Ban on hedge fund oil investments considered

[sinkingfeeling]

Source: MSNBC.com

WASHINGTON - With pump prices holding above $4-a-gallon, there is no shortage of proposals from Capitol Hill about how to address speculation in oil markets.

The latest plan circulating in Congress would ban large institutional investors from trading commodities altogether. It's a radical idea that might sound appealing to motorists and small business owners, but experts say it would actually do little to lower prices and could have the opposite effect.

Large investors have been pumping money into contracts for oil and other commodities as a hedge against inflation when the dollar falls.


Read more: http://www.msnbc.msn.com/id/25267047/

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One of several plans being talked about. Florida Senator Nelson has one on his web site.

[Zynx]

1. I suggested a regulation to my senators on limiting futures trading to only

licensed investors and traders or actual producers and distributors.

[sam sarrha]

2. which will cause it to fail. its a matter of national security, just like outsource'n shoe factories

and farming, anything we cant do without.. like jobs

[Kweli4Real]

3. I'm no expert, but ...

"Analysts said intervention by Washington could actually push commodity prices higher. That's because investment funds add liquidity to the market, helping oil producers and consumers buy and sell freely rather than horde scarce supplies."

Wouldn't this mean that the prices would DROP because as the investors are driven out of the market, the only ones left would be the consumers, who actually planned to take delivery of the oil/commodity, rather than profiting on the price appreciation?

Someone ... Please explain where my Econ 101, from more than 30 years ago, has failed me. :shrug:

[Tandalayo_Scheisskopf]

4. It hasn't.

That statement is a prime example of FUD, thrown out there to confuse people, and especially the all-too-easily-confused congresscritter.

Look for a lot of flailing like this in the coming days. These guys have played out their string, indictments are hitting and they know that terraformation of The Planet Greed is nigh.

[truedelphi]

5. I'm thinking that Tandalayo_Scheisskopf

Is right and that your 30 year old memory of the mechanics of an economy are quite right.

And Olbermann had a whole spiel on this a few days ago - about how the re-formatting of the speculations market or its "Enronization" all worked out real well for the inside players like Phil Gramm and his wife.

Olbermann also said that if we don't (or rather COngress doesn't) do something about it - we will never get back to normal - that if oil can be so heavily speculated on, so can solar energy or some miracle alternative that allows a driver to get 400 miles to the gallon. The speculaters can then just make that miracle alternative that much more exorbitantly expensive.

[sui generis]

6. so have we finally arrived at the conclusion

that free market economies and finite resources do not mix? At least, they don't correct in our lifetime.

I think there are perfectly valid economic reasons to allow government to be socialist in terms of managing finite resources, regulating shared resources and administering security, law enforcement and law with a common yardstick.

That would drive us to invest in innovation, in renewable (non-regulable) resources, and allow a real "free market" to drive innovation instead of pricing.

[Dover]

7. We could do what many countries are doing to protect their resources...

nationalize oil, water, etc. and rework our financial structure.

[truedelphi]

8. Unfortunately the Powers that Be will only pretend to do that

This is the home of "privatization" not nationalization.

If we were into nationalization rather than privatization, we could buddy up to Chavez of Venezuela (where gas is all of 17 cents a gallon!) But instead our leaders and our media use the terms "Socialist" with a sneer when talking abt Chavez.

Mark my words - over the next decade there will be a lot of talk and fuss over the preciousness of the planet's resources. And in every instance the burden will be on the middle income class and the poor. We will be the ones paying the carbon taxes and we will be the ones that wil be sneered at for "our consumption."

(Standing on a street corner in Marin, having just emerged from a four hour car trip, I was sipping my coffee in a styrofoam container and got such dirty looks from people. Bear in mind - these are the same people that think nothing of re-modeling the entire house - -- all 2500 feet of it every three years. But sytrofoam - very bad very bad!!)

[Psephos]

12. Venezuela's gasoline price encourages profligate waste

17 cents a gallon means far larger CO2 emissions (along with other poisons), plus global demand distortion, causing others not in Venezuela to pay even more. Ditto for other subsidizers - China and Saudi Arabia come immediately to mind.

[sui generis]

13. Oddity in naming though:

sneering at democratic-socialism implies that there is something wrong with taking care of our people.

Calling something the "nationalist" initiatiave rings strangely like the German word for "Nazionalist", or Nazi for short.

We should not worry about terms and go after the meat of the situation. RE-REGULATION. We really don't want to "own" those industries, but we by golly don't want free market enterpreneurs to buy and sell the products of those industries as commodities.

Water - I can tell you that a certain group of uberwealthy international investors has quietly bought up gigantic swaths of water rights in south america in a buy and hold move. In multiple multi-tranche investment schemes that exceed normal AHP targets for profitability. It's so important they are willing to lose tens of billions of dollars holding on to those rights, for now.

There are governments that believe they will be able to renationalize those assets when push comes to shove, but they have to have water from upstream before they can renationalize it.

Ask me how I know these things. Or don't. Just remember that I said it.

[Kweli4Real]

10. While I'm concerned about ...

the effect speculation on oil can do ... I'm more afraid that some greedy "capitalist" will develop the balls to do, on a large scale, the same thing for food, making the run-up on corn and rice look like child's play.

[truedelphi]

11. Already happened.

Between Monsanto and its GMO stuff, and the specualtors, we could be facing food shrotages big time in five years or sooner.

[brentspeak]

9. To paraphrase President Merkin Muffley:

There's nothing to "consider", Congressmen; hedge fund oil speculation must be stopped, once-and-for-all.