Friday, May 11, 2012


Speculators are at it again, and our President's response at the beginning of March was to ask AG Holder to "reconstitute" the oil speculation task force.

On March 9th Exxon's CEO Tillerson observed to Matt Lauer on the Today Show: "I don't see gas prices topping $5." Per usual, scapegoats are to blame - it's "political risk."

And everyone knows the annual traditional summer price gauging gas festival is fast approaching: so Big Oil can celebrate its voracious appetite for profit gluttony.

Have you felt the pain at the pump? Doesn't it feel like déjà-vu? Remember 2008 when all the most important oil execs and investment gurus proclaimed all sorts of reasons for the spike in crude going to about $150 per barrel. Of course, Congress was bewildered.

Where has the Commodities Future Trading Commission (CFTC) been?

Remember herds of oil tankers were discovered circling off shore from ports waiting for prices to go up before landing to unload. Why, because speculators had cornered the market on oil futures. And then retrospectively it was concluded the blame for the speculation was the "Enron Loophole" created by the Commodity Futures Modernization Act of January 2000 which allowed commodities to be traded outside the jurisdiction of the (CFTC), which meant that the trading of commodities was no longer regulated or subject to anyone knowing what was going on.

June 21, 2008 - the Secretary of Energy under Bush, Sam Boardman said (lied) -- "there is no evidence of speculation."

By Sept 2008, Bernie Sanders rescued the truth by providing leaked "confidential" data (probably considered proprietary by all the lying speculators and market makers) - that it was, indeed, speculation.

So there was a media outcry, and on May 22, 2009 the loophole was closed by attaching the legislation to close the loophole to Farm Bill HR 2419. And true to form Bush, ever a man of the people and hand holder of Saudi Royalty, vetoed it; however, it was passed by a veto override.

SEC. 13106 Portfolio Margining and Security Index Issuers gives authority to the Chairman of the Fed, the SEC and the CFTC to take appropriate action - (WHERE'S THE ACTION?). Think about this: Gary Gensler, the chairman of the commission, is a former Goldman Sachs Partner and responsible for oversight of oil speculation/commodity speculation as well as derivatives. The chairman of a regulatory commission should not need to be asked to become involved. So why must Justice get involved - because our regulator failed!

Why do so many regulators who formerly were either partners or CEOs of Goldman fail to protect us?And why would any President appoint anyone from Goldman considering all the empirical evidence of their consummate protection of the markets and not the public. The word market is code for Wall Street's self interest and sociopathic greed. Clearly our economy has been devastated by all the deregulated and unfettered unbridled greed - and oil prices are more of the same, unless you have faith in the analysis of Exxon's CEO.

Where is the SEC? Is it OK to manipulate markets? Don't think the Volker Rule will materially help! The SEC obviously has a mission to provide liquidity for market makers for traders to engage in making markets for unbridled speculation, ie., geometric volatility.

It must be OK to manipulate because innovated financial-structured investments - like 700 trillion dollars of derivatives now loom over us like a giant hydrogen (H Bomb) bomb! Silently waiting for one hiccup in the virtual surrealistic world of virtual values underneath an Everest sized inverted pyramid of 40 times the virtual value.

How is the Volker Rule going to help when will be administered by the SEC? The Rule fictitiously contends it will strengthen compliance and tighten (the fallacy of) risk management by math? What - better quantitative equations to measure the qualitative essence of subjective risk. The sure way to lower and measure risk is by having more cash and less leverage. But that's not what will happen and not what is happening.

The US is now exporting more oil than ever, and demand for gas is way down world-wide due to the 2nd worst economy in the US since 1776 - and even worse in so many other developed countries. Incomes and jobs are down, so consumers' ability to pay for gas, and heating oil, is lousy.

The media has not delved into the obvious nature of the speculation, but reports what others observe and stays away from the real issues. And where is the outrage from the American public? Is it believable that oil analysts, people paid by Wall Street to provide 3rd party influence to sell securities, are right this time - concern for political disruption, the price is fear-based? The role of the 4th Estate is to objectively create informed public opinion - and this has not been the case, although Americans seem to be oblivious of reality.

How can Gensler (the anointed fox) be in charge of protecting anyone other than his ex partners' best interests? Why has the CFTC not already curbed this new round of oil speculation! Come on! There is no reason for a task force, just have Justice investigate the CFTC.

Gensler formerly was a principal advisor to Robert Rubin, when Rubin was Goldman's CEO. Rubin, as Clinton's Treasury Secretary, petitioned Clinton to participate in deregulating greed and then joined Greenberg at Citi; and Gensler later served as Larry Summers chief advisor when Summers was with Goldman. Summers followed Rubin as Clinton's Treasury Secretary and was a staunch supporter of Greenspan and leading cheerleader for the deregulation of greed. Then Obama appointed Summers as his chief economic advisor - do you get this, I do not! And Gensler, as the Chairman of CFTC, will be instrumental in policing the Volker Rule - the commodity markets - aided and abetted by other commission members, some with conflicts and others who have only served in different governmental capacities - where is the Dali painting of this surrealistic model for failure? I would vote for Dali's painting titled, Persistence. (google it)

Romney thinks the free markets will resolve everything - let Detroit go bankrupt, let all the houses (homes) go into foreclosure, continue to innovate toxic derivatives - let the markets resolve these problems -- and he is the leading contender for the Republican nomination to run for president? While the media sits silently listening to the same market lies that led to our current economic disaster - which now cover up all the oil speculation.

So we can sleep better knowing it is not speculation and that H Bombs are not really financial. Who cares, lots of people still have money for gas and jobs, and so what if we prefer to not be informed. Or critically examine preposterous excuses and denials.

E. Henry Schoenberger, is the author of How We Got Swindled by Wall Street Godfathers, Greed & Social Darwinism ~ The 30-Year War Against the American Dream, with a foreword from David Satterfield, the former business editor of the Miami Herald, and 2 time Pulitzer Prize-winner.
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