• If you are having problems logging in please use the Contact Us in the lower right hand corner of the forum page for assistance.

Unregulated markets

fff

Well-known member
Gas prices down? You can thank the Democratic Congress. Since the Enron Loophole was fixed, oil and gasoline prices are down about 60%. America, you did the right thing by voting Democratic. :D

June 17, 2008

Economist's View
« FRBSF: The Current Economy and the Economic Outlook |June 17, 2008
The "Enron Loophole"
From Marketplace:

Deflating the oil bubble, by Michael Greenberger: ...Host Kai Ryssdal talks with former commodity regulator Michael Greenberger about ways to keep tabs on speculation.

Kai Ryssdal: ...The [Commodity Futures Trading Commission is] in charge of regulating oil markets in this country and Congress has been after the agency to do something -- to do anything -- about oil and gas prices, what lawmakers perceive to be speculation, in particular.

Michael Greenberger used to run the ... [Division of Trading and Markets for the Commodities Futures Trading Commission. He now teaches law at the University of Maryland.]

Ryssdal: Why is it so hard to figure out what's going on in commodities markets -- oil specifically?

Greenberger: Well, the reason it's hard to figure out is about 30 percent of our crude oil energy futures are traded in what is called a dark market -- that is a market that was deregulated in December of 2000 at the behest of Enron. Prior to that legislation..., all energy futures traded in the United States or affecting the United States in a significant fashion were regulated ... under a very careful regime that had been perfected over about 78 years and many observers believe that because those markets are not being policed, malpractices are being committed and traders are able to boost the price virtually at their will.

Ryssdal: You're not really telling me that seven years on, we're still paying the price for Enron, are you?

Greenberger: Well, this has been called the "Enron Loophole" and there are many legislators working very hard to close that loophole ...[and] bring the speculation under the kind of time-tested controls that were used until Enron had its way and amended the law...

Ryssdal: So what's Congress going to do?...

Greenberger: Well, there are several proposals..., but the bottom line is the speculators will, in the end, be policed. We will know who they are, what they're doing, what their controls are, what effect they're having on the market. Maybe we'll find out that there's nothing there.

Ryssdal: So just to be clear, you do think that we're in a bubble, then?

Greenberger: I believe it and I'm certainly not alone in my belief. If you talk to anybody who trades in these markets on a regular basis, they will tell you that the markets are completely dysfunctional and out of control because of speculative activity.

Ryssdal: How long is it going to take then if we are, as you say, in a bubble, for it to work its way through and us to get back to something more realistic for the price of a barrel of oil, whether its 50 bucks or 80 bucks?

Greenberger: From my own experience as a commodity regulator, I believe that if the Bush Administration were serious about its regulation, we could begin seeing prices drop within a month. If we don't get the kind of regulation that has been done for decades and the market proceeds along the pace its proceeding, we will have to go through a very, very serious recession. The question is do you want to deflate the bubble by that kind of suffering or do you want to deflate the bubble by applying tight U.S. regulatory controls? ...

http://economistsview.typepad.com/economistsview/2008/06/the-enron-looph.html
 

fff

Well-known member
Sandhusker said:
When was the Enron loophole fixed, fff?

Oh, you want want to know more about the Loophole? You surprise me, Sandhusker, being so inquisitive. :lol:

The "Commodity Futures Modernization Act of 2000" (H.R. 5660) was introduced in the House on December 14, 2000 by Rep. Thomas W. Ewing (R-IL) and cosponsored by Rep. Thomas J. Bliley, Jr. (R-VA) Rep. Larry Combest (R-TX) Rep. John J. LaFalce (D-NY) Rep. Jim Leach (R-IA) and never debated in the House.[2]

The companion bill (S.3283) was introduced in the Senate on December 15, 2000 (The last day before Christmas holiday) by Sen. Richard Lugar (R-IN) and cosponsored by Sen. Peter Fitzgerald (R-IL) Sen. Phil Gramm (R-TX) Sen. Chuck Hagel (R-NE) Sen. Thomas Harkin (D-IA) Sen. Tim Johnson (D-SD) and never debated in the Senate.

Given the above-stated chronology, it would appear that the House and Senate versions of the bill were introduced just prior to the Christmas holiday in December 2000, following George W Bush's (first) election (in November 2000), while then-President Clinton was serving out his final days as President. The bill was never debated by the House or Senate. The bill by-passed the substantive policy committees in both the House and the Senate so that there were neither hearings nor opportunities for recorded committee votes. In substance, it appears that the leadership of the Republican-controlled Senate and House incorporated the deregulation of credit default swaps into an omnibus budget bill (without hearings or recorded votes)at a time when the outgoing president was in no position to veto anything. The following article suggests that Bill Clinton and Alan Greenspan endorsed this law The Bet That Blew Up Wall Street though Clinton's position in 2000 is only suggested, not confirmed or made clear in the report.

The Republican leadership of the House incorporated"The Commodity Futures Modernization Act of 2000(H.R. 5660)" by reference, as Section 1(a)(7), in a long and complex conference report to the 11,000 page long "2000 omnibus budget bill" formally known as "The Consolidated Appropriations Act for FY2001(Labor, Health and Human Services, and Education Appropriations Bill) (H.R. 4577)." 157 Democrats and 133 Republicans voted for the appropriations bill. 51 Republicans and 9 Democrats opposed the appropriations bill vote results in the house. The Senate version passed by "Unanimous Consent." President Clinton signed it into Public Law (106-554) on December 21, 2000.

Senator Levin started trying to get this thing fixed last year:

In September 2007, Senator Carl Levin (D-MI) introduced Senate Bill S.2058 specifically to close the "Enron Loophole" [7] This bill was later attached to H.R. 6124, the Food, Conservation, and Energy Act of 2008, aka "The 2008 Farm Bill". President Bush vetoed the bill, but was overridden by both the House and Senate, and on June 18, 2008 the bill was enacted into law.[8]. One specific reason behind its introduction was to address the record high oil prices of the 2000s energy crisis.

Links and other stuff:

http://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000
 

aplusmnt

Well-known member
fff said:
Gas prices down? You can thank the Democratic Congress. Since the Enron Loophole was fixed, oil and gasoline prices are down about 60%. America, you did the right thing by voting Democratic. :D

You got to be one of the craziest loons on line! Oil is dropping world wide, there is a world wide recession have you not heard? Markets drop when the economy drops.

By your reason then can we blame the Democrats for calf prices dropping also? What did the Democrats change that caused cattle prices to tank just like oil prices? :roll:

Maybe them Enron loopholes they changed are also why other stocks are tanking on the stock market seeing how they are traded similarly. Heck even stuff is cheaper on Ebay auctions. Picked me up a good deal recently on a Case knife, should I thank the Democrats for that?

And if the Democrats could have changed this with legislation, where is the legislation record of them trying to fix it years ago but the Republicans blocking it?????????

You are a Partisan Loon!!!!!!!!!!!!
 

Sandhusker

Well-known member
Aplus, they didn't "fix the loophole" as fff claims. She's having trouble separating reality from the Liberal fantasy land again.
 

VanC

Well-known member
Well, silly me!! I always thought it was a bit more complicated than that, but I guess I was wrong. Seems that the sharp decline in gasoline consumption, because of the worsening world economy and $4.00 gas, had abssolutely nothing to do with the sharp drop in gasoline prices. No, it was fixing the Enron loophole that did it!!

That's wonderfull news!! Now I can go to bed at night knowing that OPEC's promise to cut production by, as of now, 4.2 million barrels a day will have no effect on prices. Why? Because the Enron loophole has been fixed!!

Now we can go back to using even more fuel than we did before $4.00 gasoline. So go back to driving those gas-guzzling SUV's, luxury cars, and huge trucks you don't need. Make all the unnecessary trips you want and let them idle till you're blue in the face!! It's OK. The price won't rise one dam bit. Why? Because the Enron loophole has been fixed.

Even better, not only do we not have to search for more sources of domestic oil, we can shut down every stinking oil field and platform we have operating right now. Not only will it save the planet, but it will mean fewer profits for those nasty, evil oil companies!! And you know what? It won't raise the price of gasoline even a little bit!! Why? Because the Enron loophole has been fixed, that's why. Hallelujah!! :roll:
 
A

Anonymous

Guest
Sandhusker said:
Aplus, they didn't "fix the loophole" as fff claims. She's having trouble separating reality from the Liberal fantasy land again.


Well actually Congress did take a majpr step toward fixing the Enron loophole with what they had in the Farm Bill- until George W again told Congress to "go to Hell" and isssued one of his over more than 1,100 "signing statements" (more than all previous Presidents combined)-interpreting it his own way and telling the CFTC and the regulators not to enforce it...

The same thing he did after Congress overwhelmingly overrode his veto and passed a law not allowing Mexican trucks into the US....

But as Commissioner Greenberger testified to Congress the CFTC still had enough powers to do much toward stopping hoarding and speculation if GW would just tell them to/allow them to act- and hadn't ordered them to take an "8 year vacation on any regulation".... :(
Which has now shown up to be a pattern thruout this administration and is the major reason our economy is in the disasterous state it is.... :( :mad:
 

jigs

Well-known member
the only holes that can be associated with voting democrat is the ones they will cut into MY pocket and drain me of tax money....


i guess Bill Clinton was a dem, and other holes could be mentioned, but I will refrain
 
A

Anonymous

Guest
Its nice to see the Repubs are finally beginning to question GW on his misuse of power, failure to follow the directions of Congress, or enforce the laws- and his misuse of signing statements to assume almost dictatorial power... But its too little-- too late- the damage their Congress did to the Repub party/country is done.... And the power that "rubber stamp" Congress let Bush assume unchallenged set precedent- and is now in the hands of the Dems- and Obama....

Bush, Cheney assert new power to bail out Detroit
By GEORGE WILL
Of the Washington Post
Dec. 21, 2008

WASHINGTON - A new Capitol Visitor Center recently opened, just in time for the transformation of the Capitol building into a tomb for the antiquated idea that the legislative branch matters. The center is supposed to enhance the experience of visitors to Congress, although why there are visitors is a mystery.

Congress' marginalization was brutally underscored when, after Congress did not authorize $14 billion for General Motors and Chrysler, the executive branch said, in effect: Congress' opinions are mildly interesting, so we will listen very nicely - then go out and do precisely what we want.

Friday the president gave the two automakers access to money Congress explicitly did not authorize. More money - up to $17.4 billion - than had been debated, thereby calling to mind Winston Churchill on naval appropriations: "The Admiralty had demanded six ships: the economists offered four: and we finally compromised on eight."

The president is dispensing money from the $700 billion Congress provided for the Troubled Asset Relief Program. The unfounded assertion of a right to do this is notably brazen, given the indisputable fact that if Congress had known that TARP - supposedly a measure for scouring "toxic" assets from financial institutions - was to become an instrument for unconstrained industrial policy, it would not have been passed.

If TARP funds can be put to any use the executive branch fancies because TARP actually is a blank check for that branch, then the only reason no rules are being broken is that there are no rules. This lawlessness tarted up as law explains the charade of Vice President Dick Cheney warning Republican senators that if they did not authorize the $14 billion, the GOP would again be regarded as the party of Herbert Hoover. Surely Cheney, a disparager of Congress and advocate of extravagant executive prerogatives, knew that the president considered the Senate's consent irrelevant.


Government expansion
Evidence that casualness about legality is inherent in big government is found in H.W. Brands' new biography "A Traitor to His Class: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt." FDR became president on Saturday, March 4, 1933. Banks were closed that day and the next, temporarily preventing panicked depositors from withdrawing their money. At 1 a.m. Monday, FDR ordered all banks closed for four days, hoping that the fever would break. His act may have been prudent. But was it legal? Brands writes:

"He cited a section of the 1917 Trading with the Enemy Act as justification. The act had never been formally repealed, but a body of legal theory held that the law, along with other wartime legislation, had expired upon the signing of the peace treaty with Germany in 1921."

FDR had asked the opinion of his as-yet-unconfirmed attorney general, Montana Sen. Thomas Walsh, who gave the answer FDR wanted. Walsh never had to defend this: He died March 2 en route to the inauguration.

The expansion of government entails an increasingly swollen executive branch and the steady enlargement of executive discretion. This inevitably means the eclipse of Congress and attenuation of the rule of law.

For decades, imperatives of wars hot and cold, and the sprawl of the regulatory state, have enlarged the executive branch at the expense of the legislative. For eight years, the Bush administration's "presidentialists" have aggressively wielded the concept of the "unitary executive" - the theory that where the Constitution vests power in the executive, especially power over foreign affairs and war, the president is immune to legislative abridgements of his autonomy.


Making laws
The administration has not, however, confined its aggrandizement of executive power to national security matters. According to former Rep. Mickey Edwards in his book "Reclaiming Conservatism," the president has issued "signing statements" designating 1,100 provisions of new laws - more designations than have been made by all prior presidents combined - that he did not consider binding on him or any other executive branch official.

Still, most of the administration's executive truculence has pertained to national security, where the case for broad prerogatives, although not as powerful as the administration supposes, is at least arguable. With the automakers, however, executive branch overreaching now extends to the essence of domestic policy - spending - and traduces a core constitutional principle, the separation of powers.

Most members of the House and Senate want the automakers to get the money, so they probably are pleased that the administration has disregarded Congress's institutional dignity. History, however, teaches that it is difficult for Congress to be only intermittently invertebrate.

http://www.billingsgazette.net/articles/2008/12/21/opinion/guest/20-bush.txt
 

hypocritexposer

Well-known member
You got to be one of the craziest loons on line! Oil is dropping world wide, there is a world wide recession have you not heard? Markets drop when the economy drops.

And recessions historically follow a "spike" in oil prices.

Historically a $5 spike in oil, has resulted in a .5% decrease in growth, in the following recession.
 

fff

Well-known member
Oil/gasoline prices are directly responsible for this recession. Yes, people ran up too much debt (Bush told us to spend, spend, spend after 9/11), and, yes, many of them bought too much house (but everyone EXPECTS their income to increase and Bush encouraged the "ownership society"). But when gasoline prices started going up, up, up, they could no longer make their payments, causing banks to fail, mortage companies to go under. As banks stopped lending, smaller businesses went under, along with big ones, laid off more people who could make fewer payments, etc.

AND THERE WAS NO BASIS FOR THE INCREASE IN GASOLINE PRICES that we've seen this last seven years! It's been a scam on the American people brought to you by the Bush Administration. You can ignore it all you want, make excuses all you want, but I'm, personally, PO-ed! :mad:

Think about how many gallons of gasoline you've bought during Bush's term, multiple that by the cost of gasoline when he came into office, then again by the average cost of gasoline during his term and you'll see just how much money they took from you and your family. And some people want to bitch and moan about Dems and taxes? :mad:
 

Sandhusker

Well-known member
fff said:
Oil/gasoline prices are directly responsible for this recession. Yes, people ran up too much debt (Bush told us to spend, spend, spend after 9/11), and, yes, many of them bought too much house (but everyone EXPECTS their income to increase and Bush encouraged the "ownership society"). But when gasoline prices started going up, up, up, they could no longer make their payments, causing banks to fail, mortage companies to go under. As banks stopped lending, smaller businesses went under, along with big ones, laid off more people who could make fewer payments, etc.

AND THERE WAS NO BASIS FOR THE INCREASE IN GASOLINE PRICES that we've seen this last seven years! It's been a scam on the American people brought to you by the Bush Administration. You can ignore it all you want, make excuses all you want, but I'm, personally, PO-ed! :mad:

Think about how many gallons of gasoline you've bought during Bush's term, multiple that by the cost of gasoline when he came into office, then again by the average cost of gasoline during his term and you'll see just how much money they took from you and your family. And some people want to bitch and moan about Dems and taxes? :mad:

Why should we believe anything you have to say after you said that the Democrats closed the loophole?
 

Sandhusker

Well-known member
reader (the Second) said:
I do remember before the Iraq War how going into Iraq was guaranteed to cause oil and gasoline prices to drop :) And it did the opposite it seems.

I was paying $60/tank and I go through a tank in 3 days when I commute for work. It's now down to $30/tank, I assume because of the global recession personally.

I agree that the price of gasoline was outrageous, but more outrageous is that Congress has not passed stricter CAFE standards. My understanding is that would solve the world's energy needs, if our cars and trucks got more mph. In Europe they get 40 - 50 and more mph is possible but there has been opposition in the U.S. I believe we will see this and soon.

The Corporate Average Fuel Economy (CAFE) regulations in the United States, first enacted by Congress in 1975, are federal regulations intended to improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) sold in the US in the wake of the 1973 Arab Oil Embargo

Why don't you buy one of those European cars that gets 40 mpg?
 

Sandhusker

Well-known member
reader (the Second) said:
You don't understand that the cars that come into the U.S. are manufactured for the U.S. or converted for the U.S.?

I may buy a hybrid now that they have been out a few years.

Our local Cadillac dealer switched 2 years ago to mini Coopers and this year brought in Smart Cars. That's a real American entrepreneur for you!

My car gets okay gas mileage. We just commute distances here believe it or not. I may drive 100 - 200 miles in a day.

I do understand that they are converted. You need to find out why and then you might not think Congress is the savior.
 

hypocritexposer

Well-known member
GM is profitable in China, and they are selling outdated models, that do not meet US CAFE standards for about $4000/car? 2004 numbers

By the way $4000 in 2004, was a year's wages in mid class China.

I wonder if consumer choice has anything to do with it, and conform to "group-think"
 

TSR

Well-known member
fff said:
Oil/gasoline prices are directly responsible for this recession. Yes, people ran up too much debt (Bush told us to spend, spend, spend after 9/11), and, yes, many of them bought too much house (but everyone EXPECTS their income to increase and Bush encouraged the "ownership society"). But when gasoline prices started going up, up, up, they could no longer make their payments, causing banks to fail, mortage companies to go under. As banks stopped lending, smaller businesses went under, along with big ones, laid off more people who could make fewer payments, etc.

AND THERE WAS NO BASIS FOR THE INCREASE IN GASOLINE PRICES that we've seen this last seven years! It's been a scam on the American people brought to you by the Bush Administration. You can ignore it all you want, make excuses all you want, but I'm, personally, PO-ed! :mad:

Think about how many gallons of gasoline you've bought during Bush's term, multiple that by the cost of gasoline when he came into office, then again by the average cost of gasoline during his term and you'll see just how much money they took from you and your family. And some people want to bitch and moan about Dems and taxes? :mad:

To know if there was a BASIS for the increase in gasoline prices over the last 8 years we would need to know what was said between Cheney and the Energy exec's at their secret meeting in the beginning. But alas, executive privilege trumps transparency.

BTW did anyone the History Channel the other night comparinf today's economic mess with that of the '20's and '30's? It had thenSen. Phil Graham talking about how are markets "were like a man still wearing boy's clothing. The regulations needed to be gotten rid of and allow this market economy to dress like a man." Phil hit the nail on the head didn't he? :shock: :cry:
 

TexasBred

Well-known member
fff said:
Oil/gasoline prices are directly responsible for this recession. Yes, people ran up too much debt (Bush told us to spend, spend, spend after 9/11), and, yes, many of them bought too much house (but everyone EXPECTS their income to increase and Bush encouraged the "ownership society"). But when gasoline prices started going up, up, up, they could no longer make their payments, causing banks to fail, mortage companies to go under. As banks stopped lending, smaller businesses went under, along with big ones, laid off more people who could make fewer payments, etc.

AND THERE WAS NO BASIS FOR THE INCREASE IN GASOLINE PRICES that we've seen this last seven years! It's been a scam on the American people brought to you by the Bush Administration. You can ignore it all you want, make excuses all you want, but I'm, personally, PO-ed! :mad:

Think about how many gallons of gasoline you've bought during Bush's term, multiple that by the cost of gasoline when he came into office, then again by the average cost of gasoline during his term and you'll see just how much money they took from you and your family. And some people want to bitch and moan about Dems and taxes? :mad:

Gasoline prices go up so people quit making house payments?? Maybe you liberals do it that way but not where I come from. If your budget was that tight you were already long over extended.
 

Mike

Well-known member
fff said:
Oil/gasoline prices are directly responsible for this recession. Yes, people ran up too much debt (Bush told us to spend, spend, spend after 9/11), and, yes, many of them bought too much house (but everyone EXPECTS their income to increase and Bush encouraged the "ownership society"). But when gasoline prices started going up, up, up, they could no longer make their payments, causing banks to fail, mortage companies to go under. As banks stopped lending, smaller businesses went under, along with big ones, laid off more people who could make fewer payments, etc.

AND THERE WAS NO BASIS FOR THE INCREASE IN GASOLINE PRICES that we've seen this last seven years! It's been a scam on the American people brought to you by the Bush Administration. You can ignore it all you want, make excuses all you want, but I'm, personally, PO-ed! :mad:

Think about how many gallons of gasoline you've bought during Bush's term, multiple that by the cost of gasoline when he came into office, then again by the average cost of gasoline during his term and you'll see just how much money they took from you and your family. And some people want to bitch and moan about Dems and taxes? :mad:

This is an asinine discussion. Gas prices in the U.S have only gone $0.05 per gallon (in 2008) above the previous record high when adjusted for inflation. :roll:

Go buy yourself another bottled water, drink it, and then wonder why it's such a hot seller even though it's priced sometimes 17 times more than gas per gallon but costs virtually nothing to pump and process.


Did GWB drop the price down over $100 per barrel in the past few months too? :roll:
 
Top