Class Warfare Blog

April 20, 2012

Speculate on This!

Filed under: Politics — Steve Ruis @ 6:14 pm
Tags: , , , ,

The Obama administration is proposing new rules (regulations!) that will prohibit wealthy institutions from speculating on the price of oil. The reason being global demand for oil is down, global supply is up . . . and prices are climbing. Huh, you mean the market doesn’t work the way economist say it would? Shouldn’t prices fall when demand is low and supply high? Well, no, because of a couple of things. One, there is a futures market in oil and gasoline designed to help even out supply and demand waves (a good thing, probably) but also wealthy individuals and corporations have no place to put their mountains of money, so why not drive up the price of gasoline with it?

A St. Louis Federal Reserve study found between 2004 and mid-2006 speculation contributed more to the price of oil than both global supply and demand combined, roughly 15% of the cost per barrel. Hey, I’m for speculators going away. A 15% decrease in the price of gas would be quite helpful now. In fact, I am for speculators everywhere just going away. They contribute nothing to society, they are just economic leeches.

I propose a “New Rule” (Thank you, Bill Maher.),
namely that: “Whenever a businessman or politician predicts dire results
from a piece of legislation or a new regulation,
they must have a sign behind them stating what their other predictions have been
and whether they have been right or wrong.”

Of course, congressional Republicans began gnashing their teeth almost immediately. New regulations (sputter, sputter) . . . impossible, it will hurt business! Not as much as overly expensive gas so that speculators can add even more money to their piles, while again, contributing nothing to the system.

Every time new regulations come along, business experts explode because those regulations, well, they will put them out of business. Auto manufacturers predicted that the Clean Air Act would put them out of business. (They also thought a 5mph impact surviving bumper would cost billions until an inventor displayed one he could sell for $75. By the way they got Congress to lower the requirement from 5 mph to 3.5 mph because it was just too hard on them.) The CFC Ban was predicted to doom certain industries, but their replacements improved efficiencies and cut costs. Environment regulations have at least broken even (or better) on their balance sheets.

I propose a “New Rule” (Thank you, Bill Maher.), namely that: “Whenever a businessman or politician predicts dire results from a piece of legislation or a new regulation, they must have a sign behind them stating what their other predictions have been and whether they have been right or wrong.” Even baseball players have batting averages. Just because you are wearing a $4000 suit doesn’t mean you have more brains than a rabbit. Show us a track record of being able to predict these things correctly and if you can’t, why should anyone listen?

Advertisements

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog at WordPress.com.

%d bloggers like this: