Commodity boom, what will the US government do about index funds?

Discussion in 'Commodity Futures' started by Daal, Apr 23, 2008.

  1. Daal


    as this thing gets more and more out of hand the pressure should keep mounting, eventually some kind action by the authorities will be take to stop 'massive speculation', the CFTC will probably go along with it. Im really worried they might just shutdown the game on a lot of markets
  2. Well, by the looks of it, blame it on the mob or go a step further and say that a few Area 51 aliens escaped and broke into the PPT office and pushed the red button.
  3. We've got the PPT to keep the stock market from going down... maybe we need yet another "team" to keep food and energy from going up...

    Can you see taxpayer money shorting oil, gasoline, rice?
  4. Daal


    I used to think exactly like you, that this stuff was just for alex jones lunatics. the massive level of government intervention on the financial sector(by a 'free market' administration) changed my mind, the government(obama and a democratic congress) will act as the commodity boom gets out of hand Im pretty sure of that, its only a matter of what they will do, other governments around the world are already doing it, they cant wait because they per capita income and standard of living is lower so they are already on the riot stage but the US time will come
  5. Daal


    to think they will just watch as prices go to the moon is to think 'this time is different', governments have a history of getting involved, worldwide they are already doing it. I thought that the chicago school influence on paulson, bernanke and co would diminish the level of intervention, now they are just about to buy mortgages on the open maket. a democratic president(who will be seeking reelection) will be very biased towards the idea that there is 'massive speculation'
  6. is it your impression that the government has a long history of intervening in the prices of commodities?

    Outside of defending the dollar occasionally, or taking away the right of Americans to own gold, I sincerely doubt everything you are saying

    Speculation is about price discovery. And when somebody suffers, somebody else benefits.

    For years, farmers struggled with prices that kept them in debt or in poverty. Now the high grain prices are allowing them to profit.

    The best intervention by the government is NONE. I think that will be the course they will take
  7. Daal


    you forgot price controls in the 70's?reread market wizards, the book describes futures trading under price controls. plus look at the exports shutdowns happening everywhere, the price controls in china and india, the accusations of 'speculation' and the complete disregard for supply and demand. I do agree that the government ought not to get involved but history says they will
  8. Daal


    there you go

    Democratic Senators Unveil Consumer-First Energy Act Of 2008
    "Stop Market Price Speculation – The Administration’s failure to regulate the oil futures market has lead to exorbitant speculation. The Consumer-First Energy Act establishes two key limitations on speculation. First, the bill prevents traders of U.S. crude oil from routing transactions through off-shore markets to evade speculative limits and sets forth reporting requirements. The bill also requires the Commodities Futures Trading Commission to set a substantial increase in the margin requirement for all oil futures trades, contracts or transactions. Recently, one oil company executive indicated crude oil prices could be inflated due to speculation in the futures market."

    With obama in the white house this kind of thing could go forward. if jim rogers is right and this boom has a decade more to come, imagine what they will be doing when the price of everything is on the moon
  9. Unless the government has unlimited amounts of commodities to deliver they can't lower prices. Unless they drastically reduce the money supply, prices keep going up. Bernanke loves printing money, that will never happen and it would cause the economy to collapse.

    Unlike the stock market, which is cash settled and the government can print cash to pay for their futures settlement, the futures market for commodities are physical delivery contracts. They cannot lower prices unless they go in there and sell a ton of futures and deliver the commodities to the buyers. That's not going to happen because they don't have the commodities on hand.
  10. Theoretically, the PPT could interdict in a commodity market via massive short-sales, drive prices lower, cover its short-sales and spook the hell out of the "longs" before prices may rally again. Delivery has to be avoided. :eek:
    #10     May 9, 2008