Wishful Thinking, Bear Edition

Somebody is trying to convince us the Russian Federation's financially hurting over Georgia.

Good luck selling that one.

b also published a nice snicker at Samuel Bodman's recent assertion that insufficient drilling, not speculation, was the cause of the rise in oil prices.

...Of course there was no evidence available to prove speculation in the commodity markets. That was because the regulators simply never looked for evidence until pressure from some folks in Congress finally made them do something 'unusual':

...The [Commodity Futures Trading Commission], which learned about the nature of Vitol's activities only after making an unusual request for data from the firm, now reports that financial firms speculating for their clients or for themselves account for about 81 percent of the oil contracts on NYMEX, a far bigger share than had previously been stated by the agency. That figure may rise in coming weeks as the CFTC checks the status of other big traders.
[...]
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.
[...]
"Business is lousy right now," Bowie said of Goldman Sachs. "Commodities and currencies are clearly the strongest business they have right now."

Originally only people connected to commodities, producers and consumers like farms and airlines plus a few middlemen, were allowed big trades at the commodity exchanges. In 1991 a loophole was created for a Goldman Sachs subsidiary. A second loophole was opened in 2000 with the Commodity Futures Modernization Act of 2000. A main sponsor for that law was Enron. Since then private, unregulated commodity trading platforms have opened in London and in Dubai...

If the Congress made them investigate it, you can be sure it's because Someone wasn't geting their pistons lubed well enough.

Good links in the comments to the role of Swiss banks and Balkan war criminals in the oil speculation biz, too.

I find it amusing that the role of speculation is dismissed by the Bu$hies, and when it becomes common knowledge, articles blaming it on Swiss banks and Serbians come to press. !0% of the market is, after all, a minority share compared to say, the Bu$hCo-Cheneyburton (and its Dubai ba$e) or the Mc$ame-Gramm-Enron connection.

Pay no attention to all those houses behind the curtain, and don't ask how many there are, either.