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Market Transparency

A

Anonymous

Guest
The Senate is holding hearings on oil speculation..... Interesting how they are tying it to being similar to the nontransparency/enforcement in Agriculture trading- the beef industry- and the parts of the farm bill that failed....

Speculation boosts oil prices
Recent investor interest in commodities is an issue of intense debate. Though some analysts say market fundamentals are playing a large role in the doubling of oil prices in a one-year span - driven by strong global demand and a shrinking supply - others believe that commodities investors have boosted the price of crude with speculative trading, treating oil as a hedge against inflation due to the weakened dollar.

"We have what I think is a speculative bubble, and the laws of bubbles is that all bubbles burst," said Sen. Byron Dorgan, D-N.D. "The problem is, this bubble is causing a dramatic amount of damage to our economy and to individuals."

Nearly all of the witnesses agreed that speculation has artificially boosted the price of oil.

"Excessive speculation on energy trading facilities is the fuel that is driving this runaway train in crude oil prices today," said Gerry Ramm, president of Inland Oil Company.

Others tried to quantify the scope that speculation has had on crude costs.

"We're paying, some believe, as high as a 50% premium to the pockets of speculators that are operating in markets that are completely unpoliced," said Michael Greenburger, a University of Maryland professor and former CFTC official. "At least 70% of the US crude oil market is driven by speculators and not people with commercial interests."

Mark Cooper, director of research at consumer rights organization Consumer Federation of America, said $40 of oil's current price is "baloney" and can be chalked up to speculation, though Soros called that an exaggeration.

Soros said the increasing cost of discovering new oil reserves, diminished supply, foreign subsidies on petroleum product prices, and speculation have all contributed to higher prices - a "bubble" that may not burst until prices become so high that they drag the economy into a recession.

"Only when a recession is well and truly in place is a decline in consumption likely to outweigh the other factors."


Solution: Close the Enron loophole

Some suggested closing the "Enron loophole" as a possible solution to the speculation problem. The loophole, which was codified in the Commodity Futures Modernization Act of 2000, allows oil futures to be traded electronically in unregulated markets outside of the jurisdiction of the Commodities Futures Trading Commission.

"Americans may be surprised to learn that the oil futures markets were substantially deregulated by the CFTC staff decisions that were made behind closed doors," said Sen. Maria Cantwell, D-Wash. "Now this London and Dubai loophole is keeping important U.S. energy trading in the dark and without proper light ... it can give manipulators free rein in energy markets."

As part of the recently-passed Farm Bill, Congress attempted to close that loophole, but Greenburger said language did not go far enough. He said the Farm Bill placed the burden on the public to prove a trade needs regulation rather than placing the onus on the trader to prove it does not need regulation. Greenburger said Congress should return the language of the original bill "this afternoon," saying that overnight it would bring the price of crude oil by 25%.

Greenburger also suggested that Congress impose increased margins for oil traders and regulate hedge fund owners' public speculation on oil prices.

"I find it highly ironic that when you control the price of oil, you can speculate it will go up to $150," he said.

Goldman Sachs and Morgan Stanley hedge funds own large amounts of oil futures, and have both recently said the price oil could go up to $150 or even $200 this year.

CFTC investigation
Last Thursday, the CFTC announced it had launched a wide-ranging probe into oil price manipulation six months ago, saying it would gather more information about the effect investors are having on the market.

The commission's public acknowledgment of a normally secret probe has sparked talk that it has evidence oil companies are withholding oil from the market in an attempt to manipulate prices.

Regarding speculators, CFTC has previously said that it had not found any evidence that traders were artificially inflating prices.

On the day the CFTC announced its investigation, crude oil futures dropped $4.41 - the third-biggest one-day slide since 1991 - and prices have hovered around that $127-a-barrel level since.

But some lawmakers were critical of CFTC's investigation.

"If we want our exchanges to be world leaders, they need to have transparency, and speed and integrity," said Sen. John Sununu, R-N.H.

Cantwell said the CFTC investigation will not go far enough and doesn't have any enforcement mechanism. As a result, she called it a "ruse to deflect criticisms" and an "abdication of oversight responsibility."

"It is clear to me that the CFTC is not doing everything that it can to protect consumers from oil price manipulation," said Cantwell. "CFTC's response is a toothless tiger."

Full Article:
http://money.cnn.com/2008/06/03/news/economy/energy_manipulation_hearing/index.htm?postversion=2008060311
 

TSR

Well-known member
Oldtimer said:
The Senate is holding hearings on oil speculation..... Interesting how they are tying it to being similar to the nontransparency/enforcement in Agriculture trading- the beef industry- and the parts of the farm bill that failed....

Speculation boosts oil prices
Recent investor interest in commodities is an issue of intense debate. Though some analysts say market fundamentals are playing a large role in the doubling of oil prices in a one-year span - driven by strong global demand and a shrinking supply - others believe that commodities investors have boosted the price of crude with speculative trading, treating oil as a hedge against inflation due to the weakened dollar.

"We have what I think is a speculative bubble, and the laws of bubbles is that all bubbles burst," said Sen. Byron Dorgan, D-N.D. "The problem is, this bubble is causing a dramatic amount of damage to our economy and to individuals."

Nearly all of the witnesses agreed that speculation has artificially boosted the price of oil.

"Excessive speculation on energy trading facilities is the fuel that is driving this runaway train in crude oil prices today," said Gerry Ramm, president of Inland Oil Company.

Others tried to quantify the scope that speculation has had on crude costs.

"We're paying, some believe, as high as a 50% premium to the pockets of speculators that are operating in markets that are completely unpoliced," said Michael Greenburger, a University of Maryland professor and former CFTC official. "At least 70% of the US crude oil market is driven by speculators and not people with commercial interests."

Mark Cooper, director of research at consumer rights organization Consumer Federation of America, said $40 of oil's current price is "baloney" and can be chalked up to speculation, though Soros called that an exaggeration.

Soros said the increasing cost of discovering new oil reserves, diminished supply, foreign subsidies on petroleum product prices, and speculation have all contributed to higher prices - a "bubble" that may not burst until prices become so high that they drag the economy into a recession.

"Only when a recession is well and truly in place is a decline in consumption likely to outweigh the other factors."


Solution: Close the Enron loophole

Some suggested closing the "Enron loophole" as a possible solution to the speculation problem. The loophole, which was codified in the Commodity Futures Modernization Act of 2000, allows oil futures to be traded electronically in unregulated markets outside of the jurisdiction of the Commodities Futures Trading Commission.

"Americans may be surprised to learn that the oil futures markets were substantially deregulated by the CFTC staff decisions that were made behind closed doors," said Sen. Maria Cantwell, D-Wash. "Now this London and Dubai loophole is keeping important U.S. energy trading in the dark and without proper light ... it can give manipulators free rein in energy markets."

As part of the recently-passed Farm Bill, Congress attempted to close that loophole, but Greenburger said language did not go far enough. He said the Farm Bill placed the burden on the public to prove a trade needs regulation rather than placing the onus on the trader to prove it does not need regulation. Greenburger said Congress should return the language of the original bill "this afternoon," saying that overnight it would bring the price of crude oil by 25%.

Greenburger also suggested that Congress impose increased margins for oil traders and regulate hedge fund owners' public speculation on oil prices.

"I find it highly ironic that when you control the price of oil, you can speculate it will go up to $150," he said.

Goldman Sachs and Morgan Stanley hedge funds own large amounts of oil futures, and have both recently said the price oil could go up to $150 or even $200 this year.

CFTC investigation
Last Thursday, the CFTC announced it had launched a wide-ranging probe into oil price manipulation six months ago, saying it would gather more information about the effect investors are having on the market.

The commission's public acknowledgment of a normally secret probe has sparked talk that it has evidence oil companies are withholding oil from the market in an attempt to manipulate prices.

Regarding speculators, CFTC has previously said that it had not found any evidence that traders were artificially inflating prices.

On the day the CFTC announced its investigation, crude oil futures dropped $4.41 - the third-biggest one-day slide since 1991 - and prices have hovered around that $127-a-barrel level since.

But some lawmakers were critical of CFTC's investigation.

"If we want our exchanges to be world leaders, they need to have transparency, and speed and integrity," said Sen. John Sununu, R-N.H.

Cantwell said the CFTC investigation will not go far enough and doesn't have any enforcement mechanism. As a result, she called it a "ruse to deflect criticisms" and an "abdication of oversight responsibility."

"It is clear to me that the CFTC is not doing everything that it can to protect consumers from oil price manipulation," said Cantwell. "CFTC's response is a toothless tiger."

Full Article:
http://money.cnn.com/2008/06/03/news/economy/energy_manipulation_hearing/index.htm?postversion=2008060311

The problem is how many of our legislators are sold out to corporate interests. We just need a house cleaning in Washington.
 
A

Anonymous

Guest
Yep- and since essentially Congress stopped oversight and regulation of the oil commodities market (which before was regulated for 78 years ) with a midnight addition to a budget bill of the Enron loophole law in 2000 and GW told his CFTC to take an 8 year picnic- the OPEC cartel could not do any business in or operate in the US like they are now- without transparency and without it being known and regulated...(they deal in West Texas Crude)....

The folks that are raping us at the gas pumps and with the heating oil speculation are oil countries like Dubai and UAE that are tied in with our own US lending, banking, and hedge companies like Morgan Stanley and Goldman Sachs... Companies that under regulation were not even allowed to invest in speculative investment- which was part of the cause of the mortgage bubble breaking.....

According to testimony from the fellow (Gerry Ramm) that represents the small oil companies and folks that deliver to you- Morgan Stanley now controls 70% of the heating oil needed in the state of Maine- and essentially bankrupting the small companies as well as creating fuel oil prices so high that folks can't afford to heat their houses...
Its GW's elitist buddies that are controlling much of the price-screwing us at the fuel pumps- and profiteering 100 fold over.... :mad:

Testimony on the current price of oil came out that 33% (approx. $40) of the cost of a barrel of oil is actual average cost of production and research-- 33% (approx. $40 is the OPEC rakeoff) and 33% (approx. $40 is the oil speculators profiteering)...It was pretty much agreed that the price of gas should be around the $2.25 a gallon mark- and could be brought down closer to that if CFTC just would conduct regulation of the oil commodity markets like they did previously for the 78 years before 2000.....

Something that should interest cattlemen and grain producers is the testimony coming from Sen Dorgan- that not only did GW tell the CFTC to take an 8 year paid picnic and do nothing when he came in office- but he has cut their budget and size by 8% while the trading volume in commodities that should have oversight has increased by 8000%......

If you get a chance to watch these ongoing hearings on CSPAN- I urge you to......
 

TSR

Well-known member
Oldtimer said:
Yep- and since essentially Congress stopped oversight and regulation of the oil commodities market (which before was regulated for 78 years ) with a midnight addition to a budget bill of the Enron loophole law in 2000 and GW told his CFTC to take an 8 year picnic- the OPEC cartel could not do any business in or operate in the US like they are now- without transparency and without it being known and regulated...(they deal in West Texas Crude)....

The folks that are raping us at the gas pumps and with the heating oil speculation are oil countries like Dubai and UAE that are tied in with our own US lending, banking, and hedge companies like Morgan Stanley and Goldman Sachs... Companies that under regulation were not even allowed to invest in speculative investment- which was part of the cause of the mortgage bubble breaking.....

According to testimony from the fellow (Gerry Ramm) that represents the small oil companies and folks that deliver to you- Morgan Stanley now controls 70% of the heating oil needed in the state of Maine- and essentially bankrupting the small companies as well as creating fuel oil prices so high that folks can't afford to heat their houses...
Its GW's elitist buddies that are controlling much of the price-screwing us at the fuel pumps- and profiteering 100 fold over.... :mad:

Testimony on the current price of oil came out that 33% (approx. $40) of the cost of a barrel of oil is actual average cost of production and research-- 33% (approx. $40 is the OPEC rakeoff) and 33% (approx. $40 is the oil speculators profiteering)...It was pretty much agreed that the price of gas should be around the $2.25 a gallon mark- and could be brought down closer to that if CFTC just would conduct regulation of the oil commodity markets like they did previously for the 78 years before 2000.....

Something that should interest cattlemen and grain producers is the testimony coming from Sen Dorgan- that not only did GW tell the CFTC to take an 8 year paid picnic and do nothing when he came in office- but he has cut their budget and size by 8% while the trading volume in commodities that should have oversight has increased by 8000%......

If you get a chance to watch these ongoing hearings on CSPAN- I urge you to......

And some still believe and want us to believe it entirely from competition from India and China. You know it doesn't take a rocket scientist to see how the prices have fluctuated in recent yrs/months to know there is some dealings going on. Imagine how much money is made when gas just rises a couple of cents a gallon.
 

Texan

Well-known member
Oldtimer said:
...GW told his CFTC to take an 8 year picnic...


Oldtimer said:
...not only did GW tell the CFTC to take an 8 year paid picnic and do nothing when he came in office- but he has cut their budget and size by 8% while the trading volume in commodities that should have oversight has increased by 8000%......
How about some real FACTS, Oldtimer?

This is testimony of Walter L. Lukken, Acting Chairman of the Commodity Futures Trading Commission, before the Senate on May 7, 2008:

"Since the collapse of Enron, CFTC has brought 39
cases involving energy markets and charged 64 entities or persons with manipulation,
attempted manipulation, and false price reporting
. The collective civil monetary
penalties levied in these energy market enforcement actions exceed $444 million. "


I'm sure it could be more, but that's not quite the same thing as doing nothing as you allege, is it?

And the 8000% increase in trading you talk about...

Oldtimer said:
...the trading volume in commodities that should have oversight has increased by 8000%...

...has happened over the last THIRTY years - not just during "GW's" term:

"For instance, total contract volume has increased more than 8,000 percent in thirty years
compared to CFTC staffing and overhead expenses, which have decreased 12 percent
and 5 percent respectively."


President Bush has proposed a budget INCREASE for the CFTC for fiscal year 2009. An INCREASE of 10 staff members and $18.7 million dollars:


"The FY09 President’s Budget request, as seen in Figure 5, is for an appropriation of
$130 million and 475 full time staff, an increase of approximately $18.7 million and 10
staff
over the FY08 appropriation
.
Key changes in the FY09 Budget are:
• $3.2 million to provide for increased compensation and benefit costs for
current employees;
• $1.9 million to provide for salary and expenses of 10 additional full-time
employees.
This increase – although modest – will allow us to build on
current key hiring efforts.
• $13.6 million to provide for increased operating costs for technology
modernization, office space, and all other services."


http://www.cftc.gov/stellent/groups/public/@newsroom/documents/speechandtestimony/opalukken-39.pdf

The President is proposing to INCREASE their budget, Oldtimer. The staffing levels will be back within 20 staff of what it was 30 years ago when it began the decline - under President Carter.
 
A

Anonymous

Guest
Texan- What do you expect the Acting Director to do- Make it sound like he's getting paid for doing nothing :???:

A $120 million agency with 465 people has only brought 39 cases in the past 5-6 years :???: Remember- these are the same type of investigators that GAO said were told to shuffle papers by their Director involving grain and cattle trading violations :???: ....

Dorgan testified that while they have 8,000 new commodoties to oversee- the agency has dropped 8% overall in budget...He did mention the 12% loss in staffing....
From all the hearings on other agencies -USDA, FDA, CPSC, etc..- my question would be- how much did Congress previously offer to increase the budget and Agency size that Bush cut out :???:

All the testimony coming out is that CFTC could do major things about these current gas prices-(lower them tomorrow by 25% with just Administrative action)- but refuses to do it....And with the proper legislation could bring the price down by close to 50%- and get gas back to $2.35 a gallon....

And yes I know this started back in the days before Bush- and Clinton was a big corporate backer (Bilderberger).....But now its going to take some statesmen to step forward- and put America and the American people before the lobbyists and make some changes....After hearing the oil companies, OPEC, and now the regulators all say that much of the cost of oil is because of massive unregulated speculation- that could be easily brought to an end- we need bipartisan action to do something....

But we know that won't come from GW- whos' heart is with the elitist rich and corporate interests- not the publics....

But you as a loyal Bushie and (R) idolist would rather back your cultist leader to driving this country into bankruptcy- while a few elitists around the world make Billions $ off illegal/immoral speculation- and the average Joe on the street suffers trying to pay for what soon may be $5 or $6 gas if nothing is done....

Texan- do you really feel it is morally correct and ethical for a company like Morgan Stanley (that prior to 2000 couldn't even operate in these type futures with peoples invested money) should be allowed to go out and tie up 70% of the heating oil to the northeast- and hold it up for ransom to people to be able to heat their homes- and run all the small oil delivery companies out of business :???:
Knowing that even if the bubble bursts and they go broke- GW and Congress will bail them out like they did Bear Stearns with bad invested US tax dollars :???:

If you do- then I guess Texas morals and business ethics are a lot different than Montana morals and business ethics :(

Now I can see why the article I read last night was asking " Where have all the Republicans gone"....
 
A

Anonymous

Guest
A copy of the e-mail I received back from Senator Tester in return to the e-mail I sent him yesterday....Apparently the section I included about the current "Throw the Bums Out" attitude I am hearing towards all D.C. incumbent politicians brought my quick response :wink:


Dear Richard:

Thank you for taking the time to contact me with your concerns about the effects of speculation on the oil markets.

Current oil prices defy the fundamentals of global supply and demand. Big oil is reaping record profits and speculation in financial energy markets is compounding the problem. The Senate Energy and Natural Resources Committee recently held a hearing to examine the role of non-commercial, institutional investors in determining crude oil prices. These folks never touch the oil yet they make huge profits through financial gimmicks.

The Consumer-First Energy Act of 2008 (S. 2991) calls for greater oversight of financial speculation in energy markets. I recently signed a letter to the Commodity Futures Trading Commission asking them to take immediate action to protect consumers by ensuring that United States energy market futures are fully transparent and subject to direct Commission oversight. As these issues come before the Senate, be assured that I will keep your views in mind.

I appreciate the time that you have taken to be involved and informed about this matter. Please do not hesitate to contact me again in the future if I can be of further assistance.

Sincerely,

Jon Tester
United States Senator
 

Texan

Well-known member
Oldtimer said:
Texan- What do you expect the Acting Director to do- Make it sound like he's getting paid for doing nothing :???:
So...you only believe testimony from the people that YOU want to believe? Is that the way it works? :lol:


Oldtimer said:
A $120 million agency with 465 people has only brought 39 cases in the past 5-6 years :???: Remember- these are the same type of investigators that GAO said were told to shuffle papers by their Director involving grain and cattle trading violations :???: ....
The 39 cases were only the ones involving energy markets. They have other commodities besides energy. I'm not saying that they couldn't have done more. Name me a bureaucracy that can't?


Oldtimer said:
From all the hearings on other agencies -USDA, FDA, CPSC, etc..- my question would be- how much did Congress previously offer to increase the budget and Agency size that Bush cut out :???:
If that's really your question, why don't you find out? Instead of just making allegations?


Oldtimer said:
But you as a loyal Bushie and (R) idolist would rather back your cultist leader to driving this country into bankruptcy- while a few elitists around the world make Billions $ off illegal/immoral speculation- and the average Joe on the street suffers trying to pay for what soon may be $5 or $6 gas if nothing is done....
No, what I would rather have is some FACTS. But you as a loyal George Soros and Moveon.org cultist would rather throw around half-truths to denigrate Republicans. I really don't think you've got any room to call somebody else a cultist. :wink:



Oldtimer said:
Texan- do you really feel it is morally correct and ethical for a company like Morgan Stanley (that prior to 2000 couldn't even operate in these type futures with peoples invested money) should be allowed to go out and tie up 70% of the heating oil to the northeast- and hold it up for ransom to people to be able to heat their homes- and run all the small oil delivery companies out of business :???:
Knowing that even if the bubble bursts and they go broke- GW and Congress will bail them out like they did Bear Stearns with bad invested US tax dollars :???:
Who do YOU think should control it? You'd raise hell if Exxon controlled it, too. A company has to have deep pockets to be in the wholesale business. Who do YOU think it should be?


Oldtimer said:
If you do- then I guess Texas morals and business ethics are a lot different than Montana morals and business ethics :(
Oldtimer, you are constantly posting half-truths and posting your own allegations as if they were facts. Too often, you can't even back stuff up when asked to. Is that an example of your Montana ethics? :lol:
 

PrairieQueen

Well-known member
So does the speculation need to be reined in or not? Over in Bull Session there was a thread regarding commodities and it appeared everyone agreed that there was a lot of speculation going on. Does something need to be done/changed to stop it?

I guess my question in all this is 1) why did they deregulate to start with (was there a positive aspect to that) and now there are unintended consequences?

and now does it need to be changed.

I am not trying to be partisan - I really am just interested in what everyone thinks should be done.
 

PrairieQueen

Well-known member
O.K. so I did find this

Changes to commodities regulations expected: report

Sat May 31, 11:54 AM ET

NEW YORK (Reuters) - The U.S. commodity markets' chief regulator will unveil policy changes next week meant to address public and political concerns that market malfunctions may be contributing to rising food and energy prices, The New York Times reported on Saturday.
ADVERTISEMENT

Citing people who have been briefed about the agency's plans, the Times said that the new measures would be announced by the Commodity Futures Trading Commission, which oversees exchanges central to the establishment of prices for commodities ranging from corn to crude oil worldwide.

Facing mounting political pressure and farm industry demands, the CFTC is expected to outline measures to address the role played by new financial investors in the futures markets, the Times said, in particular those who invest through commodity index funds, which have grown from a $13 billion stake in 2003 to some $250 billion this year, it said.

Index funds differ from traditional commodity investors in that they do not sell commodity futures, but only buy them, the Times said. Critics say this has helped drive up commodity prices artificially.

But the newspaper said the new steps may fall short of sweeping measures sought by the index funds' critics. The people who spoke of the new measures discussed them on condition of anonymity because the plans are not yet finalized.

http://news.yahoo.com/s/nm/20080531/bs_nm/usa_cftc_prices_dc_1
 

kolanuraven

Well-known member
Texan said:
Oldtimer said:
Texan- What do you expect the Acting Director to do- Make it sound like he's getting paid for doing nothing :???:
So...you only believe testimony from the people that YOU want to believe? Is that the way it works? :lol:


[


Well....it's worked pretty well for this admin for close to 8 yrs now!!!!
 

TSR

Well-known member
kolanuraven said:
Texan said:
Oldtimer said:
Texan- What do you expect the Acting Director to do- Make it sound like he's getting paid for doing nothing :???:
So...you only believe testimony from the people that YOU want to believe? Is that the way it works? :lol:


[


Well....it's worked pretty well for this admin for close to 8 yrs now!!!!

:lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:
 
A

Anonymous

Guest
TSR said:
kolanuraven said:
Texan said:
So...you only believe testimony from the people that YOU want to believe? Is that the way it works? :lol:


[


Well....it's worked pretty well for this admin for close to 8 yrs now!!!!

:lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:

Yep-- actually I believe in looking at the mass of the testimony- and what the credibility is of each giving that testimony- and further weigh it by what they stand to lose or gain with their statements/evidence....

Over 4 sets of hearings, I have now heard independent economists, professers, ex government officials, Consumer protection Agencys, OPEC cartel, US oil executives, and independent businessmen and investors (brought in by both parties) all testify that the price of oil is being greatly inflated by the speculative trading that the Enron Loophole allows by removing regulation and oversight on oil and mineral commodities....And all testified that currently there is little or no oversight- even to the point of what is already allowable by law....
Testimony indicates that oversight/regulation of those commodities/trading could/would bring the price of oil/gas down by 25 to 50%...

So forgive me when I don't override all their testimony- with one Bush appointee's testimony- who is trying to CYA- and whose total administration's credibility is daily being shown to be nil......
 

TSR

Well-known member
Oldtimer said:
TSR said:
kolanuraven said:
Well....it's worked pretty well for this admin for close to 8 yrs now!!!!

:lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol: :lol:

Yep-- actually I believe in looking at the mass of the testimony- and what the credibility is of each giving that testimony- and further weigh it by what they stand to lose or gain with their statements/evidence....

Over 4 sets of hearings, I have now heard independent economists, professers, ex government officials, Consumer protection Agencys, OPEC cartel, US oil executives, and independent businessmen and investors (brought in by both parties) all testify that the price of oil is being greatly inflated by the speculative trading that the Enron Loophole allows by removing regulation and oversight on oil and mineral commodities....And all testified that currently there is little or no oversight- even to the point of what is already allowable by law....
Testimony indicates that oversight/regulation of those commodities/trading could/would bring the price of oil/gas down by 25 to 50%...

So forgive me when I don't override all their testimony- with one Bush appointee's testimony- who is trying to CYA- and whose total administration's credibility is daily being shown to be nil......

So much for that Corporate Corruption bill signed by the president. :roll: :roll:
 

PrairieQueen

Well-known member
Commodity Regulators Vow Stricter Oversight


By DIANA B. HENRIQUES
Published: June 3, 2008
Regulators of the nation’s commodity markets will demand more information about investors to determine whether they are evading market limits on speculation and artificially driving up world food prices.

The regulatory agency, the Commodity Futures Trading Commission, also plans to initiate talks with bank regulators to ensure that adequate credit is available for the farm economy.

In addition, the commission intends to strengthen a program aimed at lowering the cost for farmers of hedging crop prices, which has grown more expensive with the increasing volatility in the markets, according to a draft of the proposals obtained by The New York Times. The commission is expected to announce the proposals Tuesday.

Finally, in an unusual departure from the secrecy that usually cloaks its enforcement actions, the commission will confirm that it is investigating the price spike that hit the cotton futures market in late February, a step demanded by cotton industry executives at a commission hearing on April 22.

The commodity futures markets play a key role in establishing worldwide prices for wheat, corn, soybeans and other foodstuffs, as well as energy products like crude oil and natural gas.

But in recent years, these markets have also become an attractive haven for investors seeking both profits from rising prices and protection against inflation and a withering dollar. As a result, billions of dollars have poured into the commodity futures market — from pension funds, endowments and a host of other institutional investors — through the new conduit of commodity index funds.

Billions more have come in from investment banks that are hedging the risk of complex bets, called swaps, that these same investors have made in the unregulated international swaps market, which dwarfs the regulated markets supervised by the C.F.T.C.

The commission has come under fire, most recently at a hearing on May 20 before the Senate Committee on Homeland Security and Governmental Affairs, for not doing enough to monitor the impact of these investors on markets that have such influence on family budgets nationwide.

The proposals are being presented as an initial, but not final, response to those concerns, which echoed complaints made at a C.F.T.C. hearing in April by farm industry officials. They believe this flood of new money from swaps and index funds is undermining confidence in the market’s role in setting prices and managing risk.

“The commission recognizes that — although no single solution exists — there are several steps it can take to improve oversight of the futures markets and bring greater transparency and scrutiny to the types of traders in the marketplace,” according to a draft statement introducing the plan.

Specifically, the commission will start requiring more information about index funds and, more significantly, about the clients on the other side of the unregulated swaps deals that are being hedged on the regulated futures exchanges.

The swaps market has traditionally be seen as off limits for federal commodity regulators, but the commission clearly is responding to Congressional concern that investors may be using swaps dealers to evade rules that limit the size of their speculative role in regulated markets.

Besides collecting more information about these new players, the commission is revising its monthly trading reports, starting in July, to present the expanded data in a way that will be clearer and more comprehensible to the public.

The commission is also putting the brakes on granting waivers that have exempted some commodity index funds from speculative limits, and is formally dropping proposed rule changes that would have extended a blanket exemption to all index funds.

In recent years, more than a dozen commodity index fund companies have been granted individual waivers, after successfully arguing that they were using the futures markets exclusively to hedge their obligations to the people who have invested in their index funds. But the commission now intends to “be cautious and guarded before granting additional exemptions in the area,” according to the draft proposal.

The proposal also outlines the commission’s plan to coordinate with the Farm Credit Administration and banking authorities, including the Federal Reserve Banks in Chicago and Kansas City, Mo., to help insure a reliable supply of credit to the farm economy.

Bank regulators testified at the commission hearing in April that farm-belt banks were financially sound and could handle the credit demands of farmers and grain elevators trying to meet margin calls on their hedged positions in the futures markets.

But the commissioners are apparently not satisfied that this ability to lend is being matched by a willingness to lend and are trying to head off a credit crisis that could wipe out farmers and grain elevators before they can profit from higher crop prices at harvest.

The proposals also include steps to strengthen an existing alternative to futures contracts — an over-the-counter product called agricultural trade options that farmers grain-elevator operators could use to hedge crop prices. The existing product has not gained acceptance as a hedging tool, and the commission is directing its staff to find ways to make it more useful to hedgers and more visible to regulators.

Today’s initiative comes less than a week after the commission announced steps to expand its information and oversight of energy traders in the futures markets, and confirmed that it has been investigating possible manipulation of energy futures prices for six months.
 

aplusmnt

Well-known member
Oldtimer said:
Oil Jumped to another Record High --up over $11 today alone to $139...... :( :mad:

Be sure and let us know when it goes down, and the Stock Market goes up a little and the war is making improvements, and unemployment rises. Surely if you are going to be the bearer of news you want to be fair and balanced don't you? Surely you will keep us informed of the good happening as it happens?

You would not want to get a reputation as only a Doom and Gloom kind of guy would you? :wink:
 

Texan

Well-known member
Oldtimer said:
Texan- do you really feel it is morally correct and ethical for a company like Morgan Stanley (that prior to 2000 couldn't even operate in these type futures with peoples invested money) should be allowed to go out and tie up 70% of the heating oil to the northeast- and hold it up for ransom to people to be able to heat their homes- and run all the small oil delivery companies out of business :???:

Oldtimer, I'm STILL trying to find something that verifies that Morgan Stanley actually controls 70% of the heating oil in the northeast. Do you have anything to verify that?

I found this piece about a heating oil component to the SPR:

"On July 10, 2000, President Clinton directed Energy Secretary Bill Richardson to establish a two million barrel home heating oil component of the Strategic Petroleum Reserve in the Northeast."

Morgan Stanley is one of the contractors for that storage. But the latest numbers I can find show that they only store 750,000 barrels out of the two million that the contracts call for. And that's only the heating oil that is in the reserve - not ALL heating oil.

http://www.fossil.energy.gov/programs/reserves/heatingoil/


A few other mentions of "70%" along with "Morgan Stanley" are these:

"On these markets in particular, Greenberger said, a few hedge funds and three investment houses--Goldman Sachs, Morgan Stanley, and JP Morgan Chase--are controlling 70% of the speculative buying of U.S. oil futures"

http://larouchepac.com/news/2008/06/03/senators-want-force-cftc-end-british-control-u-s-oil.html


"70% of oil futures are held by hedge funds, trust, foundations, banks and companies like Morgan Stanley and Lehman Brothers which are people that aren't in the oil business."

http://www.alipac.us/ftopicp-698141.html


There's a lot of difference in saying that Morgan Stanley controls 70% of the heating oil in the northeast and saying that Morgan Stanley is one of many companies that control 70% of oil futures.

If the Senate actually heard that testimony - that Morgan Stanley controls 70% of the heating oil in the northeast - they must not have asked for any proof. But...maybe I just haven't found it yet.

Typical of the Democrats holding hearings, though. They ask somebody like George Soros to testify and as long as it fits their agenda, they never try to verify.
 
A

Anonymous

Guest
I believe it was Mr. Greenberger and Gerry Ramm, president of Inland Oil Company- who represents the Independent oil companies who supply the oil directly to the consumers...

Did you notice who was making comments today- in an effort to get the oil they are speculating in to go higher?


Oil Rises Above $139 on Price Spike Prediction

Friday, June 6, 2008 11:16 AM

NEW YORK -- Oil prices shot up more than $11 to a new record above $139 Friday after Morgan Stanley predicted prices would hit $150 by the Fourth of July. The unprecedented jump is all but certain to drive gas prices well past the $4 mark in the coming weeks.

http://www.newsmax.com/newsfront/Oil_rises_/2008/06/06/102282.html
 
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