Speculator-Bashing: Scapegoating, Grandstanding
Speculator-bashing is another exercise in scapegoating and grandstanding. Leading politicians either don't understand what's happening or don't want to acknowledge their own complicity.
By their nature, raw materials (food, energy, minerals) sustain the broader economy. They're not just frills. When unexpectedly high demand strains existing production, prices rise sharply as buyers scramble for scarce supplies. That's what happened - in industry after industry, global buying has bumped up against production limits.
Politicians promise to tighten regulation of futures markets, but futures markets aren't the main problem. Scarcities are.
Government subsidies for corn-based ethanol have increased food prices by diverting more grain into biofuels. A third of this year's U.S. corn crop could go to ethanol. Restrictions on oil drilling in the U.S. have reduced global production and put upward pressure on prices. If politicians wish to point fingers of blame, they should start with themselves.
~Robert Samuelson in today's IBD