Thursday, April 12, 2012

Speculation in the Oil Markets... 40 Percent "Tax"



[excerpted] "...there are factors contributing to the high price of oil that we can do something about. Chief among them is the effect of “pure” speculators — investors who buy and sell oil futures but never take physical possession of actual barrels of oil. These middlemen add little value and lots of cost as they bid up the price of oil in pursuit of financial gain. They should be banned from the world’s commodity exchanges, which could drive down the price of oil by as much as 40 percent and the price of gasoline by as much as $1 a gallon...."

This is a hidden and hefty tax that shifts vast wealth from the many to a few speculators.

Today's speculators use a variety of techniques enabled by high frequency trading that allows "scalping" and outright fraud (e.g. naked short selling and quote stuffing).

I've published an essay on the topic.
http://www.mediatropes.com/index.php/Mediatropes/article/view/15747
see also
http://majiasblog.blogspot.com/2011/08/financial-warfare-using-high-frequency.html
http://majiasblog.blogspot.com/2012/02/wsj-traders-manipulated-key-rate-bank.html

Investment today bears little resemblance to past practices. Today investment capital is as likely to destroy firms as enable them to grow.

See Max Keiser's well-directed rants, Barry Lynn's excellent book Cornered, as well as the numerous essays at Rolling Stone by Matt Taibbi.

Speculation on vital resources, such as food and energy, should be very tightly regulated, or better yet, banned altogether.

People in the developing world die because of speculation on food.

For information on how food speculators are starving millions see the Democracy Now Interview with Kaufman on the Food Bubble http://www.democracynow.org/2010/7/16/the_food_bubble_how_wall_street
also

People in the US are losing their houses because of the speculative real-estate bubble, which was largely driven by the securitization and distribution of mortgages. Fraud was endemic at every stage in this process, as so many critics have documented. See the film Inside Job

People everywhere are being poisoned by nuclear "energy" in part because of speculation in this evil market -- including uranium futures...

Capitalism would work much better without rentier speculation corrupting and distorting markets and operations, at every possible point.



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