It’s suspicion-of-profit time at the U.S. government:
The chairman of the U.S. Commodity Futures Trading Commission said Tuesday he believes the agency must “seriously consider” setting “strict” new limits on traders who place bets on energy contracts.
The standard arguments prevail, the same chutzpah:
“The CFTC is in the best position to apply limits across different exchanges, and we are most able to strike a balance between competing interests and the responsibility to protect the American public,” Mr. [Gary] Gensler said.
He’s the Commodity Futures Trading Commission’s new commissioner, “pledged to look into setting aggregate limits across commodities of finite supply to make the rules more consistent.”
Now “certain agricultural markets” feel CFTC’s strong, visible hand — “hard limits” — soon oil, currently under such limits only in the last three days of a contract. Speculation jacked up prices last time around, not heightened demand for shrinking supply, as some old-timers continue to insist on, say these wizards.
No nature-of-the-beast thinking here, no nature of anything, just stuff to be manipulated.
One of the big guys, CME Group, is on board with this stuff. Stands for Chicago Mercantile Exchange, owner of Merc and Board of Trade — among whose directors has been the astute and readable Sun-Times columnist Terry Savage, age 64 (!), since July 2007, for what that’s worth.
Ramifications of what CFTC does exceed the scope of my pay level, as do many other ramifications, but we do spy a, ah, philosophical difference here between standard Republican and standard Democrat approaches to business, do we not? Not to mention when the Democrat hails from the party’s radical wing.
Gensler has blamed “speculation by index investors” for last year’s price run-up,” in the face of CFTC economists’ holding for “supply and demand fundamentals, not speculation, [as] to blame.”
As for CME support for this, it’s the sort of thing that the big guys have always liked, they being very conservative with their bundles. (CME trailing only Amex, ING, the NY exchange, and Citigroup.) At least since FDR, the biggies have lived nicely with controls and regulations — hey, hire a new compliance officer, set up a new department, we can afford it.
While not so big guys moan in the spirit of this fellow, reacting on Market Watch to the July 7 news of these very coming CFTC regulations: “Watch them help Goldman [Sachs] and JPM[organ] steal more.”