The futures market would be policed for the next 70 years — until that night in 2000, when Phil Gramm handed the keys to Enron, Goldman and the Kochs. The amendment passed without hearings or public notice. Democrats, practicing their patented brand of acquiescence, were happy to ride shotgun. President Bill Clinton signed it into law.

They were "bipartisan, effete snobs who thought they knew better than everybody," says Mark Cooper about Congress. He's the director of research for the Consumer Federation of America, among the many who warned Washington that it was playing with matches near dynamite. He'd soon be proven spectacularly correct.

Gramm's amendment became known as the "Enron Loophole," named for the criminal empire that was then America's seventh largest company. Though Enron would soon crumble in a heap of avarice and fraud, Gramm & Co. had unleashed the parasites, allowing them to prey on American commerce.

Former international securities lawyer Dennis Kelleher: “I asked the senior official at Goldman [Sachs] at the time. There were no supply and demand issues that could remotely explain the doubling and doubling again of oil prices.”
Charles Steck
Former international securities lawyer Dennis Kelleher: “I asked the senior official at Goldman [Sachs] at the time. There were no supply and demand issues that could remotely explain the doubling and doubling again of oil prices.”
William Black, former bank regulator turned economist at the University of Missouri-Kansas City: “People can’t conceive of a world without these massive institutions, and can’t believe they’re a negative influence.”
Forester Michael
William Black, former bank regulator turned economist at the University of Missouri-Kansas City: “People can’t conceive of a world without these massive institutions, and can’t believe they’re a negative influence.”

Prior to the change, speculators were generally kept to no more than 30 percent of any given market. Anything beyond that became dangerous. That's because they have no concern for the things they're buying or the people who use them. They're simply betting on price swings. The more volatile the market, the more money they make. Most sell well before they'll ever take delivery of, say, a load of sugar.

Yet Congress had set them free. Banks such as J.P. Morgan and Lehman began to rally large, institutional investors to bet on oil. It took them just five years to pervert the market's very purpose. By 2005 they'd set off a buying frenzy that launched prices into the stratosphere.

Sherri Stone, vice president of the Petroleum Marketers Association of America, likens it to buying a home. Under normal conditions of supply and demand, you might have a few other people bidding for the same house. "But with speculation, now you have 200 other people bidding for that house. You're going to pay an enormous price for this house."

By the time the economy began to collapse in the summer of 2008, speculators had cornered a stunning 81 percent of the oil market. Some had even begun to hoard fuel, just as the robber barons had done a century before. Olav Refvik, a top trader at Morgan Stanley, became known as the "King of New York Harbor" because he was leasing so much storage space.

Yet the bankers' incompetence would once again prove dangerous to themselves and everyone else. They'd already sabotaged the housing market. Artificially high fuel prices were the second prong of their attack.

The U.S. economy was officially in free fall.


Meet America's dumbest bookies

Think of Wall Street banks as not much different than your neighborhood bookie. After all, there's little difference in betting on Starbucks stock or a football game. The smart ones realize they can make a handsome living just sitting back, wisely setting odds and making a killing off of the transaction fees.

But what separates the two is that bankers violate a cardinal rule of the bookmaking trade: They're degenerate gamblers themselves. And history says they're very much in need of adult supervision.

In just the last 25 years, the financial industry has gone from the savings-and-loan crisis to the tech-stock bubble to the accounting-fraud scandals to the mortgage-industry collapse. Pepper in a ceaseless string of criminality — from Drexel Burnham Lambert to MF Global — and you realize the industry has routinely set off large bombs in the U.S. economy for a quarter century.

Worse: The pattern is accelerating.

This reign of depravity just happens to correspond with deregulation, the legacy of Ronald Reagan. Surely he was right to reduce the red tape and paperwork garroting small business, the nation's largest and most stable employer. But his disciples took it as a one-size-fits-all theory. The people benefiting most were those who could afford to buy senators like Phil Gramm.

Deregulation of the futures markets would solely serve America's greatest welfare queens, Big Oil and Big Finance. Over the years both had purchased competitive advantages from Congress, making a mockery of the free market. America's five largest oil companies receive $20 billion in welfare annually, largely through tax breaks afforded to no other industry. Big Financiers pay half the personal tax rates of their brethren at community banks. Despite buying off the umpires, they still couldn't stand on their own two feet.

"Nine of the largest financial institutions in the world failed" in 2008, says William Black, a former bank regulator turned economist at the University of Missouri-Kansas City. "That should petrify people. All of them pulled the pin on their own grenades."

When the economy collapsed, speculators found themselves with a small problem. No one could afford to buy gas. In just a few short months, the price plunged from $147 to $30 a barrel.

Some good came from this. President Barack Obama would soon follow Sarah Palin's charge, increasing drilling in the United States. He also strong-armed Detroit into producing more fuel-efficient cars as part of its bailout.

Finally, the simple fact that we're still broke four years later has caused U.S. consumption to steadily decline. Today, America exports more petroleum products than it imports for the first time since the 1940s.

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16 comments
northsiderasta
northsiderasta

Remember when gop lackeys & hacks worried that BP would not have enough money to drill for more oil?

Richard1980
Richard1980

Goldman Sachs, and others, have done the same thing to metals. They've bought warehouses and are "hoarding" steel and aluminum supplies, manipulating the market and pushing prices higher. Wall St. and the banks need to be kicked out of the commodities markets. They've turned our "free markets" into "manipulated markets," their own Las Vegas, and they are putting our economy on the gaming table, as long as they win, our economy, and citizenry, be damned. http://www.protopage.com/buy-keflex-online http://www.protopage.com/buy-clomid-online http://www.protopage.com/order-amoxil-online http://www.protopage.com/bigger-breasts

Daniel Mays
Daniel Mays

just more republican lies when will u people see whats going on and vote democratic for the people not corporations get rid of citizens united reinstate glass- steagall reelect obama

Don G
Don G

Finally! Someone else with the same conclusions I have had from the get go. Nothing more than big business in politicians pockets. What a bunch of A$$ holes!

Imapayne_57
Imapayne_57

And their blaming Obama for this. This was spear headed by George W.

Snazd
Snazd

Maybe we could put a few of our jobless Americans to work - building guillotines to set up on Wall Street and in front of the Capitol building.

Jacquebquique
Jacquebquique

Timothy Geitner was the "fair haired boy" of Goldman-Sachs. I wonder where he ended up?

Mzonker1
Mzonker1

RE Petro terrorists You are beyond "full of crap". Follow the $ to see who profits from increased gas prices. How long will u remain a sophomore in Jr College?

Not Applicable
Not Applicable

I agree with the major tenets of the piece - politicos are soft on regulation and my calculations show gas today would be $2.40 to $2.70 a gallon in STL without speculators (but not 40% less). There are ways to deal with this, but there isn't the political willpower to do so (combined with the reality that too many voters are economics/math challenged and can't understand the true factors involved).

Trista DiGiuseppi
Trista DiGiuseppi

I'm pretty liberal, but this article is ridiculously subjective. Sorry, I believe there is some truth to this piece of work, but I also smell a lot of sour grapes and bullshit.

Droptheduck7
Droptheduck7

How is the WAR on DRUGS going??? Makes one beleive that Congress and Wall Street are making very nice Profits on BOTH!!! - and NO NEWS NETWORK addresses either!!! After reading this article, it is evident to me that BOTH PARTIES MIGHT ON THE TAKE!!! - However, I have no concrete proof of either - except results, or lack there of !!!

Danieljoeoconnor
Danieljoeoconnor

thankyou for this article. i hope your house doesn't get hit by a drone attack. the fact that this insanity continues unabated despite all common simple logic is evidence of an ulterior motive being perpetrated by evil men in league with senator phil ghram. and that is the imploding of our economy along with other sovereign nations economies to create a problem in need of a solution: the new world order global government. it all ties in with the inside 911 job, all the fema camps across the nation, to the rehearsing of martial law complete with tanks in the streets of st. louis. our government has obviously been hi jacked by the satanic devils that eisonhower and john f kennedy warned us about a week before they blew his brains out.

Robert
Robert

The only way America is going to show congress and these corporate fat cats we are tire of their s#*t is to do what they think we wont do. We have to literally storm congress and wallstreet and throw these people out into the streets right and their faces. We would have to start with congress first, the very place these crooks are hiding at. The sad part is America seems to not be ready to stand up so we continue to get raped without the use of any lube. All I see and hear is people talking about doing something and yet nothing happens and the false promises from campaigners telling us what we want to hear for an election. The great John Adams stated that American democracy would destroy itself from within and that is exactly what is happening. So if congress and big bussiness think they don't have to follw the rules, THEN WHY SHOULD THE REST OF AMERICA HAVE TO FOLLOW ANY RULES.

Lennonsmum
Lennonsmum

Most of the country's working people, or should I say unemployed and underemployed, are hiding their heads in the sand. When there is no more money anywhere but in the hands of the ultra-wealthy, there is no one to blame but ourselves for not throwing the thieves in prison. I am very disappointed with how little the average person reads about what is going on. The sound-bites on TV is all they hear and then think they are so well-informed...What's worse is that most people have given up and don't listen or read much of anything; they have given away their power...

Rikarius
Rikarius

And that my dear is how they get away with it. Total denial by citizens as to the depth of corruption in todays political and judicial arena. If one questions the integrity of our leaders we are considered unpatriotic, in reality the opposite is true. It is our duty as citizens to be diligent in the safeguarding of our rights. Politicians only have the power which we give them. To blindly follow any parties or pollitical agenda is ignorance of the highest degree. Businesses only purpose is to make money. The human, environmental or any other factor is contrary to their purpose. If a loophole exist is it there duty to exploit it. It is our duty to amke sure to close it. To allow this type of corruption to exist for so long says a lot about the intelligence and gullibility of our nation as a whole.

 
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