Futures trading in strategic commodities by US companies and citizens should be banned.

Write your Congresscritter

/not submitter

The startling spike in oil prices to their highest level this year on Tuesday was caused by a rogue broker who placed a massive bet in the Brent oil market The July 4th holiday travel spike and greed.

wall street isn't thru farking the rest of us.

acanuck: Futures trading in strategic commodities by US companies and citizens should be banned.

Stupid laws just make new businesses for the Jhereg.

So, who is to blame for the gas prices doubling this year?

Despite the Financial Times tag, I clicked the link fully expecting to see the blame dropped on the one person who has brought about every single mishap has ever occurred in the history of man. Barack HUSSEIN Obama. I was somewhat disappointed.

/Jaded

acanuck: Futures trading in strategic commodities by US companies and citizens should be banned.

Uh, no. As someone involved in agriculture, we depend on that liquidity to discover prices and aggregate production data. Abuse of the futures market should be restricted (i.e. close bank loopholes that allow them to take gigantic positions), but beyond that allow that market to do what it's best at: figuring out the best price for commodities.

Examples like this rogue trader make everyone smarten up, so it's not a bad thing.

Playerslight: Examples like this rogue trader make everyone smarten up, so it's not a bad thing.

Like last year when that guy put oil prices over $100 and everyone smartened up (to the $130 range)?

Playerslight: Uh, no. As someone involved in agriculture, we depend on that liquidity to discover prices and aggregate production data. Abuse of the futures market should be restricted (i.e. close bank loopholes that allow them to take gigantic positions), but beyond that allow that market to do what it's best at: figuring out the best price for commodities.

I totally agree. Perhaps limit the size of any position in any one good?

/no, you can't have 1/10th of the world's oil futures, you massive dick.

Go Fast Turn Left: Like last year when that guy put oil prices over $100 and everyone smartened up (to the $130 range)?

Every few years some successful stock trader looks over at the commodities market and thinks "look at those backwards hicks, I can totally game that market", with the ensuing consequences. You can move the commodity market for a while, but eventually inventory will smack you upside the head. Just look at prices now.

And 2007-2008 saw the greatest amount of money all moving in the same direction ever placed in the commodities market. If it survived that onslaught it can survive most anything. Many many large investors got their asses handed to them, which is nice, and they won't make that mistake again anytime soon.

FTFA:

This is the second episode of rogue trading in the oil market this year. In May, an oil trader at Morgan Stanley was banned by the City watchdog after he hid from his bosses potential losses on trades made under the influence of alcohol.

I just keep picturing this something like me and my college roommates, stumbling home from the bar at about 3 a.m., going to the computer and saying, "Hey, watch this!"

Rather scary that that's even possible.

I love how the loss is listed in pounds sterling (and euros), yet they list the oil price in $US and later list the loss in $US.

FishingWithFredo: FTFA:

This is the second episode of rogue trading in the oil market this year. In May, an oil trader at Morgan Stanley was banned by the City watchdog after he hid from his bosses potential losses on trades made under the influence of alcohol...

Say no more.

Playerslight: Many many large investors got their asses handed to them, which is nice, and they won't make that mistake again anytime soon.

Yeah, I'll bet the bailouts really taught them an important lesson.

Therion: Yeah, I'll bet the bailouts really taught them an important lesson.

Touché. Although, to be fair, many of the losers in that whole debacle (hedge funds, pension funds, etc) haven't gotten a direct bailout. Yet.

Perhaps many were bailed out indirectly, like through coverage provided through AIG or something, but there are some hurting pension funds out there right now.

abb3w: acanuck: Futures trading in strategic commodities by US companies and citizens should be banned.

Stupid laws just make new businesses for the Jhereg.

Steven Brust reference most appreciated. Thank you.

abb3w
Stupid laws just make new businesses for the Jhereg.

A Brust reference in the Business tab. Gotta love Fark.

rubi_con_man: I totally agree. Perhaps limit the size of any position in any one good?

/no, you can't have 1/10th of the world's oil futures, you massive dick.

That's ALREADY IN PLACE.

The only traders who are allowed to take large future positions are THE OIL COMPANIES who want to fix the price up front for some of the oil they'll be delivering in a few months. Like farmers selling pork or corn futures.

acanuck: Futures trading in strategic commodities by US companies and citizens should be banned.

If you read the fine article, you will discover that the company involved just lost a ton of money.

In other words, the company may have bounced the day to day price, but in the end it just subsidized your next tank of gas.

I've just never heard the term "over-the-counter oil brokerage" before.

opiumpoopy: The only traders who are allowed to take large future positions are THE OIL COMPANIES who want to fix the price up front for some of the oil they'll be delivering in a few months. Like farmers selling pork or corn futures.

That's the way it should have been. However, Phil Gramm pushed the Commodity Futures Modernization Act of 2000 which introduced the Enron Loophole, removing government regulation of over the counter commodity trades. Basically, large players became exempted from position limits. That's been repealed now with the 2008 Farm bill.

Antidamascus: I've just never heard the term "over-the-counter oil brokerage" before.

I do my brokering at the local Chevron/McDonald's

The $10m loss is a heavy blow for PVM, which reported profits of just $5.6m in the year to July 2008, according to its accounts.

hahahahaa
so technically, they will learn to better police their own employees?

FishingWithFredo: FTFA:

This is the second episode of rogue trading in the oil market this year. In May, an oil trader at Morgan Stanley was banned by the City watchdog after he hid from his bosses potential losses on trades made under the influence of alcohol.


I just keep picturing this something like me and my college roommates, stumbling home from the bar at about 3 a.m., going to the computer and saying, "Hey, watch this!"

Rather scary that that's even possible.


That is exactly what I thought as well. The more I learn about accounting practices and business dealings (my major) the more I realize that one person can do an amazing amount of harm if he's equal parts smart and amoral.

namatad: The $10m loss is a heavy blow for PVM, which reported profits of just $5.6m in the year to July 2008, according to its accounts.

hahahahaa
so technically, they will learn to better police their own employees?

Yep, meanwhile the entire *world* just got screwed by fictitious gas prices.

Futures trading has its place. For instance, SouthWest Airlines saved a fortune over the last 2 years because they locked in their jet fuel prices. Farmers do it by locking in corn and other prices.

However, having knuckleheads trying to make money by manipulating the market and trying to shake money out of it for nothing is what needs to be regulated/banned.

Obama?

/drtfa

TheGreatGazoo: However, having knuckleheads trying to make money by manipulating the market and trying to shake money out of it for nothing is what needs to be regulated/banned.

The problem is that the government is not smart enough to determine what movements are legitimate market movement and what is manipulation. So the end result would be just as harmful. Only that the speculator can loose his ass if he is in the market when it crashes. The government can just print money.

Kill the trader.
Kill his family.
Set his dog on fire.
On national TV.

That's change I can believe in.

TheGreatGazoo: Futures trading has its place. For instance, SouthWest Airlines saved a fortune over the last 2 years because they locked in their jet fuel prices. Farmers do it by locking in corn and other prices.

However, having knuckleheads trying to make money by manipulating the market and trying to shake money out of it for nothing is what needs to be regulated/banned.

Southwest took delivery of the gas it hedged. Futures traders never do. Force them to take delivery of the good, pay for transport, storage, permits, etc and they'll get out of the market and stop ruining life for the rest of us.

bhcompy: Southwest took delivery of the gas it hedged. Futures traders never do. Force them to take delivery of the good, pay for transport, storage, permits, etc and they'll get out of the market and stop ruining life for the rest of us.

The problem is that it's a catch-22. We can either have higher prices now, ensuring an increasing supply because there is now profit in doing so. Or a shortage and even higher prices later. Industry HAS to have some idea of what the future price of something will be.

Think of it as a weather forecast. Sure it isn't perfect, often things get revised a bit as time passes or end up being completely wrong. That being said, everyone is still better off having these economic weather forecasts despite all their faults.

I bet the people who are complaining the loudest about high prices weren't saying a peep about the poor oil companies back when oil was $15 a barrel and new exploration/production was unprofitable.

Yep, it's George Soros.

Frank Stallone?

I blame Bush !!

has this already been said?

acanuck: Futures trading in strategic commodities by US companies and citizens should be banned.

Write your Congresscritter

/not submitter

I hope your joking...