That moment is now past, oil is less expensive and the spotlight is on other political issues. But if Congress provides the $52 million the President asked for – or even if it does not – resources will be spent to expand bureaucracy and an already mind boggling body of rules. The politics comes and goes but leaves a permanent residue. With every bit of additional regulation, the government constructs a more comprehensive straitjacket for the economy.
The price of gasoline is only one example of the broader problem of political-regulatory ratcheting up. With oil, the political issue is its being expensive, so traders get the blame for driving the price higher, not lower—as the price heads down, we have not been told that speculators are manipulating the market downward. By contrast in stock markets traders are often blamed for falling prices. Thus in the financial crisis, banks complained of short sellers driving down their share price. Thereupon the US Securities and Exchange Commission banned the short selling of financial stocks.
So depending on what the political agenda of the day is, speculators can be taken to task for either a high price or a low price. Either way, the political mood tends to be ephemeral but the regulation it helps create stays on and we all bear the costs.Read it at ThinkMarkets
By Chidem Kurdas
The title of this post is certainly not true but, as Kurdas points out, might as well be given the recent fall in oil and stock prices. In reality, there is little difference between investing and speculating. People rarely invest in any project without speculating that the returns will be positive. Therefore, we should not seek to prevent speculation anymore than we desire to prevent people from making investments.
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