New Press and Journal Article, CFTC Caps on Commodities, and Guess What City the Top Income Average in America Resides...

Got a new article in the Press and Journal today entitled "Occupy Wall Street- They're Only Playing the Blame Game" which deals with a lot of the fallacies and misunderstandings of the OWS crowd.  An excerpt:

The solution to reform Wall Street is far simpler than locking up folks like JP Morgan head Jamie Dimon and Goldman Sachs CEO Lloyd Blankfein. As economist Robert Wenzel so eloquently puts it, “If the government didn’t back up the banksters, these clowns would be out of business.”

The belief that unfettered capitalism caused the financial crisis is absurd. Since when did the existence of the Federal Reserve, the Securities and Exchange Commission, the F.D.I.C. and Fannie Mae and Freddie Mac constitute a free market?

Yes, Wall Street gorged itself on toxic securities (approved by government sanctioned rating agencies, mind you) and brought the world economy to its knees. Yet hardly anyone who treats Keynesianism as the Gospel actually questions why this occurred.

The idea that the federal government provided an implicit backing for risky behavior is like premarital sex on “Leave it to Beaver” – it just doesn’t happen.

And unlike June and Ward Cleaver, large financial institutions don’t sleep in a separate bed from their government purveyors. Just ask current White House Chief of Staff and former JP Morgan executive Bill Daley or former Treasury Secretary and Goldman Sachs CEO Hank Paulson.

My article was placed against a supportive OWS piece by Paul Heise, professor emeritus in economics Lebanon Valley College.  Here is an excerpt from his piece which is titled "Occupy Wall Street- They're Absolutely Right" :

The electoral and legislative processes have been purchased by corporate America, especially the Wall Street banks. Press reports, however, consist of putdowns, confrontations and sensationalism. The real story of who these people are, where their anger comes from and what they want is being suppressed.

For just a moment, President Barack Obama got it back in 2008-09 but then he lost it. Almost 80 percent of the people in this country still want that “Change You Can Believe in.’’

It is now the turn of the liberals, progressives or whatever you want to call the Left, to give up on the political process as a captive of Wall Street. They are following the example of their fellow Americans in the Tea Party Movement.

Both Occupy Wall Street and the Tea Party are Americans rising up in frustration. Though similarities to the Tea Party Movement might be embarrassing to both sides, they share a lot. In the end, in both cases, we can say proudly, it is Americans exercising their constitutional right to petition their government.

I am obviously partial to own piece but Heise's article comes off as the typical leftist endorsement of OWS.  He makes the "government would be better without special interests buying influence" argument without realizing that any form of government will eventually be manipulated.  That is the nature of the beast that has a monopoly on coercion and is run by corruptible human beings.  Heise makes no mention of the Fed of course which should instantly disqualify any judgement on the workings of the financial system.

A few months ago I wrote an article for the Shippensburg Slate titled "Speculators Are Our Friends."  I made the standard argument about how speculators play an important role in easing fluctuations in commodity prices.  It was in response to numerous calls for the Commodity Futures Trading Commission to put a boot down on commodity speculation mainly in oil.  Well it looks like the idiots got their wish, via Financial Times:

The US commodity regulator approved sweeping new constraints on speculation in food, energy and metals, in a decision riven along party lines.

The limits on the size of positions in futures and swaps markets will curb banks’ and investment funds’ ability to trade commodities, though the rules were watered down after lobbying by Wall Street.

The reform will put the US at the forefront of the clampdown on investment in commodities, an increasingly popular bet on global growth and hedge against inflation. Assets under management reached an all-time high of $447bn in August, according to Barclays Capital.

The Commodity Futures Trading Commission on Tuesday finalised the rules in a 3-2 vote, with the agency’s three Democrats forming the majority.

This isn't going to help curb volatility of course but will actually increase it in the long run.  Like I wrote last March:

In our world of limited resources, certain products fluctuate in price more than others. These items tend to be heavily relied upon commodities such as food and energy.
Whenever shortages of goods such as wheat, cotton or oil are anticipated, prices are bid-up initially to ensure a steady rise rather than a sudden and drastic fluctuation.

The more accurate the forecast, the less drastic the price increase.

Bidding up the price of a highly fluctuating product ensures that there is a sufficient amount of supply to reach potential demand. Speculators not only serve those who they buy products from by taking on the risk of predicting future prices, but actually help consumers by preserving certainty in times of extreme uncertainty.

The truth of the matter is, that an increase in the price at the pump is being driven up by a number of factors. The civil war brewing in Libya is the main cause as anti-government rebels have secured much of the country’s oil drilling facilities. The Federal Reserve’s continued devaluation of the dollar has been driving up oil prices for decades.

I will admit I took a certain view on tax breaks in the article that I have since changed my mind on.  But the message remains the same: speculators take on the risk of fluctuating prices at the benefit of consumers.  The federal government is overly reactionary to the spike in oil prices caused by Bernanke's QE2, not crazed speculators.  The elephant in the room that finances warfare and welfare continues to go unacknowledged.  What will be celebrated however is data such as this via CNBC:

U.S. consumer prices outside food and energy rose at their slowest pace in six months in September as the cost of apparel and used vehicles fell, suggesting inflation pressures remained contained.

Another report on Wednesday showed groundbreaking on new homes rose at the fastest rate in 1-1/2 years, though most of the gains came from the often volatile multi-family construction.

While inflation slowed during September (the CPI rising just .3%), as mentioned yesterday, the PPI soared for the month of September.  The core CPI has reached the upper breach of the Fed's stated goal (2%), and I don't see it dying down unless China finally pops or the idiots in Europe don't print their way to artificial prosperity (any day now as Portugal is ready to blow).

With all the money printing going on to finance Uncle Sam's gorge on spending, is it any surprise which city became the wealthiest metropolitan area?  Via Bloomberg:

Federal employees whose compensation averages more than $126,000 and the nation’s greatest concentration of lawyers helped Washington edge out San Jose as the wealthiest U.S. metropolitan area, government data show.
The U.S. capital has swapped top spots with Silicon Valley, according to recent Census Bureau figures, with the typical household in the Washington metro area earning $84,523 last year. The national median income for 2010 was $50,046.

No surprise there.  Where the hell is Occupy Capital Hill to protest this gross accumulation of wealth in one geographic area?  Meanwhile Ron Paul is considered "radical" for wanting to cut $1 trillion in the federal budget within his first year as president.  When he mentioned his plan during last night's debate, the audience laughed as if saving the country from insolvency is some type of joke.  While the debate got pretty heated last night, Paul still shined as he got more speaking time than usual.  Here are highlights:

His response on energy subsidies was clear, logical, and the highlight of the night besides Romney and Perry fighting like preteen girls.  Paul also has a great new ad out trashing his opponents for being fakes or as George Will says, versatile in conviction:

There is nothing like great political theater to take your mind off of how pathetic the other candidates are.