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View Full Version : Metal-Trading Limits Weighed by U.S. Regulator



silversurfer1
27th March 2010, 06:29
I hope they follow through with this...

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aQEmXWROcmRQ

Smokey-Seven
27th March 2010, 07:28
In general, that article seems to point to position limits as a bubble busting control. Bubbles, in general, refer to upticks not suppression of prices by short selling. I saw noting about shorts in there.

Here's an amusing quote that seems harmful on the quick read but think about it a bit. :

"Copper futures in New York more than doubled in 2009, the biggest annual gain ever, after plunging a record 54 percent the previous year. Masters estimated last year that a speculative run-up in commodity prices in 2008 led to more than $110 billion in excess food and energy costs for U.S. consumers."

So lets pick a number.... 100$ and that's the cost of something. It drops to 46$ (a 54% drop) over the previous year. It is now worth 46$. Over the following year, prices of that product double. The price is now 92$. for the, wait for it, "Biggest annual gain ever."

Gee whiz.... a commodity loses 8$ out of 100$ over the course of 2 years and this is a big problem?

Position limits won't fix stupid. Position limits will only slow down the inevitable, just like wage and price controls just slow down the leaks in the inflation dike. Eventually you run out of fingers to plug the holes.

nmreich
27th March 2010, 08:10
Eventually you run out of fingers to plug the holes.

That's the biggie. The dam is springing leaks left and right. They can't contain it for much longer.

Reminds me of that scene in Terminator 2 with the black guy with his finger on the trigger of a bomb and he's dieing and he says: "I... don't.... know.... how... much ... longer.. I ... can ... hold .... on...... ... .... **KABOOM**!!!". ((Then Arnold Schwarzenegger rushes in and saves the day! NOT!))