“So you think the Hunts trying to corner the silver market and driving the price to $48/oz was a good free market thing?”
Yes, it worked fine. The highly leveraged Hunt Borthers were unable to meet their margin calls, and were forced to sell. The price of silver fell dramatically; on March 27th 1980 the price fell 50% in one day, from $21.62 to $10.80. The Hunt Brothers were forced to declare bankruptcy. Bache Group, which handled of the trades for the brothers, was financially ruined.
Too bad, so sad. Market worked.
Except the difference between silver and oil is that oil is MUCH more vital for our daily existence. Some of the speculators will get singed in the end. But in the meantime people are getting hammered economically by their actions. The economy grew just fine during the years after a few basic regulations were put in place to prevent another Hunt-style action. Those regulations have since been allowed to be circumvented. Which led to Amaranth in 2006 and the mess we see today in the oil markets.
Simply removing the investment banks from being classified as commerical entities in the commodities markets will go a long way towards getting those markets back to their intended purpose.
... because regulations were changed, requiring margin requirements to be raised, which is what you're objecting to in regards to investment banks.