President Barack Obama said on Thursday the U.S. attorney general was assembling a team to root out any fraud and manipulation in the oil markets that might be contributing to higher U.S. gasoline prices.Scapegoating 101
"The truth is, there's no silver bullet that can bring down gas prices right away," Obama said in prepared remarks for his opening statement at a townhall-style meeting in Nevada.
"The Attorney General's putting together a team whose job it will be to root out any cases of fraud or manipulation in the oil markets that might affect gas prices - and that includes the role of traders and speculators. We are going to make sure that no one is taking advantage of the American people for their own short-term gain," Obama said.
The first rule in scapegoating, of which president Obama is a renown grand-master, is to quickly point the finger at someone else before everyone figures out where the finger should be pointed.
Bear in mind that traders and speculators probably are pushing the price of oil higher. I cannot quantify "how much" but open interest in commodity futures by speculators is at or near peak levels. Moreover, hedge funds and pension plans have plowed into commodity ETFs. These actions have an upward, yet unquantifiable effect on price.
The root cause of this mess however, is massive, perpetual, and ever-increasing budget deficits in conjunction with the Fed's explicit policy of US dollar debasement.
As a result of those forces, it is perfectly natural for traders and speculators to bet against the dollar and on hard assets like gold, silver, and oil, even though the trade may become overly one-sided, as it is right now.
Thus if Obama wants to point a finger, he should point a finger at himself, at Congress, and at the Fed, not at traders and speculators.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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