We’ve written about oil speculation HERE. Make no mistake about it – Wall Street is robbing you blind. There is war going on behind the scenes….major Wall Street players are suing to prevent limits on speculation by traders. These limits would make it difficult for companies to “corner the market” or have any real affect on the supply side of the economic equation…and thus – it would be more difficult for these Wall Street firms to manipulate prices which would drive pricing down for consumers. Speculation in energy markets is purported to account for at least 25% of the total that you pay at the gas pump; that’s real money that goes directly to the most profitable industry in the world and every $ spent on gas is a $ not spent buying a manufactured good which produces real jobs in the U.S.
Wall Street is suing to prevent limits on commodities speculation as made law in the Dodd-Frank bill – Bloomberg reports:
Trade associations representing companies including JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) sued to overturn the U.S. Commodity Futures Trading Commission regulation approved last year that would cap the number of contracts a derivatives trader can have.
The lawsuit is one of the financial industry’s highest- profile challenges to the Dodd-Frank law that bolsters regulation of derivatives after largely unregulated swaps helped fuel the 2008 credit crisis. The International Swaps and Derivatives Association Inc. and the Securities Industry and Financial Markets Association argue that the agency used a flawed analysis of Dodd-Frank when it completed the rule and didn’t adequately consider the costs of the rule. A ruling is pending from U.S. District Judge Robert Wilkins in Washington.
Bernie Sanders has introduced a bill which would force the Commodity Futures Trading Commission to limits on speculative trading in energy futures markets – from the Hill:
“Millions of American consumers are hurting as a result of excessive speculation on the oil futures market and the future of our economy hangs in the balance. The time to act is now,” Sanders said Wednesday.
The senators argued that the CFTC has been “dragging its feet” in establishing “position limits” on the amount of futures and swaps contracts for oil and other commodities that traders may hold. The limits are required under the sweeping 2010 financial reform law.
Ali Kadri at TripleCrisis explains the geo-politics of oil relative to U.S. imperialism:
Below the surface, however, oil prices are too important to be left to the ‘market.’ With the oil-dollar standard holding, rising oil prices dampen the performance of all importing economies to a higher degree than they do the US economy. Oil price variations therefore engender a shift in the degree of power enjoyed by the US economy vis-à-vis others. In the ongoing depressive cycle, which does not nudge in spite of rising debts, reasserting US stature through the oil control mechanism gains ground.
Financial capital has been altogether content as a result of expanding US indebtedness and rising fictitious capital. Capital as whole has shown robustness as a result of debts burdening working people in ways that reduce their means to acquire a decent living. Pauperising working folk, in times of a predominant crisis in social ideology, raises the share of real value and wealth acquired by the ruling classes. In a sense, rising debts or fictitious capital have had non-fictitious and dire effects on the working classes in the more advanced economies.
But the real dire consequences of expanding fictitious capital fall upon the peoples of the Middle East. Wars of aggression meant to underwrite expanding US debts by staking claims to oil rise in intensity by the weakness of the bond tying oil to the dollar. Oil prices therefore have much more to say about the state of the global economy than simply the cost of petrol at the pump.
I’m absolutely SHOCKED, SHOCKED I tell you that the Council on Foreign Relations thinks oil speculation is good for the common man – read HERE.
ValueWalk explains how we subsidize commodities speculation through the tax code- click HERE for more:
In essence, the tax code promotes short-term speculation in commodities markets, and it does so in several ways. People who are speculating in commodity future markets are inherently short-run, and care far more about the discount on the short term capital gains tax rate than they do the increased cost of long-term commodity ownership. Whereas a short-term equity speculator is taxed at the general income rate, a commodities/futures speculator is taxed at 23%. The consequences of this are two-fold: first, there is an economic incentive for speculators to ply their craft in commodities markets as opposed to equity markets, and second, speculators desire volatility in the short-run in order to maximize their capacity to make money, such that there is a serious misalignment of incentives between speculative market participants and the purpose of commodity markets.
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