Commentary

On Speculation- by Greg Strid

Maybe, instead of letting all of the useless hot air
generated in Senate hearings on the evils of speculation
with regard to record high energy prices, it should be
harnessed to power Washington DC. This would be real
action that could actually drive down prices, whereas
pointing fat fingers at speculators only makes headlines
and does nothing to address the real causes of the energy
price explosion.

The nasty combination of rising demand from emerging
economies and the downward spiral of the US dollar is
driving prices increasingly higher- speculators are merely
acting on current market conditions. ( Physical “barrels”
or “bushels” of commodities do not even change hands,
and the overall dollar value of futures contracts traded
is dwarfed by the value of goods actually consumed.)

A few weeks ago, Senator Joseph “Droopy Dog” Leiberman,
-Independent in name only- was slaving away on a
ridiculous proposal to ban large institutional investors
from participating in commodity markets altogether.
Bravo, a-hole. Droopy’s behavior seems to fit a long,
boring and destructive pattern. God forbid blame was
assigned where it actually belongs- this would cost
votes and create even longer and sadder faces in the halls
of government.

The silliness in DC is just another instance of shallow
politicians seeking scapegoats to appease a restive and
angry public- a public that has helped create the massive
rise in energy prices.

The American consumer has also fueled the growth in
emerging economies by blindly purchasing all that hums
and whirs- and to top it off, the money spent was borrowed
equity from over-inflated home prices- which is also helping
to drive the dollar lower. (Most of those nasty subprime
loans doled out like crack candy over the past few years
are souring, making US dollar denominated assets all the
more unappealing to global investors, which has helped
fuel the dollar’s decline.)

Pointing fingers solves nothing. Americans, and their
idiot representatives in Washington, will be forced to
clean up the mess they together have made. It will be
painful. It will take a long time. But, it is inevitable.

© Greg Strid 2008

© 2008 Splendid Marbles.