How Anti-Regulation Hype Becomes News

If you wondered about what I am talking about when I say that there are so many half-truths told about oil trading, you only need to look at a "Breaking Views" column in The New York Times today entitled "Energy Traders on the Firing Line." It's time for a textual analysis of the way these half-truths are defended.

It doesn't take long to get right into the bias: "America's top commodities cop is eager to prove his bona fides." Wrong: Gary Gensler, chairman of the Commodities Futures Trading Commission, has written and spoken and knows more about regulation and trading than just about anyone in America. He doesn't need to prove his bona fides. He's got them, but this makes it sound like he's a rube.

Next the writers mention that Gensler intends to hold hearings on whether the agency should limit the activities of energy traders to "curb excess speculation" (writers' quotes), but, they go on, "any rules born of such a narrow focus are likely to be harmful." Huh? What is Gensler supposed to be doing, holding hearings about why it's terrific to allow speculators run rampant? Is he supposed to be holding hearings that examine the notion of futures? If they worked, for heaven's sakes, why the heck would he hold hearings?

Then the writers go on to say that there is a 180-degree reversal from the CFTC's position last year, which "debunks" the idea that speculation was behind the oil price run-up. The Bush administration was against any form of regulation. Most conclusions were reached beforehand. This is the notion that I have been pointing out, that the markets are "too deep" to be manipulated. We know just last week that the markets were moved $10 by a rogue trader. That's empirical evidence of manipulation. The idea of trusting anything that came out of the CFTC under a regime ideologically opposed to regulation would certainly be worth a mention.

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