Posted on 05/09/2011 9:06:35 AM PDT by SeekAndFind
As gasoline prices passed $4 per gallon in Connecticut, Sen. Richard Blumenthal and Rep. Joseph D. Courtney joined President Obama in denouncing "speculators" and urging investigation of manipulation in the oil market. There are a few problems with this.
First is that such investigations have been undertaken before, including investigations by Blumenthal himself during his 20 years as Connecticut's attorney general, and they never found anything more than the OPEC oil producer cartel's public but uneven efforts to support the oil price. Anti-competitive as its activity is, OPEC's formation a half century ago was only a defensive response to the rigging of the currency markets by Western central banks and particularly by the U.S. Treasury Department and Federal Reserve, which were manipulating the value of the world reserve currency, the dollar, the international means of payment for oil, long before OPEC began to try to manipulate the oil price.
The second problem is that there are always speculators in all major markets. There were speculators in the oil market when gasoline last went to $4, in the summer of 2008, again when it crashed to $1.65 at the end of that year, and ever since then as it has risen back to $4. Big players in commodity markets can get away with a lot of manipulation because regulation by the U.S. Commodity Futures Trading Commission is so weak, but as the biggest players are investment banks allied with the government, which wants lower commodity prices, much of that manipulation is actually downward.
Third, and most important, the value of the U.S. dollar as measured in other currencies has fallen about 13 percent over the last year, hitting its lowest point since the dollar's last link to gold was broken in 1971. The dollar's fall reflects the U.S. government's long mismanagement of its finances and the nation's economy.
Any review of market manipulation should start with the biggest manipulator -- the U.S. government itself. With nearly complete secrecy, the Federal Reserve lately has been funneling hundreds of billions of dollars to private financial institutions, purportedly to stabilize markets. Congress and the public have little idea of what actually has been done with this money, nor any idea at all of the private understandings the Fed and Treasury Department have with investment houses like J.P. Morgan Chase that often act as government agents in the markets.
Further, federal law long has established an office in the Treasury Department whose very purpose is market manipulation: the Exchange Stabilization Fund. While it originally was intended to stabilize the dollar against foreign currencies, the fund is authorized to intervene in any market at the discretion of the treasury secretary and president. The law says the fund's decisions "are final and may not be reviewed by another officer or employee of the government."
The Fed and the Treasury Department routinely refuse to answer questions about their secret market interventions. Now that the government bond market is admittedly and almost entirely a Fed operation, even reputable market observers suspect that the government's market intervention has become comprehensive as the government's financial mismanagement has worsened -- that not just the bond market but the dollar and equity markets as well are being held up only because of secret government intervention.
So congressional investigation of market manipulation should start with the government itself -- if members of Congress aren't too scared of what they might find.
-----
Chris Powell is managing editor of the Journal Inquirer.
The feds need a convenient scapegoat.
Their in tent is to make the speculators the boogey men and their hands are clean................Right out of Animal Farm and 1984...........
Paging Capt. Obvious.
In a dramatic move yesterday President Bush removed the executive-branch moratorium on offshore drilling. Today, at a news conference, Bush repeated his new position, and slammed the Democratic Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.
http://www.nationalreview.com/kudlows-money-politics/2249/bush-says-drill-drill-drill-151-and-oil-drops-9
We collect big permit fees from "big oil" so they can drill, then not allow them to drill.
We subsidize about $0.51 per gallon of gas sold to big oil as long as they give $0.07 to big ethanol. So if we stop this subsidy, we are also choking big corn.
Since none of this makes sense, it must all be part of the Obama energy anti-petroleum, non-energy energy plan.
The feds need a convenient scapegoat.
Their in tent is to make the speculators the boogey men and their hands are clean................Right out of Animal Farm and 1984...........
You got that right. Look for Eric Holder to announce some bogus charges against a couple of them shortly, followed by a high-profile show trial. Speculators will start fleeing the market and the price of oil will plummet. Barry will look like a hero and begin lecturing us about how we NEED him to ride herd on Grrrreedy Capitalism.
this is just bait and switch.
“pay no mind to that polician or bureacrate behind the curtain.”
Obama is just trying to sell useless Volt cars.
I just get in front of a Chevy Volt, throw it in neutral, and let them push me along. When I get to my destination, I give ‘em a tip of the old hat, turn off, and I’m set. I’m getting 500 miles per gallon.
most our Congresscritters couldn't find their ass with both hands.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.