Monday, July 22, 2013

Senate hearings today: "Should Banks Control Power Plants, Warehouses, And Oil Refiners."

Tip o'the hat to ZeroHedge for pointing to some Senate hearings on July 23, 2013 that could be very, very important. Why are prices basic foodstuffs, oil, and other commodities so high? Because Wall Street banksters have been allowed to rig the commodity futures markets in their favor AND buy control of crucial nodes of physical markets as well. In 2010, JPMorgan Chase bought one of the largest metal warehouse companies in the world - despite a 2005 agreement with the U.S. Federal Reserve that it would not do so. There has already been some excellent reporting on how the banksters have driven up the price of oil, and thus gasoline, such as Goldman Sachs Turns Global Hunger Into Wall Street Profit, and How Wall Street Fuels Global Hunger Food Speculation. Tomorrow hearings could give new life to the story.

Ahead Of Tomorrow's Hearing On Goldman And JPM's Commodity Cartel 
Submitted by Tyler Durden on 07/22/2013 12:18 -0400
Back in June 2011 we first reported how "Goldman, JP Morgan Have Now Become A Commodity Cartel As They Slowly Recreate De Beers' Diamond Monopoly" in an article that explained, with great detail, how Goldman et al engage in artificial commodity traffic bottlenecking (thanks to owning all the key choke points in the commodity logistics chain) in order to generate higher end prices, rental income and numerous additional top and bottom-line externalities and have become the defacto commodity warehouse monopolists. Specifically, we compared this activity to similar cartelling practices used by other vertically integrated commodity cartels such as De Beers: "While the obvious purpose of "warehousing" is nothing short of artificially bottlenecking primary supply, these same warehouses have no problem with acquiring all the product created by primary producers in real time, and not releasing it into general circulation: once again, a tactic used by De Beers for decades to keep the price of diamonds artificially high."
Over the weekend, with a 25 month delay, the NYT "discovered" just this, reporting that the abovementioned practice was nothing but "pure gold" to the banks. It sure is, and will continue to be. And while we are happy that the mainstream media finally woke up to this practice which had been known to our readers for over two years, the question is why now? The answer is simple - tomorrow, July 23, the Senate Committee on Banking will hold a hearing titled "Should Banks Control Power Plants, Warehouses, And Oil Refiners."
While congratulations are also due to the Senate for finally waking up to this monopolistic travesty conducted by the big banks, we can only assume that this is due to various key non-bank industry participants (such as MillerCoors) crying foul so much that even the Fed is now involved and is supposedly reviewing its own decision from 2003 that allowed this activity in the first place.
Read more.
(Update—Jon here) Even Ken Galbraith, the guy who made me aware of Veblen's writings and good guy who got the Minnesota Veblen house on the National Registry of Historic Place, was skeptical of Veblen's claim that the big dividing line in economics was between business and industry.  I, on the other hand, have fashioned my worldview around this stunning bit of insight.  And the reason is—it tends to demonstrate it's validity in dramatic and obvious ways.

This battle between manufacturing end users and commodity speculators on display today is a perfect example of why Veblen was right.  Thanks Tony for spotting this!  (Hint: because of the books he sells and the people he meets doing it, Tony may understand the distinction between business and industry on a nearly molecular level.  I mean, he REALLY gets it.)

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