340. TIME TO STRANGLE THE SPECULATORS
It's getting clearer by the day that commodities are the next bubble -- the successor of the NASDAQ and housing bubbles. All the signs are there: vertical takeoff of all commodities simultaneously, massive piling on by hedge funds and J6Ps, talk of a "New Era" where prices will never come down.
As usual, the bubble(s) are being primed with fraud. Here's a couple of enlightening talks by Frank Veneroso on rampant market manipulation and cornering in the base metal markets.
Address to Global Central Bankers at the World Bank(pdf)
PPI summer 2007 roundtable(pdf)
It's not clear what useful social function is being served by hedge funds with massive leverage trampling all over small markets in essential commodities like metals, oil and food -- billionaire investment clubs turning a tidy profit on the backs of the world's poor.
When it comes to oil, Pickens is not often wrong. He has pocketed more than $1 billion (£493m) in each of the past two years by making big bets on rising oil prices, say Wall Street sources.SourceYou know who paid Boone that $2 billion? You did, at the pump. And that's just the frost on the tip of the iceberg. You know what Boone did to earn that money? Nothing except sit on his bony ass. It's welfare for billionaire parasites.
Here's a helpful hint on how to strangle the speculators:
Oil prices will continue to rise, insists Verleger, who compares the rise in oil to the accompanying rise in silver prices during the 1980s oil crisis, which is mirrored by the rush to commodities today. CalPERS, the California retirement fund for state employees, is increasing its investment in commodities, notes Verleger, from $450 million to $7.2 billion. This will mean an additional 36,000 crude futures to the fund's portfolio. The push on these futures is also reminiscent of silver, he says.This sounds like a great idea. And since the banks are over a barrel right now, this would be a great time to "encourage" them to pull the plug on the hot money surging into commodities.
Silver's rise was ended by government intervention, when Fed chairman Paul Volker asked banks to stop lending to investors buying commodities. "I suspect the continued rise in oil prices will be broken only when the Federal Reserve, CFTC, NYMEX and ICE take similar actions. To be specific, I expect to see prices fall when the central bank orders banks not to lend to hedge funds to purchase commodities."
But why stop there? All these commodity markets, from base metals to agriculturals, are small markets, ripe for manipulation by massively leveraged big players. So I think we need a much stronger enforcement presence on the LME, NYMEX, grain exchanges etc. The Feds and the CFTC need to be crawling all over the exchanges, sticking a periscope up everybody's ass, looking for collusion, cornering, squeezes, squirreling and all the usual species of commodity fraud. The enforcement agencies also need to start taking down names and numbers of every person involved in the futures and ETF markets, in preparation for confiscatory windfall taxes.