Comment Text:
Setting the “position limits” on the amount of derivative contracts, including futures and swaps, a trader for 28 commodities, which include oil, corn and gold, is allowed to control at 25% of deliverable US supply unless they are hedging for “bona fide” commercial purposes is total insanity. Allowing the possibility for four (4) traders, that have no “bona fide” interest in the commodity except monetary profit, to control 100% of the U.S. market is ridiculous. If you do not have a “bona fide” commercial purpose, other than pure trading for monetary profit, they should not be allowed to trade the commodity. Speculators only drive up the commodity price for their own monetary profit and provide no other value!
I urge you to take appropriate and immediate actions in order to curb the impact of speculator dominance and market manipulation in derivative contracts, including futures and swaps, trading.
According to The Bank for International Settlements (BIS) Quarterly Review: June 201, in 10 years there has been over a 6 fold increase from December 2000 ($95 Trillion) to December 2010 ($601 Trillion) and over a 9 fold increase from June 1998 ($72 Trillion) to its peak in June 2008 ($672.6 Trillion) in the Notional Amounts outstanding of over-the-counter (OTC) derivatives.
To grasp how significant this bubble increase is, let's put that $601 and $672.6 trillion in the context of some other domestic and international monetary data:
•World's GDPs for all nations is approximately $62 trillion
•Total value of the world's real estate is estimated at about $75 trillion
•Total value of world's stock and bond markets is more than $100 trillion
The Banks are printing their own money to gamble with and expecting the taxpayers and central banks to bail them out when the bubble bursts.
I would suggest that you read
THE COMMODITIES MARKET BUBBLE
Money Manager Capitalism and the Financialization of Commodities
By L. RANDALL WRAY, fall of 2008
This can be found at http://www.levyinstitute.org/pubs/ppb_96.pdf
and
Randy Wray: The Biggest Bubble of All Time – Commodities Market Speculation
By L. Randall Wray, September 22, 2011
This can be found at http://www.nakedcapitalism.com/2011/09/randy-wray-the-biggest-bubble-of-all-time-%e2%80%93%c2%a0commodities-market-speculation.html
L. Randall Wray, a Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College.
