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.

Although world supply and demand are thought to be roughly in balance, the bright young things working for the investment banks and hedge funds have bid up the cost of a barrel of crude oil through the stratosphere.

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

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

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

In fairness, we ought to be getting used to this by now. After all, we are only just starting to foot the bill for the financial elite's last jolly jape: the sub-prime mortgage crisis.

Here, they bundled up huge quantities of flaky American and other mortgages, declared them to be top-quality investments and flogged them to investors - including banks - 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 their home loans, banks stopped lending to one another because no institution could be sure which of the others could be brought down by these 'toxic securities'.

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

And the fallout means there are fewer mortgages available for would-be homeowners, and people with perfectly good credit ratings are having their plastic cards taken away.

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

The bursting of the dot.com bubble in March 2000 threatened to drag the West into recession, hence those other Masters of the Universe - the much admired central bankers led by America's Alan Greenspan - cut interest rates, flooding the system with the cheap funds that would make possible ... the next bubble.

Full article here.