had your basic Brent Crude and Light Sweet Crude on offer and I could sort of figure out what was going on with the attendant strike prices and expiry dates.

The derivatives at least had a sensible trail that led back to the underlying commodity.

Sensible in the sense that if you thought about it, you could make sense of it.

To say there has been an explosion in the proliferation of derivative products in the past twenty years would be an understatement of vast proportions.

And it's not hard to understand why.

Every year tens of thousands of new MBA's are graduated from universities in America and beyond. They've got to do something.

Not a one of them is prepared to contribute anything to the real economy, so they are forced into the Rumpelstiltskin economy of paper-shuffling and inventing new derivative products, and I swear the NYMEX must be adding at least a dozen new derivative products every day.

That makes it more time-consuming to sort through the multiplicity of Crack Spreads and the Conway Propane BALMO Swaps and find the real, or at least "realer" stuff, the futures options that are going to make the clean clear jump the moment the war on Iran takes off.

Once Bibi pulls the trigger oil will triple overnight. The trick to maximizing your profits will be to buy those contracts that are just days away from expiry when the shit hits the fan.

Of course, if the shit doesn't hit the fan, you just kissed your life savings good-bye.

But time it right, and every penny you invest will turn into a hundred dollar bill.

The Rumpelstiltskin economy; spinning straw into gold till it doesn't work anymore

Jon Corzine has certainly had an illustrious career. CEO of Goldman Sachs in the nineties. Senator and then Governor of the Garden State till Chris Christie turfed him. Never quite made it onto the Forbes billionaire list but came close.

After Christie put the boots to him he ended up as the top dog at MF Global, one of those Rumpelstiltskin creations that don't actually do anything useful but manage to put their ownership group into 100 foot yachts and 6000 square foot upper east side apartments. MF Global declared bankruptcy today. The times they are a-changing.

But maybe not. Back in the '20's there was a Guelph boy who made it big in the major money centers of America, first Chicago, then Wall Street. His name was Arthur Cutten. The Cutten Club in Guelph bears his name to this day. Had that Rumpelstiltskin magic working for him. Made the cover of Time magazine in 1928. The local mythology has him making hundreds of millions while his competitors were doing their death dives from the towers of Wall street.

Had it all. The yachts. The fancy apartments. All because he had a knack for spinning money out of nothing.

Spent the rest of his life being hounded by the federal government. Died in the late thirties while under indictment for income tax evasion and other oversights. He's buried in the same cemetery in Guelph as my grandmother and my great grandmother. Just as dead as they are.

So there's really nothing new about all this derivatives and options and futures stuff. The Rumpelstiltskin economy. Real wealth comes from making stuff that works and doing useful things for other people. It will never come from being a more clever or crooked paper shuffler than the next guy.

That's been our downfall. We've been worshiping the crooked paper shufflers for far too long.