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I really thought everyone understood this already.

Commodity Futures Modernization Act signed by GWB

The real problem is the electronic, and index fund brokering of these futures. Futures are speculative betting, and allowing them to be part of indexed fund portfolios that are controlled electronicly has always been seen as a bad idea.

Once you can take massive amounts of indexed fund money and move it back and forth just to increase the futures profit by 0.8% is just the most blatant greed! And it's dangerous.


But nobody is going to do anything about it. Cause Rich people deserve the right to keep getting richer. Even if there is historical precendent, and absolute proven facts to supoprt htat their methodolgy is harmful and potentially ruinous to the economy as whole.

Cause it's "their" wealth! They earned it, they should be able to use it to stangle out fair markets however they choose!
 

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Discussion Starter · #3 ·
Once you can take massive amounts of indexed fund money and move it back and forth just to increase the futures profit by 0.8% is just the most blatant greed! And it's dangerous.
And that is the problem, yes greed is human nature; however, it can be marginalized.
 

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Once you can take massive amounts of indexed fund money and move it back and forth just to increase the futures profit by 0.8% is just the most blatant greed! And it's dangerous.
And that is the problem, yes greed is human nature; however, it can be marginalized.
Ratchet effect again. It takes twice or more the work to put the ratchet back one tooth, than it did to get it there.
Fixing it???
It won't happen.

And I still say people aren't willing to discuss this reality. Because "Rich people deserve to be rich". You can't tell them how to use their money.

And I am just amazingly baffled by that whole thing.

Rich people telling poor people that fair is bad. On the principle that "If you got rich, they could do it to you too".

Knowing in fact that the average person will face financial harm, for 0.8%^ a day.

Even the index fund managers went before congress last year, and explained directly to congress, in a public hearing, that allowing indexed funds to trade on commodities using electronic decision makers, was a recipe for disaster. These are the guys who Operate the funds.

They pointed out that if you look at oil futures there was a consistent 0.8% baseline increase, per day, for the time after the deregulation.
It fell off last summer, ONLY, because the price bubbled and the automatic safeties in the software tripped over one slip, that happened because of a single shorted sale of 1 million barrels of light sweet.

The programs keep betting on the futures as long as the futures hit a certain percentage by a certain time each day. They sell when the futures drop a certain percentage in a predetermined time frame at a certain rate.
So as long as the electronic indexed funds, keep buying, at a certain point, their buying alone, guranteed the increase that justified the buying, so they keep increasing their own purchasing benefit.

Say if a company could dump enough futures at one time, then that company could place a shorting sell bet based on what their computer models determine the reaction of the other computer models will do when the "magic" sell percentage is hit.
Well, then that company would be able to pull of a totally legal, and nearly undetectable short sell coupe that would net them record profits during one of the largest and fastest futures declines in market history.
I guess that just makes them lucky.

[Edited to remove an "unproven" allegation against morgan stanley for the 1 million barrels.]

And it's not illegal! Not in the least. But again. No one really cares. Only socialists complain about stuff like that.
 

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If you are asking us if we would rather have oil speculators, or the beginning moves of nationalizing the oil industry, then I would take the speculators. Your cure is worse than the disease. Find another solution.
 

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If you are asking us if we would rather have oil speculators, or the beginning moves of nationalizing the oil industry, then I would take the speculators. Your cure is worse than the disease. Find another solution.
Neither actually. You've jumped the rails on this, landed in rhetoricville and done a full u-turn.....again!

It appears to me, by reading the post, by looking at the information present without using powered rocket boots to jump to a pre-determined conclusion that we made up by reading the subject, and nothing else, Both Leadslinger, and I, would simply like to see a return of oversight, and regulation, on commodities trading just like we had for the last 43 years, before the last administration stripped it away for the benefit of very short sighted greedy individuals.

His point is that greed can be directly limited with restrictions.

I was pointing out that those restrictions had been in place since after the great depression, up until 2005 or 06. Then they were removed.
 

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If you are asking us if we would rather have oil speculators, or the beginning moves of nationalizing the oil industry, then I would take the speculators. Your cure is worse than the disease. Find another solution.
His point is that greed can be directly limited with restrictions.

I was pointing out that those restrictions had been in place since after the great depression, up until 2005 or 06. Then they were removed.
Greed is limitless. No amount of regulation can reign it in because of politicians in the back pockets of executives. They find a workaround. Plain and simple.
 

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And that is the problem, yes greed is human nature; however, it can be marginalized.
I agree that it can, and had previously been marginalized!

The difference now is that the stakes have increased through specific windows of deregulation, which, like you are pointing out, offers even more chances to create loop holes and work arounds.

That's why the ratchet effect is so usefull. I takes something drastic to correct it, but what you gain from such a short effort, will always make it worth while.
 

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Just exactly how else is the Congress going to regulate an international business dealing with a global resource? If the speculators don't do business here they go to another place to conduct business. Nationalizing the oil industry here in the US has already been revealed as a mid-term goal of the socialists and gets thrown out to the media every time there's a rise in prices.

At some point you may as well admit the only control Congress has is the power to foul things up beyond all recognition, I stand on their record.
 

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Discussion Starter · #10 ·
^ As taken from the aforementioned interweb area

Will traders move overseas if Congress re-regulates commodities markets?
One-fourth of the entire world's crude oil consumption occurs in the United States. The bottom line is that if traders want access to U.S. capital, liquidity, stability and the protection of the U.S. court system, they will continue to trade in the United States. We are not aware of a single example of an organized U.S. exchange, such as NYMEX, losing a significant market to another exchange - especially a foreign one - based on a change in regulations. In addition, even if traders were to move overseas to use foreign exchanges, they would still need to trade through U.S. terminals. The regulations we are urging would make foreign exchanges follow U.S. laws when they use U.S. terminals.

What specific actions should Congress take to stop oil speculation?

* Re-establish strict position limits on energy commodities - Position limits have existed since 1936 and work well at curtailing excessive speculation. Any trader not hedging with the intention of taking physical delivery of a related commodity must be subject to strict position limits
* Close the "London Loophole" - Foreign Boards of Trade with U.S. terminals trading futures contracts that cash-settle against U.S. contracts should follow the same regulations as U.S. exchanges. It is not fair for U.S. futures exchanges to face more regulation than their foreign counterparts trading in U.S. commodities
* Regulate "swaps trades" - All trades in the over-the-counter (OTC) swaps market must be subject to strict position limits. It is unfair to exempt swaps dealers from the same regulations that other market participants face. Experts have estimated the size of the OTC markets to be nine or 10 times larger than the futures markets
* Fully close the "Enron Loophole" - Current law allows certain commodity markets to operate with almost no government oversight, even though they trade contracts that are essentially identical to those traded on fully regulated exchanges like the New York Mercantile Exchange. These "look-alike" contracts significantly impact the value of a commodity like oil, and Congress needs to mandate that they all be traded on a transparent, regulated exchange
* Bring transparency to all energy trading - Positions of traders in all markets should be reported to the Commodity Futures Trading Commission (CFTC), and should be categorized based on where the trades occur and who is doing the trading. This will provide vital information to detect and prevent market manipulation


As to standing on records, I'll stand on the record that every time I notice people walking with umbrellas, it soon starts raining, thus I blame those people with umbrellas for causing the rain.
 

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err how many jobs have moved oversea due to excessive government regulation?

Now tell me again how they just wont carry out the transactions in say any one of a hundred places. Yet we will still have even more government. FDR was one of the worst examples of a progressive run wild and yet you guys hold him up like a god. Holding up a law having come into being during his "reign" is like freely admitting its futility.

God this must be like Heroin to some people, long after you know its bad and its killing you still you want more!
 

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Discussion Starter · #12 ·
err how many jobs have moved oversea due to excessive government regulation?
And how many of them still make a killing using tax code...err...loopholes, here read http://www.citizenworks.org/corp/tax/taxbreif.php

Anyhow it's not about more government, it's about the durn thing doing what it's supposed to do. Now it's not redcoats coming to burn down the White House, but worse it's our people fleecing our pockets and laughing all the way to foreign banks...UBS...cough...cough
 

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LS unless we pull the plug on this attitude that everything has to accomplished though more and greater regulation, Federal power, at some point you are not going to be allowed to live your life as you would even compared to the aggravating presence the government exerts now. I care not that you think its a good thing, good intentions have killed as many as evil.

The problem of this generation is containing a runaway government, not runaway capitalists. One has the ability to turn us into slaves, the other has cash. I think the more dangerous of the two is apparent. We now face the unsavory situation of having so many problems to deal with we must face the more extreme or all is lost. Then it wont matter one wit about oil speculators.
 

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Discussion Starter · #14 ·
LS unless we pull the plug on this attitude that everything has to accomplished though more and greater regulation, Federal power, at some point you are not going to be allowed to live your life as you would even compared to the aggravating presence the government exerts now. I care not that you think its a good thing, good intentions have killed as many as evil.

The problem of this generation is containing a runaway government, not runaway capitalists. One has the ability to turn us into slaves, the other has cash. I think the more dangerous of the two is apparent. We now face the unsavory situation of having so many problems to deal with we must face the more extreme or all is lost. Then it wont matter one wit about oil speculators.
It's not an attitude of everything needs to be regulated, although at the same time as we humans have proven time and time again, without regulation we will exploit something until the bitter end. Example, not to sound like a eco-hippie but think about mountaintop-removal coal operations, 2,200 hundred acres estimated gone by 2012, perhaps it's a necessary evil (5% of total coal output in US) but it needs hardline regulation.

I had to argue with a guy recently at work who insisted that our regulations against trimming trees, moving large rocks was valid despite the fact that his 45' motorpalace would not make a turn to get to a spot he wanted to stay at for the weekend. He grumbled and b!tched about not being able to do anything with breaking some regulation. The point he missed was that without some well thought-out an rationally enacted regulations one of the most diverse places on this planet would be subject to everyone trimming a tree, yanking up a bush, moving rocks, etc. here and there to suit themselves.

I don't care that you don't care if I think regulation is a good thing, yes the road to hell is paved with good intentions. I know it is when done correctly and not in the interest of corporate America or pure political pandering, regulation works excellently.

As to runaway government turning us into slaves, on that we can agree. However, at the same time runaway capitalist with cash are enslaving institutions all the same; that great American company Wal-Mart :rolleyes2: , yeah they just lost a settlement with workers over back/unpaid wages.
 

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The fact remains that the regulations that had been in place handled the system just fine.

It wasn't broke. So when they "fixed it", who were they fixing it for?

Certainly no consumers. Not even for the oil men really. Constant boom/bust pricing just leads to cost issues for producers. They don't get a benefit because they can't speculate on their own commodity. It would be too close to insider trading and price fixing.
So the oilmen don't even benefit from the deregulation so the argument that it aides those businessmen and their employees is out the window too. The long term issues with ramping up and down your production and shipping mean that you lose more during the bust than you gained during the boom.

It only benefited large institutional investors. The same institutional investors who have created serious issues on a recurring basis in this country since the great depression.
The ones who lump in for tens and hundreds of millions on a single throw. And their own money movement is what sets the pace and excites the growth.

What it comes down to is gambling that affects multiple industries right down to the core of all commerce systems in the US right now.
Distribution and activation of services.
Your goods cost goes up when distribution goes up. Airline, frieght, mail. Everything is affected by the rather huge quarterly increases of the Fuel Supply, so letting that supply be so drastically toyed with on a daily basis makes predicting other business trends nearly useless.

There use to be regulations on the scope and scale of this gambling on a daily and quarterly basis because it has such far reaching effects for the whole economy.
In 2006 those regulations were removed without any public or even corporate outcry over those regulations.

The only people who have wanted those regulations removed, are large, institutional banks and investment companies, because of whom those regulations were put into effect in the first place.

I'm not advocating "new and more" regulation.

I'm saying the existing regulations were very well balanced for the economic model we have. Just put them back in place. They took a chance on removing them to see if it helped stimulate investment, and it caused very serious problems and a level of instability into the market that is too hard to predict.

Just put the regulations we had before 2006, back into place. No harm no foul.
 

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By the way just when was an unregulated economy ever given a fair shot in the last hundred years? The RR barons of the nineteenth century were using government coruption to further their aims, just as GE is now doing. Without the powerful corrupt federal state to use as a tool against us you find their bag of tricks to be very limited.

They may very well give you what you want on this since they have the votes and there little spine left on the other side of the aisle. But it wont do anything to help us, frankly it still comes down to the Feds being able to screw up an iron ball with a feather. Giving them more power in anything is not what we ever needed.
 

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By the way just when was an unregulated economy ever given a fair shot in the last hundred years?
Never.

But since the great depression our economy has been a theoretical paper/formula construct anyway.

Once the goods standard was replaced by the "labor output potential" standard, it's been a shell game of "swap the debt" in every aspect of transactions from the start of the money to where the money ends.

It's a damned if you do damned if you don't scenario.

But at least there can be some application of common sense that says if the entire economy is driven off this one segment,(oil) don't use that segment to shoot craps with every day.

I hold the opinion that the current economic downturn, is the direct result of the deregulation of the oil futures. The banks that had pinned so much on those mortgage backed securities weren't worried about the attrition rate until the oil prices got so high that companies couldn't ship products and the entire standard of commerce in the US got shifted up drastically due to the cost of shipping and travel caused by the oil speculation.

Mortgage backed securities failing, don't cause companies to lay people off.

Layoffs happen when people don't buy your product, because you increased the price by 30% to cover your fuel costs during shipping, and the people can't afford the increase because they have to keep that money to pay for the 60% increase in their own fuel costs.

Mortgage backed security failures occur when people get laid off and can't pay the too high mortgages.

Once Gas reached $4 a gallon, people couldn't afford as many road trips, fast food, and junk disposable items in their lives. They cut back.
And that started the recession. They rolled over and crashed the oil commodities once they saw the immediate impact, but the ball had already started rolling, and the fear and retraction caused by that lead to the realization that the entire financial system had been playing fast and loose to the point that any one slow down would knock down the house of cards.

Just look at any graph of Gas prices between 2005-2009 and General economic growth in the us between 2005-2009. The gas increase is right ahead of the slump in the economy, and the great gas price drop is right after the mortgage back securities failure.
Gas dropping was an attempt to stop the collapse. They saw it, they couldn't stop it, and the bailout is pretty much across the board with the banking systems who facilitated the oil commodities deregulation.

It's just crazy greed, with no one slapping at all the grabby hands.
 

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Actually the mortgage defaults were greatly increased by giving people loans that had no business getting them, and guess who set that up? Your friendly full of good intentions Fed just chomping at the bit to do good in the world with our money. Now maybe it was greed and maybe it was politics but in the end it didnt matter they screw up everything they touch.

Besides we have bigger fish to fry any way like Cap and Steal, ObamaCare, Second Amendment assaults, search and seizure abuses, in others words the basic rights that shouldn't be an issue but are because someone gave the government more power with good intentions.
 

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Actually the mortgage defaults were greatly increased by giving people loans that had no business getting them, and guess who set that up? Your friendly full of good intentions Fed just chomping at the bit to do good in the world with our money. Now maybe it was greed and maybe it was politics but in the end it didnt matter they screw up everything they touch.
No that one is demonstrably not the case.

The "magic" loans scenario was driven by banks who wanted to gurantee they weren't missing out on any of the pie being baked by the housing boom.

The Fed started warning people as early as 2004 about the danger of reverse ammortization loans, and balloon payments and stacking multiple mortgages in order to afford 10% more house.

There were several federal programs explaining to people that the safest bet in mortgages was the HUD minimum of 3% down and 3 months of mortgage payments in savings and having your rehab budget in the actual bank before you tried to take out a line of home equity credit to rehab a house you had just gotten a mortgage for.

I went to two of those federal "workshops" which were paid for to explain to people how mortgages work, what you have to have, why and how banks do underwriting and all the little things that go along with buying a house.

YES they did give some money to people for down payment assistance. But it was pretty small amounts of money and there was a cap on how high a mortgage you could get an still have the assistance. So it wasn't like single ghetto moms were getting assistance buying $300K mansions. They were getting $3000.00 down payment assistance as long as they had matching funds in the bank to prove their commitment and their financial ability to payback a federally backed mortgage.

Very few of the people at the workshops could qualify for the HUD loans including myself. THere were just too many requirements, and too many specific things on the checklist that had to be verified. I didn't even qualify. My savings account was too light to get a HUD loan.

But I qualified for SEVERAL dodgey interest only reverse mortgages and all kinds of loans that I decided not to take after having gone to the workshop and finding out that most of these loans would quadruple my payments after a year, or would constantly mean I owed more on the house than I paid for it with no way out of it unless someone was willing to buy the house for 3 times what it was worth and so on.
WIthout that federal workshop I would easily be one of those people who bought a house when I couldn't afford it.

But the feds didn't start making up dozens of new loan types and continuously shop around underwriting until they found one that stuck, or fail utterly in due diligence to check income statements or employment.

I personally knew two people who's adult children applied for mortgages on houses their parents couldn't even afford based on falsified earning statements and fake job histories, and got them. Took out gigantic mortgages while working at Taco bell and turned around and expected Mom and Dad to help them make the payments since it was "such a great investment".

I can still remember one of my buddies face when he was telling us what his stepdaughter did. I thought he was gonna have a heart attack right there. He was most pissed that the bank couldn't figure out that an unemployed 22 year old girl couldn't afford a $280,000.00 mortgage.
How exactly is that the feds doing?
 
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