Even more comical: Lanny Breuer was named head of the Justice Department's criminal division. He'd previously chaired the white-collar defense unit at Covington. Prosecutions on Wall Street slammed to a halt.

Black estimates that at the height of the mortgage crisis, 2 million fraudulent loans were being written each year, largely through lenders inflating buyers' incomes. But not a single major figure was ever prosecuted. Had those 1,000 savings-and-loan criminals from the 1980s practiced their larceny under Bush or Obama, they would have been given million-dollar bonuses and retired to beach homes in the Hamptons.

It was under these pleasant skies that oil speculators launched their attack on America. In 2008, when their assault became evident, even some Republicans called for investigations. But that quickly ended when Obama became president. Senate Minority Leader Mitch McConnell (R-Ky.), not one for subtlety, announced that his party's Mission One was sabotaging Obama.

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.”

Democrats managed to pass the Dodd-Frank Act in 2010. One of its goals was to hand the oil market back to actual users and allow the feds to crack down on excess speculation. Kennedy believes this alone would have reduced the price of gas by $1 a gallon.

But after Congress announced its great triumph over Wall Street, it quietly teamed with bankers to gut the law. The Commodity Futures Trading Commission, which was supposed to spearhead the crackdown, saw its budget slashed. Speculators filed suit, essentially arguing that they had the inalienable right to play the futures markets.

The financial industry would eventually spend $100 million to stave off regulation, buying congressmen, setting up fake public interest groups, and funding academics to produce laughable studies.

Two years after Dodd-Frank passed, the feds have yet to touch a single hair on a speculator's head.

The propaganda campaign has worked. "What they've really won is the intellectual struggle," says Black. "People can't conceive of a world without these massive institutions, and can't believe they're a negative influence."

Take the Tea Party movement. Its followers are largely concentrated in the red states, statistically the nation's poorest and the most easily damaged by high gas prices. Yet their greatest benefactors, the Koch brothers, have boasted of being among the top five speculators in the world.

So while the Tea Partiers rally against regulation and government interference, the Kochs steal $14 from them every time they fill up their Fords.

"This is all part of the same formula of lower taxes and less regulation," says Kennedy. "That formula wins elections and ruins the country."


SORRY, BUT IT COULD GET SCARIER
As gas prices neared $4 this spring, Republicans reprised their Great Campaign of Idiocy from 2008. Once again the environmentalists and liberals were to blame, this time for blocking construction of the Keystone Pipeline, a massive project that would allow the shipping of oil from Canada to Texas.

Presidential aspirants Newt Gingrich and Michele Bachmann claimed they would lower gas prices to $2 if elected, presumably by magic. Congressman Paul Ryan of Wisconsin, considered the party's brightest financial mind, proposed cutting the Commodity Futures Trading Commission's staff by two-thirds, just in case they might decide to grab coffee in the general vicinity of Wall Street. McConnell said he'd be happy to address speculation — but only if Democrats agreed to allow drilling on environmentally sensitive lands.

"They believe nothing was wrong with the markets in 2008," says Cooper of the Consumer Federation.

Obama, meanwhile, was doing an inverse impression of Teddy Roosevelt. Instead of walking softly and carrying a big stick, he brayed noisily and brandished a twig.

When gas prices approached $4 in April 2011, the president announced the creation of the Oil and Gas Price Fraud Working Group. This was Obama's grand plan to finally strike a blow against our enemies within.

But while the announcement came with fireworks, these new crime fighters would meet just a few times over the next year. Malevolence uncovered: zero.

"Anybody who looks at the non-activity of that working group knows that the only fraud was in naming it," says Kelleher. "I think their non-record speaks for itself."

Some senators, like Sherrod Brown of Ohio and Bernie Sanders of Vermont, have pushed earnestly for the feds to step in. But Republicans say they'll block any move against Wall Street — with swing-state Democrats there to serve the appetizers.

"There's a free market philosophy that continues to exist," says Mark Williams, a former Federal Reserve examiner now at Boston University. "If you're a trader, you should have the right to trade. But if the greater community is harmed, you shouldn't have that right. We still live in a democracy, right?"

Michael Greenberger is among the few who believe a reprieve is in store. He's a law professor at the University of Maryland and a former director at the Commodity Futures Trading Commission. He believes Wall Street's relentless ineptitude may finally do it in.

Two months ago, JP Morgan was the latest to set itself aflame. One of its traders managed to gamble away $2 billion in just a few weeks. The damage is expected to reach $7 billion by the time the cinders go out.

"The JP Morgan episode really struck at the nerve of the American psyche about banks and what kind of damage they can do," says Greenberger. "These people who are doing nothing productive for the economy are walking away and, even in failure, collecting millions and millions of dollars."

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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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