The events surrounding the Enron fiasco and its lessons appear to have been forgotten by many of us, including Congress. Very intelligent, calculating minds had created complicated financial derivative structures, and cultivated massively leveraged speculation in pursuit of unregulated markets. The teachings, however, were very well understood by some who currently manage vast and rapidly growing pools of capital. Though we may feel very connected to our skyrocketing cost of driving our kids to school, the Enron trials of 2004 have morphed to a faded culpability attributed to reprehensible, greedy or corrupt individuals.
An important part of the resource speculation game is the management of effective PR. The length of the game and the extent of the proceeds, are directly proportional to the impact and manipulation of public consciousness. Contrary to what we have been fed by most media and self-styled experts, price of oil has not been driven by demand. The drop in demand by oil’s primary market, the U.S., or the drop in the dollar’s value does not explain the 100% price rise of the past year. It is also not consistent with Asian demand, which though increasing, is not surging, as claimed.
The idea floated in some media, that we are nudging Peak Oil, is a canard sent against the stream of a reality that includes the substantial new finds being discovered.
The excessive greed that has been driving oil prices went out of control, and consumers have made some serious behavior modifications that are impacting consumption. This change will continue to cut use of oil and suppress price increases. The economic slowdown across America, and the rest of the oil-consuming world, will accentuate that downward pressure on demand. Suppliers, enjoying a perfect storm of revenue, will continue to reduce their production to limit the speed of the bubble’s escaping gas, as supply continues to outpace the dropping demand, particularly from oil’s biggest market.
Congress faces a challenge in its search to understand what happened, as it questions the likes of the Commodity Futures Trading Commission, (CFTC). We should not expect useful insight to be forthcoming. Oil moves and trades on the high seas in unknown quantities, and too much volume in oil futures speculation occurs offshore beyond prying eyes and oversight. Reports to and from Congress will be incomplete, and make examination and monitoring of the speculation intractable. Congress should lead the charge, and require that margin requirements be increased for commodities to that required on stocks.
Goldman Sachs recently predicted $150 to $200 per barrel prices for crude. Really? What is the purpose of this PR posit? It remains that it’s time to listen for the hissing sounds, which will be evidence of a leak in the bubble, and the eminent burst. Then $75 to $80 here we come.
Monday, June 2, 2008
• OIL PRICE BUBBLE - IS THAT A HISS WE HEAR?
Thursday, February 28, 2008
• MINIMUM WAGE – Where's The Confusion?
It is regretable to observe the fact that CEO's of America's 1,000 largest corporations have demonstrated little restraint on their personal accumulation of wealth while too many of their own employees or subcontractors earn below subsistence wages. In the face of such minimal display of reason or wisdom, the answer defaults to “legislation” to minimize devastation at the bottom of the income spectrum.
Even the middle class has seen no increase in its real income for over 20 years, while the income for the top 5% of earners has been skyrocketing. The millions of low income earners don't need to read the current Forbes list of the wealthiest to know there is a fast growing imbalance. Let's pay attention.
Heeding that imbalance and reducing it will ensure there isn't a complete breakdown in our social system and our social contract. All arguments presented in opposition hold little logic, common sense, or reason. They also demonstrate an absence of compassion. Such assertions are usually misinformed and proffered by individuals too busy cashing monthly checks higher than the average annual Income to care. We all deserve what we get, after all, don’t we? Perhaps not.
Are we truly concerned that most of our goods are produced by people earning poverty level wages in distant foreign backwaters? Not much really, pass the ketchup. We're just thrilled to get our furniture or designer jeans at cheap prices. Are corporations making sure that the goods they import are made in safe conditions or assembled by people earning a reasonable wage? Nope. How can such companies know such things . . . they use sub-contractors, don't they? The rationalizations are endless.
Let's make sure that the minimum wage enables at least the human beings at the bottom of our own food chain to rise above the level of an indentured class. Slavery is neither legal nor politically correct . . . so why is it so present and pervasive? The statistics are overwhelming. Let’s not ignore them.
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