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.