Bailing Out the Oil Market

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Permalink Reply by dave murray on October 2, 2008 at 5:47am

you hit the nail on the head. i call them price driven markets.
they will never work. i've concluded it's like being in a maze and you can't find your way out. someone starts pouring water into the channels and before you know it it explodes.
another conclusion i came to is you can't manufacture money[ except the good old fashion way our grandparents did] but in todays world if you don't make it today you lost. the thing about america though is if you lost you get up brush off the dust and go at it again. you can't invest long term w/ borrowing short term. it/s putting the cart before the horse.
but in our liberal higher education system if you show conservative views you may pass w/ a c or d. where you going to get a job w/ those grades. so basically they have fallen in line.
let me tell you a little story. a young girl came home from school ranting and raving about a professor who said that the liberals where going to change the world and make it a better place. health care wellfare everyone will be taken care of.
her dad beinng a republican didn't say much just asking her how her grades were. you shouldn't have to ask she said you know they are A's. then he asked how one of her friends from highschool was doing. oh she just makes C's but she is the most popular girl on campus get's invited to everything and here i sit at home study and work my butt off while she plays around.
dad says well, since she isn't doing so good on her grades you could let her have a little of yours. she has a C average you have an A give her one grade point and you will be even. the daughter responds, are you nuts all the work i've done and you just want me to give her that. the father looked at her smiled and said, welcome to the republican party.

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Permalink Reply by Robert Jackman on October 2, 2008 at 10:07am

No.

It's not a political party.

The original story was punch lined: "welcome to a Free Market Philosophy" which, sadly, no political party adheres to, not even today's joke of a Libertarian party.

That's how bad things have become. First the Libertarians stole the joke, then the Republicans are borrowing it. All talk free markets, but none adhere to it today.

The Derivatives market is the elephant in the parlor room no one is talking about.

That gambling game is in the trillions and no one knows how big their losses are. This is why the problems are being blamed on a bad mortgage market which might have another 150 billion in bad paper to liquidate.

Chump change by comparison.

They need 6 trillion dollars RFN and I guarantee they will need a similar amount by New Years.

We will see this debt based economy unravel now, or a bit later, but it will unravel, just the same, only it will be worse if it drags out.

The answer is going back to basics. Local small banks with loan boards that bank employees and officers are all involved by pledging all their assets to even work in the industry, as it was in days of olde.

We could start over by declaring total from top to bottom debt forgiveness across the board.
But of course, any Political Leader or Statesman that suggested that would be dead by tomorrow morning.

That defines the real reason for a credit system that is top down. It's a control mechanism.

IOW, it's all about CONTROL.

Problem is, a fiat money system is technically impossible to maintain. No way to pay it all down, much less pay it off. They all fail before they hit their 100th. birthday

Something to think about while You sip Your last cup of hot coffee. Made with energy that is imported and coffee that is imported.

Who is going to pilot a tanker of oil here if our money melts down?

We need domestic energy and more important, we need stable money that isn't subject to manipulation by synthetic market forces.

Something totally transparent, or go back to gold and silver.

Both have the element of Trust.

Without Trust, one can't have Civilization, in the sense that Mark Twain would like to use the word.

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Permalink Reply by Clynton on October 2, 2008 at 12:12pm

Very interesting.

Of course, even with 24 hours of news (actually 18, because of repeated shows and sleeping reporters), you don't get this stuff from the main street media.

Thanks for posting, Luane.

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Permalink Reply by Robert Jackman on October 2, 2008 at 2:32pm

It's important that we take responsibility for the fact that we were fooled.

We must forgive, and heal the system by changing the structure in which we operate.

Most people are good and want something that operates "On the Level"

Our two worst attributes according to Mark Twain, cowardice and laziness have worked against us.

Our great Grand Parents allowed the creation of the Federal Reserve system, a privately owned monopoly. Jefferson warned us we would: first by inflation, then, by deflation loose it all. Created at midnight by 5 Senators on Christmas Eve. Sound like a good thing to You?

Our Great grand parents allowed coyotes to take control of the newspaper business, when Hearst had hemp outlawed and then most of his competition had to buy paper he made off of his forest lands.

The above "game" came about because John D. Rockefeller successfully bought the Senate through the Women's Christian Temperance Movement with John's 4 million in gold, about $400 million today, and had passed Prohibition which outlawed the production of Ethanol in the U.S. that gave JDR a monopoly on fuel for about 15 years, long enough to expand his network from cities to the countryside.

Other schemes and Games have duplicated this method and today we have a mess no one can unravel.

The only thing We can be certain of is that We own very little in what is left of this Nation.
WE had better hope foreign owners send their children here to marry our daughters and have a system in place that makes it attractive to stay and rebuild an economy based on something other than debt and schemes.

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Permalink Reply by Luane Todd on October 2, 2008 at 8:15pm

I like to find short history lessons so I thought I would share this one with all of you. It tucks into the original discussion I started with.

Lu

Published on Thursday, October 2, 2008 by TomDispatch.com

The Specter of Wall Street
Wall Street's Comeback as the Place Americans Love to Hate
by Steve Fraser

Wall Street sits at the eye of a political hurricane. Its enemies converge from every point on the compass. What a stunning turn of events.

For well more than half a century Wall Street has enjoyed a remarkable political immunity, but matters were not always like that. Now, with history marching forward in seven league boots, we are about to revisit a time when the Street functioned as the country's lightning rod, attracting its deepest animosities and most passionate desires for economic justice and democracy.

For the better part of a century, from the 1870s through the tumultuous years of the Great Depression and the New Deal, the specter of Wall Street haunted the popular political imagination. For Populists it was the "Great Satan," its stranglehold over the country's credit system being held responsible for driving the family farmer to the edge of extinction and beyond.

For legions mobilized in the anti-monopoly movement, Wall Street was the prime engine house of monopoly capitalism, leaving behind it a trail of victimized businesses, consumers, captive municipalities, and crushed workers. For Progressive reformers around the turn of the twentieth century, Wall Street's "money trust" was the mother of all trusts, its tentacles -- and the octopus was indeed a popular image of the time -- choking off economic opportunity for all but a favored few. Its political power in Congress, in presidential cabinets, in statehouses, in both major political parties was seen as so overwhelming as to threaten to suffocate democracy itself.

All the periodic panics and depressions -- 1873, 1884, 1893, 1907, and 1913 -- that, with numbing regularity, punctuated economic life until the Crash of '29 and the Great Depression brought the house down seemed to begin on the Street. And whether they actually began there or not, all the misery that followed in their wake -- the homelessness, the armies of tramps and hobos, the starvation, the bankruptcies, the broken families, the crushing sense of dispossession -- was regularly laid at the feet of the Street.

Despite the hot-tempered invective directed its way, the "Great Satan" didn't face its comeuppance until the New Deal in the 1930s. Then, all its transgressions -- its speculative greed, its felonious insider-dealing, its cynical manipulation of popular credulity, its extravagant incompetence and seemingly limitless capacity for self-delusion -- left Wall Street truly vulnerable. Its reputation had struck bottom.

Wall Street's Invisible Decades

Just like our Wall Street heroes of the recent past, so, too, back in the 1920s the savants of the Street claimed credit for the rickety prosperity of the Jazz Age. With the Crash they took the blame for the disaster, just as they had taken the credit for the prosperity, and were despised for their hypocrisy as well. Just as seems to be starting to happen today, Congressmen, some of whom had spent their careers genuflecting before the titans of Wall Street, suddenly hauled them before investigating committees, there to be defrocked, treated to a withering storm of biblically-inspired injunctions and Shakespearean curses, and indicted in the court of public opinion. Wall Street was, as it now seems about to be again, excommunicated.

Suddenly weak beyond compare, the Street was powerless to resist Franklin D. Roosevelt's regulatory state. In rapid succession came the Glass-Steagall banking act and the Federal Deposit Insurance Corporation, the two securities acts of 1933 and 1934, the creation of the Securities and Exchange Commission (SEC), the Public Utility Holding Company Act, and much more. When, in 1936, the President summoned the people to battle against the "economic royalists" everyone knew just who he was talking about.

It's long been said that FDR's New Deal saved capitalism from itself. That is true. One ironic consequence of that fateful turn of events was, politically speaking, to cloak Wall Street in invisibility. After all the shouting was over, after the installation of legislative reforms had further chastened an already cowed Street and constrained its penchant for financial wilding, it ceased to function as the magnetic north for all those troubled by the inequities, injustices, and deformations of capitalism.

During the long prosperity of the post-war years from 1945 to 1970, when the income and wealth inequalities that had always been associated with Wall Street narrowed dramatically -- economic historians know this as "the great compression" -- news of the Street retreated to the business pages and remained there. Except for an occasional act of street theater, even in the tumultuous 1960s, the Street remained largely exempt from sustained political criticism. Once the bête noire of all those who found themselves in opposition to the ravages of laissez-faire capitalism, Wall Street had been neutered.

Just as remarkable is how long that immunity from criticism lasted. After all, Wall Street's record over the past quarter century is nothing to boast about -- unless, that is, you happened to have made your living on it or in its environs.

Beginning in the 1980s, the Street supervised and profited handsomely from the de-industrialization of America. "Lean and mean" capitalism, the watchword of the Reagan era, added up to the systematic dismantling of the core of American industry. This was done in the interests of "shareholder value," as well, of course, as the bounteous short-term returns offered by the merger, acquisition, and junk-bond mania of those years. Did the rise of a speculative economy of virtual wealth and the fall of an economy that had once employed millions productively at decent wages disturb the political equanimity of American public life? Barely.

When the financial regulatory apparatus of the New Deal was weakened, piece by piece, or simply eliminated by a triumphant conservatism, the economy began to re-experience the cycles of bubble and bust so familiar to previous generations of Americans. In 1987, the stock market briefly collapsed. Then, during the late 1980s, a large-scale savings and loan bailout was accompanied by the rescue of banks caught short holding shaky Latin American debt. Not long after that came the savaging of the "Asian tiger" economies by Thomas Friedman's "electronic herd" of speculators, and the government-arranged bailout of that period's biggest hedge fund, Long-Term Capital Management.

Before the country could catch its breath, matters got really serious with the popping of the dot.com bubble, Enronization, and finally, of course, our current catastrophe. Through all of this -- until now -- the political fallout was virtually nil. Sarbanes-Oxely, the act passed by Congress in 2002 in response to an avalanche of Wall Street and corporate scandals that began with Enron, was a remarkably tepid piece of reformist legislation, given the scale of the debauch; yet, within moments of its passage, howls of protest could be heard from our offended friends on the Street, grievous complaints treated with all due seriousness by the media, somehow still infatuated with Wall Street's rain-makers.

The Return of the Repressed

No longer. There is a new agenda in America and it calls for re-regulation, recovery, and retribution. It is enough to make one gasp in disbelief, but nowadays there is practically universal agreement that the financial sector must be more or less rigorously reined in and regulated. (Hedge fund managers and some other hold-outs demur, of course.) Yet mere weeks ago, "government regulation" was still a phrase to be avoided like the plague, ranking right up there with "liberal" in the vocabulary of political obloquy.

It's hard not to be reminded of just how quickly the political chemistry of the country changed at the end of the 1920s. The presiding figure who had loomed over that decade was Secretary of the Treasury Andrew Mellon -- then considered the greatest Treasury secretary since Hamilton. In 1929, his insane faith in the free market led him to suggest to President Herbert Hoover that the way out of the Depression was to do nothing, except "liquidate stocks, liquidate labor, liquidate the farmer, liquidate real estate." That thought earned him the enmity of a once admiring country. So, too, laissez-faire has suddenly become much too French for Americans who, but moments ago, treated it like the Holy Grail. We are all regulators today.

Of course, the devil, as every politician on television now makes sure to say, will lie in the details of just what re-regulation consists of. If all it involves is transparency, that won't be nearly enough. After all, that is precisely what Sarbanes-Oxley promised when it required financial institutions to make full disclosure of their activities. When it comes to circumventing the rules of information sharing so as to leave the insiders in the know and the rest of us out in the cold, where there's a will, there will always be a way. The new regulatory regime must have powers that extend beyond umpiring. New rules need to be invented whose purpose is as much to assure economic recovery and equity as it is to police the borders of illegality.

Indeed, popular anger fueling the regulatory crusade now seems to be coupled with a deep-running fear of a coming depression and an urge to reverse course. This, too, is symptomatic of a shift in the axis of political debate, in the zeitgeist, if you will.

The meltdown of the financial system has called into question American economic behavior over the last generation. Wall Street has come to stand for a paper economy that produces nothing useful, nothing tangible the way it once did. It has frittered away resources on embarrassingly grotesque forms of conspicuous consumption and patently non-productive forms of investment. It has left the real economy underdeveloped, its infrastructure rotting away in plain sight, its wealth fractured by unprecedented inequalities, dependent on sweated labor, and its industries, across a broad spectrum, technologically second-rate. It has left the country lost in a sea of debt and headed for an abyss of unemployment, bankruptcy, and evictions. Somehow regulation -- although not all by itself -- must address this, or so, for the first time in a long while, large numbers of Americans hope and desire.

People are now looking to the government -- that ogre of the dying old order -- as the only power resourceful and strong enough to direct the flow of capital where it's needed rather than where the discredited overlords of the financial system think may be most profitable. Conservatives, especially those who rightly balk at the mega-bailout now in the works as unfair to the American taxpayer, decry what they call financial socialism. But what then?

The Meaning of Retribution

As it did in 1929, the free market has failed beyond tolerance. Overwhelming popular sentiment (which each new poll registers with added vehemence) may, sooner or later, bring not only a full recognition of just how wrong-headed the country has been for how long, but how much in need it is of fresh institutions. New forms of public authority, closely overseen by the mechanisms of democracy rather than turned over to some autocrat on leave from his day job as an investment banker, might have a chance of doing what was once unthinkable: de-sanctifying private property and compelling it to perform in the general interest when its private misuse has placed us all in peril. The New Deal ventured in that direction. We need to venture further.

Here's a first principle: Refuse to reward those institutions that have done us no service. If that entails their liquidation (to borrow a word from Andrew Mellon), so be it. The world won't end, only the world as they have known it.

Let's use what's left of their grossly inflated assets to re-start the engines of real economic development. Compel investment in the re-industrialization of the country along lines that reward labor not parasitism, end the reign of the sweatshop, rescue the country from environmental suicide, revise the division of wealth and income so we can all live free of the indecencies of lavish piggery, and insist that social responsibility takes precedence over the bottom line.

Many will seek retribution as well, just as Americans used to do in the decades before the Great Depression. How could they not? That's what happens when simple rage turns into moral outrage, when people are finally called to account for the damage they've done. The emotion fuels a chemical reaction even now at work in our cultural innards. It may prove the catalyst for an intellectual and emotional explosion that someday will add up to a genuine break with the past. It did so back in 1929.

However justifiable, cutting CEOs loose from the life-support systems they've used to drain corporate treasuries for decades is small potatoes. Do it, but let's hope the instinct for retribution will be turned to better purposes -- to, in fact, reintroducing into our political life and our economic behavior an ethos of social solidarity. Let's see where that might take us. We could do much worse.

Copyright 2008 Steve Fraser
Steve Fraser is the co-director of the American Empire Project [1] at Metropolitan Books and the author, most recently, of Wall Street: America's Dream Palace [2] (Yale University Press).

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Permalink Reply by Robert Jackman on October 2, 2008 at 9:25pm

I like the sense of balance in his article. a hint toward doing things "on the Level"

It could be improved with two attributes and will otherwise fail without them.

First, I don't care about saving Wall St.

I want to see a mechanism for clearing of debt, profit, and promoting constructive commerce, disposing of failed assets, etc. That does not need to happen in one place. Only Grand Mischief comes out of a single den of "operators" where so much is concentrated. We see what they have become.

Instead, lets have 3,000 Wall Streets across the land, one in each County. The outfits and players in Each County will be close enough for us to see if they merit our participation.

Those who try to Shuck and Jive us will fail if they are liars or are less than totally Transparent.

That way, the transacting people will partake in, will be up close and personal. Face to face.

Our Court house Flag poles will sustain the memory of having two potential purposes.

Let the buyer beware and Broker too.

Transparency will become an everyday affair.

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Permalink Reply by Mike Anthony Fernald Sr. on October 3, 2008 at 5:20am

Hey Friends
I was not fooled I knew it would not help to Bail out these Crooks, I knew we were in do do, now the DO DO is getting deeper.
We need to pack our bags and move onto the Whitehouse steps until they listen to us WE the people. If passing this bill was so good why did the Dow Drop another 400 points.
Im not sure whichway McCain voted on this bill I don't think he even voted at all., But Obama voted yes.

Dennis Kucinich on cspan says there was nothing in the bill for the homowner. We CANNOT LET THIS BILL GET TO THE Presidents Desk He will more than likey pass it, This is nothing short of 850 Billion Dollars of PORK that will go to the crooks that got us into this Mess to Start with. That money should be put down here on Main Street NOT Wall Street.

So if you have time and writing Skills Let them Know they can Not do this to the American People. Also this money is going to Foreign Investors.

Thanks for Listening
Mike

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Permalink Reply by Robert Jackman on October 24, 2008 at 8:53am

I will attempt to illustrate how far we have drifted away from a culture based on voluntary cooperation.
The results are all around us. The problem is not one of stopping the President from signing this Bill, the problem is structural. It involves our monetary system, as designed.

Long ago, the only place wealth came from was the Forest, Farm, Fisheries, Mines, (Oil too) and the efforts of man, via labor and invention.

One portion of life was funded by exchange and barter. Transactions with people outside of close circles usually involved gold or silver. Some started using receipts for gold warehoused with the fellow in town who had it locked in a secure safe. If the man You dealt with was honest, You probably lived all Your life with little problems, maybe a recession that lasted 1.5 to 2.5 years at most. Bankers and others working in the financial system, had to sign away everything they owned, in order to work in such a system. Problems were few, excepting machinations by those wanting a powerful central bank. Even taking into account the last bank panic caused by J.P. Morgan in 1907, bank failures totaled 2.8%. A pittance compared to today's problems.

Along came a huckster in a $15.00 suit working for the European based Morgan interests, and he called for changes, He proposed a central bank, and it had close ties with the State and "Katie bar the door" We are now looking into a financial abyss.

We have lost Transparency and Accountability? What is that?

Worst of all, we have substituted credit, swapped it for money and it can be increased or decreased at will, influencing social policy and that means Control over mankind. People have become addicted to looking up to a false God other. A false source of wealth via a central authority. We are being lead around with a ring in our noses.

Instead of looking to themselves, and from the old sources at the foundation of all Life, We have inserted a mechanism that is costing us dearly, it is fulfilling the warnings of Thomas Jefferson: First by inflation, then by deflation we will loose it all if we ever allow the money supply to be controlled by private interests.

This system guarantees we will always have interference in our lives, interruptions in our plans, effecting everything, including our desires to become energy independent, for the Oil we buy is traded for Arms, an industry with close ties to the current monetary system.

As a result, Alternative Energy has to buck Big Oil, Banking, and the Arms industry to advance.

I have not even addressed the Tax Credits and subsidies Big Oil gets amounting to at least $4 a gallon we pay via income taxes. Were it not for that, natural gas and ethanol would be king of transport fuels as gasoline would be at least $7 to $9 a gallon, as it costs that and more, everywhere else on this planet.

It is my sincere hope that members of Pickens plan would all read the above and understand just how big the obstacles are to energy independence.

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Permalink Reply by Robert Jackman on October 24, 2008 at 9:17am

It is my understanding that McCain voted for this illegal Bill also.

Illegal? Yes, for Congress is the only body that can generate a Bill.

A Bill of legislation started by the Senate is no such thing. This can be stopped by a lawsuit.

They all know better, they are just hoping no one would notice and we go back to sleep.

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