WEDNESDAY, APRIL 18, 2012
Back in the days Capitalism was taught in public schools as the best economic. For those of you who were taught that the various forms of Marxism (such as Socialism, Communism or Fascism for example) were just as viable as Capitalism ask anyone who graduated High School prior to the mid-80's, they will back me up on this point.
What the hell did they teach kids in Hawaii 40 years ago?? We learned that the way to lower prices was to increase supply or lower demand. Either they didn't teach that in Hawaii or President Obama played hooky during those lessons, because he constantly demonstrates a lack of understanding of the basic assumptions of capitalism.
Just take a look at his little oil regulation speech made yesterday.
“We can’t afford a situation where some speculators can reap millions while millions of American families get the short end of the stick. That’s not the way the market should work,” Obama said in a Rose Garden speech, laying out a $52 million proposal largely aimed at beefing up the Commodities Future Trading Commission’s oversight and enforcement of the oil and gas markets.Lets examine that for a moment.
First of all speculators are involved in trading all kinds of agricultural products such as wheat, pork bellies, corn, soy oil, different kinds of precious metals, industrial metals as well as energy products. Heck, Obama's progressive buddies were even looking at creating a carbon market (which failed).
Successful traders in any of these speculative markets make millions of dollars because of another capitalism tenet that the President never learned about, people who take the most risk stand to make the most profit, they also stand to take the biggest losses. Therefore Obama is correct when he says speculators can reap millions---that's the way the market is supposed to work. But they can also lose their shirts. Look at what happened to Fannie Mae and Freddie Mac when the housing bubble, created by the progressive policies of people like Barney Frank and Chris Dodd, collapsed.
Let's get back to supply and demand for a moment. If we concede that Obama truly believes that it is the speculators causing oil prices to spike (OK that in itself is a giant speculation, but go along with me on this). If Obama truly believes that it is the speculators causing oil prices to spike then there is one easy way to punish the speculators, flood the market. Going back to the housing market example, the prices of houses collapsed when the market was flooded with foreclosures and demand tailed off because of the lousy economy. It's been almost four years and the value of houses is still below pre-collapse levels.
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