"How to burn the speculators" - Galbraith

"On these matters, there is a quick fix. Under pressure, the cftc is closing the London loophole. Early in the next administration, Congress must slam shut the Enron and swaps loopholes. Index speculation should be curtailed by making such strategies illegal for regulated pension funds and by imposing limits for all traders on how much they can buy or sell. Investment banks using credit default swaps to enter the commodities markets should be regulated to the standards that apply to speculators, not as if they were heating-oil vendors hedging against a warm winter. Investigations now under way at the Federal Trade Commission, the Federal Energy Regulatory Commission, and the Department of Justice should be intensified, and criminal manipulation of the markets, if detected, should be punished.

Finally, the federal government should burn the oil speculators by selling up to 4 million barrels a day from the Strategic Petroleum Reserve. And as economist Tom Palley has pointed out, consumers can help too. An awful lot of gas is stored in cars. If people stop topping off and make do with half a tank, they'll back up supply and lower demand. It's a brilliant suggestion and definitely worth a try.

And while this is being done, and especially if all this smoke leads to fire, someone should ask, "What did Henry Paulson know, and when did he know it?""  Galbraith

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Am I beating this horse to death?

Yes.

Why?

...Because the horse isn't dead yet.

pl

http://www.motherjones.com/news/feature/2008/09/exit-strategy-how-to-burn-the-speculators.html

Comments

[m savoca]

Dumas

to amplify the point, the dollar amount of oil futures trading is about five times the actual dollar amount of oil that is produced and consumed.

most futures contracts involve traders who neither produce nor consume and they try the best they can to trade the contracts to actual users prior to expirations

when they cant, a small percentage of the time, actual storage may become necessary

http://blogs.reuters.com/globalinvesting/2008/06/06/growth-in-oil-futures-outpaces-oil-consumption-2/

[Arun]

Dear Col. Lang: this is to draw your attention to the NYT story:

http://www.nytimes.com/2008/08/22/world/middleeast/22sunni.html

that begins

"BAGHDAD — The Shiite-dominated government in Iraq is driving out many leaders of Sunni citizen patrols, the groups of former insurgents who joined the American payroll and have been a major pillar in the decline in violence around the nation."

Seems like the Iraqi govt is determined to unravel whatever measure of peace has been secured there. I hope that you write about it.

Best,
-Arun