Why we're having to pay so much in gas and everything else.

[Sarah Ibarruri]

Speculators Get a Break in New Rule
New York Times
September 24, 2011


By GRETCHEN MORGENSON


A LOAF of whole wheat. A gallon of gasoline. A pair of Levi’s. Americans are paying more for many basic items this year, making tough economic times even tougher. But these hardships for consumers provide another reason to check in on Dodd-Frank, that package of financial reforms that Congress passed in 2010. Here’s why: Congress told federal regulators to write rules that would ensure that Dodd-Frank does what it’s supposed to do, which includes protecting consumers. But the Commodity Futures Trading Commission has proposed rules that critics say might actually encourage speculation in the commodities markets, rather than reduce it. Senator Bill Nelson, a Florida Democrat, says that as things stand, the C.F.T.C.’s plan could cost ordinary Americans.
“Despite a clear directive from Congress to rein in excessive speculation, regulators still are listening too much to Wall Street and not acting quickly enough to protect American consumers,” Mr. Nelson said last week.

Granted, prices of various commodities, including heating oil and gasoline, fell last week amid all the economic gloom. But that’s no reason to give speculators a pass. There are those who reject the notion that financial speculation has made commodity prices more volatile and even driven up prices in recent years. Some of them work for the C.F.T.C. But Michael Greenberger, a professor at the University of Maryland Law School, says that a majority of academic studies on this issue — from Texas A&M, Rice and Stanford — demonstrate the ill effects of speculation on energy and food prices...

... At the center of the debate are rules that would place a cap on how many financial contracts traders can accumulate for any given commodity. The idea is to prevent a small group from dominating an entire market.
Mr. Nelson’s bill, the Anti-Excessive Speculation Act of 2011, sets limits in energy contracts that would apply to speculators as a class of traders, aiming to cap the overall level of speculation in the market at its historic 25-year average. In the oil markets, speculative trading accounts for about half of all trading. He says his plan would reduce that figure to about 20 percent. He cited research showing that speculators may add $21 to $27 — or about 25 percent at current prices — to the price of a barrel of oil. “This legislation aims to ensure that prices at the pump better reflect the true supply and demand for oil — and not the activities of speculators,” he says. The C.F.T.C. might still change its proposal. The commission is expected to vote by mid-October...

Article here: http://billnelson.senate.gov/news/details.cfm?id=334195&

[sam11111]

1. Gamblers should have no foothold anywhere in an economy

Gamblers are an unsavory element

[Sarah Ibarruri]

2. Yes indeed. nt