http://bit.ly/7XwAG
A decade ago when Enron wanted and got the Bill cleared at the U.S Congress for deregulated energy markets, they unleashed a mega monster on the world that would stay even after their creators were wiped out. Pulling out all stops and spending millions of dollars on highprofile campaigns on the media, the energy majors and brokers who assisted Enron in achieving its objectives were many, some of whom like Duke Energy, CMS Energy, El Paso and Dyengy were also booked by SEC on charges of round trip trading and value falsification that were major charges against Enron.
Enron's deregulated market concepts meant lack of an audit trail to the operations and the source of funds invested in the markets. With one shot it legitimised billions of dollars of hotmoney and Swiss Bank deposits into the global financial markets. Now hot money and money from tax havens had a entry point in the global money markets through the commodity markets. The profits from the commodity markets could then be pumped into other markets be it the stock markets or the bond markets or the currency markets, and create volatility without being questioned. You may read my article "What Is The Right Price Of Oil" at Newscollective Blog for more details on the Enron loophole now the London loophole at http://bit.ly/a7YUFH and the manipulations in the deregulated London commodity exchange.
Bloom berg columnist Caroline Baum recently highlighted the problem as “Regulators Need Babes,Bucks, Expense Accounts” but the truth is politicians too encourage public fleecing of the tax payer. Enron opened the floodgates of public fleecing that created the California energy crisis and blackouts all over the US during the last decade. Enron went, but the thousands of energy traders who operated and profited from the Enron scam moved to other parts of the world, and operated globally through the network of big banks and the London exchanges.
They institutionalised public fleecing and round trip trades survived by shifting base to London at the ICE commodity exchange. Big banks like Goldman Sachs and Morgan Stanley big oil companies like BP, Shell and Total joined the fray and formed a cartel. They and took oil to its historic high levels 2008, before bringing it down sharply in an excercise which put competetors like Lehman brothers and Bear Stearns out of business and precipitated the liquidity crunch before the 2008 crash.
Even today there is excess liquidity, a mix of hot money plus TARP (stimulus)funds in the market along with little or no regulation especially at the exchanges based at London, be it the stock exchange or the commodity markets.
Europe’s problems have been exaggerated by the Banks and hedge funds as they need high volatility to make the super-profits. It does not matter to them what is right or wrong or whether the profits come from Oil or Gold or shorting Greece or California municipal bonds.
While banning naked shorts is a beginning, it really does not solve the main problem of short selling because the margins on other types of short selling are as low as 2% to 6% at best. Besides bull operators who create volatility in Oil, Sugat and Gold are not affected by the short selling ban
One way to fight this is by imposing a nominal transaction tax of .01% on all market based transactions, which will automatically leave an audit trail on who is behind which transaction. Any nation which can start doing it, will loose some investor funds initially but will have stability thereafter as the manipulators will slowly exit those markets
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