In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them.
Paul Solman answers questions from NewsHour viewers and web users on business and economic news here on his Making Sen$e page. Here's Tuesday's query:
Question: Aren't the regulations removed by the Bush administration on oil commodities the main reason for the spike in prices? Since the speculators no longer have to take delivery on the oil, that means more money is put into speculation and the higher the price. Why not report this fact?
Paul Solman: Because it's not a fact. Speculators in the commodities markets (not just for oil) have not had to take delivery for many years. It has nothing to do with the Bush administration -- either Bush administration. Moreover, spikes in price -- or falls in price, for that matter -- are a commonplace in markets going back as long as we have records of them. In all probability, therefore, booms and crashes have little to do with whether or not a speculator has to take delivery, though "cash settlement" does, as you suggest, make betting easier. Finally, speculators bet on downward as well as upward price movements. The more money put into speculation on the downside, the lower the price.