On the heels of last week's idiotic yet startlingly mainstream call to "re-regulate" the airline industry, comes this week's horror show of a congressional hearing, with the truth-in-advertising title of "Energy Speculation: Is Greater Regulation Necessary to Stop Price Manipulation?" Here's your moment of zen yesterday from Energy and Commerce Committe Chair John "Dingell" Dingell:
[T]he sharp rise in energy prices during the Bush Administration has been outpaced only by the rise in speculation. Energy speculation has become a growth industry and it is time for the Government to intervene.
We need to consider a full range of options to counter this rapacious speculation. For example, we should examine imposing 50 percent margin requirements for financial speculators; setting position limits on transactions across all futures exchanges; requiring full disclosure of all trading by investment banks in all markets; preventing pension funds from using the commodities markets as an investment vehicle; and prohibiting investment banks from owning energy assets. These and other ideas need to be debated, evaluated, and acted on, sooner rather than later.
It's easy to shrug this kind of stuff off, especially with a (newly veto-tastic) former oilman in the White House, but all that will change six months from now, and the Democrats are rubbing their hands at the prospect of unified government. In the meantime, the air is only getting thicker − on both sides of the aisle − with Mahatir/Larouche levels of hostility toward those shadowy bankster types who make money without even manufacturing widgets or tilling the land.
Seriously, did we kick communism to the curb only to suddenly discover, centuries after the French, that a free market will attract (and benefit from!) suspiciously smart people in pinstriped suits who are using their money to − wait for it − make more money? "Speculators" provide crucial liquidity (which is marketese for "money with which to buy the stuff you want to sell"), and perform a valuable function in helping locate assets that are under- or over-valued. Even those nassty speculatorsses at the end of the real estate boom (the evil "flippers" mom told you about) did some good stuff: They allowed people to sell their houses at a tidy profit, and fixed up old properties in preparation for resales that maybe never came. Many gambled and won (as did the people who sold to them), many others gambled and lost (freeing up "winners" who will buy those properties at firesale prices). That's all kind of the point.
Meanwhile, if you want to imagine what a unified Democratic federal government might look like, imagine this week's hearings paired with a sympathetic president:
On Tuesday, the Senate Homeland Security and Governmental Affairs Committee, chaired by Sen. Joe Lieberman (I-Conn.), holds a hearing to discuss legislative options for "ending excessive speculation in commodity markets." I previewed the hearing here last week.
On Wednesday the Senate Small Business and Entrepreneurship Committee will hold a hearing on home heating oil prices.
On Thursday, the topic of a hearing of Congress' Joint Economic Committee will be: "Oil Bubble or New Reality: How Will Skyrocketing Oil Prices Affect the U.S. Economy?"