Wednesday, May 10, 2006

Re: Thomas Friedman's Call For A Third Party

May 10, 2006

----- Original Message -----

From: Jack
To: Dean Lawrence R. Velvel


I agree we need to throw the rascals (left and right) out! What about calling the third party the RIGHTEOUS CENTER party? Webster defines righteous as "arising out of an outraged sense of justice or morality". We certainly have enough to be outraged about! Never in our history have our politicians failed us so miserably. As to who could lead such a party, the only person I see that has demonstrated an ability to govern well, to be a leader, to be totally incorruptible, to be intellectually up to the job, to be beholden to neither of the existing national parties is the Mayor of New York (being which may make him totally unelectable). But he could do it.


--- Original Message -----

From:Mina
To: velvel@mslaw.edu
Sent: Tuesday, May 09, 2006 11:34 AM
Subject: Constitutional Party

Agree with the third party idea. The Democrats are "owned" as a party, and the Republicans are, for the most, corrupted individually. The vote doesn't work in the present system.





----- Original Message -----

From: David
To: "Dean Lawrence R. Velvel"
Sent: Tuesday, May 09, 2006 11:42 AM
Subject: Re: Thomas Friedman's Call For A Third Party.


> Dear Larry:
>
> I thought of you immediately when I read Friedman’s
> column in the NY Times. At least someone has broached
> the subject. It will take a groundswell of activism at
> the grassroots level. Clearly, the internet makes
> anything possible these days. Word of mouth of a
> particular site of interest or a particular blog can
> spread like wildfire. However, it needs to be an idea
> whose time has come. I don't know if a "third party"
> is there yet. I'll keep my fingers crossed.
>
> David



----- Original Message -----

From: Armande
To: Dean Lawrence R. Velvel
Sent: Tuesday, May 09, 2006 10:59 AM
Subject: Re: Thomas Friedman's Call For A Third Party.

Thanks. As usual I have to use a translated Proverb: " A dog barking with us is better than a dog barking Against us".. ha!

Take care,

Armande

----- Original Message -----
From: Dean Lawrence R. Velvel

Sent: Tuesday, May 09, 2006 8:23 AM
Subject: Thomas Friedman's Call For A Third Party.



May 9, 2006

Re: Thomas Friedman’s Call For A Third Party.

From: Dean Lawrence R. Velvel VelvelOnNationalAffairs.com

Dear Colleagues:

It is somewhat rare for this writer to find himself in agreement with a column by Tom Friedman. But on May 3rd, sounding more serious by far than tongue in cheek, Friedman spoke of a desire for there to be a third party. A third party is something this author has spoken of previously and devoted a lengthy posting to on March 21, 2006. Frankly, I never thought to see a major columnist seriously discussing the idea so soon after March 21st, if ever. But Friedman has done so (even if one wonders whether his column of May 3rd is a one day wonder, so to speak). Beyond this, some of his reasons for a third party, and even the name he would give it, are not so different from what has been said here. This strikes me as a case of parallel invention brought about, as such invention usually is in science and technology, by the emergence of ideas and actions obvious to all who are interested.

It is nonetheless true that Friedman’s “wedge issue,” as it were -- the energy problem -- is a lot narrower than this writer’s broader critique of American politics and society. Friedman, however, does use his wedge issue as a basis of a somewhat broader critique than that of the energy policy alone, but his overall critique nonetheless remains far narrower than mine.

* * * * *

Friedman begins by lambasting Congress for considering laws that could pander to our “addiction to gasoline.” “With a Congress like this,” he pricelessly adds (no pun regarding the price of gasoline intended), “who needs Al Qaeda?” Our addiction to oil, he later says, floats (that is a pun) “bad governments” -- “some of the world’s worst regimes, who are using their oil windfalls to halt the spread of freedom.”

Friedman (rightly) excoriates both the Republican and Democratic parties for their failures with regard to oil: “Seriously, there is something really disturbing about the utterly shameless, utterly over-the-top Republican pandering and Democratic point-scoring that have been masquerading as governing in response to this energy crisis.”. He then quotes the author of a history of foreign policy who said, “‘We used to say the system is broken because it won’t respond until there is a crisis.’” “But now,” says Friedman, “it’s really broken, ‘because the system can’t even respond to a crisis!’” (Emphasis in original.)

Friedman continues: “What to do? I’m hoping for a third party.[!] The situation is ripe for one . . . .[!] . . . [N]either major party will offer a solution . . . . Combine a huge leadership vacuum on a huge issue with an internet that has proved itself as an alternative platform for organizing, financing and energizing a political campaign outside the Washington establishment, and you have the makings of a credible third party.” (Emphasis added.)

Friedman thinks a third party would have to be ‘big, strategic, centrist and forward-looking.” So he would not call it “the ‘Green Party,’” a name which is taken and which “connotes an agenda that is too narrow and liberal.” Rather, he might call it the “‘American Renewal Party’” -- which isn’t too different a name than the name “American Internet and Reform Party” (emphases added) which has been propounded here, is it? He says his chosen name “frames the energy issue as critical . . . .”

Then he goes on to say that energy is the key to American nirvana in several ways, including reducing the trade and fiscal deficits, making us more competitive and respected in particular ways, weakening horrible regimes, and “stimulating more young people to study math and science.” (The reason for this last boon is not explained, but one presumes it is because we will need more scientists who focus on energy, not that people will be using higher mathematics to count the money they’ve saved on fuel.)

In the final part of his column, Friedman quotes an author of a book on third parties as saying “‘There is an opportunity here for someone who will seize it.’” Friedman himself says that person will have to be “someone who will tell the truth” about the energy situation, and he concludes with the following paragraph:

Yes, our system is rigged against third parties. Still, my gut says that some politician, someday soon, just to be different, just for the fun of it, will take a flier on telling Americans the truth. The right candidate with the right message on energy might be able to drive a bus right up the middle of the U.S. political scene today -- lose the far left and the far right -- and still maybe, just maybe, win a three-way election.

* * * * *

Now, frankly speaking, nobody could be more pleased than I to see a major columnist take up the cudgels for a third party, an idea propounded here, but one I did not expect to see taken up by any big foot any time soon. But Friedman’s view is nonetheless somewhat truncated. True, he passingly, and only passingly, extends its ramifications from energy alone to the internet, deficits, democracy, even math and science. Perhaps the merely passing nature of the extension is due to the word limitations on a New York Times column. Or perhaps, it is due more -- his column reads as if it is due more -- to the fact that his real concern is energy. Whichever, this writer thinks, as said in the blog of March 21st, that the need for a third party arises not from the energy problem alone, but from a broad array of failures in American politics and from a broad array of issues that have not been successfully dealt with -- sometimes have not even begun to be dealt with. As indicated on March 21st, American politics and life have seen a gross failure of honesty, competence and concern for others, the structure of the American electoral system is a moral crime and the mentality of the politicians who are in the system is worse, the one party, reactionary South has had vastly disproportionate influence for almost all of the 217 years since 1789 (except for 1861-1876), and we need to find answers to a host of problems (not just the energy problem) including: militarism, medical care, medical research, globalization, loss of jobs, global warming, education, the Federal courts, secrecy, and the use of money in politics.

Beyond this, the idea that “some politician, someday soon,” will “take a flier” on changing things strikes me as a triumph of hope over reality. Just who among our current politicians can one name who, one would think, has the courage, morality, intelligence and far sightedness to do this? Just who among them would be willing to do it at the risk of defeat and possible subsequent political Coventry. Not a one, this writer would guess. Our political life has descended to the point where politicians are invariably people whose major and usually only concern -- the goal to which they devote almost all their energies -- is their political survival and advancement. God forbid, in their minds, that they should take a big chance on losing an election merely to do what should be done in behalf of the country. As has been said here before, at least in part, the people who are in politics today show by that very fact that they shouldn’t be, while the people who should be ineluctably refuse to be.

* * * * *

So . . . . One is delighted that, however incomplete his logic and analysis, a big foot like Tom Friedman has, at least once, taken up the cudgels for a third party (although I seriously wonder whether we shall hear from him again on this subject). But, delighted or not, one has the irresistible feeling that his analysis must be enormously expanded if it is to embrace what must in fact be covered.*


*This posting represents the personal views of Lawrence R. Velvel. If you wish to respond to this email/blog, please email your response to me at velvel@mslaw.edu. Your response may be posted on the blog if you have no objection; please tell me if you do object.



----- Original Message -----

From: John
To:
Sent: Sunday, May 07, 2006 8:49 AM
Subject: Summers


> Dear Dean Velvel,
>
> This is in response to your very interesting piece on Larry Summers.
>
> One quick reaction: I appreciate your mention of the Schleifer
> affair, some of the details of which I had not heard about
> previously. It would seem that it was that, i.e. the civil judgment
> against Harvard and Summers failing to take appropriate action in
> response that is the real reason for the corporation's action against
> him.
>
> However, what the administration has successfully promoted as the
> primary cause, as you know, was entrenched leftist faculty who were
> resistant to the difficult but necessary changes which Summers was
> effecting at the institution.
>
> The upshot of this is the corporation scored a victory on two fronts:
> they were able to get rid of Summers (who was, as you point out, an
> inept administrator) and also at the same time reinforce the
> widespread impression that leftist faculty have made Harvard and
> other universities ungovernable, thus paving the way for a Summers-
> lite candidate who will implement the same basic agenda but more
> "thoughtfully" after having carefully engineered a consensus for
> "change."
>
> Thanks for your excellent work.
>
> Best Regards,
>
> John Halle




----- Original Message -----

From: Jane
To: velvel@mslaw.edu
Sent: Saturday, May 06, 2006 7:01 PM
Subject: great column on harvard


Thank you. it was awful when i was there (class of '77). can only imagine the pit it is now.



----- Original Message -----


From: Victor
To:
Sent: Saturday, May 06, 2006 12:40 PM
Subject: BU trumps Harvard: a plagiarism accusation itself containing plagiarism


> re: www.counterpunch.org/velvel05062006.html
>
Dear Prof. Velvel,
>
Not only did Summers ramp up the quotient of Washington-style dishonesty in the Harvard administration, but he pushed crony capitalist model (a fate unintentionally anticipated by the term "Harvard Corporation" I suppose). In case you haven't seen it yet, you may enjoy Immanuel Wallerstein's brief but pointed analysis of the latter trend ("The Future of the University System", http://fbc.binghamton.edu/27en.htm, 1999).

Personifying the confluence of both forms of corruption, Summers was a lightning rod for faculty resistance, and of course you're correct that the struggle at Harvard ain't over! As you rightly also emphasise, the Law School is another bastion of low intellectual-cum-moral standards. A third area to watch is of course biotech, as documented by Prof. James Ennis, a sociologist at Tufts.
>
But as much fun as Harvard bashing may be, one must give proper "credit" to B.U. for outdoing its big brother across the Charles. On the sanctimonious blowhard scale, Summers never attained the lofty heights of John Silber, and Silber's special creature Dean Joachim Mestre made history by plagiarizing the better part of a commencement speech in which he also accused Martin Luther King of plagiarism! You probably remember the kerfuffle, but here are some background links in case you ever decide to expand the Counterpunch piece into a longer essay.
>
> http://people.bu.edu/whitakal/Plagiarism/Maitre's%20Letter%20to%20Silber.ht
> m
>
> http://people.bu.edu/whitakal/Plagiarism/BG%2010%20Sep%201991%20--%20Maitre
> %20Denies%20Plagiarism%20Again.htm
>
> Today, B.U. may have a new president, but Silber's legacy of sychophantic deans and department heads may take another decade to overcome!
>
> Best,
>
> Victor


----- Original Message -----
From: Armande
To: Dean Lawrence R. Velvel
Sent: Friday, May 05, 2006 8:17 PM
Subject: Re: Harvard And Its Presidents.

Thank you.

Describing Mr. Summer as the "smartest guy in the room", one must ask who is in the Room? George Bush and Company???
It seems to me that one goes to college among other traits, to learn honesty and character (provided it did not happen when one was little).

The fact that you are writing about it, it means you do care. If one doesn't care, one ignores the issue!!!

Thanks again.

P.S. most of the time I am translating, so maybe my sentences are not the greatest, but you do get the meaning.. I hope!!

Armande


----- Original Message -----

To: "Dean Lawrence R. Velvel"
Sent: Friday, May 05, 2006 9:11 PM
Subject: Re: We Need People Of Proven Competence On The Private Side In Politics.


> Dear Dean Lawrence R. Velvel:
>
> As always you speak to the issues that most of us think about in our daily lives, but about which we rarely talk as we seem to have so little time to listen to one another.
>
> Ad hoc reply:
>
>
> Perhaps the use of working in public or in private jobs creates a false dichotomy as it seems success and failure in the jobs does also.
>
> It is time that we reward those selfless hardworking people both public and private workers with the recognition that is well deserved and allow them the power to make the decisions at work with fellow workers.
>
> Competence ought to be defined as being effective in achieving our mission with goals and objectives that are defined through democratic means. It seems to me that we are very far away from democratic actions so long as the measurement of our lives are defined in dollars as we continue to trade our precious time for things.
>
> Cordially,
>
>
> L.
>
>
> -------------- Original message ----------------------

> From: "Dean Lawrence R. Velvel"
>>
>>
>> April 24, 2006
>>
>> Re: We Need People Of Proven Competence On The Private Side In
>> Politics.
>>
>> From: Dean Lawrence R. Velvel
>> VelvelOnNationalAffairs.com
>>
>>
Dear Colleagues:
>>
It is this writer's thought, and I believe the facts support, that today the vast majority of our politicians are professional politicians. That is to say, most of them have spent all or nearly all of their adult lives in politics. Relatively few of them have had decently long careers in the private sector. Still fewer have had what could be called truly significant careers in the private sector -- the kind of career that, for example, Jon Corzine had, or Tom Coburn (to choose both a liberal and an arch conservative). Some have been government prosecutors (usually state rather than federal government prosecutors, one imagines -- i.e., have been a state's attorney as opposed to a U.S. attorney, one imagines). But even if it is harsh to say so, I don't think that really counts. For being a state's attorney is, and even being a U.S. attorney often is, a highly political
>> job. It is not like being on the private side.
>>
It may be perverse to say so, but one can't help wondering whether the fact that so few politicians have significant experience on the private side, and even fewer have been major successes there, is part of the problem with today's politicians. If it is, one equally wonders whether it ought to be one of the factors addressed by the new third party which this blogger believes is the only way this country is likely to overcome the political problems plaguing it.
>>
Politicians who have had no private careers, still less significant ones, have nothing to fall back on if they lose office. The best they usually can hope for, perhaps the only thing they can hope for, is to become highly paid lobbyists -- for a federal politician, this means to become one of the K Street crowd. But politicians don't want to lose elections regardless of the possibility of becoming another of the locusts of K Street or its state-level equivalents. Those who have had no significant private careers, and have nothing to fall back on, are therefore desperate to stay in office.
>>
This must be one of the reasons they are so willing to lie, cheat and steal, so to speak, to remain in office. That is, this must be one of the reasons they talk out of both sides or all four sides of their mouths, why they are dishonest, why they lust after the legalized bribes called campaign contributions, why they do the bidding of the wealthy while screwing over the common man, why they are too cowardly to stand up to evil. When you have nothing to fall back on, after all, your choices are more circumscribed than those of someone who can say, "To hell with you. I'll go back to a satisfying job delivering babies." Or "I'll open my own investment bank." Or, as once (and for decades) was true of major figures in the Executive, "I will go back to being a senior partner in a Wall Street or La Salle Street law firm," or sometimes even a downtown Washington law firm.
>>
There is another factor involved, too. People on the private side, and
even the more so among those who are major successes there, of necessity have the ethos of getting the job done, the ethos of accomplishment. This is worlds apart from the political ethos, which is to talk, talk, talk, not to get the job done, to talk, talk, talk rather than to accomplish great things, to try to offend nobody, or at least as few as possible, rather than to take well thought out positions. The ethos of getting the job done seems to be sadly lacking among professional politicians, who talk, talk, talk and do so in a way that they hope will advance their wish that everyone will like them, or at least that nobody will dislike them.
>>
If I am right in thinking that people with long, significant careers on the private side, those who have been major successes there (unlike George Bush, who was a major failure there), would bring to politics some characteristics that are sorely needed there, then this is plainly something that a new third party should be cognizant of. This is the more true because it is unrealistic to expect the professional pols of our two current parties to encourage their own replacement by a different breed of cat -- even if the new breed of cat is in some respects a throwback to the successful private side types who were so prominent, indeed preeminent, among the founding fathers whose veneration is an American civic religion (albeit one honored in the breach).
>>
But the idea that more of our politicians -- perhaps even most of them -- should be persons with records of success on the private side does raise certain questions and does give rise to certain criticisms. To begin with there is the question of whether successful people will leave their careers to run for and hold office, and will do so despite the savage, often irresponsible nature of the present day media. My personal suspicion is that, despite the good for nothing elements of the media, in a climate which is welcoming apart from such elements, the answer would be yes for a lot of persons. Not all, but a lot.

There used to be a tradition of public service in this country that was illustrated by major private side figures like Root, Stimson, Acheson, Forrestal, Stevenson, Richardson, Dillon and Vance. One suspects that a lot of successful private side people today, too, would be interested in service if we encouraged them to it and respected them for it, and if they felt that they would not be called upon to abase oneself as current politicians do. Nor would they have to serve "time without end." Four years, six years, eight years would be sufficient from the standpoint of the public interest. If they do not fall into the trap of Potomac fever, and do not fall in love with the ego gratifying perquisites of public office (to which they should be less susceptible than professional pols because they, unlike the pols, get similar gratification on the private side), then four or six or eight years might be sufficient from the individual's standpoint in many or most cases as well as from the standpoint of the public interest.
>>
It is also said that individuals who are successful on the private side expect their orders to be followed without question. They are unprepared for the extensive discussion and compromises of public life, it is claimed. If this is true, it is to some extent desirable, not undesirable. For it reflects the ethos of getting things done, which is exactly the ethos needed in public life. But beyond this, the universal accuracy of the criticism is subject to serious question. Lots of private endeavors involve compromise. (If you wish to test the truth of this, try being a private lawyer in a large multi-party, multi-multi-lawyer trial.) As well, the famous figures of bygone years from the private side who were also major governmental servants, illustrate that people from the private side can indulge the necessary give and take, can make the needed compromises. We are, after all, discussing the need for people who have shown they can be successful, not private side hacks like George Bush or, for that matter, Rumsfeld or Cheney, who were nothing but professional pols chosen to head private companies strictly because of their political connectedness and who, especially Cheney, did not necessarily do such a hot job on the private side.
>>
Then there are a couple of possibly twinned criticisms . To seek candidates who are proven successes on the private side may be criticized as elitist and as too likely to unearth many more conservatives than liberals. Well, if it is elitist, so be it. We need competence, and if it is elitist to seek those who have demonstrated it, then call me elitist. Not to mention that competence comes from a host of walks of life, has no racial, religious or gender limits, and will be shown by lots of people who have worked themselves up from nothing. And plenty of people who are competent will be liberals, especially perhaps those who have had to work themselves up from nothing. Competence, after all, is not the exclusive preserve of the conservative. (Nor is incompetence, notwithstanding Bush, Cheney, Rumsfeld and the rest of that inept crowd.)
>>
There is also the fact that proven competence on the private side will not necessarily translate into competence in political matters. Bill Frist perhaps exemplifies. But this does not alter the fact that, given the pass to which we have been brought by our host of professional pols of demonstrated incompetence, it would be wise to try people who in other endeavors have demonstrated competence. Remember, after all, Root, Stimson, Acheson and the others named above.
>>
And, finally, there is the question of whether one considers certain types of jobs to be private side jobs, or equivalent to them even if the jobs are technically governmental ones. One thinks of two professions in particular, academics at state universities and the military. With regard to universities, my own view is that it makes no difference whether they are state or private. They are highly political entities with the same kind of non-accomplishment-oriented talk, talk, talk ethos as government itself.
>>
Yet there are those whose success in higher education bespeaks an attitude of getting the job done and bespeaks competence. So, in this writer's view, it really depends on the person rather than on the fact that one comes from higher (or previous) education. As to the military, one admits to being a little leery because the military of today is so often a highly political institution where, despite often very high levels of innate ability, people have nevertheless adopted and in their pores absorbed don't-rock-the-boat, CYA attitudes that are too much like those of professional pols. In this regard, one's view is not wholly unaffected by the fact that too many generals went along with the disasters of Viet Nam and Iraq, and that, despite his reputation for alleged candor and forthrightness, John McCain, a military hero, not only got himself involved in the Charles Keating affair, but of late seems to have become no better than any other pol in kowtowing to the worst elements in pursuit of his desire to be President. Nor is one's view wholly unaffected by the fact that Colin Powell, in service of their desire to invade Iraq, capitulated to and lied for his deeply incompetent masters, the three stooges, aka George, Dick and Don.*


----- Original Message -----

To: Dean Lawrence R. Velvel
Sent: Wednesday, May 03, 2006 11:22 AM
Subject: Re:

It's the price of the instability created by the Bush regime. We'll see who ends up paying for it.


-----Original Message-----

From: "Dean Lawrence R. Velvel" Sent: May 2, 2006 7:16 PM
To: Subject:


May 2, 2006



Dear Colleagues:

The appended blog that was sent out yesterday contained the wrong article from The New Times. The corrected article has been appended to the end of the blog.

Sincerely,

Lawrence R. Velvel

May 1, 2006

Re: New York Times Article On The Futures Market For Oil And Gas.

From: Dean Lawrence R. Velvel VelvelOnNationalAffairs.com

Dear Colleagues:

Nearly a week after an MSL press release explaining that the futures market is responsible for the increasing price of oil and gas, The New York Times wrote an article on this. That article, preceded by an MSL press release concerning it, is appended below.

THE TIMES PUBLISHES AN ARTICLE ON THE EFFECT OF THE OIL AND GASOLINE FUTURES MARKETS

On Saturday, April 29th, not quite a week after MSL sent round a press release detailing the one hour television interview in which Tyson Slocum of Public Citizen said that the future markets were responsible for the rising price of gasoline, The New York Times ran a lengthy, page one article on the matter. That article is appended below.

The Dean of MSL, Lawrence Velvel, who conducted the interview with Slocum, said the following about The Times’ lengthy article:

“In the typical journalistic fashion of obtaining quotes from differing sides as if this represents truth, The Times ran quotes from people of varying views -- including those who claim that the futures market does not raise the price even if it does contribute to volatility. (How the market can contribute to volatility -- which means prices sometimes rise -- without affecting price, is not explained. This is typical of today’s shallow journalism.) However, as was “said by BPs chief executive, Lord Browne,” “‘it is the case that the price of oil has gone up while nothing physically has changed.’” Similarly, a Washington energy consultant is quoted as saying that “‘Gold prices don’t go up just because jewelers need more gold, they go up because gold is an investment. The same has happened to oil.’””

“So it seems pretty clear,” continued Dean Velvel, “that even the stodgy New York Times is now conceding an effect from the futures market even though, like the rest of the media, for years it did not cover this story.”

“But it is also true,” added the Dean, “that The Times’ story totally fails to mention one of the most important aspects of the Slocum interview. It does not mention that the prices of oil and gasoline are almost totally divorced from the costs of drilling, transportation and refining. Although The Times quotes individuals who say that the price supposedly is determined by the fundamentals of supply and demand, it neglects to deal with the fact that one of the most important fundamentals of economics often does not apply in markets where, as in the oil industry, there are huge and powerful companies (e.g., Exxon/Mobil). That is, the story neglects to say that in such industries the price can become totally divorced from costs regardless of the normal operation of supply and demand. This divorce has now occurred with oil and gasoline because of the operation of the futures markets.”

*This posting represents the personal views of Lawrence R. Velvel. If you wish to respond to this email/blog, please email your response to me at velvel@mslaw.edu. Your response may be posted on the blog if you have no objection; please tell me if you do object.

April 29, 2006Trading Frenzy Adding to Rise in Price of Oil By JAD MOUAWAD and HEATHER TIMMONS

A global economic boom, sharply higher demand, extraordinarily tight supplies and domestic instability in many of the world's top oil-producing countries — in that environment higher oil prices were inevitable. But crude oil is not merely a physical commodity that fuels the world economy; powers planes, trains and automobiles; heats cities; and provides fuel for electricity. It has also become a valuable financial asset, bought and sold in electronic exchanges by traders around the world. And they, too, have helped push prices higher.In the latest round of furious buying, hedge funds and other investors have helped propel crude oil prices from around $50 a barrel at the end of 2005 to a record of $75.17 on the New York Mercantile Exchange last week. Back in January 2002, oil was at $18 a barrel.With gasoline in the United States now costing more than $3 a gallon, high energy prices may be a political liability for the Bush administration. But for outside investors — hedge funds, investment banks, mutual funds and pension funds and the like — the resurgence in the oil market has been a golden opportunity. "Gold prices don't go up just because jewelers need more gold, they go up because gold is an investment," said Roger Diwan, a partner with PFC Energy, a Washington-based consultant. "The same has happened to oil."Changes in the way oil is traded have contributed their part as well. On Nymex, oil contracts held mostly by hedge funds — essentially private investment vehicles for the wealthy and institutions, run by traders who share the risks and rewards with their partners — rose above one billion barrels this month, twice the amount held five years ago.Beyond that, trading has also increased outside official exchanges, including swaps or over-the-counter trades conducted directly between, say, a bank and an airline. And that comes on top of the normal trading long conducted by oil companies, commercial oil brokers or funds held by investment banks. "Five years ago, our futures exchange was a small group of physical oil players," said Jeffrey Sprecher, the chief executive of Intercontinental Exchange, the Atlanta-based electronic exchange where about half of all oil futures are traded. "Now there are all sorts of new investors in trading commodity futures, much of which is backed by pension fund money."Such trading is a 24-hour business. And more sophisticated electronic technology allows more money to pour into oil, quicker than ever before, from anywhere in the world. In the Canary Wharf business district of London, for example, the trading room of Barclays Capital is filled with mostly young men in identical button-down blue shirts, staring intently at banks of computer screens where the prices of petroleum products — crude oil, gasoline, fuel oil, napthene and more — flicker by. Occasionally a trader breaks from his trance to bark instructions to a floor broker a couple of miles away, delivering the message through a black speaker box. Above them is a television screen, where President Bush this week was telling America to "get off oil."Experienced oil traders are in heavy demand, and average salary and bonus packages are close to $1 million a year, with top traders earning as much as $10 million.The rush of new investors into commodities has meant a rash of new clients for banks like Barclays. Lehman Brothers and Credit Suisse have recently beefed up their oil trading teams to compete with market leaders like Goldman Sachs and Morgan Stanley."Clearly the big attraction of commodity markets like oil is that they've been going up," said Marc Stern, the chief investment officer at Bessemer Trust, a New York wealth manager with $45 billion in assets. "Rising prices create interest."This year alone, oil prices have gained 18 percent; they were up 45 percent in 2005 and 28 percent in 2004, a performance far superior to the Standard & Poor's 500-stock index, whose gains in these years have been in the single digits. And to some extent, the rising price of oil feeds on itself, by encouraging many investors to bet that it is likely to continue doing so."The hedge funds have come roaring into the commodities market, and they are willing to take risks," said Brad Hintz, an analyst with Sanford C. Bernstein & Company, an investment firm in New York.Energy funds make up 5 percent of the global hedge fund business, with about $60 billion in assets, according to Peter C. Fusaro, principal at the Energy Hedge Fund Center, an online research community. The gains on the oil market have attracted a fresh class of investors: pension funds and mutual funds seeking to diversify their holdings. Their investments have been mostly channeled through a handful of commodity indexes, which have ballooned to $85 billion in a few years, according to Goldman Sachs. Goldman's own index holds more than $55 billion, triple what it was in 2002. Pension funds have been particularly active in the last year, said Frédéric Lasserre, the head of commodity research at Société Générale in Paris. These investors, seeking to diversify their portfolio, have added to the buying pressure on limited commodity markets.While all this new money has contributed to higher prices, by some estimates perhaps as much as 10 percent to 20 percent, the frantic trading ensures that even the biggest players — including the major oil companies — cannot significantly distort the market or tilt it artificially in their favor. It also makes oil markets more liquid, meaning a buyer can always find a seller."The oil market has been driven by speculators, by hedge funds, by pension funds and by commodity indexes, but the fact of the matter is that it's mostly been driven by the fundamentals," said Craig Pennington, the director of the global energy group at Schroders in London. "Prices are supported by the fact that there is no spare capacity."The inability to increase output fast enough to keep up with global demand accounts for most of the oil price rise over the last three years, analysts say. And until more investments are completed in oil production and refining, markets will remain on edge, with the slightest bit of bad news likely to push prices up further."The reality is that the world has no supply cushion left," said Edward L. Morse, an executive adviser at the Hess Energy Trading Company, a New York oil trading firm. Political strife and circumstance played major parts as well. A crippling strike in Venezuela's oil industry in 2002, the invasion of Iraq, civil unrest in Nigeria, and last summer's hurricanes in the Gulf of Mexico, among other things, have all contributed to pinching supplies."If we didn't have politics," said William Wallace, a trader on the Nymex for Man Financial, "we'd be like corn." According to Cambridge Energy Research Associates, an energy consulting firm owned by IHS, Iraq is 900,000 barrels a day below its prewar output; Nigeria has shut 530,000 barrels a day; Venezuela is still 400,000 barrels below its prestrike production; and the Gulf of Mexico remains down by 330,000 barrels a day. In all, this amounts to more than two million barrels of disrupted oil, Cambridge Energy estimates.The latest reason for gains on energy markets is the growing fear that the diplomatic standoff between the Western powers and Iran over nuclear technology will get out of hand."All the risk," said Eric Bolling, an independent trader on Nymex, "has been on the upside."One characteristic of today's futures market is the sharp increase in volatility, which industry insiders largely attribute to hedge funds and other speculators looking for a quick profit."It is the case," complained BP's chief executive, Lord Browne, "that the price of oil has gone up while nothing has changed physically."In the end, supply and demand call the tune. "The idea that speculators can systematically push the price up or down is wrong," said Robert J. Weiner, a professor of international business at George Washington University and a fellow at Resources for the Future, a nonpartisan think tank. "But they can make it more volatile. They can't raise water levels but they can create waves."Not all bets have turned out to be profitable. Veteran commodity market traders have been stymied by the high prices of oil, which have exceeded their expectations, and many now predict a steep decline in prices is ahead. But they have been wrong so far. "We found the last 18 months difficult," said Russell Newton, director of Global Advisors, a New York and London hedge fund with $400 million in assets under management that had a down year in 2005. In one often cited example, the Citadel Investment Group, a Chicago-based hedge fund, lost tens of millions of dollars after betting oil prices would fall just before Hurricane Katrina struck."Everybody is jumping into commodities, and there is a log of cash chasing oil," said Philip K. Verleger Jr., a consultant and a former senior adviser on energy policy at the Treasury Department. "The question is when does the thing stop. Eventually they will get burned."





----- Original Message -----

To: velvel@mslaw.edu
Sent: Sunday, May 07, 2006 6:29 PM
Subject: Summers

Dear Dean Velvel:

At an earlier age, when I thought Harvard and Yale were the beacons of American intellectual life-- instead of the "Kaderschmieds" for US empire-- I would have been surprised and even worried about the integrity of the President and Fellows and all those would be American "dons".
But a university which gives such privilege to war criminals like Dr Kissinger and does not find something reprehensible in Summers argument that the Third World should be freely polluted because of the low per capita value of such environmental waste disposal and the competitive advantage of such countries as low cost toxic dumps-- made in all seriousness while Mr Summers was in Washington-- gives even a one-time New Englander pause. Prior to Summers invidious remarks about the capability of women, Harvard was scarcely known for its positive social policies (whether it be the attitude toward unionisation or its investment portfolio).
Harvard is and has long been a keystone in the Washington-New York- Cambridge "axis" providing the ideological haven for some of the most tainted of official intellectuals. That has long been its role. It would be nice to think that Mr Summers' opportunity to "do the honourable thing" was an indication of moral uplifting within the premier IV league walls. Most probably this has just been an indication that New England taste (notorious for its hypocrisy) has been offended by the odours of a seriously dyspeptic government. The pressure for Mr Summers' departure is more like swallowing a packet of Rolaids to treat a duodenal ulcer.

Nonetheless you are right that Harvard's action or inaction will have an effect on the academic profession. In the tradition of Massachusetts Bay "scarlet letters" may be issued to all those unfortunate enough not to enjoy enough patronage. This kind of discipline will set an example for lesser institutions about how to deal with embarrassing or undesirable breaches of the already cut-throat publish and/ or perish code.

Maybe the answer lies in abandoning the worship of Harvard and accepting that it is just another business-- like those who fund it-- with no greater virtues or vices than the other great businesses that dominate US American life.

Many people in my country swear that we need "elite universities" like Harvard here to compete for brains and research money. They do not understand what Harvard is (or charitably speaking, what it has become). Aside from the truly pleasant campus and libraries, I would not wish anyone a "Harvard" if they are not already saddled with one.

If the affaire Summers were to be an opportunity for Harvard, it would take a long look at what intellectual responsibility means when a country's government has gone beserk. It would go back to a meaningful tradition: emollit mores nec sinit esse feros-- taming the state's violence with humanist values instead of legitimating it. Then aqua -"Veritas" might mean something again on the banks of the Charles.

Thank you for your most interesting article.

Mit freundlichen Grüßen/ Cordialement/ Cordiali saluti/ Yours sincerely


Patrick

Links to this post:

Create a Link

<< Home