The Sultan of Dubai has dreams of making his country the financial capital of the world. Why does our Congress have to help him? |
Posted on 06/23/2008 9:19:28 AM PDT by gleeaikin
WASHINGTON -- Speculative traders' interest in crude oil has grown to the point that they now account for roughly 70% of all trading in West Texas Intermediate crude on the New York Mercantile Exchange, compared with 37% in 2000, according to an investigation by a congressional subcommittee that forms part of an escalating political assault on Wall Street's role in the run-up in oil prices.
The subcommittee's findings, based on data obtained from federal commodity-futures regulators, are the latest sign that Washington is gearing up to try to limit the role of hedge funds, investment banks and other speculative traders in the oil markets. The issue flared into the presidential contest Sunday as the campaigns of Illinois Democrat Barack Obama and Arizona Republican John McCain sparred publicly over which candidate would be more aggressive in closing legal loopholes that some say have contributed to excessive speculation
(Excerpt) Read more at online.wsj.com ...
Big money does not like to be controlled. None of us wants the government to control our businesses.........but, when you have a product that 300 million people rely on for transportation, clothes, food, etc.........you can’t allow a very small group of money people to take control of it strictly for money purposes without regard to the general public. I hate controls but I see no choice in this matter.
Thought this might interest you as some have responded with good comments on other posts. For example:http://www.freerepublic.com/focus/f-news/2020588/posts
The Sultan of Dubai has dreams of making his country the financial capital of the world. Why does our Congress have to help him? |
Congress will probably make the situation much worse. Congress cannot control foreign commodity exchanges so any major changes in domestic commodity exchanges will just lead to trading on other exchanges. Attempts to limit speculation may limit the ability of commodity producers and users to reduce uncertainty in managing the commodity.
Congress should forget scapegoats (oil companies, OPEC, speculators, conservatives) and non solutions (lawsuits against OPEC, corn-based ethanol, over regulation of commodity exchanges, ...). The only meaningful reform is to increase supply by reducing restrictions on drilling, enabling construction and expansion of refineries, and reducing unnecessary gasoline blends and environmental restrictions (draconian reductions in sulfur content in diesel). Supply reform is for the children!
The speculators will continue to bet on the price of oil going up as long as there is a remote chance of the left winning the White House, congress and the senate.
And they will be correct. Nothing good for America if the left wins.
Any who believe sitting home is a principled statement ought to please consider the consequences.
I do believe there is market manipulation contributing to the higher prices, but every time I read of our government getting involved, I can only see the problem getting worst.
Congress cannot control foreign commodity exchanges so any major changes in domestic commodity exchanges will just lead to trading on other exchanges.
Very good analysis! The largest commodities traders are in the UK, the I.C.E. In 2006, they had $60B+ in paper. Today they have more than $270B. Threaten the traders in the US, they’ll just move. (See SarOx, more IPOs opening in foreign markets)
The only immediate answer (a least a first step) is to ‘flood’ the market with product. Maybe it’ll cause a ‘tipping point’, cause they won’t be able to buy it all. Will they?
The typical RAT-controlled Congress’ solution is like peeing your pants in a dark suit...it gives them a warm feeling, but nobody notices!
So, the answer from big government on how to resolve this issue is to introduce MORE big government as a means to control the problem the the big government types created in the first place.
RIIIIIIIIIII - GGGGGGGHHHHHHTTTTTTTTTT!!
UK?
Intercontinental Exchange (NYSE: ICE) is an American financial company that operates Internet-based marketplaces which trade futures and over-the-counter (OTC) energy and commodity contracts as well as derivative financial products. While the company's original focus was energy products (crude and refined oil, natural gas, power, and emissions), recent acquisitions have expanded its activity into the "soft" commodities (e.g. sugar, cotton and coffee), foreign exchange and equity index futures.
Currently ICE is organized into three business lines:
ICE Markets - futures, options, and OTC markets. Energy futures are traded via ICE Futures Europe; soft commodity futures/options are handled by ICE Futures U.S. ICE Services - electronic trade confirmations and education.
ICE Data - electronic delivery of market data, including real-time trades, historical prices and daily indices. Contracts sold through ICE Futures U.S. are processed through a subsidiary, ICE Clear U.S. Energy futures and OTC contracts are currently cleared externally, through LCH.Clearnet, Ltd., but ICE has announced plans to transition these operations to a new subsidiary, ICE Clear Europe, by mid-2008.
Headquartered in Atlanta, ICE also has offices in Calgary, Chicago, Houston, London, New York and Singapore, with regional telecommunications hubs in Chicago, New York, London and Singapore.
Upon what evidence do you base that belief?
ICE® conducts its energy futures markets through ICE Futures Europe, its U.K. regulated London-based subsidiary, which offers the world’s leading oil benchmarks and trades nearly half of the world’s global crude futures in its markets.
“control...will just lead to trading on other exchanges.”
So there are a lot of speculators in the UK. And you don’t think that the recent surge of gallon prices to almost $11 in Scotland won’t cause pressure on Parliament to do something about non end-use mega-speculators? It may take a little time, but whereever the mega-speculators move, this is going to catch up with them. Too many people and too many countries are being hurt by this.
I happen to think that much of the speculation involves Iran.
I think a possible attack on Iran by the US and/or Israel and the retaliation of closing down the Straits of Hormuz is a big part of the spec price.
Just my theory.
Thank you for the detailed information.
I would be interested in your evaluation of my gut reaction at Comment 18.
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I don't understand what you think "imposing controls" is going to do, other than drive the trading out of the U.S. and into countries where rules and regulations imposed by the United States Congress are so much noise.