o CFTC Looking for Excessive Speculation

The CFTC has woken up to the fact that speculation may have behind the commodity bubble of the last few years. The easiest place to look for speculation in with Exchange Trade Funds (ETF's) and Commodity Index Funds. These "investment" vehicles allow retail traders, mom and pop Smith, access to the commodity markets. Billions of dollars worth of investment money pour through these funds and that are used to buy (long only) front month futures contracts. One of the biggest sources of speculation are the "investors" in these types of funds, driving prices higher by buying futures contracts each month. Its retail money, aided by the ease of electronic trading, that leads to the speculative bubbles. The government is misdirected when it focuses on institutional players. Large financial institutions provide liquidity that enables end users and producers to hedge their risk in the financial markets.

Recommendations:

I see the problem as retail "investors" being involved in an institutional market.

1) Keep all futures contracts in "big" volume sizes. E-mini's cut the size of a contract in half or a quarter allowing smaller speculators to trade.

2) Disallow the aggregation of funds to purchase a futures contract. This will effectively eliminate ETFs and Commodity Index Funds. The market should be left to large, professional traders. Then prices are determined by supply and demand and not retail money flow.

3) Force all futures exchanges, whether on shore or offshore, to publish volume data.

o Federal Government Intervention of Social Issues

It’s impossible to keep 200 million people happy while focusing on bigger issues of national security. Let states handle social issues on a state-by-state basis. If the temperance movement lives on in Utah, that’s their own business. Abortion can be legal in Maine but illegal in New Hampshire, it’s not a winner take all issue so it shouldn’t be dictated from the top down. The Federal Government does not have time to waste debating Roe v Wade. If people are so opposed to their state laws, they can move states.

o Changes in Public Education

Public schools should teach logic for two years in junior high school. Its better to know how to think than to just learn facts through rote memorization. Also computers are logic driven machines, and everyone should be given the ability to interact with computers because they are an integral part of our society. Chess should be a mandatory class to force students to learn strategy and forward thinking.

o Cabinet Positions

Cabinet positions should be split evenly between the two ruling parties so that voices from both sides can always be heard. A one sided discussion is not a discussion, its an echo. Debates should be lively and opposing views should always be expressed.

o Pitfalls of a Global Economy

Lower and uneducated people in the U.S. have no way of making a living in the Global Economy because labor is always cheaper abroad. The Global Economy is really government-sanctioned discrimination against the working class poor. Create a unit cost per item manufactured in the U.S. and tax imports accordingly. A cheap and slave labor source is an unfair playing field, especially when our own government sets an internal minimum wage. Blue collar and manufacturing jobs are hard to export, white collar jobs only need a computer and a desk. Think about that one for the future.

o Externality Costs

What is the price you pay for a tomato you buy in the supermarket? Does it properly reflect the shipping cost, the social cost of migrant workers who picked the tomato, and the environmental impact of irrigation and pesticides?

You can buy a bottle of water for $1.00, but no one pays for the recycling of the plastic bottle once you throw it out. It’s an externality paid for by government services and not applied directly to the consumer of the good.

The cost of any good should include the hidden costs that go along with the production of the good. Manufactures and growers should be made to pay for the externalities embedded in their products. Only then will consumers realize what the true cost necessary to grow and to ship a tomato.

o Audits of Federal Government Spending

An external audit of every government agency should occur each time a new president is elected. The results of the audit should be published so the government can be streamlined for the new administration.

o Local Currencies

A local currency keeps money circulating in a smaller area. It’s a way to support local businesses and craftsman because anyone outside the local area, for example Starbucks, will not accept the local currency. Smaller robust economies have less of a chance of imploding as dramatically as larger economies. "Berkshares" are an example of a local currency being implemented in Massachusetts.

o Health Care Reform

Something needs to be done about the large, complicated, and onerous health care system. Understanding how the system works is the first step in correcting it. System analysis requires modularizing each component of a system, then mapping the variables that impact each unit. Verbal descriptions are a suboptimal way of understanding complex systems. Visual software or diagrams are a far more effective method of communication.

Components (object):
Physical plant, hospitals
Medical equipment
Vaccines
Drugs

Components (human):
Doctors
Nurses
Trainers
Physical therapist
Patients
Lawyers

Components (activity) :
Diet
Smoking
Exercise
Drinking
Lifestyle

Components (money):
Salary
Lawsuits
Insurance

Step 1. Take insurance out of the hands of employers and make individuals purchase their own. The correct behavior modifications can only be controlled with money as an incentive. Company health care policies mask the true expenditure on insurance.

Step 2. Increase competition among health care providers by allowing doctors and hospitals to accept any insurance company payment.

Step 3. Cap lawsuits for medical malpractice or drug related complications. Maintain a list of the 95 percent most common types of lawsuits and have a maximum payment associated with the malpractice. Also include a social penalty against those that lose a case to discourage frivolous suits.

Step 4. Fund open source software for doctors and hospitals to use. Encourage use of standardized record keeping software and databases.

Step 5. Create and design educational programs within universities called hospital management. Put the programs on par with hotel and restaurant management schools. Do not have doctors run hospitals, have professionals.

Step 6. Create a two tier health insurance system. One is for catastrophic accidents and one for personal health care. Require everyone to purchase catastrophic insurance.

Step 7. Create a Wellness Index. 1 being poor health, near death and 100 being great health. Have mandatory yearly checkups. The Index number determines your rates, much like a credit score. Those who score 90 or higher receive a check from their insurance company. Failure to meet minimum health standards may result in fines or community service.

Step 8. Tax foods $0.10 per gram of fat.

Step 9. Subsidize gym visits and personal trainers through lower insurance cost

Step 10. Create a profession called Health Care Professional. Require only 2 years of school and 1 year residency. Have them take care of the little stuff and do house calls. Pay them directly.

Step 11. Reduce the cycle of time it takes for a drug to hit the market. Fund bio-informatics. Create custom drugs based on individual DNA.

Step 12. Reverse the mentality. Health care coverage is a privilege, not a right. Refuse lung cancer treatment for smokers or liver care for drinkers.

Step 13. Have government subsidized for people under the age of 21 and over the age of 60. From 21 to 60 years, you are on your own.

Step 14. Chronic hereditary health problems may require special attention.

Health Care Chart

o Balanced Budget Amendment

The result of an over spending by the government is higher taxes to pay for more spending. It also leads to mortgaging the future by having to borrow money now to make the budget whole. Instead, force states and the federal government to balance the budget every year. Fiscal responsibility increases the faith in the American economy by preventing bankruptcy or the need for issuance of more debt.

o Mandatory Military Enrollment for Children of Elected Officials

Enforce mandatory enlistment for the sons and daughters of Congressman and other elected officials. The fact that someone's own child is on the front lines, instead the child from an under privileged household, will spur a healthy debate as to the necessities of the war. Voting for war will be a much more serious issue, those that vote "yes" will truly be held accountable.