Letting the market do its job

I was surprised recently to hear my favorite Republican stalwart declare that someone needed to stop all those speculators who were driving up the price of oil.

Wait, I said. What about the free market economy? What about "laissez-faire?"

While he admitted the need for government to stay out of business as much as possible, he observed that there was obviously something wrong with $150-a-barrel oil, because the stuff is not intrinsically worth that much more than it was before.

And he's right. Like the housing bubble, the dot-com bubble and, indeed, the 17th-century tulip bubble, the oil bubble was not inflated by true market forces. It was inflated by greed and wishful thinking.

Yesterday, Lehman Brothers filed for chapter 11 bankruptcy protection, the largest bankruptcy filing on record. Lehman is an investment bank, and it was among the big institutional investors behind the run-up in commodities prices during the last 12 months. Another of those investors, Merrill Lynch, was bought by Bank of America in a $50 billion deal.

Crude oil futures for October, meanwhile, have dropped to less than $93 a barrel.

Connection? Oh, yeah. That, my friends, is the free market in action.