Global financial speculation: the short-selling of America

Part 2 of 2 - The Solution

The futures market, particularly what are called commodities futures, originally served laudable purposes.

Futures purchases permitted farmers, miners, energy producers, manufacturers and others to go ahead and plant crops, explore for resources, create energy and make products of value to society, knowing in advance that they could count on future marketability to customers and consumers. These were what we might call long sales. They were bets in favor of the future.

But nothing cannot be gamed. Along came the likes of Enron, who used the futures purchase and sales techniques to corner the energy market. Enron gave up being a producer of energy and they certainly never were a consumer. They found a way to become middlemen profiteers.

By using leveraged financing and buying forward even before the energy had been produced, Enron could drive up the price of energy for their own benefit. Later, when it came time for a California school district to buy energy for their schools, schools had to buy at the artificially high prices Enron had falsely created. Today, Wall Street and the hedge funds are accomplishing much the same thing.

It is reliably estimated that over 30 percent of the price of gasoline at the pump today is not due to imbalance in supply and demand, but is due solely to Wall Street, hedge fund, Enron and Ponzi-style trading in global financial markets.

These investors do not sow, nor do they weave or spin, but they do reap. Using their wealth and leverage, they buy up all available fuel ahead of time, in effect monopolizing the free market and driving up the price for everyone else. Then they cash in, all the way to the bank. This has to be regulated.

Just when you might expect the effect of such financial futures speculation should at least be to always drive up prices and favor industry, along came the global financial speculators and hedge-funders who bet against stocks, bonds, derivatives, mortgages, currencies, products, industries and whole economies.

The short sellers win if such ventures fail. They win if the economy fails. They win if America fails — provided they take their loot out on time. Loyalty to country does not enter the picture. It’s time to change how the game is played.

Should we weep tears for the global financial speculators who game the system? They are notorious for tax avoidance (questionable ethics) and tax evasion (criminal behavior), which together more than account for the entire U.S. national debt. Therefore, why should we hesitate to reduce tax breaks for the super-wealthy? They buy and sell, flip and gamble, trillions of dollars a year and pay no sales tax.

The sensible answer, of course, would be to adopt a 1 percent securities and financial transaction tax (like a sales tax) on such high volume speculation. A 1 percent transaction tax on a $200 trillion market turnover would yield $2 trillion in additional U.S. revenue in a short period of time.

That alone would wipe out the U.S. national debt in no time and restore America to permanent solvency. There would be no need to cut social programs or ever worry again about the national debt ceiling. Problem solved.

Nevertheless, the utility, integrity and legality of many of these current financial products and practices need to be comprehensively reviewed with a view to introducing responsible regulation and control in the national interest.

We need to seriously consider in particular whether any form of short selling or betting against an enterprise, investment vehicle, the economy or the nation, should be permitted in the absence of proof of an underlying commercial or other useful social or economic purpose.

Who will enforce this? What we need is a powerful, independent, executive administrative enforcement authority, a sort of combined SEC/CFTC/CFPB with real teeth, to determine what investment products and practices have legitimate underlying purpose, such as the financing of commercial transactions, and what products and practices are deceptive and counter-productive, serving only middle-man speculative gambling purposes, putting the national economy and markets at pointless risk.

The devil will reside in the details, but we’ll have to be willing to address those details in the national interest. Otherwise, the United States will be subject to future roller coaster cycles of booms and busts, for the enrichment of the already wealthy speculators and at the expense of most Americans.

One day, we may never be able to pull out of the bust. We have to clean house now. Let’s do it. Let’s not short sell America.

Sharon resident Anthony Piel is a former director and general legal counsel of the World Health Organization.

Latest News

Robert J. Pallone

NORFOLK — Robert J. Pallone, 69, of Perkins Street passed away April 12, 2024, at St. Vincent Medical Center. He was a loving, eccentric CPA. He was kind and compassionate. If you ever needed anything, Bob would be right there. He touched many lives and even saved one.

Bob was born Feb. 5, 1955, in Torrington, the son of the late Joseph and Elizabeth Pallone.

Keep ReadingShow less
The artistic life of Joelle Sander

"Flowers" by the late artist and writer Joelle Sander.

Cornwall Library

The Cornwall Library unveiled its latest art exhibition, “Live It Up!,” showcasing the work of the late West Cornwall resident Joelle Sander on Saturday, April 13. The twenty works on canvas on display were curated in partnership with the library with the help of her son, Jason Sander, from the collection of paintings she left behind to him. Clearly enamored with nature in all its seasons, Sander, who split time between her home in New York City and her country house in Litchfield County, took inspiration from the distinctive white bark trunks of the area’s many birch trees, the swirling snow of Connecticut’s wintery woods, and even the scenic view of the Audubon in Sharon. The sole painting to depict fauna is a melancholy near-abstract outline of a cow, rootless in a miasma haze of plum and Persian blue paint. Her most prominently displayed painting, “Flowers,” effectively builds up layers of paint so that her flurry of petals takes on a three-dimensional texture in their rough application, reminiscent of another Cornwall artist, Don Bracken.

Keep ReadingShow less
A Seder to savor in Sheffield

Rabbi Zach Fredman

Zivar Amrami

On April 23, Race Brook Lodge in Sheffield will host “Feast of Mystics,” a Passover Seder that promises to provide ecstasy for the senses.

“’The Feast of Mystics’ was a title we used for events back when I was running The New Shul,” said Rabbi Zach Fredman of his time at the independent creative community in the West Village in New York City.

Keep ReadingShow less
Art scholarship now honors HVRHS teacher Warren Prindle

Warren Prindle

Patrick L. Sullivan

Legendary American artist Jasper Johns, perhaps best known for his encaustic depictions of the U.S. flag, formed the Foundation for Contemporary Arts in 1963, operating the volunteer-run foundation in his New York City artist studio with the help of his co-founder, the late American composer and music theorist John Cage. Although Johns stepped down from his chair position in 2015, today the Foundation for Community Arts continues its pledge to sponsor emerging artists, with one of its exemplary honors being an $80 thousand dollar scholarship given to a graduating senior from Housatonic Valley Regional High School who is continuing his or her visual arts education on a college level. The award, first established in 2004, is distributed in annual amounts of $20,000 for four years of university education.

In 2024, the Contemporary Visual Arts Scholarship was renamed the Warren Prindle Arts Scholarship. A longtime art educator and mentor to young artists at HVRHS, Prindle announced that he will be retiring from teaching at the end of the 2023-24 school year. Recently in 2022, Prindle helped establish the school’s new Kearcher-Monsell Gallery in the library and recruited a team of student interns to help curate and exhibit shows of both student and community-based professional artists. One of Kearcher-Monsell’s early exhibitions featured the work of Theda Galvin, who was later announced as the 2023 winner of the foundation’s $80,000 scholarship. Prindle has also championed the continuation of the annual Blue and Gold juried student art show, which invites the public to both view and purchase student work in multiple mediums, including painting, photography, and sculpture.

Keep ReadingShow less