Back in 2008, I was puzzled by President Bush blaming the subprime mortgage crisis on "irresponsible homeowners." I knew of no reason why homeowners should all of a sudden become irresponsible en masse. So I began looking into what had really caused the crisis. That's when I began to get acquainted with derivatives and other weapons of mass financial destruction. I found out that one of McCain's top financial advisors, Phil Gramm, had not only helped cause the subprime mortgage crisis by deregulating derivatives, he was also still a lobbyist for UBS, while he was counseling McCain. I pitched the story and wrote it up.
In the course of my research, I realized that Gramm had also helped create the Enron Loophole--which deregulated trading of oil and other commodities on electronic platforms (like, computers). We did another report on that, too. But closing the Enron Loophole was not enough. Speculators have overwhelmed the trade of oil and other commodities. Airlines and bakeries and other end-users of these commodities are now far outnumbered by Wall Street speculators in these markets. Which means that these consumers can no longer count on futures (contracts that set prices now for purchase later) to keep their costs stable. And, of course, both the resulting instability and the speculation itself lead to costs that get passed on to you the consumer. So gas goes up and so do food prices (an estimated 3.5% this year, according to the USDA).
The agency in charge of all this is the Commodity Futures Trading Commission. So, we kept an eye on the CFTC as the Obama Administration took over. Despite a lot of concern about how Obama's CFTC Chairman Gary Gensler would do, he seems committed to position limits and seems to have all those desperate end-users in his corner. Last year, the Dodd-Frank Wall Street reform bill specifically charged the CFTC with imposing position limits on commodities--meaning that Wall Street could own no more than a specified maximum portion of all the futures contracts out there. The point, of course, is to prevent the genuine end-users from getting overwhelmed by Wall Street speculators.
So how come gas and food prices are still spiking? One of the Democratic commissioners, a Bush appointee, doesn't believe in position limits. So Democrats haven't had the votes on the CFTC to implement position limits. That commissioner's term is almost up, however. And what the Obama White House decides to do about that appointment could well determine what happens to gas prices now, and what happens to Obama in 2012. We'll be breaking news on The Ed Show tonight about where the president is going with this. We've been working on this series with Chris Hayes of "The Nation"--he'll be writing about this tomorrow and will join Ed tomorrow night. Please join Ed tonight and all week for this special series on gas prices, food prices, and the president's decision.
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I can't believe the Obama Administration hasn't blamed Bush yet. Ed, don't you think if the Obama Administration allowed more drilling in the US the speculators would speculate that we in the US would not need as much foreign oil? Sounds simple doesn't it. That is what was done when oil was 150 per barrel the last time! Guess what, allowing more drilling dropped the price of oil!
This country does not own the oil that is drilled. The oil companies do. If they are allowed to drill more, they can sell that oil to whoever they choose. That may or may not be us. Canada pumps 150% of their oil needs and that doesn't lower their prices. In fact, they pay more than we do. The oil companies have plenty of capped wells that they are choosing not to pump. Why should they? They are making their largest profits in history and despite that, last year, comapanies like Exxon-Mobil did not pay one dime in taxes. The government has oil in reserves and if they brought some of this oil out for sale, they could lower prices. About 10 years ago, the government removed restrictions that kept companies like Goldman Sachs from purchasing large amounts of one commodity, like oil. Now, there is nothing to prevent one group of investors from "cornering the market" on that commodity. This fact, more than any other, is what is causing oil prices to surge.
The GOP talk of drill baby drill backfired last decade.
WHEN are Amercians going to wake up and start movements/actions to "clean up" and REVERSE the atrocities being perpetrated--and ALLOWED--upon the majority of we Americans ???...upon the manipulations of our economy by Wall Street & cronies << ???...will we continue to just sit by and "suck up" the continuing spiral of gasoline and basic food prices<< while those who "bid" on the track the prices will take continue to FORCE the prices in the directions THEY want -->>so as to make MORE money....while the rest of the 95%-98 % of us struggle to just "get by" ???????
REALLYYY ????.....WHO can the majority of us contact to file OUR grievances? More importantly >>. IIISSS there anyone ????
I am not sure if anything can be done about the gas prices, which is very unfortunate. All the politicians will scream and say that they are going to "look" into but in the end nothing will be done. The oil companies will say that they are losing money but yet they have profits in the billions every quarter. They also make sure that the politicians get some of the money in contributions. I am afraid that the raising oil and gas prices will put a hold on the small recovery that we do have. In my opinion will start the recession all over again. Here is an example of what happened last time. You have a gas budget of say $50 a week to go to work etc. Now that doubles to $100 a week. Now to compensate that you have to take from another budget of say your food budget (which these prices will go up). To offset this you have to take from another budget which say is your credit cards and to offset this you have to take from another budget and it goes on and on...... I have known my friends that lost their homes because of this. The reason being is that they have to provide for their families. One needs a car to get to work and put food on the table but one can always rent a place to live. Is it because they are irresponsible "no" but because of the oil and gas prices and the politicians that always promise that they are going to look into but nothing will every come of it. By the way I am talking about both sides, the republicans and the democrat's.
i_be_ben,
I agree with you, I have stop giving to charities because we can no longer afford to, I will take care of my family first and worry about others later. That's the cold hard facts of life.
Blame Bush?
Where's Waldo, out to lunch again "winning the future" What a joke!
A parable for our time: A unionized teacher, a member of the tea party, and a CEO were seated at a table. In the center of the table was a plate with a dozen cookies on it. The CEO eagerly grabbed 11 of the cookies, looked over at the tea partier and said: " Look out for that union guy...he is after your cookie". Ain't it the truth!