In These New Times

A new paradigm for a post-imperial world

CFTC Data Show Oil Futures Market Went Wild in July 2007; Confirm LaRouche Announcement Crash Was Under Way

Posted by seumasach on September 6, 2008


Sept. 4, 2008 (EIRNS)—Under intense Congressional pressure, even the Bush Administration Commodity Futures Trading Commission (CFTC), since late May, has been doing its job—investigating the commodities futures markets—and the results are getting extremely interesting.

Especially interesting, the results of interrogating the British Financial Services Agency about the Intercontinental Commodities Exchange (ICE) in Atlanta, which, incredibly, the CFTC had been allowing the British to “regulate” until $4 gasoline got Members of Congress screaming.

On July 14, the CFTC revealed that data it had gathered showed that 81% of all oil futures trading was speculation—exactly the opposite of what CFTC Chairman Walter Lukken had been telling Congress at hearings all during June. Furthermore, most of this speculation was being run, CFTC found, by a few very large speculative corporate, hedge fund, and bank operations. Names that leaked out, were the Swiss-based Vitol oil-trading firm, and the Morgan Stanley investment bank.

Now, the Sept. 4 Wall Street Journal reports, CFTC investigators are finding that big speculative operators engaged in market manipulations of the type made notorious in the 1970s’ “oil hoaxes”: keeping “floating inventories” at sea; falsely reporting inventories in tank farms, etc. The Journal was told that the CFTC is “examining … a rapid shift in the structure of oil markets at the end of July 2007. Price relationships flipped in a way that was extremely profitable for traders.” The oil futures price, which at $70 was then actually somewhat down from earlier in 2007, took off and did not stop until it reached nearly $150 in early June 2008.

The timing being revealed by the CFTC’s investigation leaking out is notable: July 25, 2007 was marked by economist Lyndon LaRouche’s webcast announcement that the international banking system was in collapse, and that hyperinflation would follow as a consequence. Helga Zepp-LaRouche, in her campaign to dump the WTO and double food production, has repeatedly pointed to the explosion of food and other commodity prices in late Summer/early Fall 2007, which was covered up in the world press until Spring 2008 even though people were rioting, and starving, as a result. The CFTC is unintentionally revealing that the banking collapse Lyndon LaRouche announced, explosively triggered a hyperinflationary commodity price bubble as desperate financial firms tried to keep alive by speculation.

In addition, ironically, the CFTC is revealing that its testimony to Congress throughout many June hearings—at the height of public panic over soaring prices and demands for reregulation—was completely false. Senators Ron Wyden (D-Wash.), Carl Levin (D-Mich.) and others are jumping on this, and promising action this month.

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