I hope you saw the 60 Minutes segment on Sunday evening about the reason for the oil price spike that we all suffered last year.
Last year when oil prices spiked to nearly $150 a barrel and then, in a period of just three months, crashed along with the stock market, it was extrememly suspicious..
I told my husband at the time that there was some kind of artificial reason why that happened. It was too drastic to be a matter of supply and demand. I suspected the government was manipulating the market since the oil companies had gained so much from this administration with their multi-billion dollar profits. Instead, according to 60 Minutes investigation, it appears that it had more to do with traders and speculators on Wall Street than with oil company executives or sheiks in Saudi Arabia. This invasion was by a new breed of investor. According to Kkroft, of 60 Minutes, approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions,
In a five year period the amount of money institutional investors, hedge funds, and the big Wall Street banks had placed in the commodities markets went from $13 billion to $300 billion.
According to the 60 Minutes investigation, for years stock speculators bought oil on commodity futures. And of course, much regulation has been eliminated so guess who paid the price? That's right! The consumer....the American public.
Yet when Congress began holding hearings last summer and asked Wall Street banker Lawrence Eagles of J.P. Morgan what role excessive speculation played in rising oil prices, the answer was "little to none" . "We believe that high energy prices are fundamentally a result of supply and demand," he said in his testimony.
That's baloney and now we know it was baloney.
If anyone had any doubts, they were dispelled a few days after that hearing when the price of oil jumped $25 in a single day. That day was Sept. 22.
Michael Greenberger, a former director of trading for the U.S. Commodity Futures Trading Commission, the federal agency that oversees oil futures, who was interviewed on 60 Minutes, says there were no supply disruptions that could have justified such a big increase.
Masters believes the investor demand for commodities, and oil futures in particular, was created on Wall Street by hedge funds and the big Wall Street investment banks like Morgan Stanley, Goldman Sachs, Barclays, and J.P. Morgan, who made billions investing hundreds of billions of dollars of their clients’ money.
Guess which company was the biggest winner in this game for many years? Enron...with the president's buddy, Kenny boy Lay, at it's head. Then, it became the biggest loser when it collapsed.
I am looking forward to a new administration in this country. I am hoping for more honesty and forthrightness, as well as new regulation from the Obama administration. Deregulation and a free market is fine when everyone is playing with a level deck but when greed prevails, regulation is the only way to prevent abuse.
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7 comments:
Unfortunately, greed has ruled in this country (and elsewhere) for years. I wish I could have seen 60 Minutes, but we don't have television any more. I've never been a big TV watcher, but 60 Minutes was one that I did watch. Obama has so many problems waiting to drop on him a week from today and I just hope he has lots of support, gets the right advice from the right people.
Sylvia. Type 60 Minutes into a search engine and that will bring up 60 Minutes transcript of the program.
I have said for years that greed is what is wrong with our country. If you ever watched the Michael Moore movie Sicko, you will see how the doctors in Europe say they would not work in the United States. One said he made enough money to drive a very nice car and he did not have to drive 3 very expensive cars like doctors here. That movie really opened my eyes on a lot of things. I missed 60 minutes. Wish I had seen it. I will look it up.
Margie, as usual you leave me in awe when you explain one of these complicated situations. I just don't know how you do it. That's a real skill. To bad you weren't in Washington taking minutes on the secret energy meetings Cheney held.
I said it before and I'll say it again...I only believe capital punishment should be used for politicians, business executives, and religious leaders who are guilty of committing gross acts of fraud that affect a lot of people. Greed, especially, should be a capital offense. Its the only thing that would scare future people from doing such acts in the future. It's obvious that white collar crimes pay, because the worst that'll happen is a country club prison sentence or, in Madoff's case, house arrest in his multi-million dollar Manhattan condo suite.
I just read and watch a lot of news, Linda. The real astute one is Nicholas. He is often right on with these things.
Like Linda, Margie, I've appreciated your succinct analysis of various news stories. You sum them up and explain them very well.
Without a doubt, greed is at the heart of so many of our country's problems. As I Timothy 6:10 says, "The love of money is the root of all evil."
On an entirely different note, I sure would love to have your famous coffee cake recipe, Margie! Please?
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