Monday, January 12, 2009

It's Not The Cheese That Costs so Much

I admit that I can still be astonished. When I watched '60 Minutes' last night I saw a big surprise report that I was right all along about oil prices. This was reported like it was big news, but I was not along in left wing economics. That 'supply and demand' had made you reach deeper and deeper into your family budget to pay to drive to work, the store, school, was obviously wrong. Demand was falling, as families cut back the miles and the amount of use the car got.

The oil industry executives gave elaborate excuses in hearings on what was destroying family finances, credit and prices of absolutely everything that had to be transported. Okay, I was amazed that Mitch McConnell twice said on This Week last week that half of America is represented by Republicans in the Senate. No one stood up and said "Liar". No one stood up and told oil executives that they were lying and our economy was being destroyed. No one stood up for children that go hungry because green is destroying our economy.

I tend to be polite even when I know I am being lied to. But if I swear to protect and defend this country, that politeness has to be wrong. If I can protect children from going hungry, from being denied their real needs, it's no longer polite to let those stealing from them lie.

A sampling of the news we are now being given by our media, once the damage has been done.

To understand what happened to the price of oil, you first have to understand the way it's traded. For years it has been bought and sold on something called the commodities futures market. At the New York Mercantile Exchange, it's traded alongside cotton and coffee, copper and steel by brokers who buy and sell contracts to deliver those goods at a certain price at some date in the future.

It was created so that farmers could gauge what their unharvested crops would be worth months in advance, so that factories could lock in the best price for raw materials, and airlines could manage their fuel costs. But more than a year ago those markets started to behave erratically. And when oil doubled to more than $147 a barrel, no one was more suspicious than Dan Gilligan.
Asked who was buying this "paper oil," Masters told Kroft, "The California pension fund. Harvard Endowment. Lots of large institutional investors. And, by the way, other investors, hedge funds, Wall Street trading desks were following right behind them, putting money - sovereign wealth funds were putting money in the futures markets as well. So you had all these investors putting money in the futures markets. And that was driving the price up."

In a five year period, Masters said 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. Last year, 27 barrels of crude were being traded every day on the New York Mercantile Exchange for every one barrel of oil that was actually being consumed in the United States.

"We talked to the largest physical trader of crude oil. And they told us that compared to the size of the investment inflows - and remember, this is the largest physical crude oil trader in the United States - they said that we are basically a flea on an elephant, that that's how big these flows were," Masters remembered.

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.

This is what is so difficult to understand? Excuse me, no, don't excuse me. If the truth is rude, then we need to be rude, and often. The financial, mortgage and credit card companies tell us that to save the country we need to give them more money, because to make families able to buy things they have a right to, they had to give them credit they didn't earn. The oil companies tell us they were just unable to sell oil for a reasonable price because we wanted too much of it, and that just ignores the lack or refineries due to closing existing refineries by those same oil companies.

We have a government that has lost its purpose, the purpose of protecting the public. We talk about giving aid to other countries, while the aid we give is in our own high-priced commodities. One third of assistance to the fight on AIDs from this administration is given to right wing abstinence education, something that has proven to contribute to AIDs occurrence. The list goes on and on. The next year or so will be hard for working people to survive, because laws have been broken allowing them to be stolen from

No more Ms. Nice Guy/Lady. We were right, and now we get told as if it were a surprise, that oil companies lied, made big bucks, were enabled by the crooks that are sworn to protect us, our economy is a shambles, and that was too hard for them to understand because it was not their local stock broker making the money.

We have let the makers of the little green paper money take away its value. Manipulation of our markets has been theft of the basic value, the work we do to put the food on the family, keep the heat on in winter and cool us off in summer, and keep the clothes on our backs.

Telling the truth about what is happening isn't bad manners, it's protection of basic rights.

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