I imagine that conversations in your home and your workplace resemble those in mine. For the past two weeks, I have heard practically everyone complain about the rising price of gasoline – including TV commentators and newspaper columnists.
Of course, our Congressional professionals (Senators and Representatives) love to jump into the public spotlight when a “hot topic” surfaces and opportunity presents itself to sound like a populist (ie. someone in favor of “the people” vs. “the elite”). Not surprisingly, many of these attention-seekers have been granted their sought after media “sound bites” – ranging from complaints about profit hungry oil companies to haranguing about greedy oil speculators.
Don’t believe a word they say about their heart felt concern about us, “the people”. It is great political theater, but in reality it is no more than (to quote a great source) “…a resounding gong or a clanging cymbal”, signifying nothing!
Why do I say this? Let me remind you of the “insider trading” scandal which bubbled to the surface just months ago! During the brief time the press bothered to reveal the dirty details that Congress wanted kept under wraps, we learned the following:
1) Over the past 25 years, the average member of Congress has tripled their wealth, while the rest of us have seen our net worth fall (in no small part due to the profligacy of the big banks, which brought the economy to its knees in 2007-08!);
2) Up until this year, whenever Congress enacted “insider trading” laws, they always exempted themselves from such laws;
3) Back in 2008, when Fed Chairman Ben Bernanke warned Congressional leaders (in a closed door session) that a severe financial crisis was just around the corner, Illinois Senator Dick Durbin sold $100,000 of the stocks in his portfolio!
4) Outdoing even Durbin, Representative Spencer Bachus left that meeting and invested in instruments which profited when the market went down, reaping a reported profit in the tens of thousands;
5) Separately, when Sen. Bentsen learned about pending legislation intended to diversify choices within school lunch programs regarding milk, he bought shares in Morningstar Foods (a huge player in dairy production). Being a shrewd fellow, Bentsen sold that stock in amazingly timely fashion – just eight days prior to the Justice Department announcement of an investigation of that firm for milk contract bid-rigging;
6) When Visa issued a very highly sought after initial public offering of stock, Representative Nancy Pelosi (then House Minority Leader) managed to secure a slice of the very limited “pie” – investing an incredible $5 million in the IPO. The result? She pocketed a 50% profit in two days! What makes this particularly fascinating is that Pelosi (normally anti-business and as liberal as one can get) became a firm opponent of credit card reform;
Are you surprised by any of this? Are you outraged?
Remember all of this next time you hear one of these public figures sounding outraged about Wall Street or speculators.
Of course, if we are honest about all of this, we’d have to agree that these Congressional figures did not, in fact, “speculate”. They made sure they invested in a sure thing!