Oh noes, the tender hearts of Wall Street have been bruised beyond healing. And the man responsible for this crime against humanity?
Bernie Sanders, of course.
Oil trading data that exposed the extensive positions speculators held in the run-up to record high prices in 2008 were intentionally leaked by a U.S. senator, sparking broader concern about industry confidentiality as Congress moves on Wall Street reform.
Senator Bernie Sanders, a staunch critic of oil speculators, leaked the information to a major newspaper in a move that has unsettled both regulators and Wall Street alike.
For those with short memories, the 2008 oil price spike immediately preceded the mortgage meltdown and near-implosion of the economy. In retrospect, the oil business may have gotten lost in the shuffle. But it was huge at the time; there were predictions that oil prices would shoot through the roof, sending many Vermonters scurrying to pre-buy their heating oil. At what turned out to be the very peak of the market.
The primary cause of that spike was not demand or global instability or exploration failures; it was the severe warping of the market at the hands of speculators. The notable non-Socialist Matt Cota of the Vermont Fuel Dealers Association put it this way in 2008:
The problem is that the trading of oil has been deregulated. And large financial players are dominating the market. A recent Washington Post article showed that 81 percent of future oil contracts are controlled by non-physical players — people who don’t own trucks, people who just trade paper.
…It’s provided volatility to a market that, frankly, is so vulnerable to volatility. We’re talking about a product that people need to get to work and to heat their homes. And for this to be used as a financial tool, so Wall Street traders can make billions, is shameful.
Shameful indeed. And now comes Bernie Sanders, revealing the extent of speculative perfidy:
“The [Commodity Futures Trading Commission] has kept this information hidden from the American public for nearly three years,” he said. “This is an outrage. The American people have a right to know exactly who caused gas prices to skyrocket in 2008.”
… The leaked data contains long and short positions held by oil traders in 2008, the same year that oil prices spiked to $147 a barrel. Critics at the time accused oil speculators of driving up prices, leading lawmakers to later insert a provision into the Dodd-Frank Wall Street overhaul law compelling the CFTC to place stricter limits on how many commodity contracts any one trader can control.
Sanders was perfectly within his rights to release the data. According to Reuters, the CFTC is legally barred from such releases, but it is bound to give information to members of Congress upon request. They are not constrained from releasing the information.
But regulators and Wall Street sharpies are worried that making the data public
makes them look really bad might have “a chilling effect on derivatives trading,” according to John Damgard, the head of the Futures Industry Association.
Heavens to Betsy, I certainly hope so. Our economy would be a lot healthier and more stable if there was a lot less dicking around with futures and derivatives, and more focus on productive activity that makes stuff, creates jobs, and generates honest profits.
(Great line from Lewis Black: There should be a law that says if you have a company, and you can’t describe what it does in one simple sentence, it’s illegal.)
Sorry, Mr. Damgard. I ran a thorough self-diagnostic, and I found no trace of sympathy. Take your hurt fee-fees and go swim with the other sharks.