More proof that Congress is dumber than a sack full of rocks.
Congress is in a mood to “do something”. Better bolt your doors, lock the windows, and hide your wallet.
This spectacle first played out when the CEOs of the major oil companies were pilloried in front of television cameras for having no compassion for cash-strapped consumers. Wild charges were exchanged, including one member who threatened the industry with nationalization.
This is not Mexico in the 1930s or Venezuela we are talking about. This is the most productive economy in the history of the world that is being carelessly dissed.
Now we have the spectacle of Congress investigating “speculators” who may be causing the run-up in global commodity pricing. See the Wall Street Journal’s article “Commodities Regulator Under Fire” (7/7/09, page C1).
The cynic in me says this newest pogrom is a Soviet show trial designed to deflect blame and confuse cause and effect. It should only last through the November elections.
History Lesson 1: 1973
But the last two energy crises resulted in some very bad policy. The Nixon administration created the post of an energy czar, to ration fuel supplies in the 1973 crisis, resulting from the Arab oil embargo after the Yom Kippur War.
This was a complete disaster, resulting in spot shortages and surpluses, once regulator whims took the place of free market pricing to allocate supplies efficiently.
History Lesson 2: 1979
The second seventies crisis came with the Iranian revolution in 1979, and that gave us the government’s heavy handed intervention into subsidized “syn” fuels, long gas lines and shortages, and Jimmy Carter admonishing us to put on our cardigan sweaters, turn down the heat, and suffer in silence.
Which goes to show that idiocy and poor policy is not being monopolized by either major political party.
If this is not just for show, and if we are going to try to repeal the law of supply and demand, be prepared for a greatly diminished quality of life for decades to come.
Let The Markets Decide
Whatever punitive laws that may be passed will hasten the decline of the mighty American economy as a haven for deep and liquid markets, causing entire industries and commodities to flee offshore in search of equilibrium.
Oil and other commodities are globally fungible, and the suppression of their unimpeded market clearing here will simply outsource the trading to less cumbersome regimes.
The last time we engaged in the repudiation of global trade, including the worst and most restrictive tariff act in modern times, we helped to engineer the decade long depression of the thirties.
That’s one way to handle commodity speculation. Better than being propped up in front of a firing squad, which is yet another tradition in governments threatened by independent actions by “hoarders” and “speculators”.
And to add fuel to the fire, taxes were raised, and gold was literally confiscated from the citizenry. You were an enemy of the state, subject to criminal prosecution, if you held on to the $20 double eagles in your coin box.
Even seventy-five years ago, Congress and the executive branch were of a mind to “do something”.