"Each time a person stands up for an ideal, or acts to improve the lot of others. . .they send forth a ripple of hope, and crossing each other from a million different centers of energy and daring, those ripples build a current that can sweep down the mightiest walls of oppression and resistance."Robert F. Kennedy
Using grade school physics of both Newtonian and Nuclear models, does anyone foresee counter currents of sufficient size to minimize/change direction of the huge 'Tsunami' roaring down on us, taking away not only our Freedom, but our Lives? Regardless if our salaries are dependant on us not knowing the inconvenient truths of reality (global warming, corporate rule, stagnant energy science) portrayed by the rare articles in the news media? I know only one - a free science, our window to Reality - that easily resolves the Foundational Problem of Quantum Physics and takes E=MC2 out of Kindergarten

Full Text Individual Post Reading

Thursday, January 22, 2009

As the Economy Tanks, More and More Ponzi Schemes Come to Light

REPEAT: Two issues dwarfing all others, without whose resolution, nothing will change! Bring freedom back to energy science + redefine Corporism, corporate personhood, the current controller of science direction through university funding $$$$$$$$

Freedumb, Freedumb, Read All About It! "A Free Trade, Free Market, Free Corporate, Unregulated Economy run like Al Capone's Casino Joint, and Policed by Al Capone". Is this the best University MBA/PHD Masters and Government Regulators can provide?

PEOPLES LIVES DEPEND UPON THE ECONOMIC SYSTEM. The economic system is not singularly a tool for profit, and the hell with Life. "We now have to pay for the greed and recklessness of those who should have known better.” It is time, Mr. Schumer said, for the American economy to be revived as the “engine of prosperity,” rather than as a “casino” for high-rollers in the realm of finance.

How, in a world of exploding human population, with unparalleled needs, wants and desires, can the economy keep falling, with more and more working people around the world, poorer, lacking basic needs and going hungry... this can only be termed Freakohnomics: The new 21st Century Supply & Demand Economics - absolute greed, absolute power brings on absolute madness - Turns into Freakohnomics gone berserk. Or mafia economics by deliberate Design - the greater the need, the higher the price for all commodities required to sustain Life. The Outcome, economic strangulation and workaholic enslavement of a people was not designed by the lord thy God, nor (for the non-believer) is it a Natural or Nature's Law, nor a Scientific Law

What factors changed Market Supply & Demand Fundamentals to Freakohnomics gone berserk? From cheaper goods and services available to all through continual advances in science, technology and mass production, to 'Whatever The Market Will Bear' depending on how great the need for sustaining Life?

The answers lie in Power, Greed, and Stagnant Energy Science

The Deadly Dangers of a Mis-informed, Dis-informed & Un-informed Population, Ultimately to Itself, History Provides Ample Evidence.

The Solution: The Promise of New Energy Systems & Beyond Oil

Evaporates the Problem: The ill designed "Corporism: The Systemic Disease that Destroys Civilization." when devoid of a Bill of Rights for Human Life, devoid of scientific parameters necessary for Life's evolution, sustainability, and survival.

Mild shock and disbelief barely registered in the nation of the most productive, overworked, underpaid, underinsured, vacation deprived, low paid slave/workers in the world, as they watched their bridges fall down along with their retirement savings in equity & stocks, while their taxes, gas, energy and food costs continued skyrocketing to uncharted realms and many continue to lose their homes and go hungry; as the masses stagnated in unmovable traffic, and government departments threatened to close due to lack of funds - On the bright side, the worldwide corporate 2% greedy guts, individually, had aplenty, more wealth than 30 nations combined, apiece.... irrelevant to who is paying for their errors (as in subprime loans).

As common sense in science is lost with the continued stagnation of our energy base and deep troubling theoretical foundational issues in physics, so too, Civilization's Survival Parameters fly out of sight, out of mind, along with the values and morals inherent within new scientific understanding which new energy systems would reveal. Scientific Stagnation bodes an ill wind to evolution, sustainability, and survival as "cycles of humiliation, dumbing us down, violence, and Unrestrained Corporate Greed prompting resource wars with nuclear finality" join hands with global warming and ecological imbalance to precipitate the historical "rise and fall of civilization" - a Tsunami accelerating toward us with a far more spectacular event than the legends and myths of 'Atlantis and Lemuria"........ had more people known that Energy from Corn (or going backwards to a dimwitted concept of radioactive nuclear power application ) sounded a wee bit kindergartenish and senile for the twenty first century......the Future may have had a chance.




















































Madoff: One of Many Scammers?
As the Economy Tanks, More and More Ponzi Schemes Come to Light
By SCOTT MAYEROWITZ ABC NEWS Business Unit
Jan. 22, 2009 —
As America sinks deeper into recession, more and more investors apparently are learning that their savings are gone, not because of a down market, but because they were victims of a scam.
Government investigators said they have seen millions of dollars disappear recently as Ponzi scams and other schemes come to light.
These aren't of the scale of the $50 billion that Bernard Madoff is alleged to have lost, but hundreds of millions of dollars have vanished. Officials point to the cases of Arthur G. Nadel in Florida, Joseph S. Forte in Philadelphia and James Ossie in Atlanta as among the most notable allegations.
Call them mini-Madoffs.
"With the economic downturn that we are experiencing, Ponzi schemes are just crashing," said Stephen Obie, acting director of enforcement at the Commodity Futures Trading Commission.
Officials say it doesn't necessarily mean more scams are occurring, it just means that more are being exposed as scams.
The commission said the number of tips to the agency has doubled since July. In the last 12 months, it has filed 15 cases and Obie expects that to rise by 25 percent in the coming months.
"These schemes rely on new people to be found and people aren't investing. People are hurting. And because people are hurting, they are seeking redemptions from what they think are these legitimate schemes," Obie said. "Between not having new investors and having old investors redeem, the Ponzi schemes are just collapsing."
The most recent case to come to light involves Nadel, a Florida hedge fund manager who has been missing for more than a week and was charged Wednesday with misleading investors.
After the 76-year-old Sarasota-based manager's disappearance, hundreds of investors learned that $300 million of their money was gone, too.
Nadel left a suicide note at his home in which he described "extreme guilt" over losing other people's money. However, his car was found at a Sarasota airport and officials believe he planned his disappearance.
The Securities and Exchange Commission said Nadel recently transferred at least $1.25 million to secret bank accounts that he controlled.
It is quite a downfall for a man named "America's Top Ranked Money Manager" in 2003 by The Wall Street Digest, an investment newsletter.
"The community is very shocked, obviously," said Gordon Garrett, a friend of Nadel's and president of the Jazz Club of Sarasota. "Art and his wife Peg have been very prominent members of our community, very involved with the arts."
Garrett didn't have any money invested with Nadel's company, Scoop Management, but his group does not need to cancel eight concerts that Nadel had promised to sponsor.
Things are a little bit more grim at the local YMCA.
Neil Moody, who was a general partner in some of Scoop Management's funds, donated $1.12 million to the YMCA Foundation of Sarasota. That money makes up about 13 percent of the group's $8.6 million endowment.
Moody's first gift came in 2005 and he insisted that it be invested with one of Nadel's funds, Valhalla Management.
"The fund did not meet our investment guidelines, so he made a personal guarantee that it have a return of 10 percent, per annum," foundation president Karin Gustafson said. "He believed that that fund could outperform any other funds that were being managed for us."
Tony Souza, executive director of Habitat for Humanity, Sarasota, said the Nadels were strong supporters of charities in the area. Peg Nadel has been chair of Habitat's capital campaign for the last year and a half.
"They have provided a lot of money to many of the bigger nonprofit corporations in Sarasota," Souza said. "Of course, this is a total shock to all of us. A total shock. Everyone considered them to be great philanthropists in the community. They've been around for a while.
"There are many, many black tie events and fundraisers here in Sarasota, and you would always see them very prominently there," Souza added. "They were involved right across the board."
The couple had their own nonprofit foundation, the Guy-Nadel Foundation, which gave thousands of dollars to various charities, according to its tax records.
In 2006, the most recent tax filing, the couple gave $112,000 to the Sarasota Opera, $4,000 for animal shelters, $150,000 to youth social agencies, $135,000 to a theater company and $144,800 to various churches for everything from a youth bus to general charity.
Brad Garrett, a former FBI agent and ABC News consultant, said the discussions about Madoff could have helped bring other scams to light.
"It doesn't mean there are more of them. It just means that people are talking about them more. People are coming forward. People are complaining that they lost money," Garrett said. "One of the problems is people are embarrassed sometimes that they got caught up in these things and they end up not reporting them, particularly if it's not a huge amount of money."
Garrett said such scams will exist regardless of the economy.
"Ponzi schemes attract people because they give them an outrageous percentage" return on investments, he said. "There will always be a percentage of us that will do that because there's that too-good-to-be-true thing. And we're hoping that it's too good to be true."
In the past two weeks, two other Ponzi schemes have been prosecuted by federal authorities.
Forte is alleged to have scammed $50 million out of investors in the Philadelphia area.
"Forte engaged in lies, deception and rapacious behavior at the expense of innocent investors, many of whom considered themselves his friends and close acquaintances," said Daniel M. Hawke, director of the SEC's Philadelphia regional office, in a statement. "Using other people's money, Forte promised and reported outrageous returns over more than a 10-year period, and because of his relationships with investors, was able to lull them into trusting him with their funds."
Starting in 1995, Forte allegedly reported to investors annual returns ranging from 18.52 percent to as high as 37.96 percent. But such returns were just an illusion. From January 1998 through October 2008, the trading account had roughly $3.3 million in losses.
Then just last week, Ossie of Atlanta and his company CRE Capital Corporation were charged with operating a Ponzi scheme involving more than 100 people. The scam involved about $25 million in foreign currency transactions.
Ossie allegedly promised pool participants that they would earn a 10 percent return on their money within 30 days by trading United States and Japanese currency pairs.
"Investors must run the other way when approached by anyone claiming to guarantee exorbitant monthly returns, like those promised by CRE and Ossie," the Commodity Futures Trading Commission's Obie said in a statement. "Such representations should raise an immediate red flag that such investment is too good to be true."
2009 ABC News Internet Ventures

Monday, January 12, 2009

Where Did The Bailout Billions Really Go?

REPEAT: Two issues dwarfing all others, without whose resolution, nothing will change! Bring freedom back to energy science + redefine Corporism, corporate personhood, the current controller of science direction through university funding $$$$$$$$

Freedumb, Freedumb, Read All About It! "A Free Trade, Free Market, Free Corporate, Unregulated Economy run like Al Capone's Casino Joint, and Policed by Al Capone". Is this the best University MBA/PHD Masters and Government Regulators can provide?

PEOPLES LIVES DEPEND UPON THE ECONOMIC SYSTEM. The economic system is not singularly a tool for profit, and the hell with Life. "We now have to pay for the greed and recklessness of those who should have known better.” It is time, Mr. Schumer said, for the American economy to be revived as the “engine of prosperity,” rather than as a “casino” for high-rollers in the realm of finance.

How, in a world of exploding human population, with unparalleled needs, wants and desires, can the economy keep falling, with more and more working people around the world, poorer, lacking basic needs and going hungry... this can only be termed Freakohnomics: The new 21st Century Supply & Demand Economics - absolute greed, absolute power brings on absolute madness - Turns into Freakohnomics gone berserk. Or mafia economics by deliberate Design - the greater the need, the higher the price for all commodities required to sustain Life. The Outcome, economic strangulation and workaholic enslavement of a people was not designed by the lord thy God, nor (for the non-believer) is it a Natural or Nature's Law, nor a Scientific Law

What factors changed Market Supply & Demand Fundamentals to Freakohnomics gone berserk? From cheaper goods and services available to all through continual advances in science, technology and mass production, to 'Whatever The Market Will Bear' depending on how great the need for sustaining Life?

The answers lie in Power, Greed, and Stagnant Energy Science

The Deadly Dangers of a Mis-informed, Dis-informed & Un-informed Population, Ultimately to Itself, History Provides Ample Evidence.

The Solution: The Promise of New Energy Systems & Beyond Oil

Evaporates the Problem: The ill designed "Corporism: The Systemic Disease that Destroys Civilization." when devoid of a Bill of Rights for Human Life, devoid of scientific parameters necessary for Life's evolution, sustainability, and survival.

Mild shock and disbelief barely registered in the nation of the most productive, overworked, underpaid, underinsured, vacation deprived, low paid slave/workers in the world, as they watched their bridges fall down along with their retirement savings in equity & stocks, while their taxes, gas, energy and food costs continued skyrocketing to uncharted realms and many continue to lose their homes and go hungry; as the masses stagnated in unmovable traffic, and government departments threatened to close due to lack of funds - On the bright side, the worldwide corporate 2% greedy guts, individually, had aplenty, more wealth than 30 nations combined, apiece.... irrelevant to who is paying for their errors (as in subprime loans).

As common sense in science is lost with the continued stagnation of our energy base and deep troubling theoretical foundational issues in physics, so too, Civilization's Survival Parameters fly out of sight, out of mind, along with the values and morals inherent within new scientific understanding which new energy systems would reveal. Scientific Stagnation bodes an ill wind to evolution, sustainability, and survival as "cycles of humiliation, dumbing us down, violence, and Unrestrained Corporate Greed prompting resource wars with nuclear finality" join hands with global warming and ecological imbalance to precipitate the historical "rise and fall of civilization" - a Tsunami accelerating toward us with a far more spectacular event than the legends and myths of 'Atlantis and Lemuria"........ had more people known that Energy from Corn (or going backwards to a dimwitted concept of radioactive nuclear power application ) sounded a wee bit kindergartenish and senile for the twenty first century......the Future may have had a chance.






















































FREEDUMB, FREEDUMB READ ALL ABOUT IT – also read history: How lethal can obscene blind power and greed become? What Happened America? Who has all the money, Who is making all the decisions?Corporate golden greedy guts decision makers continue to be rewarded with more and more of taxpayer dollars, as the trickle up compensation has left the majority of working citizens at below slavery compensation (note that slaves worked and received both FOOD AND RENT/HOUSING)…..by the way, what were CD and Money Market rates in the 60’s?

Business Home » CBS Evening News
Where Did The Bailout Billions Really Go?
CBS Evening News Exclusive: Were Bank Bailout Winners And Losers Cherry-Picked?
WASHINGTON, Jan. 12, 2009 by Sharyl Attkisson
AP
Corporate decision makers continue to be rewarded with more and more of taxpayer dollars.
Chrysler Finance Arm Gets $1.5B Loan
Automaker Announces 0% Financing; GMAC Also Loosens Lending Standards After Receiving Treasury Funds

· Circuit City To Liquidate All U.S. Stores 33
· Citigroup Splits Up Struggling Company 11
· Bank Of America To Get $20B More From Feds 61
· Coca-Cola Sued Over VitaminWater
· Consumer Prices Keep Falling
· Minneapolis' Star Tribune Bankrupt
· Jobless Numbers Jump While Prices Drop 54
· Fed: Economy Weaker, Outlook Dim 147
· Report: Bank Of America To Get More Aid 61
· Retail Sales Take December Plunge 28
· Motorola To Hang Up On 7,000 Workers
· Annual Home Repossession Numbers Double 111
· Long-Struggling Nortel Claims Bankruptcy
· Judge: Madoff Not A Flight Risk 11
» More Stories

Sunday, January 11, 2009

Did Speculation Fuel Oil Price Swings?

REPEAT: Two issues dwarfing all others, without whose resolution, nothing will change! Bring freedom back to energy science + redefine Corporism, corporate personhood, the current controller of science direction through university funding $$$$$$$$

Freedumb, Freedumb, Read All About It! "A Free Trade, Free Market, Free Corporate, Unregulated Economy run like Al Capone's Casino Joint, and Policed by Al Capone". Is this the best University MBA/PHD Masters and Government Regulators can provide?

PEOPLES LIVES DEPEND UPON THE ECONOMIC SYSTEM. The economic system is not singularly a tool for profit, and the hell with Life. "We now have to pay for the greed and recklessness of those who should have known better.” It is time, Mr. Schumer said, for the American economy to be revived as the “engine of prosperity,” rather than as a “casino” for high-rollers in the realm of finance.

How, in a world of exploding human population, with unparalleled needs, wants and desires, can the economy keep falling, with more and more working people around the world, poorer, lacking basic needs and going hungry... this can only be termed Freakohnomics: The new 21st Century Supply & Demand Economics - absolute greed, absolute power brings on absolute madness - Turns into Freakohnomics gone berserk. Or mafia economics by deliberate Design - the greater the need, the higher the price for all commodities required to sustain Life. The Outcome, economic strangulation and workaholic enslavement of a people was not designed by the lord thy God, nor (for the non-believer) is it a Natural or Nature's Law, nor a Scientific Law

What factors changed Market Supply & Demand Fundamentals to Freakohnomics gone berserk? From cheaper goods and services available to all through continual advances in science, technology and mass production, to 'Whatever The Market Will Bear' depending on how great the need for sustaining Life?

The answers lie in Power, Greed, and Stagnant Energy Science

The Deadly Dangers of a Mis-informed, Dis-informed & Un-informed Population, Ultimately to Itself, History Provides Ample Evidence.

The Solution: The Promise of New Energy Systems & Beyond Oil

Evaporates the Problem: The ill designed "Corporism: The Systemic Disease that Destroys Civilization." when devoid of a Bill of Rights for Human Life, devoid of scientific parameters necessary for Life's evolution, sustainability, and survival.

Mild shock and disbelief barely registered in the nation of the most productive, overworked, underpaid, underinsured, vacation deprived, low paid slave/workers in the world, as they watched their bridges fall down along with their retirement savings in equity & stocks, while their taxes, gas, energy and food costs continued skyrocketing to uncharted realms and many continue to lose their homes and go hungry; as the masses stagnated in unmovable traffic, and government departments threatened to close due to lack of funds - On the bright side, the worldwide corporate 2% greedy guts, individually, had aplenty, more wealth than 30 nations combined, apiece.... irrelevant to who is paying for their errors (as in subprime loans).

As common sense in science is lost with the continued stagnation of our energy base and deep troubling theoretical foundational issues in physics, so too, Civilization's Survival Parameters fly out of sight, out of mind, along with the values and morals inherent within new scientific understanding which new energy systems would reveal. Scientific Stagnation bodes an ill wind to evolution, sustainability, and survival as "cycles of humiliation, dumbing us down, violence, and Unrestrained Corporate Greed prompting resource wars with nuclear finality" join hands with global warming and ecological imbalance to precipitate the historical "rise and fall of civilization" - a Tsunami accelerating toward us with a far more spectacular event than the legends and myths of 'Atlantis and Lemuria"........ had more people known that Energy from Corn (or going backwards to a dimwitted concept of radioactive nuclear power application ) sounded a wee bit kindergartenish and senile for the twenty first century......the Future may have had a chance.
















































Did Speculation Fuel Oil Price Swings?
Jan. 11, 2009
(CBS) About the only economic break most Americans have gotten in the last six months has been the drastic drop in the price of oil, which has fallen even more precipitously than it rose. In a year's time, a commodity that was theoretically priced according to supply and demand doubled from $69 a barrel to nearly $150, and then, in a period of just three months, crashed along with the stock market. So what happened? It's a complicated question, and there are lots of theories. But as correspondent Steve Kroft reports, many people believe it was a speculative bubble, not unlike the one that caused the housing crisis, and that it had more to do with traders and speculators on Wall Street than with oil company executives or sheiks in Saudi Arabia.
To understand what happened to the price of oil, you first have to understand the way it's traded. For years it has been bought and sold on something called the commodities futures market. At the New York Mercantile Exchange, it's traded alongside cotton and coffee, copper and steel by brokers who buy and sell contracts to deliver those goods at a certain price at some date in the future. It was created so that farmers could gauge what their unharvested crops would be worth months in advance, so that factories could lock in the best price for raw materials, and airlines could manage their fuel costs. But more than a year ago those markets started to behave erratically. And when oil doubled to more than $147 a barrel, no one was more suspicious than Dan Gilligan. As the president of the Petroleum Marketers Association, he represents more than 8,000 retail and wholesale suppliers, everyone from home heating oil companies to gas station owners. When 60 Minutes talked to him last summer, his members were getting blamed for gouging the public, even though their costs had also gone through the roof. He told Kroft the problem was in the commodities markets, which had been invaded by a new breed of investor. "Approximately 60 to 70 percent of the oil contracts in the futures markets are now held by speculative entities. Not by companies that need oil, not by the airlines, not by the oil companies. But by investors that are looking to make money from their speculative positions," Gilligan explained. Gilligan said these investors don't actually take delivery of the oil. "All they do is buy the paper, and hope that they can sell it for more than they paid for it. Before they have to take delivery." "They're trying to make money on the market for oil?" Kroft asked. "Absolutely," Gilligan replied. "On the volatility that exists in the market. They make it going up and down." He says his members in the home heating oil business, like Sean Cota of Bellows Falls, Vt., were the first to notice the effects a few years ago when prices seemed to disconnect from the basic fundamentals of supply and demand. Cota says there was plenty of product at the supply terminals, but the prices kept going up and up. "We've had three price changes during the day where we pick up products, actually don't know what we paid for it and we'll go out and we'll sell that to the retail customer guessing at what the price was," Cota remembered. "The volatility is being driven by the huge amounts of money and the huge amounts of leverage that is going in to these markets." About the same time, hedge fund manager Michael Masters reached the same conclusion. Masters' expertise is in tracking the flow of investments into and out of financial markets and he noticed huge amounts of money leaving stocks for commodities and oil futures, most of it going into index funds, betting the price of oil was going to go up. Asked who was buying this "paper oil," Masters told Kroft, "The California pension fund. Harvard Endowment. Lots of large institutional investors. And, by the way, other investors, hedge funds, Wall Street trading desks were following right behind them, putting money - sovereign wealth funds were putting money in the futures markets as well. So you had all these investors putting money in the futures markets. And that was driving the price up." In a five year period, Masters said the amount of money institutional investors, hedge funds, and the big Wall Street banks had placed in the commodities markets went from $13 billion to $300 billion. Last year, 27 barrels of crude were being traded every day on the New York Mercantile Exchange for every one barrel of oil that was actually being consumed in the United States. "We talked to the largest physical trader of crude oil. And they told us that compared to the size of the investment inflows - and remember, this is the largest physical crude oil trader in the United States - they said that we are basically a flea on an elephant, that that's how big these flows were," Masters remembered. Yet when Congress began holding hearings last summer and asked Wall Street banker Lawrence Eagles of J.P. Morgan what role excessive speculation played in rising oil prices, the answer was little to none. "We believe that high energy prices are fundamentally a result of supply and demand," he said in his testimony. As it turns out, not even J.P. Morgan's chief global investment officer agreed with him. The same that day Eagles testified, an e-mail went out to clients saying "an enormous amount of speculation" ran up the price" and "140 dollars in July was ridiculous." If anyone had any doubts, they were dispelled a few days after that hearing when the price of oil jumped $25 in a single day. That day was Sept. 22. Michael Greenberger, a former director of trading for the U.S. Commodity Futures Trading Commission, the federal agency that oversees oil futures, says there were no supply disruptions that could have justified such a big increase. "Did China and India suddenly have gigantic needs for new oil products in a single day? No. Everybody agrees supply-demand could not drive the price up $25, which was a record increase in the price of oil. The price of oil went from somewhere in the 60s to $147 in less than a year. And we were being told, on that run-up, 'It's supply-demand, supply-demand, supply-demand,'" Greenberger said. A recent report out of MIT, analyzing world oil production and consumption, also concluded that the basic fundamentals of supply and demand could not have been responsible for last year's run-up in oil prices. And Michael Masters says the U.S. Department of Energy's own statistics show that if the markets had been working properly, the price of oil should have been going down, not up. "From quarter four of '07 until the second quarter of '08 the EIA, the Energy Information Administration, said that supply went up, worldwide supply went up. And worldwide demand went down. So you have supply going up and demand going down, which generally means the price is going down," Masters told Kroft. "And this was the period of the spike," Kroft noted. "This was the period of the spike," Masters agreed. "So you had the largest price increase in history during a time when actual demand was going down and actual supply was going up during the same period. However, the only thing that makes sense that lifted the price was investor demand." Masters believes the investor demand for commodities, and oil futures in particular, was created on Wall Street by hedge funds and the big Wall Street investment banks like Morgan Stanley, Goldman Sachs, Barclays, and J.P. Morgan, who made billions investing hundreds of billions of dollars of their clients’ money. "The investment banks facilitated it," Masters said. "You know, they found folks to write papers espousing the benefits of investing in commodities. And then they promoted commodities as a, quote/unquote, 'asset class.' Like, you could invest in commodities just like you could in stocks or bonds or anything else, like they were suitable for long-term investment." Dan Gilligan of the Petroleum Marketers Association agreed. "Are you saying that companies like Goldman Sachs and Morgan Stanley and Barclays have as much to do with the price of oil going up as Exxon? Or…Shell?" Kroft asked. "Yes," Gilligan said. "I tease people sometimes that, you know, people say, 'Well, who's the largest oil company in America?' And they'll always say, 'Well, Exxon Mobil or Chevron, or BP.' But I'll say, 'No. Morgan Stanley.'" Morgan Stanley isn't an oil company in the traditional sense of the word - it doesn't own or control oil wells or refineries, or gas stations. But according to documents filed with the Securities and Exchange Commission, Morgan Stanley is a significant player in the wholesale market through various entities controlled by the corporation. It not only buys and sells the physical product through subsidiaries and companies that it controls, Morgan Stanley has the capacity to store and hold 20 million barrels. For example, some storage tanks in New Haven, Conn. hold Morgan Stanley heating oil bound for homes in New England, where it controls nearly 15 percent of the market. The Wall Street bank Goldman Sachs also has huge stakes in companies that own a refinery in Coffeyville, Kan., and control 43,000 miles of pipeline and more than 150 storage terminals. And analysts at both investment banks contributed to the oil frenzy that drove prices to record highs: Goldman's top oil analyst predicted last March that the price of a barrel was going to $200; Morgan Stanley predicted $150 a barrel. Both companies declined 60 Minutes' requests for an interview, but maintain that their oil businesses are completely separate from their trading activities, and that neither influence the independent opinions of their analysts. There is no evidence that either company has done anything illegal. Asked if there is price manipulation going on, Dan Gilligan told Kroft, "I can't say. And the reason I can't say it, is because nobody knows. Our federal regulators don't have access to the data. They don't know who holds what positions." "Why don't they know?" Kroft asked. "Because federal law doesn't give them the jurisdiction to find out," Gilligan said. It's impossible to tell exactly who was buying and selling all those oil contracts because most of the trading is now conducted in secret, with no public scrutiny or government oversight. Over time, the big Wall Street banks were allowed to buy and sell as many oil contracts as they wanted for their clients, circumventing regulations intended to limit speculation. And in 2000, Congress effectively deregulated the futures market, granting exemptions for complicated derivative investments called oil swaps, as well as electronic trading on private exchanges. "Who was responsible for deregulating the oil future market?" Kroft asked Michael Greenberger. "You'd have to say Enron," he replied. "This was something they desperately wanted, and they got." Greenberger, who wanted more regulation while he was at the Commodity Futures Trading Commission, not less, says it all happened when Enron was the seventh largest corporation in the United States. "This was when Enron was riding high. And what Enron wanted, Enron got." Asked why they wanted a deregulated market in oil futures, Greenberger said, "Because they wanted to establish their own little energy futures exchange through computerized trading. They knew that if they could get this trading engine established without the controls that had been placed on speculators, they would have the ability to drive the price of energy products in any way they wanted to take it." "When Enron failed, we learned that Enron, and its conspirators who used their trading engine, were able to drive the price of electricity up, some say, by as much as 300 percent on the West Coast," he added. "Is the same thing going on right now in the oil business?" Kroft asked. "Every Enron trader, who knew how to do these manipulations, became the most valuable employee on Wall Street," Greenberger said. But some of them may now be looking for work. The oil bubble began to deflate early last fall when Congress threatened new regulations and federal agencies announced they were beginning major investigations. It finally popped with the bankruptcy of Lehman Brothers and the near collapse of AIG, who were both heavily invested in the oil markets. With hedge funds and investment houses facing margin calls, the speculators headed for the exits. "From July 15th until the end of November, roughly $70 billion came out of commodities futures from these index funds," Masters explained. "In fact, gasoline demand went down by roughly five percent over that same period of time. Yet the price of crude oil dropped more than $100 a barrel. It dropped 75 percent." Asked how he explains that, Masters said, "By looking at investors, that's the only way you can explain it."
The regulatory lapses in the commodities market that many believe fomented the rampant speculation in oil have still not been addressed, although the incoming Obama administration has promised to do so.