Wall Street fights for its right to inflate the food price bubble

[marmar]

from Civil Eats:



The Empire Strikes Back

February 10th, 2012
By Edward Miller


On December 2, 2011, two of Wall Street’s top lobby groups launched an assault on a newly reinstated “position limits” regulation, which aims to curb speculation in commodity futures markets–and a key factor behind rising food prices–in the first ever case brought against the Commodity Future Trading Commission (CFTC).

The two lobby groups, the Security Industry and Financial Markets Association and the International Swaps and Derivatives Association have challenged the extremely controversial position limits rule, which the CFTC passed in a narrow 3-2 vote this October. Wall Street has recruited the lawfirm of Gibson, Dunn & Crutcher, whose lawyers Miguel Estrada (among Bush’s counsel in Bush v. Gore) and Eugene Scalia (who overturned a Securities and Exchange Commission rule earlier this year) are determined to hold the scepter of market regulation at bay.

The rule caps the total future interest of a given commodity (such as wheat, corn, soy, etc.) a market participant can hold, aimed at preventing “excessive speculation” in those markets. Position limit supporters argue that their absence in recent years has led to price volatility and price spikes, such as the 2008 food crisis that plunged millions of the world’s most vulnerable people deeper into abject poverty, and rising oil prices which in turn drive up the price of food.

Why Position Limits?

Commodity futures exchanges are stocked with two types of traders: Hedgers and speculators. Farmers have long accepted hedging in commodity futures as a way of hedging risk, by selling off future interests (the earliest derivative contracts) in those commodities the burden of production is shared and the farmer ensured a fair price. But wherever futures exchanges were established the threat of speculation was always near. ..................(more)

The complete piece is at: http://civileats.com/2012/02/10/the-empire-strikes-back/

[Laelth]

1. k&r for exposure. n/t

-Laelth

[socialist_n_TN]

2. Food should be "Not for profit"..........

ANY of the "general welfare" things should be not for profit.

[banned from Kos]

3. Why would farmers grow it then? Why would packers pack it?

by the way - position limits and MARGIN limits are another part of Dodd-Frank not in Glass Steagall (makes about 40 such things)

[socialist_n_TN]

4. Not for profit does not mean nobody gets paid for their labor

nm

[marmar]

7. Exactly.

But the 'free market' fan club believes everything must be open for betting at the Wall Street casino.

[MrCoffee]

6. It wasn't in Glass-Steagall because it was unthinkable to let them in the market to begin with

[Neue Regel]

8. The problem is, the definition of "any general welfare thing" constantly expands

Who decides what is a necessity rather than a luxury?

That said, I don't believe speculation on food and energy commodities should be allowed. Or, at the very least, one should have to take physical delivery of these commodities when purchased, and hold them for a specified period of time to discourage trading in them as purely speculative investments.

[MrCoffee]

5. This is incredibly important...everyone should read this

Position limits are one (crucially important and exceedingly necessary) thing, but these ratfuckers have no business even being in the commodities market. Pull their bona fide hedger exemptions and get them out of the commodities markets NOW!

[malaise]

9. K & EffingR

Very important