Dawson Lodge

Time To Ban CEOs and Senators from Derivatives Markets

Well said. It's all about the Peter principal. Any clown that whines about speculators is just demonstrating his ignorance and collectivist leanings. Probably a Keynesian, and got his position through cut-throat office politics instead of merit.
Well, that's over. After this depression merit will again rise to the fore. Speculation is a holy advocation. It is the foundation of true capitalism (we ain't seen much of that in these huge companies). Speculators add liquidity to markets, damping excesses by taking risks. They are the people that business operators should transfer the risks to, instead of gambling with their profit margins.

Any CEO that spouts this ignorance should be removed by their board. If these guys are not smart enough to calculate at what price fuel costs will negatively impact their operating margins, and use the market for price insurance as it was intended, they better read some Ron Paul.
They are the speculators. Essentially they were short energy and were wrong. Speculating with the capital of their shareholders. It is just incompetence.

If I can lock in a price for fuel that guarantees my margins, I had better do it. If I don't, it is pure negligence,
the tools are there. If you can't manage risk, and get caught with your pants down, go back to school.

Better yet, hire a rogue economist that understands the realities of the market, can use cycles and trends to identify the risks, and understands your business.

My clients didn't get caught with "unexpected" price rises,
because I have trained them to be pro-active risk managers. Anybody caught by "surprise" shouldn't be blaming the guys who provide the grease that makes capitalism work. Or maybe they would prefer the
Chinese system, where gross misallocations of resources are made for political reasons. They will
crash like Russia.
Great article.