Thursday, June 19, 2008

Deregulation is just Thievery

I'm beginning to feel that I can make it a blanket statement: "If a man comes on the news espousing 'deregulation', that man is a thief."

It's coming out now, in regards to this spike in the price of oil, that the real culprit is simply deregulation. There's a bit from NBC that you can listen to here. They talk a lot of about "single commodity futures" and the various personalities that were involved in making deregulation of oil trading happen.

But the crunch is not the single commodity future. It's not monopolization (as it was in California). It's deregulation. The "Enron Loophole" as it's being called, allows trade in certain energy futures to be conducted without any oversight of the S.E.C.

It doesn't matter, at that point, what the mechanisms are. Whether it's single commodity futures, sub-prime mortgages or Savings and Loan, if someone isn't watching stock brokers and traders with an eagle eye then we're going to have cheating eventually. Eventually, we'll be hosing the general populace. There are a host of ways to cheat and the average person is absolutely helpless to understand any of it.

That's why the S.E.C. was created - to police a complicated financial system using people who new how the game could be gamed. Take away the S.E.C. and you end up with $140 barrel oil when market principles tell us it should be around $80.

My point isn't just about oil though, it's about deregulation. Deregulation is sold as a way to "increase competition" and let the free market take care of everything. Never, ever believe it.

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