In case you haven't read it this morning Norm... I love it when KD goes off about oil (sounds like you a little bit here, eh?)
From his website:
Oh boy, Congress is upset....
Senator Bernie Sanders, a Vermont independent, and Representative Bart Stupak, a Michigan Democrat, have called for action to avoid a repeat of last year’s run-up in crude oil prices to a record $147.21 a barrel, which they blame on speculators. Oil has climbed 44 percent this year in New York Mercantile Exchange trading, even amid a drop in demand and high levels of fuel in storage.
“Our first hearing will focus on whether federal speculative limits should be set by the CFTC to all commodities of finite supply, in particular energy commodities, such as crude oil, heating oil, natural gas, gasoline and other energy products,” Gensler said in the statement. “This will include a careful review of the appropriateness of exemptions from these limits for various types of market participants.”
You mean like this sort of exception?
However, in 1991, CFTC authorized the first “bona fide hedging” exemption to a swap dealer (J. Aron and Company, which is owned by Goldman Sachs) with no physical commodity exposure, and therefore, no legitimate anticipated business need.
Since 1991, 15 different investment banks have taken advantage of this exemption, even though they do not have a legitimate anticipated business need.
Right; an "exception" to position limits simply because a bank (Goldman, gee, who'd a thunk?) was making a market in energy swaps.
1991 eh? Hmmmm....
Why are we arguing over this sort of stupidity?
Goldman, along with the rest of these firms, are now commercial banks!
Folks, the solution to this sort of stupidity is simple:
REINSTATE Glass-Steagall in its entirety, and return commercial banking to the utility function that it is and should be, as it is both regulated and protected by the government against the full consequences of failure.
Demand that those who want the "hedging exception" demonstrate their actual use of the commodity in question in amounts that correspond to the hedged positions held, with nightly reporting requirements to the CFTC.
End of problem.
But no! We instead have to see oil go to $150 last year and then
double into collapsing demand and
commercial banks leasing tankers to store oil in, purchased with federally-backstopped money, that they then intend to release into the market and sell back to us at a higher price at a later date!
Since when is it proper and permitted for an entity to take taxed and borrowed money from the citizens
literally at gunpoint (try not paying your taxes and see how fast the guns come out) and then screwing us with it directly, pocketing the profits privately?
To Congress:
Stop sucking on Goldman's <censored>.
Click the chart for current oil prices.
