Comment Text:
Dear Sir or Madam,
Please take steps to educate the public, concerning the need in commodities markets, to accomodate both hedgers and speculators. Any attempt by the government to interfere with free trade between these two groups could have very serious consequences for the economy. My senator, a former astronaut who apparently knows little of how free markets are supposed to operate, believes that speculators in the commodities markets are hurting consumers. He does not evidently understand that we need speculators so that hedgers can reduce the risk of their operations, the costs of which are related to commodity prices. To the extent that hedgers of commodities pass along the costs, associated with risk of rising commodity costs, to consumers, this vital relationship between hedgers and speculators helps, not hurts, consumers.
If speculators are taking positions that are too large, causing commodity market price distortions (his concern, see below) won’t they eventually be punished by the market (absent a federal bailout)? I submit that their bad behavior is self correcting, in the end, if free market conditions are maintained. I apologize for the ignorance of the man we have put in office, but if he is ignorant, so is the New York Times, where he apparently gets his information. I can’t do a thing about Senator Nelson until 2012. In the meantime, please mount an effort to correctly inform the New York Times and the consuming public. Below please read a copy of Senator Nelson’s missive to his constituency.
Samuel D. Updike
Dear Samuel,
“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.”
Part of the reason, according to The New York Times, is that speculators are still playing games in the marketplace. Our regulators allow them to wildly bid up the price for everyday items we need, like wheat, gasoline and heating oil. Click here to read The Times article.
Despite a clear directive from Congress to rein in excessive speculation, our watchdogs in Washington seem to be listening more to Wall Street, and not acting quickly enough to protect American consumers. Consider: On any given day about half of the oil futures contracts are bought and sold by traders, not companies that use oil, like airlines and power companies. And the sky’s the limit when it comes to how much of the market traders can control.
To help stop the manipulation of commodities prices, send an e-mail now to the Commodity Futures Trading Commission - and tell the members to stop speculators from interfering with the price of food and energy. Tell the commissioners to stop listening to Wall Street lobbyists. Tell them to impose meaningful position limits.
And while you’re at it, forward this note to your friends, family and others who care about this issue. If the commission hears from enough folks, it’ll adopt stronger rules next month when a vote is scheduled.
Sincerely,
