Gas prices might plunge to $50.00 a barrel, yet MasterCard and Visa’s nearly $50 billion hidden tax on merchants and consumers is nowhere near cracking, without intervention.
If even the oil industry might face swift downward pricing pressures, why not interchange fees too? And if it does, what happens to MasterCard and Visa’s recent plan to limit certain fees at the pump. Will that experiment lead to an all out reevaluation and a lowering of all interchange fees to become cost-based, rather than unbridled-greed-based?
Some history: In the 1600’s, speculators in the Netherlands bid up the price of tulip bulbs to a level that makes today’s housing market seizure pint-sized in comparison. Just before the crash, the enormous prices demanded for a single flower was stratospheric. It was the classic market crest before the crash.
The 1980s saw similar speculation in the silver commodities marketplace. The Hunt brothers tried to make a quick profit by cornering the silver market. Then it was the housing market bust in the past few years. People were buying homes worth a fraction of its value with no money down.
Now, it seems more likely in my opinion, that the oil market will crash too. The following letter (see below) from the top executives at the major airlines are describing something very worrisome. Speculators are buying up oil contracts at record rates. This might lead to oil prices plunging, and soon. Imaging $50 oil sooner than $200 a barrel oil.
So, what does this have to do with Visa and MasterCard? Everything.
Unlike, tulip bulbs, oil, silver, the housing market and other sectors that experience pricing cycles and crashes, the credit card associations are not influenced by the marketplace. There is no supply and demand; they set the fees illegally and in violation of the Sherman Antitrust Act. Visa, MasterCard and its member banks operate an anti-business monopoly that are void of price swings because they control the market with its vast 80% market share. Visa and MasterCard publicly recognized that both trade associations might become “insolvent” if our litigation is successful – worth about as much as a Dutch tulip bulb in today’s marketplace.
AN OPEN LETTER FROM 12 AIRLINE EXECUTIVES (July 9)
REPRINT: “An Open Letter To All Airline Customers”
Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.
The nation needs to pull together to reform the oil markets and solve this growing problem.
We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.