Power From The People

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Power From The People

In troubling news that could signal a double-dip recession, growth, after expanding at a pace of 3.1 %, has slowed in the first quarter to an annual rate of 1.8%.  What is certain is that the numbers reflect higher food and gas prices hitting consumers hard.  With crude oil prices climbing 32% in the last three months, the 2010 payroll tax cuts meant to stimulate the economy, have been rendered impotent.

As powerful and wealthy corporations seem to be able to dictate what they want to a compliant government without any push back, the total absence of an advocate for the American consumer is shamefully obvious.  Yet as the individual become more powerless, the already powerful are given the legal right to perpetuate more power into the future. 

In a decision that devastates consumer protection and civil rights, last Wednesday the U.S. Supreme Court sided with AT&T in AT&T Mobility v. Concepcion.  In a 5-4 decision, AT&T got the Supreme Court to allow it to use the fine print of contracts to eliminate class actions, overturning the laws of 20 states.

Corporations can now prevent consumers and small business owners from exercising their only effective option to challenge companies that have defrauded them by banding together to file class action lawsuits to collect millions or even billions they are owed.  In a victory for union-bashing that make Governor Scott Walker look like a neophyte, millions of non-union employees who have to resort to class actions to challenge systemic discrimination by their employers, will be permanently shut out.

The corporatist majority on the Supreme Court has given major corporations the green light to screw the little guy with impunity since no one can afford to challenge corporate misconduct without a class action. This decision callously increases the already dominant market power of major corporations over ordinary Americans and small business owners, who are already outmatched, making what puny laws now protecting the public irrelevant, because few individuals can afford to enforce them.

And in terms of the gouging that is slowing down the economic recovery with possibly grave consequences, what is being done to stop the assault on the family budget from Wall Street speculators driving up the price of food and gas?  A massive transfer of wealth is underway from the pockets of consumers to the coffers of big oil who are now making record profits.

The president has announced that he will convene an inquiry into what is behind the core inflation that nobody is counting, as the cruel attack on the middle class and working poor who have to chose between feeding the kids or getting to work, continues unchallenged.

At least one person is calling it like it is and trying to do something about court-sanctioned corporate robbery.  Below is his letter to the president, and once you’ve read it, you might write a letter too.  You could start the push back that is needed from American consumers, finally acting as citizens.

April 28, 2011

The Honorable Barack Obama

President of the United States

The White House

1600 Pennsylvania Avenue, NW

Washington, DC 20500

Dear Mr. President:

As you know, the skyrocketing cost of gasoline is causing severe economic pain to millions of Americans who have already suffered through the worst economic crisis since the Great Depression.

In Vermont, where it is not uncommon for people to commute 100 miles to work and back five days a week, the increased price of gas is taking a serious bite out of the paychecks of middle class families, many of whom are already working longer hours for lower wages. We have a responsibility to do everything we can to lower gas prices so that they reflect the fundamentals of supply and demand and bring needed relief to the American people at the gas pump.

Let's be clear. There is mounting evidence that the skyrocketing price of gas and oil has nothing to do with the fundamentals of supply and demand, and has everything to do with Wall Street firms that are artificially jacking up the price of oil in the energy futures markets.

In other words, the same Wall Street speculators that caused the worst financial crisis since the 1930s through their greed, recklessness, and illegal behavior are ripping off the American people again by gambling that the price of oil and gas will continue to go up.

According to the Energy Information Administration, the supply of crude oil is higher today than it was last year when gas prices averaged $2.81 a gallon, while the demand for gasoline is lower today than it was last year. Based on supply and demand fundamentals, prices should be going down, not up. Instead, gas prices have gone up by over a dollar a gallon since last year.

According to Goldman Sachs, 20 percent of the price of crude oil is due to excessive speculation. Other experts believe that excessive speculation is driving up crude oil prices by 50 percent. This means that Americans are paying a Wall Street premium of between 70 cents and $1.63 a gallon every time they fill up their gas tanks.

This is simply unacceptable. What is particularly offensive is that this could and should have been prevented under current law.

The Wall Street Reform and Consumer Protection Act that you signed into law last summer required the Commodity Futures Trading Commission (CFTC) to impose strict position limits on the amount of oil that Wall Street speculators could trade in the energy futures market no later than January 22, 2011.

It is now April 28, 2011, and the CFTC has still not imposed speculation limits on oil trading in direct violation of both the letter and the spirit of the Wall Street reform law.

Since January 22, 2011, when these speculation limits were supposed to go into effect, until today the national average for a gallon of gas has gone up by more than 80 cents a gallon.

Instead of putting strong speculation limits in place in January of 2011 as required by law, the CFTC proposed a rule on position limits that wouldn't go into effect until late January of next year. Adding insult to injury, these position limits are so ineffective that they would allow just one Wall Street firm to control 25% of the entire U.S. crude oil spot market or four firms to control 100% of this market without violating the regulations.

Three out of the five commissioners at the CFTC must vote to approve strong oil speculation limits before they can take effect. It is clear right now that there are only two commissioners who are willing and able to do what the law requires to significantly limit oil speculation and bring down gas prices at the pump.

I urge you to make it clear to the CFTC that they must obey the law and establish strong oil speculation limits as soon as possible. I would also urge you to ask for the immediate resignation of any CFTC commissioner who refuses to obey the law and nominate someone else who will.

We cannot allow Wall Street speculators to rip off the American people at the gas pump for one more day and the American people cannot wait another eight months to go by before any limits on Wall Street oil speculators go into effect.

Thank you for your attention to this important matter. I look forward to working with you on this issue.

Sincerely,

Bernard Sanders

United States Senator