How the Masters of the Universe are murdering the middle class by gambling on black gold

By Dan Atkinson
Last updated at 11:21 AM on 01st June 2008

The Masters of the Universe, those big-name traders of the City and Wall Street, have a brand new toy to play with: oil.

Last month, waves of speculation pushed the price of 'black gold' to all-time highs.

Althoughworld supply and demand are thought to be roughly in balance, thebright young things working for the investment banks and hedge fundshave bid up the cost of a barrel of crude oil through the stratosphere.

Despite some easing last week, the price remains at record levels.

Wewill all have to pay, and not just at the filling station. Expensiveenergy means slower economic growth, fewer jobs and less tax revenue,hence less money to spend on health, education and public safety.

Social tranquillity and the quality of life could take a big hit. Thanks, guys.

Infairness, we ought to be getting used to this by now. After all, we areonly just starting to foot the bill for the financial elite's lastjolly jape: the sub-prime mortgage crisis.

Here, they bundled uphuge quantities of flaky American and other mortgages, declared them tobe top-quality investments and flogged them to investors - includingbanks - around the world.

So complicated were these packages of IOUs that nobody was sure which bank held how many.

Once- as was inevitable - low-income Americans started defaulting on theirhome loans, banks stopped lending to one another because no institutioncould be sure which of the others could be brought down by these 'toxicsecurities'.

Northern Rock in Britain and Bear Stearns in theUnited States were the biggest victims of the lending drought thatfollowed. We bailed out the former, US taxpayers rescued the latter.

Andthe fallout means there are fewer mortgages available for would-behomeowners, and people with perfectly good credit ratings are havingtheir plastic cards taken away.

Before all that, we had themassive speculative bubble in commercial and residential property inBritain, now deflating with consequences that can only be guessed at,and the crazy boom in dot.com shares in the late Nineties, regardlessof the fact that few of the companies involved had ever turned a profit.

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