Outside the United States
Prohibitions On Market Manipulation and False Information in Subtitle B of the Energy Independence and Security Act of 2007
You have 2 problems here as i see it, long term and short term. The long term issues are much more complex, i.e. budget deficet, trade deficet, fiscal policy, tax codes, etc., etc. This is not the right time or forum to address these issues and in fact i am not the right person to address them so for the moment just my views on what is going in the commodity markets. I think it is going to take some dramatic action to correct what is going on right now, and it is going to have to come from our politicians who are going to have to show their constituents some courage and vision. Are there any politicians out there that fits this description? The very first thing that needs to be done is to raise the margin requirements for trading futures contracts on the NYMEX exchange. Currently the margin requirements are only 5-7 percent, compare this to 50 percent margin requirements in a typical brokerage account for equities. So for $7,000 you can control $110,000 worth of crude oil, without any consideration as to whether they ever intend to actually take delivery of the actual oil. This would cost hedge funds and speculators a lot of money, but that is the risk they took upon themselves when they engaged in these activities that are wrecking our economy. The speculators should read the history of the Hunt brothers and there attempt at cornering the futures market in 1979-1980. I firmly believe that the same tactics used then would work now. At the least we would determine whether this market is real or not. At the moment no matter what happens the price of oil goes up. Boone Pickens talks the market goes up. If there is negative news on the economy the market goes up, in anticipation of the Federal Reserve cutting interest rates, which would weaken the dollar further. If there is positive news on the economy the market goes up, in anticipation of an expanding economy, which leads to more energy use. A few weeks ago the goverment released the unemployment report showing a loss of 20,000 jobs and crude went up 3.4 percent in 1 day, the logic being that the numbers were less then expected. WOW, i am sorry but it still showed an economy that is contracting, not expanding. Since December of 2007, 8 airlines in the USA have declared bankruptsy, if this keeps up we may not have a viable airline industrie 6-12 months from now. I know that is a popular pasttime, hating on the airline industrie, but they are a strategic asset of our country. Other things that could potentially help- - Raising interest rates dramatically to underpin the dollar. - OPEC raising production by 2,000,000 barrels a day. - Suspending purchases of OPEC oil for 30 days, replacing this oil with oil from the stategic reserve. - Monetary intervention by the G-7 to buy dollars on a massive and sustained scale. - Opening up off limits areas in the USA for drilling, i.e. Alaska and on the continental shelf and the Gulf of Mexico. - Pursuing alternative energy sources. - Building more refineries in the USA. - Conservation of energy. - A credible national energy policy. Thanks for giving me a forum to air my views.