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Raymond J. Learsy Headshot

Your TARP Money is Being Used to Prop Up the Price of Oil

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No, it's not about your local gas station not getting a loan from its bank to keep it in business. It is far more insidious. It is about hundreds of millions of TARP monies being spent on oil speculation.

Billions upon billions of TARP dollars have been made available to the likes of Morgan-Stanley. And you know what the money was meant to be for -- to finance business and to take pressure off the housing market by helping homeowners avoid foreclosure.

But then again the first $350 billion was released virtually without strings by the Bush administration and its appointees, and you can well imagine the winks and nods that went on behind closed doors. "Home mortgages? C'mon. I've got a better plan. And it's going to be a big help to all the fans of Bush and Cheney in the oil patch. We're going to do our damnedest to prop up the price of oil, and if we buy enough we'll keep it from falling and push up the price of gasoline as best we can. Just think of all those dummies out there. We take in their tax bucks and hit them again with higher oil and gas and heating oil prices. Guys, we're on a roll!"

Fantasy? How about this little news item on Bloomberg from Monday of this week: "Morgan Stanley hired a supertanker to store crude oil in the Gulf of Mexico, joining Citigroup Inc. and Royal Dutch Shell Plc. in trying to profit from higher prices later in the year, two shipbrokers said."

And what does all that mean exactly. Well Morgan Stanley as but one example, simply took off its bankers hat, and donned a speculator's hat putting down some $80,000,000 at today's prices to buy 2 million barrels of oil. No, they didn't store the oil in their bank vaults. They went out and chartered a supertanker, the "Argenta" at some $68,000 a day, and they just have it sitting out there floating at anchor day after day. And that doesn't include finance charges (But hey! Finance costs? That's cheap if you have a friendly government agency to fork over the loot), insurance costs, and all those other ancillary costs attendant to it.

How many home mortgages could have been salvaged from foreclosure? How many businesses could have been saved by the bank making liquidity available? And how much lower would the price of oil have tumbled without Morgan Stanley and other banks' intercession? (In case you need a reminder, the Bush years made it possible for Exxon Mobil and their oil company brethren to clock the largest profits ever for any corporations in history. And this while most everyone else was hurting -- and even now the price of oil is still some 100% higher than when Bush first took office.)

Let's hope the Obama administration is not so pliant to the bankers' whims!