Posts Tagged ‘Commodity Futures Trading Commission’

The government needs better repo men

September 26, 2014


The U.S. government imposes huge fines against financial criminals, but rarely collects the full amount.

Notice the chart on the right, which is in fractions of a percentage point.  That’s right.  The Commodity Futures Trading Commission has never collected as much as 1 percent of the finds it has imposed in any year.

Big money is easy to hide and hard to collect.  So why not prosecute and see if financial crooks can be sent to jail?

Source: Financial Criminals Have Been Fined Billions, But They Rarely Pay by Joe Pinsker for The Atlantic

What’s driving up gasoline prices?

March 16, 2012

Republican candidates say rising gasoline prices are due to President Obama and his administration’s onerous restrictions on the domestic oil industry.  But I don’t see his administration as being all that restrictive.  There is more oil drilling in the Gulf of Mexico that before the Deepwater Horizon oil spill.  Overall U.S. domestic oil production is up 20 percent from 2008, according to energy expert Daniel Yergin.

Democratic liberals say that the cause is Wall Street speculators who are bidding up the price of crude oil.  Normally speculators account for about 30 percent of futures contracts on crude oil and producers and users 70 percent, but now they have 60 percent of the market, according to economist Robert Reich, or 80 percent, according to Senator Bernie Sanders.  They say speculators have free rein because the Commodity Futures Trading Commission’s plan to limit what speculators can acquire has been overruled by a court decision.

But there wouldn’t be speculation if speculators didn’t have reason to think oil prices will go up in the future anyway (or if they were in a position to corner the market).  The emgargo against Iranian oil has tightened the world’s supply of oil.  Actual war with Iran would create a huge shortage.  More than 20 percent of the oil sold on world markets goes through the Straits of Hormuz, and that would be jeopardized by war with Iran.

Other factors are the increasing demand for oil from China and other emerging countries, and the fact that in the annual cycle of gasoline prices, prices normally rise a bit in the spring.

I think it would be a good thing for the Commodity Futures Trading Commission to have the authority to limit speculation in oil futures, but I don’t think this will prevent gasoline prices from going up in the long run.  I don’t think President Obama’s policies toward domestic oil production affect oil or gasoline prices, but I think his war talk about Iran spreads panic about future oil supply, which leads to hoarders bidding up the price of oil.

Click on Q&A: What’s Going On With Gasoline Prices? for analysis by Kevin Drum of Mother Jones magazine.

Click on What’s Behind Rising Gas Prices? for energy expert Daniel Yergin’s thoughts about the Iranian situation’s effect on oil and gasoline prices.

Click on Why Republicans Aren’t Mentioning the Real Cause of Rising Prices at the Gas Pump for economist Robert Reich’s thoughts on speculators.

Click on Wall Street greed fueling high gas prices for Senator Bernie Sanders’ thoughts on speculators.


“A hair trigger away from economic calamity”

August 18, 2011

The great economist John Maynard Keynes once wrote:

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.

It seems paradoxical that while government is more intrusive than ever before into the lives of ordinary citizens, it gives free rein to powerful institutions and wealthy speculators to put the economy at risk.

Bart Chilton, commissioner of the Commodities Futures Trading Commission, gave interviews to The Real News Network describing how speculators and “dark markets” put the economy at risk, and drive up the prices of food and fuel.

The first interview in the series is above and the others are below.