Thursday, August 21, 2008

Selling Off America, One Piece At A Time-- The Bush Economic Miracle


Yesterday I went to lunch with a senior VP who works at the largest bank in the world, Citigroup. She mentioned that last year Sheikh Mohammed bin Rashid Al Maktoum, who was, at the time, one year into his reign as ruler of Dubai, decided to buy his newest and youngest-- his fourth-- wife a present for her 28th birthday. He bought her Barney's. Actually he had his UAE front company, Istithmar PJSC, outbid a legitimate Japanese firm and close the deal for a paltry $942.3 million. My VP friend has nothing against Sheikhettes or any Arabs-- their money is as good as anyone else's and, after all, her own place of employment's biggest single shareholder happens to be a Saudi bandit calling himself "Prince" Al-Waleed bin Talal; all that gas you pump into your tank bought him a 4.4% stake. But she did note that our ruling class seems to have done something very wrong to set things up so that in the last 7 or 8 years a vast amount of American wealth has been transferred from U.S. control to Middle Eastern control. I think she's a Republican who's had her fill and won't be voting for John McSame in November.

Republican energy policies-- remember the top secret meetings in Cheney's office?-- have been absolutely ruinous for our economy and perhaps for our nation. They certainly drove us into this catastrophic and destabilizing war in Iraq. Before I go further, I want to say that although the energy policies-- billions of dollars in tax breaks for Big Oil, deliberate hobbling of alternative energy advances, and regulations that have led to gasoline increases from $1.51/gallon on the day George Bush took office to... well, I paid $4.29 today-- may be supported by every single Republican in the federal government, but they have also been championed by more than a few bought-off Democrats from the Republican wing of the Democratic Party, particularly Senator Mary Landrieu (D-LA- $616,744) and Congressman Dan Boren (D-OK- $379,860). Like I've pointed out before, 75% of the massive bribery program Big Oil has used to buy off Congress ($221,843,888 since 1990) has gone to Republicans-- Kay Bailey Hutchison (R-TX- $2,126,025), Phil Gramm (R-TX- $1,679,314), John McCain (R-AZ- $1,642,810), John Cornyn (R-TX- $1,317,825), Joe Barton (R-TX- $1,246,411), James Inhofe (R-OK- $1,090,023) and Don Young (R-AK- $957,263), being the biggest beneficiaries and the most steadfast shills for the industry's agenda. But that other 25% has gone to buy Blue Dogs and other corrupt, reactionary Democrats' fealty.

And that brings us to a story on the front page of the Washington Post this morning: A Few Speculators Dominate Vast Market for Oil Trading. Wow! And I thought the mass media had decided that story had no legs or was too complicated and made it go away. You see, just before they broke for the summer holiday, senators were confronted with S. 3268, the Stop Excessive Energy Speculation Act of 2008, sponsored by Harry Reid and co-sponsored by 14 Democratic senators. Its express purpose was "to amend the Commodity Exchange Act, to prevent excessive price speculation with respect to energy commodities." Big Oil whore Mitch McConnell (R-KY- $673,861) promptly filibustered the bill. When the Democrats tried to end the debate and vote, all of Big Oil's biggest shills gave the finger to the economically hard-pressed American public and stuck with McConnell and their buddies at Big Oil who have been so very, very generous to them.

The only Republican to cross the aisle and vote with the Democrats was Maine's Olympia Snowe, who isn't up for re-election but who is very aware what heating oil is going to cost her constituents in a few more months. Her colleague, Bush's "Sweet Susan," was never as bright or as quick on the uptake. She's is in a tight re-election battle and after taking $134,393 in "donations" from Big Oil & Gas, she voted to support the filibuster. If you are following the Senate election campaigns you will have noticed several Republicans like Susan Collins shouting about how Democratic opposition to more drilling is what is causing the high oil prices. Is that why they all oppose the "Use It Or Lose It" legislation proposed by Democrats to force oil companies to drill on the millions of off-shore lots they've already been granted? Among the happy filibusterers are 6-figure Big Oil prostitutes like Lindsey Graham (R-SC- $115,525), Thad Cochran (R-MS- $205,435), Saxby Chambliss (R-GA- $209,842), John Sununu (R-NH- $238,530), Norm Coleman (R-MN- $247,900), Roger Wicker (R-MS- $262,710), Elizabeth Dole (R-NC- $277,756), Gordon Smith (R-OR- $295,325), Pat Roberts (R-KS- $327,900), Lamar Alexander (R-TN- $364,675), and Big Oil's 4 Horsemen of the Apocalypse: crook Ted Stevens (R-AK- $476,540), Mitch McConnell (R-KY- $673,861), James Inhofe (R-OK- $1,090,023), and, of course, John Cornyn (R-TX- $1,317,825). Big Oil's biggest and most dedicated shill, John McCain (R-AZ- $1,642,810), was conveniently out of town and able to avoid going on record.

Post reporter David Cho explains how a very small number of firms have been able to control the ebb and flow-- and price-- of gasoline and other commodities while avoiding scrutiny from the purposely shackled federal regulatory agencies, the diminishment of which has been one of the grandest-- and most disastrous-- "achievements" of the Bush Economic Miracle.
Some lawmakers have blamed these firms for the volatility of oil prices, including the tremendous run-up that peaked earlier in the summer.

"It is now evident that speculators in the energy futures markets play a much larger role than previously thought, and it is now even harder to accept the agency's laughable assertion that excessive speculation has not contributed to rising energy prices," said Rep. John D. Dingell (D-Mich.). He added that it was "difficult to comprehend how the CFTC [Commodity Futures Trading Commission] would allow a trader" to acquire such a large oil inventory "and not scrutinize this position any sooner."

...The biggest players on the commodity exchanges often operate as "swap dealers" who primarily invest on behalf of hedge funds, wealthy individuals and pension funds, allowing these investors to enjoy returns without having to buy an actual contract for oil or other goods. Some dealers also manage commodity trading for commercial firms.

To build up the vast holdings this practice entails, some swap dealers have maneuvered behind the scenes, exploiting their political influence and gaps in oversight to gain exemptions from regulatory limits and permission to set up new, unregulated markets. Many big traders are active not only on NYMEX but also on private and overseas markets beyond the CFTC's purview. These openings have given the firms nearly unfettered access to the trading of vital goods, including oil, cotton and corn.

Using swap dealers as middlemen, investment funds have poured into the commodity markets, raising their holdings to $260 billion this year from $13 billion in 2003. During that same period, the price of crude oil rose unabated every year.

This was all made possible by the hard work of Texas Senator and Big Oil shill Phil Graham (R-TX- $1,679,314) and his Enron Loophole, officially known as the Commodity Futures Modernization Act of 2000. "The law formally allowed investors to trade energy commodities on private electronic platforms outside the purview of regulators;" it was signed into law by... Bill Clinton.
The exemptions for swap dealers and the development of overseas markets allowed big brokerages to open the door for more hedge funds, pensions and big investors to move into commodities.

In the coming years, commodity investments by funds could grow to $1 trillion, veteran hedge fund manager Michael Masters said in testimony before the Senate earlier this year. In an interview, he said this trend could raise commodity prices for everyone in the coming years and "have catastrophic economic effects on millions of already stressed U.S. consumers."

Meanwhile, commodities have been good business for big Wall Street brokerages. Its commodity trades helped keep Goldman Sachs profitable during the credit crisis, said Richard Bove, a banking analyst at Ladenburg Thalmann.

"Business is lousy right now," Bowie said of Goldman Sachs. "Commodities and currencies are clearly the strongest business they have right now."

In the coming months, swap dealers expect to have yet another venue for oil speculation. The CFTC has stated it would not stand in the way of trading in U.S. oil contracts overseas in Dubai. Goldman Sachs and Vitol are among the major investors in this new exchange.

I guess we don't get Barney's back, do we?

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At 6:14 AM, Blogger Minnesota Central said...

OK, so we know that foreign investors are buying up American companies … and lobbying government too.
But what about the Republican’s charade “Drill here, Drill now” ?
That should mean jobs, right ?
But for whom ?
So, who is drilling in the Gulf of Mexico ?
According to Minerals Management Service the companies include:
-- Australia's BHP Billiton
-- Brazil's government-run oil company Petrobras
-- Canada Nexen Inc.
-- Cobalt International Energy LP (which is owned by the Carlyle Group which is known for their relationships with George H. W. Bush and the bin Laden families)
-- ENI Petroleum Co. Inc. operates as a subsidiary of Eni Norge AS (Norway)
-- Shell Offshore Inc., (part of Royal Dutch Shell)
And you probably thought it was good-old US based Exxon-Mobil !

And just this week, the Department of the Interior’s Minerals Management Service (MMS) lease sale resulted in 53 companies submitting 423 bids on 319 tracts comprising over 1.8 million acres offshore Texas.
That’s not a lot of bidders or bids.
And the highest bid received on a tract was submitted by Statoil Gulf of Mexico LLC for Alaminos Canyon, Block 380.
A unit of Norway's Statoil ASA oil company spent nearly $286,000 to lobby the U.S. federal government in the first quarter of the year after spending $600,000 during 2007.

If we’re going to do more drilling, American business needs to invest in more rigs and train more American workers … that’s the way to have America become more energy independent.

At 1:11 AM, Anonymous Anonymous said...

Vitol has connections in very high places. They were cited in 2003 as having brokered 33 million barrels of oil under the Iraqi oil for food programme. If I had to guess, I'd look for some of Bush 41's old CIA colleagues as founders of Vitol - or perhaps some of his dad Prescott Bush's Nazi network given the Dutch connection (where Fritz Thyssen had the European base of the bank Prescott Bush managed for him in New York).


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