Today's Wall Street Journal has a long article, Inside the Iranian Crackdown, which includes a lot of information about the Iranian Basij, members of which have appeared riding scooters and harassing Iranian demonstrators in countless youtubes from Teheran:

Iran's government says the Basij count some five million members. Independent analysts put the number closer to one million, out of an Iranian population of about 75 million.

Those numbers make the group the regime's largest and most wide-reaching network of security volunteers. Members, both men and women, slip easily between roles, from social worker to community spy.

The Basij don't wear uniforms. Men typically sport beards, and often wear loose-fitting shirts that fall untucked over their pants. Women members are usually covered in head-to-toe black chadors.

Rank-and-file members don't draw salaries, though there are perks to the job. They enjoy special consideration when competing for university admission or government jobs.

A Basij chapter operates out of every officially sanctioned institution, private or government owned. Ministries, universities, factories, schools, mosques and hospitals all house Basij units. Joining the Basij can be as easy as signing up. But members are carefully vetted. Indoctrination includes theology and ideology seminars, then military training.

My initial reaction was that it would be frightening to have such a force in this country. Then I ran across information on the American Protective League:

The American Protective League was a World War I-era private organization that along with federal police like the Bureau of Investigation worked in support of the anti German Empire movement and against anti-war citizens and organizations. Formed by A.M. Briggs, a wealthy Chicago businessman, at its height of power the APL had 250,000 members in 600 cities. Officially condoned by the Attorney General, the APL support to the Bureau of Investigation, the precursor to the FBI. A private organization with no legal authority, APL members acted as vigilantes, allegedly violating the civil liberties of American citizens. The APL has been accused of having illegally detained citizens associated with progressive, labor, and pacifist movements. In 1918, APL documents showed that 10% of its efforts (the largest of any category) were focused on disrupting the activities of the I.W.W. "Wobblies" radical union movement. The APL burgled, vandalized, and harassed I.W.W. members and their offices. These activities were illegal, yet supported by the Wilson administration and the American establishment. President Wilson, despite some misgivings about their methods, deferred to the judgement of Attorney General Thomas Gregory and chose not to take any action to curtail their activities. The League disbanded in February of 1919.

APL members didn't let their semi-official status stop them from policing the populace:

The APL checked up on people who failed to buy Liberty Bonds. It spotted violators of food and gasoline regulations, rounded up draft evaders in New York, disrupted Socialist meetings in Cleveland, broke strikes, threatened union men with immediate induction into the army. The attorney general of the United States reported to Congress, "It is safe to say never in history has this country been so thoroughly policed." (emphasis added) Nor, he might have added, the training of the young so well regulated.

Update:

Home Office of the American Protective League

The New Everyman (h/t to amike)

by Megan English

The actual practices of APL investigations varied depending on the rank and position members held within the League. As a whole the League's actual practices included investigations into enemy aliens, draft dodgers, food hoarding, disloyal utterances, unions and their leaders, strikes and "radicals." The APL's investigations into food buying and the "unpatriotic activity" of food hoarding by foreign citizens were a source in which to keep all divisions nationwide busy. Neighbors were encouraged to spy on neighbors; families were pushed to spy on other members all because of the shortage of certain foods. Flour, sugar, beans, potatoes, etc, were scarce; all food was rationed in order to feed soldiers and other allied countries. Many investigations and reports went directly to the U.S. Food Administration; information included, the name of the person under investigation, their address, description of their house, phone number, job, personality, report of the questioned " unpatriotic activity", the source, and anything else considered important. This is an example of such a report.

Historical purchasing power of US dollar thru 2004 (American Institute for Economic Research)

In response to my previous post, several commenters insisted that rapid movement in oil prices must be the result of speculation, or manipulation by speculators. I found the Taibbi piece on Goldman Sachs very damning, but while I am certain that the speculation has an effect (and that futures markets were rigged), I still attribute the bulk of the movement in oil prices to fundamental supply and demand.

Nate Hagens, an editor of the Energy Depletion clearinghouse The Oil Drum, also addressed the debate over speculation vs demand:

CFTC - Futures Position Limits on Energy?

The value of fiat currencies erodes over time, while remaining high quality energy increases in strategic value, even if not recognized in monetary terms. Historically, based of course on historic comparisons, commodities were the ugly stepchild in investment portfolios. As long as energy and resources were cheap, more long term gearing/profits were to be had from the vanilla 'derivatives': stocks and bonds (these are derivatives of our real capital: natural, built, social and human that underpins them), than from the commodities themselves. But as the world, in recent decades, was flooded not only with liquidity, but an order of magnitude (or more) increase in notional credit, relaxed oversight rules, relaxed lending standards, higher leverage, etc., those digits with the highest velocity have had to seek a home. Their doing so culminated in 2007-8 via a dramatic commodity market rally, (within which, oils kiss of $147 last July grabbed the most attention). What really happened in the ensuing 9 months was not a sharp drop in commodity demand, but a global margin call of epic proportions - all sorts of players were caught long and short (mostly long) had to pare down positions in almost all asset classes (US treasuries being notable exception). During the 5 years ended July 2008, the SP500 and crude oil had an R^2 of -.29, for the 7 months after: R^2 of .97! (Daily closes, graph here) The point of this is that oil was not in a speculative bubble, unless you amend that statement to: "oil was one of many instruments in a fiat liquidity bubble, but it was the most important commodity to the global economy so the media paid most attention to it". And to those who are adamant that speculators were responsible for oils rise last year: coal tripled in the same period and is not traded on the NYMEX....

Note: It seems that there is some sort of coal trading on the Nymex.

Speculators are generally ignored unless either of the two unassailable American entitlements: rising stocks and cheap oil, are not on trend, and a witch-hunt for bad guys ensues. As we are mired in a deepening recession, the roots of which lie in the generation long replacement of tangible things with paper and digits, the logical human reaction to oil moving back from $40 to $70 is to blame someone, in order that it retreat some and not act as economic headwind. (The same thinking mans logic used to request temporary withdrawals from the national emergency Strategic Petroleum Reserve to reduce oil from $70.) The blame it seems, will again fall on speculators, (note: technically the majority of participants in our economic system should now be defined as speculators -we are buying/spending natural resources on margin with a downpayment of belief). As we have been writing on these pages for years, oil supply has maxed out, so any stabilization in demand will naturally result in rising prices. Couple that with many investors concerned about the inflationary impacts of quantitative easing, and there is a demand for ETFs, futures and derivatives representing real-not-derived-from-thin-air) assets, or the digital entries that legally control real assets. Recent liquidity dislocations arising from the linkage between the natural gas ETF, UNG, and natural gas futures have also heightened concern about position limits, and today UNGs administrator announced that no new shares will be created. In the end the demand for paper natural gas is higher than the demand for real natural gas. An odd situation, but the blame shouldn't be on the hedge funds, but on who designed the rules they follow. (On a deeper level, the blame is on all of us, for sleepwalking into this situation).

Another editor, Gail Tverberg (or Gail the Actuary) posted this chart on the recent lack of correlation between long future positions and oil-future prices:

Which, as Ellen commented, might explain why the largest oil trader was caught gaming the market last week. The traders have all been caught being too long.

In Rolling Stone's The Great American Bubble Machine, Matt Taibbi accuses Goldman Sachs of inflating and exploiting a great many economic bubbles, including the commodity market for oil, which, he claimed, crippled the average consumer by driving up the price of fuels for driving and heating. I have no doubt that Goldman Sachs did their best to profit from commodities, but I wonder if Taibbi has fallen for a post hoc ergo propter hoc fallacy.

In line with Peak Oil theory, James Hamilton of Econbrowser believed that increasing demand vs peaking supply was at the core of the price increases. AFAIK, Hamilton has not yet responded to the Taibbi article, but about a year ago, in response to persistent debate about whether speculation could or would drive prices higher, he posted this article by Scott Irwin, who holds the Laurence J. Norton Chair of Agricultural Marketing at the University of Illinois.

Index Funds and Commodity Prices... Here We Go Again by Scott Irwin

[Start with] the non-controversial observation that a very large pool of speculative money has been invested in different types of commodity derivatives over the last several years. The controversial part is [the conclusion] that money flows of this size must have resulted in significant upward pressure on commodity prices, which in turn drove up energy and food prices to consumers throughout the world. This argument is conceptually flawed and reflects a fundamental and basic misunderstanding of how commodity futures and related derivatives markets actually work.
...
The first and most fundamental error ... is to equate money inflows into futures and derivatives markets with demand, at least as economists define the term. Investment dollars flowing into either the long or short side of futures or derivative markets is not the same thing as demand for physical commodities. My esteemed predecessor at the University of Illinois, Tom Hieronymus , put it this way, "for every long there is a short, for everyone who thinks the price is going up there is someone who thinks it is going down, and for everyone who trades with the flow of the market, there is someone trading against it." These are zero-sum markets where all money flows must by definition net to zero. It makes as much logical sense to call the long positions of index funds new "demand" as it does to call the positions of the short side of the same contracts new "supply."
...
[The] second error is to argue that index fund investors artificially raise both futures and cash commodity prices when they only participate in futures and related derivatives markets. In the very short-run, from minutes to a few days at most, commodity prices typically are discovered in futures markets and price changes are passed from futures to cash markets. This is sensible because trading can be conducted more quickly and cheaply in futures compared to cash markets. However, equilibrium prices are ultimately determined in cash markets where buying and selling of physical commodities must reflect fundamental supply and demand forces. This is precisely why all commodity futures contracts have some type of delivery or cash settlement system to tie futures and cash market prices together.
...
A third error ... is an unrealistic understanding of the trading activities of hedgers and speculators. In the standard story, hedgers are benign risk-avoiders and speculators are potentially harmful risk-seekers. This ignores nearly a century of research by Holbrook Working, Roger Gray, Tom Hieronymus, Anne Peck, and others, showing that the behavior of hedgers and speculators is actually better described as a continuum between pure risk avoidance and pure speculation. Nearly all commercial firms labeled as "hedgers" speculate on price direction and/or relative price movements, some frequently, others not as frequently. In the parlance of modern financial economics, this is described as hedgers "taking a view on the market." Just last week, when commenting on new survey results of swap dealers and index traders , the CFTC stated that, "The current data received by the CFTC classifies positions by entity (commercial versus noncommercial) and not by trading activity (speculation versus hedging). These trader classifications have grown less precise over time, as both groups may be engaging in hedging and speculative activity."
...
What all this means is that the entry of index funds into commodity futures markets did not disturb a textbook equilibrium of pure risk-avoiding hedgers and pure risk-seeking speculators, but instead the funds entered a dynamic and ever changing "game" between commercial firms and speculators with various motivations and strategies. Since commercial firms have the considerable advantage of information gleaned from their far-flung cash market operations, they have traditionally dominated commodity futures markets and speculators have tended to be at a disadvantage. (If you are skeptical, I recommend reading the classic study by Michael Hartzmark about who wins and loses in futures markets.) In this light, entry of large index fund speculators has the potential to improve competition in commodity futures and derivatives markets, particularly as index funds become smarter about moving in and out of their positions.

In plain language, a commenter notes:

Folks, if you buy a futures contract at twice the price of the commodity and you can never sell it to someone else, you will receive delivery on your doorstep of what ever the commodity is and you will pay twice the price for the commodity. Not a smart move.

So as I read this, peak oilers would not claim that the futures market was not manipulated, but they would argue that the actual prices were rising more due to demand than to speculation in the futures market.

For the last week, I've been finding free copies of the Wall Street Journal outside my door, and it is an interesting read, if you ignore the opinion section. Various articles note the price of oil advancing to $73 before retreating, but there is no recap of the, "unauthorized buying" scandal that accompanied the advance. If not for reading Whipple's Energy Briefs, I would never have known that the largest oil trader gamed the market.

Yesterday the WSJ repeated much of what was in my Greater Transparency post. Today the lede is that OPEC will be spending less money on searching for new oil. Other articles mention OPEC cutting prices and the retreat to $60/bbl. The rally to $73 is characterized as a chimera brought about by over-enthusiasm for green shoots and economic recovery. Lack of increase in demand and the glut of distillates are again blamed for lower prices, but there are hints that the retreat might also be tactical in the face of greater regulation.

OPEC Forecasts Cut in Oil Investments as Demand Falls

The downward revision is likely to raise new concerns among oil consumers -- first and foremost the International Energy Agency, which has warned that reining in spending on oil-development projects could lead to a supply crunch by 2013. The IEA, which coordinates policies among energy-consuming nations, said in a May report that $170 billion of investment had been delayed or canceled in OPEC and non-OPEC nations.
...
The new assessment, however, drives them to opposite conclusions. IEA Executive Director Nobuo Tanaka reiterated in June that "huge investment is needed" to meet future Asian demand. William Ramsay, director of energy geopolitics at the French Institute of International Relations, who was deputy executive of the IEA until last year, said OPEC is "overreacting but understandably" because of the economic climate.

The real story, in my opinion, is that OPEC sees no growth in the OECD countries, the Industrialized or Wealthy nations, as far out as 2030. That means they don't see America and Europe climbing out of recession, contraction, depression, or whatever you choose to call it when, every month, thousands more lose jobs that aren't being replaced elsewhere in the economy.

After the fresh bite of the recession and of U.S. and European energy-efficiency laws, OPEC says growth in oil demand in developed countries is now over. In industrialized nations, oil demand is expected to fall continuously through 2030, after reaching a peak in 2005, OPEC said.

Emerging markets, particularly China, however, will make up for the decline.

Recovery will gather momentum only gradually, with the economy starting to emerge from the recession by year-end, but normal growth won't return until 2012, OPEC said. The statement is at odds with a view held by some in the market that stimulus plans will soon make the economic meltdown history. "The possibility of a lengthier global recession cannot be ruled out," OPEC warned.

Update: The Guardian is maintaining a spreadsheet to try to track the fates of Iranian election protestors: Iran election: faces of the dead and detained.

Update: Although stipulating that it has not been independently verified, the Guardian presents similar testimony from a doctor to that in Le Figaro below:

Many of my friends and my cousin even (who was wounded) saw snipers up on the rooftops during the protests. They said these snipers were targeting people through their rifle lenses. The injuries we witnessed in hospital testify to this. One 32-year-old patient had gunshot impact entering the sub-umbilical region with an exit wound on the thigh, which proves the bullet came from above.

Iran : des médecins dénoncent la terreur dans les hôpitaux

I stumbled through the French to see if I could, but there's a translation here.

According to an official report, at least 17 people have been killed since the beginning of the conflict. However, a list quietly made by the nursing staff from different hospitals showed that to date more than 92 people died in Tehran and its suburbs. A woman eight months pregnant is one of the victims. Shot and killed, near the presidential palace, she was then transported to the hospital. Other disturbing stories are beginning to emerge in broad daylight, as one of the six corpses of young men found last week in Shahriar, on the outskirts of the capital. "They all died from wounds in the neck. Their skulls had been smashed and their brains had been opened, presumably to retrieve the bullet to erase the trace of the crime," says the second doctor informed of this terrible massacre by a trusted colleague.

To cover this kind of attack, the doctors have been asked to certify that the persons whose bodies have been transferred to their hospitals died during surgery. "In several hospitals - including Rasoul Akram and Imam Khomeini - we have organized a sit-in protest. But state television said it was a strike for better wages. That's terribly shocking," says the second doctor. One of his friends, doctor on call for emergencies Erfan Hospital, has been "punished" for having stood up to the militia. "After missing for thirty-six hours, he was found half-conscious and disfigured on the sidewalk of the hospital," he says.

Pathology indicates that much of the deadly fire came from rooftops. Now they're hunting the wounded. My short advice to those considering political revolt is, "You'd better win."

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