Yet the heirs to Phil Gramm have done their best to protect speculators, hosing the nation in the process. "Every time the economy starts to show signs of rising, the oil speculators jump in," says Joseph Kennedy II, a former congressman from Massachusetts. "They suck the life out of the economy."

As analysts spoke of recovery in April 2011, the price of gasoline approached the $4 mark. The wicked swings had resumed. Last spring, it topped out once more at $3.96 a gallon.

But this time it had become difficult to screech about environmentalists or supply and demand with a straight face. Even the banks were confessing their sins. An analyst for Goldman Sachs admitted that banks like his had added an artificial 40 percent to the price of a barrel. Everyone from the Federal Reserve to the CEO of ExxonMobil has conceded much the same.

Former international securities lawyer Dennis Kelleher: “Wall Street is a high-crime area in which we basically have no cops on the beat.”
Charles Steck
Former international securities lawyer Dennis Kelleher: “Wall Street is a high-crime area in which we basically have no cops on the beat.”
William Black, former bank regulator turned economist at the University of Missouri-Kansas City: ““Nine of the largest financial institutions in the world pulled the pin on their own grenades.”
Michael Forester
William Black, former bank regulator turned economist at the University of Missouri-Kansas City: ““Nine of the largest financial institutions in the world pulled the pin on their own grenades.”

That led Bart Chilton to do a little math. He's a commissioner with the Commodity Futures Trading Commission, which is supposed to oversee oil trading. By his calculations, the owner of a Honda Civic is sending $7.30 to JP Morgan and men like the Kochs every time she fills up her tank. For an F-150 pickup owner, the banker fee is $14.56 a tank.

Chilton believes the annual cost to the trucking industry is a whopping $29.1 billion. For airlines, $9.8 billion. That means every time you fly, every time you buy an apple or a beer, the nation's thirstiest welfare queens take a cut.

Your neighborhood gas station doesn't get a piece of anything, says PMAA's Stone. The PMAA represents 8,000 convenience stores and oil wholesalers. Typically, a gas station makes just seven cents a gallon, all of which is eaten up by credit card fees.

Yet it's the elderly who take the greatest beating. In 1979, Kennedy founded Citizens Energy, a nonprofit that provides heating oil to the poor and aged in 22 states. Three years ago, it cost $1,200 per winter to heat a normal house. Today, it's $4,000, he says. To hear Kennedy tell it, Gramm's amendment shouldn't be called the "Enron Loophole." It should be known as the "Let's Try to Starve Grandma Act."

Osama bin Laden could only have dreamed of causing such widespread damage to the U.S. economy. But both parties in Congress remain willing to protect Wall Street at all costs — even if it means terrorizing the country.

"We're going right back to the robber baron days," says Kennedy. "And it's eating away at our heart and soul."


WALL STREET: A HIGH CRIME AREA
The late 1980s were a quaint period, when the admirals of finance were still eligible for punishment under criminal law. Savings and loans were collapsing, just as their larger counterparts would 20 years later, pillaged by executive incompetence and fraud.

So federal prosecutors did something that would never happen today: They convicted 1,000 of the biggest and worst offenders. They also filed some 800,000 civil suits, and banned sleazebags from ever working in banking again.

But Washington didn't grasp the bloodbath's obvious lesson: Bankers still couldn't be trusted. Reagan's "Government Bad, Private Sector Good" mantra had become the nation's official business plan. Instead of watching the wicked more closely, deregulation allowed Big Finance to rampage untethered.

By the time George W. Bush reached office, the philosophy was so entrenched that, without fanfare or any official change in law, the feds decided that Wall Street basically had immunity under fraud statutes.

That was clear by the early 2000s, when accounting fraud became the height of fashion in executive suites across the land. The feds would prosecute the most egregious chieftains at WorldCom, Tyco, and Adelphia. But some of the country's biggest names were caught cooking their books as well, firms like Merck, Halliburton, and AOL. All were allowed to walk. The game had become fully rigged.

Economist William Black, a former bank regulator and author of The Best Way to Rob a Bank is to Own One, says there are 1 million law enforcement officers in America today. Only 1,300 are devoted to white-collar crime. Most police departments don't have a single detective working the country club set. When Enron imploded under the largest fraud in Texas history, the Houston PD was busy rousting check-bouncers.

With local investigations rare, and the feds purposefully averting their gaze, bankers were allowed to take down the housing market in a scheme 70 times the magnitude of the savings-and-loan collapse.

"Wall Street is a high-crime area in which we basically have no cops on the beat," says former securities lawyer Kelleher, head of Better Markets, a nonprofit devoted to protecting taxpayers from the Too Big to Fail crowd.

One might expect this to occur under George W., who made no bones about his presidency's focus on aiding his fellow trust-fund swells. But it would only get worse under the self-styled change agent, Barack Obama.

The appointment of Attorney General Eric Holder said it all. He'd been a partner at the law firm of Covington & Burling, whose clients included Goldman, JP Morgan, Citigroup, and Bank of America. The year before he joined the Obama administration, he made $2.5 million through fees from the very people he was supposed to prosecute.

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5 comments
Jeffrey J. Brown
Jeffrey J. Brown

Here is my short version of what I think is going on in global oil markets. Annual Brent prices doubled from $25 in 2002 to $55 in 2005. So, we had a strong price signal. And we saw a strong positive supply response, with global supplies of oil increasing across the board. Annual Brent prices doubled again, from $55 in 2005 to $111 in 2011 (with one year over year decline in 2009). In response, crude oil production was flat. We saw small increases in total petroleum liquids and total liquids (inclusive of low net energy biofuels), and we saw a material decline in Global Net Exports of oil (GNE) and in Available Net Exports (GNE less China & India's net imports), with the volume of oil that is available to importers other than China and India falling from 40 mbpd (million barrels per day) in 2005 to 35 mbpd in 2011. And on the demand side: Here is a chart showing normalized oil consumption from 2002 to 2010 (BP data) for China, India, top 33 net oil exporters and for the US: http://i1095.photobucket.com/albums/i475/westexas/Slide1-16.jpg The chart is not yet updated for 2011, but the trend on the chart continued in 2011, to-wit, China, India and the oil exporting countries showed increasing oil consumption as Brent prices doubled from $55 in 2005 to $111 in 2011, while consumption in the US (and in most other oil importing OECD countries) fell. Therefore, while slowly increasing US oil production will help, the dominant trend we are seeing is that the US, and most other developed oil importing OECD countries, are--so far at least --gradually being priced out of the global market for exported oil, as annual global (Brent) crude oil prices doubled from 2005 to 2011. For more info, you can do a search for: Peak Oil Versus Peak Exports.

Jeffrey J. Brown
Jeffrey J. Brown

Regarding speculators, here is something that has always puzzled me about the "Blame the speculators" theory. Let's stipulate, for the sake of argument, that the rascally speculators drove the annual average price of Brent crude from $55 in 2005 to $111 in 2011 (with a decline in 2009). Preceding this doubling in annual crude oil prices, there was another doubling, from $25 in 2002 to $55 in 2005. In response to the 2002 to 2005 doubling, the EIA shows that global crude oil production (Crude + Condensate) increased rapidly, from 67 mbpd (million barrels per day) in 2002 to 74 mbpd in 2005. At this rate of increase, we would have been at about 90 mbpd in 2011. However, the EIA shows that post-2005 annual global crude oil production has not exceeded 74 mbpd for six straight years, ranging between 72 and 74 mbpd. Here's my question: Even if the rascally speculators drove the price of oil up from 2005 to 2011, why did we see no global crude oil supply response?

Oscarcmpn
Oscarcmpn

Sure took a lot of words to say, Clinton signed Gramm Leach into law. Investors have used the law to their advantage. Results mixed, as usual. The rest is a lot of gasping and harrumphing. I agree with most of what you say, but think you did a lousy job of explaining how it works. You need to say more than "Koch brothers are bad" and "hedgefunds are evil." IMO

Smoking spirit
Smoking spirit

smokingspirit | 15 August, 2011 16:26 The Muslimization of America Ron Paul wins second place finish in Iowa straw poll loosing by less the 200 votes, but the press interviews the other candidates. Ron’s message just doesn’t get out there. We are left with the other candidates one who claims “we should fast (stare) and pray more” during Ramadan And the other who says the only difference between the “right wing and the talibomb is one is a cult,” but then America just needs more right wingers so when the Muslim plays the moral card the Christian is always suppose to lose. We have seen in the past that the American has to blow up mail boxes to get his message out but we never hear his message- We condemn the Arabs for shutting down the internet and yet when a cop kills a modern day Thomas Edison, Thomas Jefferson or Henry Ford (all illegal drug users) they shut down the internet to prevent peaceful protest in California- Time Magazine points out “the true science of weed is being subverted.” Least we forget that the Mormons are Anti-Smoking, Anti Drinking and it was in Texas they demanded that the people take the medical monopolies breathalyzer test not because the owner of the bar wanted the person out or that the person was driving but because he might be celebrating the blood of Christ the water of life or that Holy Spirit that does not fit into a computer, but take the test or be arrested! They put a temporary stop to this but no protections were added to stop them from next time, This will give them time to identify those who won’t join them, as they stack the population with more Muslims, We couldn’t have more Thai – Japan- Chinese or Pilipino girls, but we get more Muslim refugees and the population of freedom loving Americans continues to decline, Help keep the world free stop the medical monopoly(their foreign owned pharmaceutical companies and their secret Arab funding) it’s not too late to change our fate and stop these snakes before they turn this world into another anti drinking- anti smoking state. From their nicotine patch to their Parkinson’s drug they don’t just make designer steroids for the jocks and with two shooting a night in almost every city they are just not helping these people out. Americans use to have the largest saving in the world but they work to run the decedent American broke, or just join the 700 club and you too can prosper, the middle class has been under attack for too long, Disaster economics ( Harper Magazine) is no longer just for the individual as we saw in New Orleans. We could have fuel at $ 0.98 per gallon if weed was legal- yet we have to pay the Arabs $4.00 per gallon as They work to eliminating the decedent American, will you join them in order to prosper or will you make a stand for freedom and liberty read more in the book About - Christians and freedom @amazon.com or An opening for the living @ Amazon.com or Visit our web site @ www.SMOKINGSPIRIT123.com

 
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