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July 2, 2008

Speculation on Tar and Feathers

Tom McLaughlin

The main focus of the oil crisis has now shifted to people called speculators and fund managers. As a liberal Democrat, who reads the Wall Street Journal (now there’s an oxymoron), I have endeavored to learn how they fit into the equation.


Let’s start with speculators. According to Mark Gongloff’s column (WSJ-June 24, 2008), a speculator “does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes.”


In other words, if I buy 10 barrels of oil for $10 and later sell the same 10 barrels for $20, then I have made a profit of $10. Nobody delivers the oil to my back yard, nor do I get to put any in my car.


Now, if Cuthbert hears I just bought 10 barrels for $10, he figures I know something. Maybe the good fairy alighted on my shoulder and whispered something in my ear. So he buys 10 barrels for $12. Then Cuthbert tells Egghead who gets all excited and buys 10 barrels for $14. The rumor gets spread around until the price of oil you and I pay causes hardship.


Now, if I represent other people and I tell them to buy the oil at $14 and behind their back sell my $10 oil at $11, I go to jail. Such a situation as this happened just recently.


However, I get to finish my breakfast, leisurely read the newspaper and casually give myself up instead of having my door busted down like in Law and Order.


Representing other people’s money is a big deal for speculators. And I am not talking about the every other Wednesday stock market club that meets at the local library. I mean billions of dollars that are in pension funds. These are large pools of money where workers contribute part of their wages for retirement. The people who manage these funds are called managers.


The most famous of these funds was the Teamsters Union. Jimmy Hoffa lent the union money to the Mafia to build Las Vegas. This was a very successful but highly illegal enterprise that resulted in the dead Mr. Hoffa being seen around the country with Elvis.


The problem everyone is trying to figure out is “who” these managers and speculators are. Mr. Gongloff states that this is a “slippery” quest and involves an “awful lot of people.” For obvious reasons, they don’t want to be identified for fear of being tarred and feathered in their own oil.


The next big thing down the line is when these people have had enough of this game and yell SELL! Here, they sell their “futures” as quickly as they can and the price of oil begins to fall because nobody wants it any more at a high price. The market crashes, and we go back to where we were wondering “what the hell was that?”


They did the same thing with Southeast Asian currency when “they” bought up the Thai baht, Malaysian ringgit, Indonesian rupee and Singapore dollar, causing them to rise against the dollar and then sold it quickly. This caused pandemonium in those nations. If the people living there did find out who was responsible, head hunting would return in the streets of Manhattan and London.


The housing market came along and they purchased houses, the property values rose and now everything is in a free fall. We all know what happened after that. But who are “they?”


We do know the Japanese are behind the corralling of rice. International pressure caused them to sell their stockpiles to the Philippines and other nations on the brink of starvation and anarchy. I assume it’s the Japanese speculators who should be forced to join their kamikaze ancestors over the Pacific.


Mr. Gongloff, who is obviously in league with the wretched speculators, doesn’t want us to find out who “they” are. He thinks it would be a waste of time. Rather, we should follow the Republican mantra of drill here, there and everywhere.


I don’t know who “they” are, or where to find “them;” but we should load our blow and nail guns, light a fire under the tar pot, pluck some chickens and start with Mr. Gongloff.


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