Wall Street Strikes Again

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Striking like serial predators, Wall Street’s wealthy plutocrats, who were just recently rescued by the beleaguered taxpayer and made whole after they had taken the world economy to the brink of collapse, are now fleecing Main Street again.  Have they no shame? No, they are laughing all the way to the bank.  Meaning the Goldmans and Morgans of the big five who are back running their private casino with impunity.

With Brent crude climbing to over $115 a barrel and U.S. crude to more than $105 a barrel, speculators’ net long position in U.S. crude oil futures rose 2% to a record high last week in the third straight record in price hikes since oil reached $147 a barrel in September 2008. 

Although we are told unrest in Libya and Bahrain are causing the spikes, I spoke yesterday with the former director of the Division of Trading and Markets at the Commodity Futures Trading Commission who have oversight over the oil futures market and he had a very different version of what is behind the price at the pump.

Michael Greenberger made it clear, just as “60 Minutes” did in their investigation following the price run up in 2008, that it is the speculators who are driving up the price, not unrest in foreign lands as is so ritually reported.  Apparently the big banks we bailed out after they ripped us off and devastated our economy, like bookies, offer to take bets on whether vital commodities like oil and grain will rise or fall. 

But the window of opportunity at Wall Street’s private casino is only open to their big super-rich clients who have placed a $40 billion bet that oil will go up.  Well guess what?  It will go up because the price is being driven up and it’s the average working stiff on Main Street who is reeling from the recession that feels the pain, as he and she gets gouged at the pump as a result. 

There is something obscene about the already rich getting richer off the backs of the poor, profiting from a rigged process that does nothing but damage the overall economy.  Particularly at a time when we are barely recovering from the recession they created.

When gas was almost $5 a gallon back in 2008, Morgan Stanley was buying oil futures contracts and having giant tankers full of crude cruise in circles to drive up the price.  It wasn’t OPEC or Exxon sitting on supply, it was Wall Street, and they are doing it again. 

The recent and watered down Wall Street reforms gave the Commodity Futures Trading Commission the power to set position limits to curb excessive speculation but the Republican commissioners are sabotaging the implementation signally to Wall Street that they can plunder with impunity. Incidentally the commodities market is supposed to be for end users of oil and grain like refineries or Pillsbury and Kellogs. But the vultures have swooped in and cornered the market making us all pay more for basic needs.

The question that arises is how can working Americans and the downsized Middle Class survive another Robin Hood in reverse raid on their almost empty pockets?  After the massive transfer of wealth from the poor to the rich with the sub-prime housing bubble, can we survive this latest rip-off at the pump?  Will the rising costs of energy and food knock us back into a double-dip recession?

And how long can we pretend we have a democratic meritocracy when it is increasingly obvious that our plutonomy is a rigged system that favors the inheritors and investors.  How long can American capitalism survive if it is all about extracting wealth for the few, not creating wealth for the many?