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what is really behind Rising Oil Prices

Prior to 1999, the so-called "Too Big To Fail" commercial banks were forbidden to invest in the commodities and stock markets by the Glass-Steagall Act of 1933. These banks were restricted to core banking activities of taking in deposits and making loans.

After Glass-Steagall was repealed by Congress in 1999, these large banks started investing huge sums of other people's money in both of these markets, helping to create large asset "Bubbles" (or price increases) followed by "Crashes (or price dips) when they pulled out of these assets.

The year before Glass-Steagall was repealed, subprime loans made up only 5% of all mortgage lending. By 2008, these loans made up 30% of all mortgage holdings by banks. Knowing that these type of loans were much more likely to default than "normal" loans, the banks had the former loans bundled into packages called "Mortage-Backed Securities". They were given false credit ratings and sold to unsuspecting investors. When these loans started to default, it caused the subprime crises.

The large banks then moved into the commodities markets. Oil is sold on the commodities market and requires only a 5% upfront deposit to control large amounts of it withouttakingactualpossession! The large banks -- with their access to huge amounts of other people's money to speculate with -- have an unfair advantage over other investors who use their own money. These banks are consequently driving up prices during bidding. Some experts say this speculation by the big banks is driving up prices in the commodities markets by 20% or greater.

TheGlass-SteagallActneedstoberestored. In addition, the margin cost to purchase oil by anyone outside the oil industry needs to be increased (e.g., to 50%).

There really exists an excess of oil on the markets. Even refineries are only operating at 80% or less capacity. Artificial shortages (and the consequent price manipulations) are being created by tying up oil supplies using only a 5% investment.

But none of this is news to those in government and finance. It is how the "game" is played today and how lots of easy money can be quickly made. The problem lies with:

● Many Legislators (on both sides of the political aisle) who receive "kickbacks" by passing favorable legislation or cutting back on Government oversight regulations;

● Official regulators who are "in bed" with the "Too Big To Fail" institutions who have mismanaged hedge and pension funds.

The irony is the solution lies with Americanvoters. The problem is that too many in public office are tempted by the "kickbacks" or invitations to participate in such speculation schemes. There are 5 financial lobbyists for every congressman and senator! The quick (if not unfortunate) solution is to nottore-electincumbents. A better solution (albeit difficult) is to elect only those who have nopreviousgovernmentservice experience and who are not associate "players" in the military-industrial complex about which Dwight Eisenhower previously warned the American public.

Additional Material

Glass-Steagall Act ( )

Commodity Futures Modernization Act of 2000

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"Inside Job" documentary about the 2008 Global economic crisis

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"Big Banks Cash In on Commodities" (Wall-Street Journal)

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"The Warning" -- the hidden history of the Nation's worst financial crisis since the Great Depression and the Legislative Action (prompted by Alan Greenspan among others) that suspended existing Commodity Futures Trading Commission oversight on the risky OTC derivatives market. The latter's crash helped trigger the Nation's financial collapse of 2008 and the subsequent multi-billion bailouts of those "Too Big To Fail" banks. In addition, the members of the Dept. of the Treasury "President's Working Group" coerced Congress to eventually cause the resignation of the CFTC's head Brooksley Born. One, because she dared to regulate the derivatives market (thereby costing millions of dollars of easy money to influential persons). And two, because she was a Washington "outsider" (and a woman to boot!) (PBS/FrontLine)

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(also archived at

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