Posted on 07/10/2008 8:28:25 AM PDT by tobyhill
Airlines are trying to divert Their frequent flyers' fury to a new villain: oil speculators.
On Wednesday, AirTran sent out an e-mail encouraging their passengers to urge Congress to crack down on commodities investors – labeled by opponents as “speculators.”
“Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now,” says the email, which went out to members of AirTran’s A+ Rewards Program. “Normal market forces are being dangerously amplified by poorly regulated market speculation.”
(Excerpt) Read more at cbsnews.com ...
The airlines don’t want people to complain about the major problem, which is congress.
They don’t want to risk regulation again.
I ask this because this point is very important to a coherent discussion.
An earlier thread today, some oil market analyst, perhaps working for OPEC said NYMEX is futures and futures trading is speculation. Nothing more, nothing less, futures trading is speculation, all of it. That is the some who use that definition. Buy an oil future contract, be speculator. Simple. EOT
Your commentator, if he believes the nonsense he uttered, logically must consider acquiring insurance to be speculation also. I'll leave you to decide how weirdly bastardised THAT definition is.
Oh, and it goes without saying that if you lost 75% of your investment in that MSFT stock, Ben Bernake would not bail you out. Yet another reason to return to sane margin limits for firm he may want to bail out in the future. If these Wall St. creeps (who are mostly Democrats, and got these loopholes thanks to Bob Rubin) want to take huge risks on commodities, let them use their own funds to do it, not the taxpayers.
It does simplify things. Everybody except those who buy direct with immediate delivery—spot market!
Just what are “sane” and “proper” margin limits?
It would appear you don’t understand the purpose of margins,
and no, they are not ‘down payments’.
The 'unpredictability' of the crude mkt is not. When you've got low excess-daily-production-capacity (about 2.5-2.6 MMbbl/day right now, as opposed to 5.8 MMbbl/day in July 2002) and have had for 6 years billions upon billions of new capital put into the energy mkts on the long side only, there's very little that's unpredictable about price. To wit, it's going hugely higher.
The excess-capacity situation rates to improve over the next year, and might improve a LOT if, as seems probable, the sabotage bombings of crude facilities in Iraq are sharply reduced. More so if we get OUR thumbs out of our bums as regards production.
The LOSO capital problem has a solution, too, but...
All it takes is one, count 'em ONE, ruling from CFTC, and the Attorney General enforcing **existing** ERISA provisions. Since the goobermint are notorious -- and rightly -- for failing to do anything that actually benefits the nation at large (as opposed to favoured groups), I don't think much if anything will be done in this area.
As a futures trader, I am well aware of what margins are.
You have a problem with specs?
I'll ''speculate'' on this, too -- that (esp. given your post) you don't have the dimmest clue what's going on in futures mkts. For one thing, any comparison between stocks and futures is by definition INvalid; they are two entirely different mkts, and quite reasonably so.
If you want a proper education, I'll give it to you -- and you won't much like it.
Oh, and two other things. Bernancke hasn't ever -- nor Greenbean -- bailed out any futures spec. Bear Stearns got overwhelmed in CDOs and SIVs, not futures.
Also, the ''Goldman Sachs'' loophole is a byproduct of the Gramm Act of 1999 and the Commodity Modernization Act of 2000. The Regress aren't going to do a damned thing about it in an election year, and especially not when GS, MS, Merrill and the boys have bought so many Regresscritters. In theory, btw, all it takes is one ruling, just one, from CFTC, that reclassifies investment-banks-acting-as-agents for clients from ''commercials (aka hedgers)'', as they are now classified, to ''reporting traders (aka 'large specs')''. Crude would drop $30/bbl in a week or two, and $50-60 over 6 months' time.
But CFTC gets its budget from the Regress, and that punk Lukken (temporary head of CFTC) only ever whines about lack of funding. Thus, CFTC aren't about to do anything, either.
Ping to post 32, if you haven’t seen it yet.
In that case why would you speak of “sane”, “proper” margins?
"...I'm a spec..."
--and montag813 is unemployed living off our taxes, but that's still ad hominum.
So what if montag813 thinks we need more government and less capitalism? Big deal, same with McCain! Our choice this November is between the likes of them and a bunch of clowns that are even worse, so let's all vote for socialists so we can keep out the islamofacists.
I’m still strongly considering voting Coolidge/Jackson.
Futures 'margin', which is of course a different beast entirely, as you've noted, is set -- every day -- by a well-defined procedure, and does take into account both mkt volatility and position risk...yet the anti-futures crowd would have us adopt their antiquated, fossilised margining procedure.
You've got a point. Republicans come up the likes of McCain while this forum bashes wall street, time for some serious changes here...
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