Atw - you happy now?

[HairyArsedBloke]

Proposed limits on 'speculants'.

The Commodity Futures Trading Commission (“CFTC” or “Commission”) is proposing to implement speculative position limits for futures and option contracts in certain energy commodities. The Commodity Exchange Act of 1936 (“CEA” or “Act”) gives the Commission the authority to establish limits on positions to diminish, eliminate or prevent excessive speculation causing sudden or unreasonable fluctuations in the price of a commodity, or unwarranted changes in the price of a commodity. In addition to identifying the affected energy contracts and the position limits that would apply to them, the notice of proposed rulemaking includes provisions relating to exemptions from the position limits for bona fide hedging transactions and for certain swap dealer risk management transactions. The notice of proposed rulemaking also sets out an application process that would apply to swap dealers seeking a risk management exemption from the position limits, as well as related definitions and reporting requirements. In addition, the notice of proposed rulemaking includes provisions regarding the aggregation of positions under common ownership for the purpose of applying the limits.

It'll all end in tears.

[AtW]

No, I am not happy even though this is a watered down step in the right direction.

What should happen is that simple rule is applied: "you bought it - you use it" (for future reference let's call it AtW's First Rule of Economics): this means unless you are authorised reseller of a company that digs/drills/otherwise-gets commodities such as oil, then you have to buy that commodity for actual use: meaning - refine it to petrol, use it to produce plastics etc. If you want to buy a derivative on such goods (futures) then it would mean you have to actually use them once you get your hands on them.

This will certainly out of job a lot of dirty spekulants, and get staff that supports their operations fired. That's acceptable loss in my view - these people went way above "not contributing to society" to "feck up society to satisfy their greed".

To be sure that it works a very large >100% tax should be put on short term capital gains, with transaction tax to ensure people don't turn exchange into casino - if you don't intend (or can't afford to) to hold your investment for 2-3 years then you should not be doing it in the first place.

Will so-called "liquidity" call as the results of such actions? That's possible, however under my model people should be accepting a risk of high losses unless they are prepared to stick long term. Maybe after that investors will actually put money into companies based on their fundamentals: there is some hoping!

HTH

[Francko]

This would be the only investment possible if your rules were set as you wish.

hhttp://cubeme.com/blog/wp-content/uploads/2009/09/Keep-Money-Mattress1.jpg

[RichardCranium]

This would be the only investment possible if your rules were set as you wish. hhttp://cubeme.com/blog/wp-content/uploads/2009/09/Keep-Money-Mattress1.jpg

That gives a better return on your investment than my Eagle Star Endowment did.

[d000hg]

What should happen is that simple rule is applied: "you bought it - you use it" (for future reference let's call it AtW's First Rule of Economics): this means unless you are authorised reseller of a company that digs/drills/otherwise-gets commodities such as oil, then you have to buy that commodity for actual use: meaning - refine it to petrol, use it to produce plastics etc. If you want to buy a derivative on such goods (futures) then it would mean you have to actually use them once you get your hands on them.

This story may interest you, about the perils of speculation... http://thedailywtf.com/articles/special-delivery.aspx

And as a side-conversation, which CUK member reminds you most of Brad.

[Toolpusher]

This would be the only investment possible if your rules were set as you wish.

hhttp://cubeme.com/blog/wp-content/uploads/2009/09/Keep-Money-Mattress1.jpg

My bed's been getting a bit uncomfortable lately.....

[AtW]

This would be the only investment possible if your rules were set as you wish.

No, the banks will just have to invest into local businesses that they understand and know local person who started them as opposed to gamble savings of local people on international money "markets".

Naturally this will result in scaling back of said casinos and associated IT and other support stuff, these people certainly won't like it but I can't see any other way around - if your own local bank prefers to invest into "AAA" subprime junk far away then local area has no future.

HTH

[BrilloPad]

That gives a better return on your investment than my Eagle Star Endowment did.

Not when you get burgled......

[kingshuk]

No, the banks will just have to invest into local businesses that they understand and know local person who started them as opposed to gamble savings of local people on international money "markets".

Naturally this will result in scaling back of said casinos and associated IT and other support stuff, these people certainly won't like it but I can't see any other way around - if your own local bank prefers to invest into "AAA" subprime junk far away then local area has no future.

HTH

Actually your 'genuine buyers/seller's won't like it either. It will suck most of the liquidity out of futures markets and create a big difference between bid/offer prices. Do you know what percentage of trades are done by 'speculators' in commodity futures markets?

[RichardCranium]

Not when you get burgled......

The contents insurance would have refunded more of the cash than Eagle Star did.