Sunday, January 07, 2007

Oiling the wheels of BushCo's government

Read this great post on the connection between BushCo, BigOil and Big Money at Riding The Juggernaut.
Many people reading this article will not be surprised by such data. A USA Today poll in September showed that a massive 42% of Americans thought the Bush administration "deliberately manipulated the price of gasoline so that it would decrease before this fall's elections." White House spokesman Tony Snow was forced to address the mounting speculation at a press briefing:
"I have been amused by ... the attempt by some people to say that the president has been rigging gas prices, which would give him the kind of magisterial clout unknown to any other human being. It also raises the question, if we're dropping gas prices now, why on earth did we raise them to 3.50 dollars before?"
Well, that was a stupid question from a stupid man. Obviously, if the oil industry is supporting Bush, it is expecting massive profits in return. And that is exactly what they have been getting. Well over a quarter of a trillion dollars, in fact.

The real question is not why they manipulate oil prices for political profit, but how do they do it?

In the case of the '06 mid-terms, it was a two-pronged attack. On the one hand, we had the Saudis and other pro-US players in the Middle East playing a delicate balancing game by promising their OPEC friends that they would cut production, but then failing to commit to the cuts and even raising production slightly instead. The market reaction was an interesting and significant factor here: none of the experts actually believed that OPEC would cut production before the US mid-terms, so the price never went up.

On the other hand, we had Goldman Sachs dumping more than $6 billion in gasoline futures contracts. This move was like a clarion call to the markets: when the big funds change their weighting, smaller funds quickly follow suit. Even if the move is actually contrary to market realities, it doesn't matter. As Lew Rockwell explains, what Goldman Sachs did is called "painting the tape":
Goldman doesn’t lose money. This is a managed commodity index. Goldman manages the index, but the actual money put up comes from institutions, hedge funds and other unlucky saps that trusted Goldman to manage the commodity index as a hedge against inflation – not to bail out of $6 billion in contracts over a few weeks. The result: Unlucky saps – Major losses. Goldman – Zero losses and their man running the Treasury. Which side of this trade would you want to be on?
It's worth noting here that Henry M. Paulson Junior, the 74th Secretary of the Treasury, appointed by Bush in June, 2006, was the former Chairman and Chief Executive Officer of Goldman Sachs. In Wall Street slang, he's now a big part of the US government's Plunge Protection Team. Following the elections, Goldman Sachs’s chief executive, Lloyd Blankfein, received an annual bonus exceeding $50 million.


Cheney and Bush later became the first ex-CEO double act to control the White House, and both oil men to boot. One of Cheney's first acts was the convening of highly secretive Energy Task Force meetings with major Big Oil players. Bush then invaded Afghanistan, launched a failed coup in Venezuela, and occupied Iraq. Surprised? You shouldn't be.

People in the know do not seriously expect the USA to ever withdraw US forces from Iraq and lose control of that oil. Ever. All that talk about a military withdrawal was just window dressing for the electorate. Just like the oil prices. When you hear Bush talking about closing down the USA's permanent military bases and handing the Green Zone over to the Iraqis, let me know.

Many people criticize Bush as a bumbling incompetent, because they judge him as a supposed representative of the US public's interests. But Bush's masters are actually the richest of the rich, a global elite who flitter from country to country in private jets, and they think he is doing a fine job, a fine job indeed. As Bush famously told a charity dinner crowd in 2000:
This is an impressive crowd — the haves and the have-mores. Some people call you the elites; I call you my base.
In the same way, people often think of the Iraq invasion as an attempt by the USA to seize control of Iraq's oil, but in fact the USA just supplied the troops, the Big Media spin and the strident voices at the UN. The US tax-payers funded the project, but they will never really profit from it.

It was Global Big Oil who sought control of Iraq's oil. And the big deal is finally about to go down. When the Iraqi puppet government signs the Oil Law later this year, US-based Big Oil companies will be assured massive profits for generations to come. For more on this, read Joshua Holland's excellent two-part article at AlterNet.

Of course, the oil-price-fixing ploy was not 100% successful this time around: Bush was "thumped" in the mid-terms and his GOP party lost control of both the Senate and the House. With Democrats finally back in control, maybe we will finally get to see the minutes of Cheney's Energy Task Force meetings. But don't hold your breath. Big Oil has deep pockets and many friends in high places.
H/T Liberal Journal


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