HIGH FUEL PRICES AND WHAT TO DO ABOUT THEM

    The airline industry could just be on the brink of bankruptcy because of market strategies being used by our enemies. It makes sense to leave foreign speculators holding the bag but not with legislative restrictions imposed on traders! Let me explain our views.

    There are many ways to fight the war on terror.  Here is one example.  To head off impending airline bankruptcies, we urgently recommend that Congress act now to pass a bill entitled “THE EMERGENCY FUEL ASSISTANCE ACT OF 2008.”  Current versions of legislation being proposed are just more of the same, contain too many compromises and just won’t do the job! For some time now the U.S. has been victim to an economic ploy called the “strategy of a thousand cuts.” Financial manipulation knows no international boundaries and greed has many friends in high places. We have a huge mountain of debt because our leadership has failed to make hard domestic decisions and takes the easy way out by throwing money at everything they perceive to be a problem. Our enemies in the War on Terror have recognized this and are using market strategies to disrupt the U.S. economy and undermine our national security.  In the case of the airline industry, as on 9/11, creating a critical emergency condition using our own resources (and the enabling characteristics of our own culture) is a fast and effective way to attack us. We react characteristically by throwing huge sums of tax dollars at “something” and the “strategy of a thousand cuts” is on a roll.

    Those who are at war with us and those who want to see America diminished around the world are attacking the supply of energy and filling their pockets by using market strategies supported by  disruptive actions. Once again politicians are confused, and argue about what to do. Talking points are put forth by campaigns, “climate change” advocates use the situation to their advantage and amid an atmosphere of “political correctness” we flounder! The answer to the fuel crisis is simple but will never be agreed upon because the way our political culture has evolved it is virtually impossible to arrive quickly at an effective solution and still satisfy every politician who has a stake in a position. They have big money willing to oppose any solution and there you have the reason why nothing effective can be done. Nothing that’s effective and timely, that is! Meanwhile, industry after industry needs a bailout and the “strategy of a thousand cuts” is alive and well, draining the American people and threatening jobs and entire industries.

    Once again! One of our primary assumptions is that oil-producing countries, hedging their bets with Al Queda, are behind the manipulative speculation in oil markets. The reasons for this should be obvious! Here are some of their motives and the techniques they use to drive up the price of oil:

    > They are flush with petro dollars and see a way of getting more.   Unlike most speculators who have limited amounts of money available, they have almost unlimited funding and are getting more and more due to their market action strategies.

    > They have discovered that they can buy their own oil futures contracts and drive prices up at will. The markets where countries flush with petro dollars trade are not subject to the reporting requirements of the U. S. Securities and Exchange Commission since those markets are largely unregulated (by design).  Hedge funds can be used as surrogates and trading on exchanges without reporting requirements can be utilized so there are many ways to hide the strategy from public scrutiny. “Big money” receives the best expert advice on how to achieve objectives in trading.

    > They are advised on their trading strategies by the shrewdest of the Wall Street firms. After all, it’s about making money and many of these Wall Street firms believe that nothing, including the national interest, should get in the way of making big money! (Do we see a mansion in the Hampton’s, a younger wife and a new Ferrari in sight? You bet we do!)

    > This largely allows them to buy and sell out of sight of western recognized market oversight and gives them the ability to use their huge money pile to manipulate prices in whatever direction they want. It’s “insider trading” in its most uncontrolled form, although not illegal per se because it has the cover of a host country that benefits enormously both politically and monetarily from the strategy.  The only entity that has the power to counter this strategy is one that can legally print money; i.e. the Federal Reserve or the U. S. Treasury.

    > Let’s be clear on one point. They are not stupid and therefore would not like the U.S. economy to go bankrupt. That would seriously impair their income. Semi slavery in the form of a huge debt load and a second-class economy with third class leadership is sufficient. In the minds of our enemies that’s enough to cripple and deprive us of a strong military and the ability to support a superior national defense and deploy an effective world-wide diplomatic and military influence.  That would go a long way toward leaving the rest of the world at the mercy of the Jihadist’s political plans and cultural ideas. (They will finally have broken through the gates of Vienna!)

    > What better opportunity to stage a highly visible example of their effectiveness than by bankrupting the U.S. airline industry at considerable risk right now from high fuel prices. They are counting on liberal politicians to continue blocking effective action in Congress.  And are further encouraged by the Presidential campaign rhetoric of the currently leading candidate who is so ill advised and naive that he unwittingly parrots their long term strategy! (Bonus: he even has an Arab name)

    HOW SHOULD WE VIEW THIS SITUATION:

    A.     Recognize that a viable national and international airline system is essential to our nation’s economic health and should not be forced into a “survival of the fittest” contest when fuel prices are being manipulated.

    B.     Consider that airline travel has become a necessity, not a luxury, and, within reason, should be regulated in a fashion similar to utilities.

    C.     Provide that in the creation of such legislation, room for free market innovation, labor negotiation and profit making should NOT be eliminated.

    D.    Realize that no country on earth, except the U.S., allows its essential transportation systems to be used as political footballs, subjecting an industry to political whim and manipulation potentially undermining our economic survival.

    E.     Bear in mind that the airline labor pool, because of the skills and training lead-time requirements, dictates job stability and is already regulated by labor legislation that severely brutalized it by the misguided notions contained in The Airline Deregulation Act of 1979.  It’s time to admit that this legislation was a mistake and fix it.

    F.   Demand that we move to effectively counter artificially high fuel prices that threaten the nation’s economy.

    THE AIRLINE INDUSTRY FUEL CRISIS:

    Congress should REPLACE the Airline Deregulation Act with NEW LEGISLATION that places reasonable and modern regulation on the airline industry.  While considering this legislation, immediate emergency fuel relief should be made available.

    There are many ways that government can influence trading habits. Our preference would be to use the markets and a production strategy against the big speculators, whoever they are, to create a market situation that encourages them to sell oil futures contracts. Maybe people in our government don’t have the “smarts” to be able to do this but we think they do! Allowing the Federal Reserve and/or the Treasury Department to back the selling of fuel futures contracts would bring down the price of oil overnight and have speculators running for cover. As in the grain markets, when the government sells from stockpiles, just the threat of this action hanging over the markets would change the trading mentality of speculators by making them wary of getting too far ahead of the markets of what actual inventory and predicted usage would dictate.

    Right now Congress is considering an unprecedented intervention in the mortgage markets.  There is no reason why they should not act in appropriate fashion on behalf of the severely endangered airline industry.  This should clearly be an interim emergency measure, but it is not without precedent. After all, the government has in the past regulated the market price of grains with various farm programs that have impacted the markets for years and kept grain prices low. (Keeping farmers solvent while at the same time keeping grain prices low was thought to be in the national interest.) We would not normally agree with government intervention and still do not in cases where an enterprise or even an industry is merely under pressure.  However, in the case of an economic emergency, caused in large part by financial and “incident” manipulations by our enemies and their allies, we see effective intervention as not only justified but essential in protecting our national security.

    Chuck MacNab
    Airline Captain (Ret.)
    Publisher and Editor of RiteOn™ (RiteOn.us) and RiteOn.org™