It's Good To Be The King
In a scene from (IMHO) one of the funniest movies of all time, Mel Brooks' History of the World Part II, Brooks, who plays the King (remember the song, "It's Good To Be The King"?), who's supposedly shooting skeet, says to nobody in particular: "I love my people!" At which point he then yells, "Pull!" And, one of Brooks' peasants goes flying through the air, screaming, and Brooks obligingly takes him out with a bow and arrow.
First, a big shout out to a gnostic for posting this last night: "Commodity Futures Trading Commission: Energy markets rigged." Unfortunately, it didn't get much response, and I didn't find any other diaries on this matter after doing a search, so I'm posting a follow-up, because I believe it's quite noteworthy of same. I really hope every Kossack sees this.
Yes, Wall Street, it's good to be the king; from
Raw Story, with an h-t to
Naked Capitalism for bringing this to our attention: "
CFTC: Speculators caused 2008 oil price crisis."
CFTC: Speculators caused 2008 oil price crisis
By Daniel Tencer
Published: July 28, 2009
In a major U-turn from its claims during the Bush administration, the Commodity Futures Trading Commission is now set to admit that speculation in oil markets -- and not the forces of supply and demand -- are behind last year's massive oil price spike.
In the summer of 2008, oil prices on the open market reached an unprecedented $147 per barrel. Many economists argue the spike helped push the US into an economic free-fall last autumn.
At the time, the CFTC -- which is tasked with regulating commodity and financial futures -- said that the huge price spike was a result of supply and demand. That explanation was met with ridicule from many market-watchers, who said it was impossible that demand for oil increased by such a huge margin even as the North American, European and Japanese economies were slowing down.
Now, according to a scoop in the Wall Street Journal, the CFTC is about to reverse its Bush-era position, and admit that market speculators -- investors who bought oil futures on the expectation they would rise in value -- "played a significant role" in the oil spike.
From the Wall Street Journal: "Traders Blamed for Oil Spike."
CFTC Will Pin '08 Price Surge on Speculators, in a Reversal From Bush Findings
BY IANTHE JEANNE DUGAN AND ALISTAIR MACDONALD
The Commodity Futures Trading Commission plans to issue a report next month suggesting speculators played a significant role in driving wild swings in oil prices -- a reversal of an earlier CFTC position that augurs intensifying scrutiny on investors.
In a contentious report last year, the main U.S. futures-market regulator pinned oil-price swings primarily on supply and demand. But that analysis was based on "deeply flawed data," Bart Chilton, one of four CFTC commissioners, said in an interview Monday.
The CFTC's new review, due to be released in August, adds fuel to a growing debate over financial investors who bet ...
From Raw Story:
The CFTC's admission highlights the often dangerous role that Wall Street speculators play in Main Street's economic health. Many policymakers are now beginning to wake up to the reality that speculation in commodities markets can cause massive damage to the pocketbooks of ordinary citizens.
Raw Story then referred to the Columbia Journalism Review's reminder of what Matt Taibbi told us just a few weeks ago--a story about which yours truly and many others, both here and throughout the blogosphere, have been blogging ever since; from: "The Great American Bubble Machine."
With the public reluctant to put money in anything that felt like a paper investment, the Street quietly moved the casino to the physical-commodities market -- stuff you could touch: corn, coffee, cocoa, wheat and, above all, energy commodities, especially oil.
Oil futures in particular skyrocketed, as the price of a single barrel went from around $60 in the middle of 2007 to a high of $147 in the summer of 2008...
But it was all a lie. While the global supply of oil will eventually dry up, the shortterm flow has actually been increasing. In the six months before prices spiked, according to the U.S. Energy Information Administration, the world oil supply rose from 85.24 million barrels a day to 85.72 million. Over the same period, world oil demand dropped from 86.82 million barrels a day to 86.07 million. Not only was the shortterm supply of oil rising, the demand for it was falling -- which, in classic economic terms, should have brought prices at the pump down...
So what caused the huge spike in oil prices? Take a wild guess.
Yes, as Taibbi pretty much called it '...the money derived from the housing bubble was merely used to create the commodities bubble.'
Please remember this the next time you hear someone in a blog infer, directly or otherwise, that Wall Street's looking out for Main Street and how a bubble's not a bad thing.
(Brooks: "Oh, piss-boy!")