Planet Nelson

Juneteenth commemorates June 19, 1865, the day Union General Gordon Granger and 2,000 federal troops arrived in Galveston, Texas, to take possession of the state and enforce the emancipation of its slaves. (From Wikipedia)

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The wonderful folks at Common Craft have done it again; explained how things work on the Internet, in this case, Social Media. It’s a great, short piece that makes blogging, podcasting and all the other great things about the web understandable.

As someone who lives in California, there was a ring of familiarity to this story from the Washington Post, titled Investors’ Growing Appetite for Oil Evades Market Limits. The piece talks about the way investors are buying huge amounts of oil futures and how this is responsible for at least some of the increase in its price.

The piece talks specifically about the Commodity Futures Trading Commission or CFTC and how it is supposed to regulate the buying and selling of commodities like oil. However, changes to the CFTC have really made it difficult for it to do its job.

Since last year, this was also the position of the CFTC [i.e., the rise of oil prices has been the result of supply and demand]. But agency officials have recently signaled greater concern, saying they want to collect more data to determine whether speculation might be a significant factor. That information can be difficult to obtain because commodity trading often occurs through private, unregulated transactions and on overseas exchanges.

Walter Lukken, the acting chairman of the CFTC, acknowledged in an interview that his agency has had a hard time keeping up with the sector it oversees. Commodity trading has exploded in complexity and popularity, he said, growing six-fold in trading volume since 2000. That was the year a handful of giant energy companies, including Enron, successfully lobbied Congress to ease the regulation of energy markets.

Meanwhile, the CFTC’s staffing has dropped to its lowest levels in the agency’s 33-year history.

“We could hire an extra 100 people and put them to work tomorrow given the inflow of trading volume,” Lukken said. “We are doing the best we can in difficult circumstances. . . . This is something that we are obviously concerned with — the potential for manipulation.”

California got royally hosed by Enron when it put the screws to the state under the last governor, Gray Davis. But all that was not understood at the time. “Supply and demand” was supposed to be regulating the price, however Enron was manipulating the supply and raking in huge profits as a result.

The now defunct company created lots of “fake” companies to obscure from the Feds what they were actually doing. They spent a huge amount of effort to hide their true intent by overwhelming regulators with intricate and convoluted holding company relationships that were impossible to figure out until it was all too late. And there were plenty of people who wanted to buy Enron stock as it rose and rose.

What’s happening with oil has a similar ring to it. Agencies supposed to regulate the market are overwhelmed. Regulations have been relaxed at the behest of, of all companies, Enron. Back in 2001 they lobbied successfully to ease rules and oversight. Today, with oil’s skyrocketing price, there are plenty of people who want to buy into this rising tide of profit.

On commodity markets, buyers largely purchase futures contracts, which determine the price goods will fetch on a particular date in the future. Unlike commercial businesses that are trying to lock in prices for coming orders, speculators have little interest in taking actual delivery of oil or other commodities. Instead, these investors trade the contracts like stocks. These investments can be very attractive because there are only light restrictions on whether they can be bought and sold using borrowed money. While risky, this can produce enormous returns.

Some Democratic and Republican lawmakers allege that gaps in oversight are allowing deep-pocketed speculators to manipulate prices.

As investors catch the fever, this create a bubble or, at least, pushes prices higher and higher. Now there are even mutual funds dealing exclusively in commodities.

George Soros, one of the nation’s leading investors, testified in a Senate hearing this week that [commodity] index funds were contributing to the rapid rise in commodity prices and were possibly creating a bubble. If it were to burst, sending prices tumbling, the fallout could wreak havoc on banks, retiree funds and colleges across the nation.

“I find commodity index buying eerily reminiscent of a similar craze for portfolio insurance, which led to the stock market crash of 1987,” Soros said.

The worst part of the story is this: no-one has a way of understanding all the moving parts. Because the various exchanges do not share information, the situation is near impossible to grasp as a whole. It is in the national interest to have a better understanding of what’s going on.

CFTC Commissioner Bart Chilton acknowledged that the agency should have been quicker to adapt.

“The commission has realized that the ordinary regulatory environment that we’ve been operating in has transformed dramatically and we need to look at things in an entirely new way,” Chilton said. “We haven’t been doing all that we needed to do. We’ve been getting by, and I think it requires more than just getting by.”

Michael Greenberger, a professor at the University of Maryland and former CFTC commissioner, said there were loopholes the agency could close without much effort.

“There’s smoke here, and the CFTC hasn’t wanted to look if there’s a fire,” he said. “Now they say they want to look, but they need the data. . . . But these are dark markets. They don’t even know who’s doing the trading.”

The logical extension of Patton Oswalt’s “failure pile in a sadness bowl.” Thanks to the J-Walk blog for pointing out this bit from The Onion.

Starting last night around 7 p.m. Pacific, US cable operator Comcast had its main portal hijacked. Subscribers have not been able to send and receive mail or use their various portal services.

According to reports appearing on BroadbandReports.com and its forums, the front page of Comcast.net went down shortly before 11 p.m. EDT on Wednesday and was replaced by a note saying: “KRYOGENICS Defiant and EBK RoXed Comcast. sHouTz to VIRUS Warlock elul21 coll1er seven.”

Broadband Reports says it seems the hackers got into Comcast’s domain registrar account at web hosting provider Network Solutions, changed the authoritative DNS servers for Comcast.net and redirected portal visitors to IP addresses in Germany and other foreign locations.

Comcast says the “hijacking” was reversed by late Thursday morning but some users were still unable to access Comcast.net and their webmail. It is also believed that emails or any other private information was not compromised by the attack.

It’s 2:15 p.m. Pacific as I write and the portal is still offline.

In a situation that reminded me of Mike Judge’s movie Office Space, a California man has been indicted for opening thousands of online brokerage accounts to collect the two cent “test” payment that verifies bank connection.

Michael Largent, of Plumas Lake, California, allegedly exploited a loophole in a common procedure both companies follow when a customer links his brokerage account to a bank account for the first time. To verify that the account number and routing information is correct, the brokerages automatically send small “micro-deposits” of between two cents to one dollar to the account, and ask the customer to verify that they’ve received it.

Largent allegedly used an automated script to open 58,000 online brokerage accounts, linking each of them to a handful of online bank accounts, and accumulating thousands of dollars in micro-deposits.

The irony is that he used accounts with names from King of the Hill, Mike Judge’s cartoon television show.

Largent’s script allegedly used fake names, addresses and Social Security numbers for the brokerage accounts. Largent allegedly favored cartoon characters for the names, including Johnny Blaze, King of the Hill patriarch Hank Hill, and Rusty Shackelford. That last name is doubly-fake — it’s the alias commonly used by the paranoid exterminator Dale Gribble on King of the Hill.

And here’s a gratuitous quote from Office Space, just because I like the flick so much:

Joanna: How dare you judge me? I mean what are you? You think you’re some kind of, like, angel here? No, you’re just this penny-stealing… wanna-be criminal… man.
Peter Gibbons: Yeah, well, that may be. But at least I never slept with Lumbergh.

Tip o’ de hat to Cliff at Kottke.org for the pointer.

I took this video using my new Flip video camera. The little ripper was on sale at Best Buy for about $120 and records up to an hour. Now all I need is content.

My first public foray is a look into the mess that is my storage locker. I live in a condo so I’ve got bupkis in the extra space department; hence, the need for an additional payment in my monthly list of expenses. Sheesh. I gotta be a sucker; just look at what’s in there. None of it is worth the amount I pay in a year for the lockup. I’m going to get smart and have a garage sale next weekend. See you there?

One of America’s great storytelling, cowboy-song-singing, labor-defending spirits is gone. He has been described as “a true eclectic, archivist, historian, activist, philosopher, hobo, tramp….” From his family’s obituary:

Utah Phillips, a seminal figure in American folk music who performed extensively and tirelessly for audiences on two continents for 38 years, died Friday of congestive heart failure in Nevada City, California a small town in the Sierra Nevada mountains where he lived for the last 21 years with his wife, Joanna Robinson, a freelance editor.

Born Bruce Duncan Phillips on May 15, 1935 in Cleveland, Ohio, he was the son of labor organizers. Whether through this early influence or an early life that was not always tranquil or easy, by his twenties Phillips demonstrated a lifelong concern with the living conditions of working people. He was a proud member of the Industrial Workers of the World, popularly known as “the Wobblies,” an organizational artifact of early twentieth-century labor struggles that has seen renewed interest and growth in membership in the last decade, not in small part due to his efforts to popularize it.

You can read the entire obit at this official site. He had a weekly radio show called “Loafer’s Glory: The Hobo Jungle of the Mind.” Good bye, Utah. Happy trails.

MUTO a wall-painted animation by BLU from blu on Vimeo.
“An Ambiguous Animation Painted on Public Walls.” This was made in Buenos Aires. Very unusual. Thanks to David Sifry for pointing it out on Twitter.