Soros Sounds Alarm on Oil/Commodity Bubble

[melvill]

The controversy regarding index funds participation in commodity futures trading continues to heat up. The U.S. Commodity Futures Trading Commission - the CFTC - is under significant political pressure to more closely regulate index fund activity. There are several articles in the Financial Times at:

http://search.ft.com/search?queryText=George Soros&aje=true&dse=&dsz=&x=0&y=0

[cottonpicken]

I'll call you soros,
and raise you...
awe screw it
all in

[cottonpicken]

Anybody else play poker?

Scenario one
-government deflates m3,commodities drop,dollar rises,houses realllly drop bonds rise,government tax revenues pluuuumeeettt,government then goes bankrupt with 80% of americans

Scenario two
-government lies about what its doing,inflates money supply(m3),to pay liabilities and overseas foreign reserves,dollar sinks(its already lost 96% purchasing power in the last 80 years,but whose counting),bond market then becomes monetized(maybe already?),inflation escalates even worse,then we bomb someone


Fran can you tell me my spelling is wrong and my logic wrong.
Or just my spelling cause you dont have a clue of what i'm talking about.

Please refrain from from third party cut and pastes.

[Fransisco]

I think a lot of folks wonder if even you know what the heck you are talking about cotton.

If I remember right an M3 is a synthesizer made by Korg, but then again there is also the BMW M3.

http://en.wikipedia.org/wiki/BMW_M3

<blockquote>The BMW M3 is a high performance version (produced by BMW M GmbH ) of the popular compact BMW 3-Series automobile, made by BMW. M3 models have been derived from the E30, E36, E46 and E90/2/3 3-series. Common upgrades over the "standard" 3-Series automobiles include more powerful and responsive (yet at times smaller) engines, improved handling/suspension, more aggressive aerodynamics/body, and an interior/exterior accents with "M"/Motorsport nomenclature.</blockquote>

Why would the government want to deflate a BMW? Oh wait, let me guess it belongs to George Soros, right?

[Fransisco]

Now back to the topic, here are some interesting Soros quotes...


Soros said a commodity index buying strategy "is intellectually unsound, potentially destabilising and distinctly harmful in its economic consequences".

"I find commodity index buying eerily reminiscent of a similar craze for portfolio insurance which led to the stock market crash of 1987," Mr Soros will tell the Senate commerce committee, according to a draft text seen by the Financial Times.

"In both cases, the institutions are piling in on one side of the market and they have sufficient weight to unbalance it. If the trend were reversed and the institutions as a group headed for the exit as they did in 1987 there would be a crash."

Mr Soros said index-buying was based on a misconception and commodity indices are not a legitimate asset class. "When the idea was first promoted, there was a rationale for it ... But the field got crowded and that profit opportunity disappeared," his prepared remarks say.

"Nevertheless, the asset class continues to attract additional investment just because it has turned out to be more profitable than other asset classes. It is a classic case of a misconception that is liable to be self-reinforcing in both directions."

Mr Soros will say a crash in the oil market "is not imminent". But he says it is desirable to discourage commodity index investing - or the "elephant in the room" in the futures market - <b>though not with more regulation.</b>

[Fransisco]

Soros is not in favour of more regulation. Interesting.

[Fransisco]

I also find these comments by Clark McKinley in one of the same articles very interesting. He obviously doesn't have the name recognition of Soros but he has some solid facts on his side.

<blockquote>The California Public Employees’ Retirement Plan (Calpers), which invests $1.1bn (€700m, £560m) in commodities futures and indices – or less than 0.5 per cent of its total markets assets – said the investments “are too small to account for the price increases of food and oil”, Clark McKinley, a spokesman, told the Financial Times.

<b>“Futures investments of all public pension funds are less than 5 per cent of commodities indexes</b> ... The actual impact in the market is small, a chip in the woodpile,” he added. “The price spikes stem from fundamental supply and demand dynamics.”

He added: <b>“There are many cases of price spikes before any pension fund invested in commodities. There are current record food prices for which there are no futures contracts.”</b></blockquote>

[TOM4CWB]

Cotton...

I am with you on scenario 2.

Will Hillary get to be V.P.?

If I were Obama... sure glad I am not... cause they are up the creek without a paddle!

US politics is a very nasty game... Obama is about as likely as Kennedy to succeed!

This one is pure politics!