Let's Blame Speculators

Townhall.com ^ | May 4, 2011 | Walter E. Williams

[rollo tomasi]

Good one Mr. Williams, someone should ask Obama the reason what and why the speculators are speculating about in the first place. Policies perhaps or are they just pissing in the wind while throwing their money in the air?

[thackney]

Great Article.

Thanks for Posting.

[raygunfan]

try explaining this simple straightforward point to the lefties or greenieweenies.....

[raygunfan]

try explaining this simple straightforward point to the lefties or greenieweenies.....

[sickoflibs]

RE :” Enter the futures market, which consists of a worldwide group of millions upon millions of traders, often called speculators. Speculators, betting on a future shortage, buy up wheat, corn and rice today in the hopes of making money selling it for a higher price when the bad harvest hits. As speculators buy more and more wheat, corn and rice, they drive up today's prices. As today's price gets higher, people consume less, but more importantly, people do the intelligent thing without bureaucratic edicts. The vital role of the futures trader, or speculator, is to allocate goods over different time periods. And, it's not just wheat, corn and rice that must be allocated over time but all commodities including oil. ..... If we don't like commodity speculation, we could easily outlaw it. That way, for example, even though there might be every indication of a reduced fall wheat harvest, today's price of wheat wouldn't rise. We could consume wheat today and not fret about fall. President Obama has asked the U.S. Department of Justice to investigate whether Wall Street speculators could be manipulating oil markets. If Obama could convince other nations to put an end to worldwide oil speculation, we might be able enjoy $2 per gallon gas and ignore Middle East conflicts that might impact heavily on future oil supplies.”

Walter Williams is really good at this.

The speculator is portrayed as 'the ant' buying up food and energy planning for the future when it will be more expensive.

The angry consumer/voter is 'the grasshopper'. He wants low gas prices NOW and doesn't care about the future, if he needs those things in the future then he will just blame who-ever is president at that time. I know many of them. Peggy the Moocher who said Obama would pay for her gasoline is one.

I have heard some more reasonable sounding proposals of limiting speculation that involve how much money a speculator can leverage (borrow) to buy the commodity , not outlawing it all-together.

[BfloGuy]

Obama's accusations are just to cover for the fact that the current speculation is turbo-charged with the Fed's newly-created money.

If the money supply is stable, some prices must drop to compensate for those that are rising -- after all, there's only so much money to spend. But when all prices are rising, you can be sure the central bank is at the root of the problem.

[stephenjohnbanker]

They are merely locking in contracts for oil at a future date, for a predetermined price. Good post!

[LuvFreeRepublic]

Excellent post. Thanks.

[PSYCHO-FREEP]

This is not at all true.

Speculators have absolutely very little with this current run up in prices.

The entire reason is due to the Treasury Secretary and Fed Chairman's Quantitative Easing. Which has caused the value of the dollar to go below common dirt. There is also a short supply due to World turmoil and high levels of prosperity in Asia and other parts of the World.

All commodities and Food prices have surged up due to QE-1 &2. I would guess then that there should be punitive a tax or penalty for their “greed” and the blame should be given to Farmers, Miners, Grocery Stores and anyone who has been forced to raise prices because of the weak Dollar.

But no, it's just those evil speculators manipulating oil prices?

[PSYCHO-FREEP]

I thought you always looked into things more carefully than that;

http://www.realclearpolitics.com/articles/2011/05/04/gasoline_and_onions_109746.html

[I_be_tc]

Later

[Always A Marine]

BUMP for economics lesson at the dinner table...

[Georgia Girl 2]

Oil is traded in US dollars. The reason gas prices are up is because the dollar is down. As Bernanke and company continue to devalue the dollar gas prices will continue to rise. It has nothing to do with speculators or the availability of oil. Have you waited in a line lately to buy gas? OK then there is no gas shortage. If the dollar gets stronger gas prices will go down. But don’t count on that happening anytime soon.

[sickoflibs]

RE :" They are merely locking in contracts for oil at a future date, for a predetermined price. Good post"

Just wait until president Trump orders OPEC to lower their prices :)

[stephenjohnbanker]

Trump better be careful, or the Saudis will seize his assets over there, and give him the finger ;-)

[ProtectOurFreedom]

Mr. Williams was doing fine until the last paragraph regarding the $4 Billion in "special tax breaks" for oil companies. This has always been suspicious in my mind and likely to be nothing but demagoguery. Randall Hoven has a brilliant analysis in American Thinker on this very issue. See About Those Oil Subsidies on May 2. As expected, the oil companies are taking advantage of basic tax code benefits that are used by every corporation in America.

[rollo tomasi]

I agree, maybe Professor Williams was commenting on the “lobbying” power as well as the “fun and games.” The article is not perfect, perhaps the good Dr. should have mentioned ending a lot of environmental regulations which cost the industry a lot of $$$ and time trying jump through shrinking hoops the government erects. The game becomes hypocritical on both sides, but most of the hypocritical weight teeters towards the Federal/State government.

[rollo tomasi]

Sorry, "... the good Dr. should have mentioned ending a lot of environmental regulations..."

Should of mentioned along with subsidies in his conclusion. Point being, get rid of big government and assign government's proper role as being a body that equals out the playing field, thus big business would not have a permanent dance partner.

[bert]

-———should ask Obama the reason what and why the speculators are speculating about in the first place. ———

A better question would be to ask about maintaining tne tax rate and decreasing, that is cutting, the Social security rate and the defacto rise in unexpected revenue. Since the cut resulted in near immediate gains, should not all rates be reduced? Why not?