Did something change on June 6, when oil prices hit $11 per barrel and unemployment jumped to 5.5%, the largest rise in 22 years?
You bet. Speculators, in the words of Business Week woke up to a new Reality.
Many market observers believe ... The stock market is catching on to a new, scary reality.
Yes, the worst fears about financial crisis are fading three months after the collapse of investment bank Bear Stearns. But now the focus is on the economy, which remains fragile, and especially inflation, which appears to be heating up.
Making the day's news all the more surprising, the outlook for the economy and inflation seemed to improve in recent weeks. Many pieces of data for May looked better than expected, like retail sales figures and the Institute for Supply Management's manufacturing index, suggesting the economy—while weak—was not in a recession. And, after rapidly rising to a record $135 per barrel, crude oil prices backed off recently, raising hopes that the speculative fever in the commodity markets was cooling off.
But speculators are gamblers and their addiction causes them to look for many different avenues of speculation: credit lending, real estate markets, and other commodities. This is why Presidential candidate John McCain lashed out at speculators and the "casino culture" on Wall Street.
The New York Sun, quotes McCain as saying, "I believe there needs to be a thorough and complete investigation of speculators to find out whether speculation has been going on and, if so, how much it has affected the price of a barrel of oil" Mr. McCain said in response to an audience member's complaint about investors driving up the price of fuel and other commodities. "There's a lot of things out there that need a lot more transparency and, consequently, oversight."
John McCain has also said: “The government was forced to commit $85bn to stop the collapse of AIG. These actions stem from failed regulation, reckless management, and a casino culture on Wall Street that has crippled one of the most important companies in America.”
McCain added that the Federal Government “must not bail out the management and speculators who created this mess... They had months of warnings following the Bear Stearns debacle, and they failed to act."
If Business Week analysts are right, they had about 3 months. Far too short a period for such a divided government to deliberate constructively and to respond proactively. To make a quick buck, speculators are willing to further undermine the weak American economy. They're like alchoholics rushing to the next drink, and just as careless of their moral obligations. They plan their days so as to get a quick fix.
Post a Comment