Posted on 05/30/2008 6:34:18 AM PDT by MNJohnnie
America's leading commodities regulator has launched an unprecedented investigation into possible market manipulation in the US crude oil market amid record prices which continue to cripple various parts of the global economy.
The Commodities Future Trading Commission (CFTC), working closely with other international regulators including the Financial Services Authority in the UK, has begun a series of detailed inquiries over concerns that energy speculators are behind the rising oil price.
This should have been done a few months or years ago for the reason you listed. Perhaps the Rats might not want this can or worms to be opened?
While Soros may or may not be involved, the commission might want to look at traders that are tied to union and other pension funds. Pension funds own large blocks of stock in oil companies and then get in on the oil futures trading to drive up the price and thus enhance their stock portfolios.......
I was thinking the same thing when I heard about it.
When I see the public fooled by such deflections, I start thinking that perhaps Plato had it right when he designed his Republic and how it was to be governed. Maybe we'd get some honest people elected if we demanded that voters take a current events test before they are allowed to vote. Instead, we get politicians--and the GOP fits here, too--who promise handouts to get elected instead of doing what's right.
see post above
It was common in those days, as it is in ours, to identify the Communists as leftist and the Nazis as rightists, as if they stood on opposite ends of the ideological spectrum. But Mises knew differently. They both sported the same ideological pedigree of socialism. “The German and Russian systems of socialism have in common the fact that the government has full control of the means of production. It decides what shall be produced and how. It allots to each individual a share of consumer’s goods for his consumption.”
The difference between the systems, wrote Mises, is that the German pattern “maintains private ownership of the means of production and keeps the appearance of ordinary prices, wages, and markets.” But in fact the government directs production decisions, curbs entrepreneurship and the labor market, and determines wages and interest rates by central authority. “Market exchange,” says Mises, “is only a sham.”
Mises’s account is confirmed by a remarkable book that appeared in 1939, published by Vanguard Press in New York City (and unfortunately out of print today). It is The Vampire Economy: Doing Business Under Fascism by Guenter Reimann, then a 35-year old German writer. Through contacts with German business owners, Reimann documented how the “monster machine” of the Nazis crushed the autonomy of the private sector through onerous regulations, harsh inspections, and the threat of confiscatory fines for petty offenses.
“Industrialists were visited by state auditors who had strict orders to examine the balance sheets and all bookkeeping entries of the company or individual businessman for the preceding two, three or more years until some error or false entry was found,” explains Reimann. “The slightest formal mistake was punished with tremendous penalties. A fine of millions of marks was imposed for a single bookkeeping error.”
Reimann quotes from a businessman’s letter: “You have no idea how far state control goes and how much power the Nazi representatives have over our work. The worst of it is that they are so ignorant. These Nazi radicals think of nothing except ‘distributing the wealth.’ Some businessmen have even started studying Marxist theories, so that they will have a better understanding of the present economic system.
“While state representatives are busily engaged in investigating and interfering, our agents and salesmen are handicapped because they never know whether or not a sale at a higher price will mean denunciation as a ‘profiteer’ or ‘saboteur,’ followed by a prison sentence. You cannot imagine how taxation has increased. Yet everyone is afraid to complain. Everywhere there is a growing undercurrent of bitterness. Everyone has his doubts about the system, unless he is very young, very stupid, or is bound to it by the privileges he enjoys.
“There are terrible times coming. If only I had succeeded in smuggling out $10,000 or even $5,000, I would leave Germany with my family. Business friends of mine are convinced that it will be the turn of the ‘white Jews’ (which means us, Aryan businessmen) after the Jews have been expropriated. The difference between this and the Russian system is much less than you think, despite the fact that we are still independent businessmen.”
As Mises says, “independent” only in a decorous sense. Under fascism, explains this businessman, the capitalist “must be servile to the representatives of the state” and “must not insist on rights, and must not behave as if his private property rights were still sacred.” It’s the businessman, characteristically independent, who is “most likely to get into trouble with the Gestapo for having grumbled incautiously.”
“Of all businessmen, the small shopkeeper is the one most under control and most at the mercy of the party,” recounts Reimann. “The party man, whose good will he must have, does not live in faraway Berlin; he lives right next door or right around the corner. This local Hitler gets a report every day on what is discussed in Herr Schultz’s bakery and Herr Schmidt’s butcher shop. He would regard these men as ‘enemies of the state’ if they complained too much. That would mean, at the very least, the cutting of their quota of scarce and hence highly desirable goods, and it might mean the loss of their business licenses. Small shopkeepers and artisans are not to grumble.”
“Officials, trained only to obey orders, have neither the desire, the equipment, nor the vision to modify rules to suit individual situations,” Reimann explains. “The state bureaucrats, therefore, apply these laws rigidly and mechanically, without regard for the vital interests of essential parts of the national economy. Their only incentive to modify the letter of the law is in bribes from businessmen, who for their part use bribery as their only means of obtaining relief from a rigidity which they find crippling.”
Says another businessman: “Each business move has become very complicated and is full of legal traps which the average businessman cannot determine because there are so many new decrees. All of us in business are constantly in fear of being penalized for the violation of some decree or law.”
Business owners, explains another entrepreneur, cannot exist without a “collaborator,” i.e., a “lawyer” with good contacts in the Nazi bureaucracy, one who “knows exactly how far you can circumvent the law.” Nazi officials, explains Reimann, “obtain money for themselves by merely taking it from capitalists who have funds available with which to purchase influence and protection,” paying for their protection “as did the helpless peasants of feudal days.”
“It has gotten to the point where I cannot talk even in my own factory,” laments a factory owner. “Accidentally, one of the workers overheard me grumbling about some new bureaucratic regulation and he immediately denounced me to the party and the Labor Front office.”
Reports another factory owner: “The greater part of the week I don’t see my factory at all. All this time I spend in visiting dozens of government commissions and offices in order to get raw materials I need. Then there are various tax problems to settle and I must have continual conferences and negotiations with the Price Commission. It sometimes seems as if I do nothing but that, and everywhere I go there are more leaders, party secretaries, and commissars to see.”
In this totalitarian paradigm, a businessman, declares a Nazi decree, “practices his functions primarily as a representative of the State, only secondarily for his own sake.” Complain, warns a Nazi directive, and “we shall take away the freedom still left you.”
In 1933, six years before Reimann’s book, Victor Klemperer, a Jewish academic in Dresden, made the following entry in his diary on February 21: “It is a disgrace that gets worse with every day that passes. And there’s not a sound from anyone. Everyone’s keeping his head down.”
It is impossible to escape the parallels between Guenter Reimann’s account of doing business under the Nazis and the “compassionate,” “responsible,” and regulated “capitalism” of today’s U.S. economy today. At least the German government was frank enough to give the right name to its system of economic control.
Here is the link for this article:
...oh yeah, noone would ever manipulate the oil market...no money to be made there....
PS folks have noted that the growth in commodities speculation parallels the Greenspan post dotcom burst bubble. It has exploded upwards and in size with Bernanke’s liquidity injection.
However, I do know one way to fight manipulation would be to significantly increase US Oil supplies which our Congress has been criminally negligent in doing
I heard this reported on CNN this morning. Sounded like this is what their responsibility. Also CNN said this investigation started sometime like last December. A government agency that's actually does some good? Better get them back to investigating baseball.
Great article. I drive the Leftists around me at work red face with rage when I point these fact out, now I got an article for them to read! Thanks!
Your opinion on this?
There's not a doubt in the world that investment banks, starting with GS, are using their artificial status as ''commercials'' (which class of trader is exempt from position limits) along with the infamous ''swaps exemption'' to game various mkts in concert with a number of pension funds. I can see no reason why A) GS, and investment banks generally, should be classed as commercials, because they are not hedgers and do not use the futures mkts for insurance purposes, and B) the ''swaps exemption'' should be allowed to continue, because it serves no broad economic purpose that I can see.
Thank you for that link. I learned something new today. I had never heard of Mises, and now I learn about Austrian Economics, and I have some hope for America’s future. If young people are attending these courses, maybe a new/old way of doing government/business will emerge. We can pray.
US Oil Markets are really Global Oil Markets. OPEC was formed over 47 years ago for the purpose of manipulating the market. Most of our imported oil comes from OPEC.
Speculators may be driving price up, but they can only be successful if supply is limited in comparison to demand. The global margin of petroleum supply remains rather tight.
Drilling domestically and international is over a two decade high. But when the US is keep much of our most promising resources unavailable, the results of that drilling are more limited.
I agree 100%. As to manipulation, I had a post here a day or two ago that offers another manipulation theory. Namely, that an oligopoly (which the oil industry is) controlled by a cartel (OPEC) has every incentive to cheat and sell more than the controllers deem desirable. I think we all know that surging demand from new buyers (e.g., especially India and China) has increased demand significantly. Oil supplies have not kept pace, hence the price increase. However, I also think that the output figures published by OPEC are lower than actual output. (If the present value of future sales exceeds the spot price, they are better off leaving the oil in the ground for now.) This tells speculators to keep bidding up the price. The only reason I think this might be the case is because there are no shortages. You can have all the fuel you want, you just have to pay more for it.
How to fix it? If Congress could find the stones to do it, all they would have to do is to announce tomorrow that it was rescinding all tree-hugger legislation and, effective tomorrow, Congress would:
1) Allow drilling in ANWR
2) Allow drilling offshore (OCS)
3) Reduce oil refinery and power plant construction permitting time from 8+ years to two months.
4) EPA will no longer allow 38 blends of fuel and reduce it to 3 (regular, hi-test, diesel).
5) Allow development of oil shale, tar sands, and coal gasification.
If these things were simply announced and the bills drafted, I just wonder how fast the spot price of oil would decrease.
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