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The President's plan to chill supposed oil manipulation: Increase by 6-fold the surveillance and...

The President's plan to chill supposed oil manipulation: Increase by 6-fold the surveillance and enforcement staff at the CFTC. Increase spending on surveillance technology. Increase civil and criminal penalties for manipulation from $1M to $10M. Give the CFTC authority to increase margins (presumably now only the domain of the exchanges). Crude +1.4% to $104.84.
Comments (66)
  • bbro
    , contributor
    Comments (9467) | Send Message
     
    Politics...
    17 Apr 2012, 11:51 AM Reply Like
  • Zanalyst
    , contributor
    Comments (78) | Send Message
     
    Politics – yes. Smart politics- no.

     

    Two of the most basic and fatal mistakes a politician can make are: 1) interfering with the “politically correct” as defined by the MSM; and, 2) interfering with the moneyed interests.

     

    Regarding #2, the Obama administration has been poking the energy industry in the eye from day one; and this may be the straw that breaks the camel’s back.

     

    Audacious arrogance - mixed with ignorant, incompetent or irresponsible policies – leads to the worst of outcomes…
    17 Apr 2012, 12:41 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Obama administration has been poking the energy industry in the
    > eye from day one

     

    Agreed, and Wall Street -- while covering their bases on both sides as always -- has definitely turned to Romney as their man.
    17 Apr 2012, 12:44 PM Reply Like
  • Trader Monk
    , contributor
    Comments (130) | Send Message
     
    Why not just execute speculators..afterall they are to blame for his declining chances of reelection..and there is nothing more important..
    17 Apr 2012, 11:51 AM Reply Like
  • sburger
    , contributor
    Comments (48) | Send Message
     
    Does investing in USO make me an evil speculator?
    17 Apr 2012, 11:53 AM Reply Like
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    Anything that does not contribute to and glorify the utter awesomeness of The One is enough to make you evil, whether you're a speculator or not. Off to the re-education camps you go!
    17 Apr 2012, 11:56 AM Reply Like
  • Trent Guinn
    , contributor
    Comments (69) | Send Message
     
    LOL. It seems as if the traders are taunting him.

     

    Obama says: "I will end speculators who are driving the price of oil up!"

     

    Market says: "Crude +1.4%"
    17 Apr 2012, 11:55 AM Reply Like
  • Windsun33
    , contributor
    Comments (4263) | Send Message
     
    I wonder why he does not want to end the speculators when they drive the price down?
    17 Apr 2012, 01:40 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Because it's very rare when that happens, especially with oil. Oil prices were certainly too low just a few years ago, but they quickly came back up.

     

    And the reality is that the industry can control supply when prices are too low, so prices being too low doesn't really affect them for long, and speculators know this too.

     

    Consumers can't just instantly reduce their demand -- oil is not a luxury commodity, it is needed to keep economies going.
    17 Apr 2012, 01:46 PM Reply Like
  • Richard Ian Carpenter
    , contributor
    Comments (23) | Send Message
     
    The President's Theory of Oil Speculation: Government intervention will halt the manipulation of the oil price and keep greedy speculators from profiting off of the suffering of the People.

     

    Market response: Oil rises 1.5% to nearly $105 per barrel.
    17 Apr 2012, 11:56 AM Reply Like
  • bbro
    , contributor
    Comments (9467) | Send Message
     
    How about if we just put these regulations into effect just in the
    election years then both parties would be happy ( well actually the ones in power)
    17 Apr 2012, 11:56 AM Reply Like
  • montanamark
    , contributor
    Comments (1435) | Send Message
     
    what about penalties for fed officials who manipulate markets
    17 Apr 2012, 11:57 AM Reply Like
  • favre231
    , contributor
    Comments (9) | Send Message
     
    To true.
    17 Apr 2012, 12:01 PM Reply Like
  • montanamark
    , contributor
    Comments (1435) | Send Message
     
    can we get some penalties for federal politicians who lie to the american public
    17 Apr 2012, 11:58 AM Reply Like
  • favre231
    , contributor
    Comments (9) | Send Message
     
    I second that
    17 Apr 2012, 12:01 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    You can if you want, but a lot more of your party would be in jail than the president's party. Just saying.

     

    See for yourself:
    http://bit.ly/xzCBor

     

    Be careful what you wish for.

     

    Of course, if it were a one-strike law, there would be no politicians left at all! :)
    17 Apr 2012, 12:40 PM Reply Like
  • Ford289HiPo
    , contributor
    Comments (466) | Send Message
     
    That may not be a bad thing.
    17 Apr 2012, 07:06 PM Reply Like
  • bbro
    , contributor
    Comments (9467) | Send Message
     
    Actually all that matters is OHIO... and gas prices are down 5 cents
    year over year there.
    17 Apr 2012, 11:58 AM Reply Like
  • favre231
    , contributor
    Comments (9) | Send Message
     
    Crude up 1.5%
    17 Apr 2012, 12:01 PM Reply Like
  • bbro
    , contributor
    Comments (9467) | Send Message
     
    It needs to raise gas prices in Akron to help Romney
    17 Apr 2012, 12:05 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    So the solution is to hire more government employees who will owe their jobs to he who hired them and will vote and campaign and contribute accordingly.
    17 Apr 2012, 12:08 PM Reply Like
  • davidingeorgia
    , contributor
    Comments (2713) | Send Message
     
    That is ALWAYS the solution with this bunch. Well, that and going on expensive vacations to spiffy locations around the world.
    17 Apr 2012, 12:13 PM Reply Like
  • favre231
    , contributor
    Comments (9) | Send Message
     
    Doubtful
    17 Apr 2012, 12:35 PM Reply Like
  • montanamark
    , contributor
    Comments (1435) | Send Message
     
    what about sec chu's evil plan to push american gas prices to european levels - what does that merit - a luxury trip to vegas on the taxpayer dime
    17 Apr 2012, 12:09 PM Reply Like
  • Terry330
    , contributor
    Comments (866) | Send Message
     
    President Obama looking out for the bottom 99%.
    17 Apr 2012, 12:13 PM Reply Like
  • Windsun33
    , contributor
    Comments (4263) | Send Message
     
    Yet another silly uninformed comment. Obama failed to mention that speculators work both sides, yet he only complains when prices go up, not down.

     

    Oil prices jumped up 1.5% on Obama's comments, so yeah, he sure is helping that so called 99%.
    17 Apr 2012, 01:42 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > speculators work both sides, yet he only complains when prices
    > go up, not down.

     

    This is precisely why it's basically just racketeering.

     

    Speculators are not serving as legitimate pricing mechanisms.

     

    The longs are not long because they think oil is fundamentally worth more, they are long because they know if they all go long, especially buying more contracts for oil than there is oil that exists, then prices will indeed rise -- a self-fulfilling prophecy. Yes, there are people on the other sides of those trades, but they are simply "muppets".
    17 Apr 2012, 01:51 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    Right, the flip side that you didn't mention is that it means that when the price is higher, oil production will go up. It might take a while, but it will happen.

     

    During that while those same speculators will switch to the short side, bringing prices back down. This is why speculators are a stabilising force. We all speculate, isn't that why we're here?
    17 Apr 2012, 01:58 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > when the price is higher, oil production will go up. It might take
    > a while, but it will happen.

     

    Correct, but just barely, and not at all productively.

     

    It will take a long, long while -- basically it won't happen until prices are so high that consumers simply can't afford to purchase enough to make the current production levels profitable. Yes, this is caused by the speculators, but this scenario is FAR from stabilizing, as it causes significant economic hardships along the way -- and the people getting rich from such shenanigans are not adding any real value.

     

    > those same speculators will switch to the short side

     

    And as those speculators (artificially!) drive prices down, the producers will scramble to reduce production again to maintain profits.

     

    Let real markets work, good old fashioned supply and demand. Fake markets just distort natural economic forces.
    17 Apr 2012, 02:28 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    I agree completely on your last statement. That's what I was suggesting we should do.
    17 Apr 2012, 03:28 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Then you should fully support dropping the hammer on most of the futures speculators.

     

    Remember, no one has a problem with a company hedging its fuel costs, or an investor investing in an oil company. It's the mockery of a market called the futures exchange that destroys any semblance of normal economic forces -- and this market falls under the CFTC's supposed regulatory authority.
    17 Apr 2012, 03:55 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    "Then you should fully support dropping the hammer on most of the futures speculators."

     

    Which ones? Will you decide based on their campaign contributions?

     

    "Remember, no one has a problem with a company hedging its fuel costs...It's the mockery of a market called the futures exchange..."

     

    Isn't it the futures market where you hedge?
    17 Apr 2012, 04:28 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    You think the CFTC are going to stop the manipulation? They're major players in manipulation as part of the "Working Group on Financial Markets" or "Plunge protection team" as they're otherwise known.

     

    http://wapo.st/zghIiB

     

    Poor Texan also makes some good points on this.
    17 Apr 2012, 04:46 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Will you decide based on their campaign contributions?

     

    No, that's only what political ideologues like all these knee-jerk reactionaries would do.

     

    I would decide based on the nature of their trading. Actually, I would simply require futures contracts to be anchored to real commodity volume, as was their original purpose. No more of this nonsense where people buy 10 contracts for every 1 contract's worth of physical goods that could actually ever be delivered. There is some merit to position size limits too.

     

    > Isn't it the futures market where you hedge?

     

    Yes, hedge, not speculate in wildly distorted quantities. :)

     

    The futures market shouldn't be eliminated, it just needs to be restored to sensibility.
    17 Apr 2012, 05:29 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    From your (1997) article:
    ----------------------...
    What would happen today during a stock drop would depend on the particulars. Here are current guidelines:

     

    * If the Dow Jones industrial average falls 350 points within a trading day, NYSE trading would be halted for 30 minutes.

     

    * If the DJIA falls another 200 points that day, trading would stop for one hour.

     

    * If the market declines more than 550 points in a day, no further restrictions would be applied.
    ----------------------...

     

    While I'm certainly against the Fed's showing of banksters with free money, I would say the above actions, which are transparent even if intrusive, are far less manipulative to the market than the current de facto (and actual) collusion in which the major traders are involved.
    17 Apr 2012, 05:34 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    If you believe there's real transparency and that those traders aren't involved in the manipulation then I've got a bridge going cheap you might be interested in.

     

    Here's the kind of transparency you get, even with FOI acts:

     

    http://1.usa.gov/J6iwAe
    17 Apr 2012, 05:44 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    And here's the transparency you get with most futures speculators. :)

     

    http://bit.ly/IvEitk
    17 Apr 2012, 05:53 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    Hah, yeah, but my link shows introducing the CFTC won't help. Transparency is a political offering, which, like the rest, generally disappear once power has been gotten.

     

    Can't have people understanding things now, can we? It might make them afraid and then get out of the market. This is the justification they used for not saying which banks were hitting up the fed for money during 2008. Transparency won't come.
    17 Apr 2012, 06:46 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Parts of government have always been opaque. Military, FBI/CIA/NSA, come congressional hearings, etc. Can't have everything wide open -- there is a very legitimate argument to be made that it's not productive to show the world how all the sausage is made all the time.

     

    I'm sure if we saw all the inner workings of most corporations (i.e., meeting transcripts), it would cause many problems as well.

     

    Hiding some things is BS, of course, like which banks got how much taxpayer money, especially after the fact.

     

    However, in general (like, situations that don't involve global crises), non-governmental entities often wield more influence in markets than governments do, and are far, far more opaque.

     

    And government at least has so-called elections involved in its creation (appointments are made by elected officials, etc), and while out election processes leave a lot to be desired, they are better than what these public and private corporations offer us: nothing, except what we can literally buy.

     

    In summary, I don't trust the CFTC much either, but I trust them more than GS, JPM, MC, C, BAC, GE, etc. :)
    17 Apr 2012, 07:15 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    Maybe that's where we differ. I mainly distrust those companies because of the power they wield via governments. Most of them have made their money by using governments' powers of distortion, to the bailouts where it was so blatantly obvious.

     

    They like these regulations, even if they cost some money. The regulations keep the competition at bay because while they don't like to pay for compliance, they can do so as they're already the status quo. It's much more difficult for competition to arise against that given the regulatory barrier to entry and associated costs.

     

    You've said "Let real markets work, good old fashioned supply and demand. Fake markets just distort natural economic forces." yet the regulators are a prime player in the distortion preventing competition from arising, even so far as keeping alive businesses which should be long dead, using taxpayer money/debt.
    17 Apr 2012, 07:34 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    How about he stop war mongering on Iran?
    17 Apr 2012, 12:16 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    How about Iran stop war mongering in Syria and Iraq.
    17 Apr 2012, 01:24 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    Iran as it stands now only exists due to British/US intervention in the middle east. A fine case of blowback if ever there was one. Still nothing has been learned.
    17 Apr 2012, 04:49 PM Reply Like
  • favre231
    , contributor
    Comments (9) | Send Message
     
    Obama is a politician not an economist
    17 Apr 2012, 12:26 PM Reply Like
  • favre231
    , contributor
    Comments (9) | Send Message
     
    Losing paper while gaining is right
    17 Apr 2012, 12:37 PM Reply Like
  • montanamark
    , contributor
    Comments (1435) | Send Message
     
    what about pres obamas speculation in solar companies with taxpayer dollars
    17 Apr 2012, 12:41 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    A speculative investment, yes, and ultimately a poor one, but not outright fraud.

     

    President Obama, for example, did not invest in more solar companies than actually existed -- which is what oil speculators do every day.
    17 Apr 2012, 12:45 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5237) | Send Message
     
    Short memories here: very short.

     

    I remember when Goldman Sachs had a superstar analyst who saw $250 oil. George Bush saw the laws of supply and demand, in all their ideological purity, and did nothing. Soon enough the financial crisis was further exacerbated. Thanks for nothing, George.

     

    I remember early in the recovery, oil started to make a run, see if it could nip the recovery in the bud. Obama orchestrated a joint release from various SPR's and prices calmed right down.

     

    I don't care about the occasional speculators, we need them to take the other side of a hedge. But the manipulators, funded by cheap Fed money, and indifferent to the plight of the economy as a whole, or anyone who doesn't live in a gated community, are back in full force.

     

    That's why Delta wants to buy a refinery, by the way. You can't just go out and hedge your fuel exposure any more, there is so much manipulation that the hedge is almost guaranteed to go awry. So they are resorting to vertical integration.

     

    The honest hedgers have a tough time in this market, ask anyone who was a customer of MF Global. They were farmers, etc., looking to hedge their exposures, left the money with Corzine, it's gone, nobody can figure out where, so their hedges didn't work too well.
    17 Apr 2012, 01:19 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    Short memories indeed -- people should listen to Fox News...from 2008: http://bit.ly/HQyOg7
    17 Apr 2012, 01:53 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5237) | Send Message
     
    Good link.
    17 Apr 2012, 03:24 PM Reply Like
  • Windsun33
    , contributor
    Comments (4263) | Send Message
     
    I don't think I have seen a more "economically challenged" president since Carter. Everything he says is pure politics with little basis in fact or reality. I find it interesting that the poltical fact check website shows Obama to have more factual bending issues than Romney.
    17 Apr 2012, 01:47 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5237) | Send Message
     
    Let me give you a hint, the first letter of the last name is a B.
    17 Apr 2012, 03:25 PM Reply Like
  • Rummeljordan
    , contributor
    Comments (477) | Send Message
     
    Great news everyone, the 52 Billion dollars, capital B on Billion, is money that the government has and can afford to spend. Its cool, they got it.
    17 Apr 2012, 03:18 PM Reply Like
  • Windsun33
    , contributor
    Comments (4263) | Send Message
     
    If oil futures speculators are so bad, does that not also make all other speculators bad also?

     

    Lumber futures today are up 1.6% - an obvious ploy by the speculators to rip off the American public. On the other hand Whey futures are down 33% - this abviously calls for more regulation to control the volatility. And just look at how the speculators have gone after pork bellies and wood pulp - some government intervention is surely justified here also.

     

    An interesting aside is this article on onion futures http://bit.ly/IlPZUd

     

    An interesting story about the onions, but with or without futures, onion prices are much wilder now than they were in the 50's.
    18 Apr 2012, 11:35 AM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > If oil futures speculators are so bad, does that not also make all
    > other speculators bad also?

     

    Absolutely, but of course, unless one is making foolish hyperbole, common sense dictates that you go where you get the biggest bang for the buck.

     

    Whole economies are not crucially dependent upon onions, whey, or pork bellies, nor do those markets have the size and scope of the oil markets.
    18 Apr 2012, 11:43 AM Reply Like
  • Windsun33
    , contributor
    Comments (4263) | Send Message
     
    You have obviously never seen the devastating effects of a whey shortage :)

     

    I think the real questions here are: (1) how well has the government done in improving things with more regulations in the past, and (2) What are the chances of any new regulations actually lowering the price of gas at the pump.

     

    Not to mention the fact that not all "speculators" are in the US, and I see little to prevent them all from moving to the Cayman Islands.
    18 Apr 2012, 12:35 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > (1) how well has the government done in improving things with
    > more regulations in the past

     

    In the past, the addition of more regulation on financial markets has generally benefited the retail investor. When Dodd-Frank was being debated, there were a lot of articles out there about how, historically, Wall Street fights reform fiercely, claiming it will destroy the world...and then the reforms happen, Wall Street adjusts, and the little guy doesn't get quite as screwed as he used to.

     

    We must be careful to separate the good from the bad, and not throw out the baby with the bathwater, and [pick your favorite metaphor].

     

    These "more regulation is automatically bad!!!!11!!" mantras are thoroughly unproductive, and ignore the content of what that regulation might include.

     

    The STOCK Act was "more regulation" (though still not enough!) -- do you think we should have let congressmen continue to violate insider trading laws?

     

    Straw man arguments ("Obama wants to eliminate all futures contracts!!11!!11!11!11") aren't useful either.

     

    Focus on the facts. For a change.

     

    > (2) What are the chances of any new regulations actually lowering
    > the price of gas at the pump.

     

    Depends what the regulation is, see above regarding content and facts. :)
    18 Apr 2012, 12:56 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5237) | Send Message
     
    Windsun33,

     

    You could also consider how well the government has done by removing regulations and defanging and declawing regulators in the past. This was a trend in financial regulation starting in the 1980's, and peaking in the Bush years when there was no effective regulation.

     

    Result: chaos and huge destruction of wealth. The markets did not regulate themselves. Instead, they indulged in wretched excess, fraud, abuse and manipulation.
    18 Apr 2012, 01:25 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3529) | Send Message
     
    "The markets did not regulate themselves."

     

    Yes, all people are greedy and unless they are regulated by an amoral elite, they will try to get more for themselves. Fortunately all lawyers, judges, and government employees are scrupulously honest and have our best interests at heart.:-(
    18 Apr 2012, 02:09 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5237) | Send Message
     
    You aren't talking about the problem - deregulation under Bush was the proximate cause of the GFC.

     

    Re-regulation under Obama is a good antidote. We haven't had enough of it yet.

     

    Would you believe that the big banks were permitted to assess their own risk and capital needs prior to the crisis? The were CSE's, regulated by the SEC. They figured out how much capital they needed to support the risks they took and reported their opinion to the SEC once a month.

     

    Now it's not exactly the same set of big banks who are now arguing with the Federal Reserve about how and why they should be able to assess their own capital needs and VAR with their own methods rather than having the Fed do it. The reason it's not the same group: Bear Stearns and Lehman are no more, that's why.

     

    Of course the idiot Bush wouldn't step in to solve the Lehman problem before it metastasized into full-blfown chaos. Oh no, not George. He was confident that the invisible hand would make everytlhing be OK. Within several days Hank explained it to him, it was interconnectedness... George mastered the concept within a couple of weeks and then he forgot about it, curled up with his tail between his legs and left the mess for Obama to clean up.
    18 Apr 2012, 02:19 PM Reply Like
  • D_Virginia
    , contributor
    Comments (2280) | Send Message
     
    > Fortunately all lawyers, judges, and government employees are
    > scrupulously honest and have our best interests at heart.

     

    Strawman. And hyperbole. Not at all useful. :)

     

    Facts! Focus on the facts! :)
    18 Apr 2012, 02:37 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    This is part of the problem. Everyone knows they'll be bailed out so they take risks. The people who screw up *should* go out of business but those same regulators who allowed the screwups then bail out the crappy players. Market forces? Gone.
    18 Apr 2012, 02:50 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5237) | Send Message
     
    Uh, the way I remember it, TARP was passed into law by both the House and the Senate, and signed by George Bush, President at the time.
    18 Apr 2012, 02:55 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    This isn't a Bush or Obama thing. This is far beyond either of them. It's the system we have, the puppets aside.
    18 Apr 2012, 03:10 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5237) | Send Message
     
    Regulation should deal with the size problem first and foremost. Too big to exist. Too big to compete fairly. Too big to answer to the law. Too big to contribute to a Super PAC. So on and so forth.
    18 Apr 2012, 03:15 PM Reply Like
  • Losing Paper While Gaining ...
    , contributor
    Comments (497) | Send Message
     
    Regulatory capture: the financial sector is a great example of it.
    Do you expect former Goldman Sachs people are going to break up Goldman Sachs? Maybe some of GS's competitors...
    18 Apr 2012, 03:20 PM Reply Like
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