Archive for July, 2010

Another Nail in the Right Hand: Destroying the Commodity Futures Markets

July 20, 2010

It looks like the Fascist financial morons that are heading our government have driven another nail through the right hand of Capitalism, the only appendage not nailed down now that they’ve gotten the left one and the two feet pierced and well secured. This is the Fascist Senator Cantwell’s pet project to castrate the futures markets, part of the new so-called “financial reform” bill, by having the government very loosely define what they mean by market manipulation, and have the government decide if you have or have not engaged in this, based on if they think the price is irregular. In other words, if the government doesn’t like you politically, or happens to think that prices have not acted the way that “they would expect them to”, then the bureaucrats can define anything you do in the futures markets as “market manipulation”, instead of actually having to prove there was some kind of conspiracy to “artificially” drive prices up or down.

You’d think that with position-limits reporting (at around 300 contracts in one commodity, unless they’ve changed it recently), and with the exchanges already given the ability to raise margins at a moment’s notice, or to raise broker loan rates by government action, that the government, the CFTC, and the large, regulated exchanges where almost all of the big trading takes place, would currently have all the tools they would need to curb what they would genuinely consider “excessive speculation” if there is such a thing, which of course there is not. In a free market, and a society of free people able to use their money as they wished, as long as it didn’t carry out violence, or the violation of another’s property rights ( the beautiful Libertarian non-coercion principle), then there would be absolutely no limits on what people could or could not buy (except other people — slavery is a complete contradiction of the Libertarian principle, since one always has a property right in one’s body — i.e. Freedom.)

Remember the oil market at $148? Without Fascist Senator Cantwell’s new regulation, the price fell all the way to the $30s level in no time. That is the power of the Free Market to correct prices without all these Nosey Parker new regulations, which will merely dry up the markets the way the animal grazers of Australia dried up their whole country. And it will also mean that the huge trading houses, who can afford the lawyers to weasel out of it, will be the only ones to attempt some so-called “manipulation”. They have eliminated, thanks to the Fascists, all their smaller competition, and the result will be less price transparency, a more irregular market, and much higher prices for the consumer at the wholesale and retail level, due to less competition in the pits. Moreover, any fine levied against one of the major trading houses will not be big enough to really hurt them as they will be in the “too big to fail” club set up by the Prez, Ms. Pelosi, and Congressman Frank et al. If it hurt too bad, it might destabilize our “friends” at that bank or investment fund, and we certainly couldn’t have that. Bankruptcy in modern America is only for the little fish, not the big whales.

What is amazing here is the sheer intellectual stupidity of the Fascists, and their complete lack of understanding of the Free-market mind, or even a basic trust in the Free Market, or Freedom itself. They have no intellectual grasp of the concepts of the Free Market, that what goes up, MUST come down, due to market mechanics, and the eternal waves of investor psychology that have been reoccurring from time immemorial, whether they were the medieval Japanese rice markets, or last July 4th’s sales, as pellucidly explained by Elliott, Prechter and Frost. If these Freedom-hating crackpot politicians really loved Liberty, and understood Capitalism, they would comprehend that it is only a completely unregulated, free market in commodities that keeps prices so comparatively stable in our society. Moreover, as Rothbard well pointed out, there has never been a “Trust” or “Cartel” or market “manipulation” that did not eventually unravel, as one member of the cartel breaks from the pre-ordained plan, and cashes in his chips while prices are ridiculously high, and before the other cartel members know what hit them. (And in the futures markets, huge quantities of a commodity can be sold in a second. Nay, they are sold in a second.) Such “turncoats” amongst the cartel members are known as “trust busters”, and they are the reason that no cartel has ever been able to stay together for very long — except and unless it can get the government to pass regulations, whole slews of them, that make it virtually impossible for anyone new to break into their field of business.

But now that the Fascist Democrat Senator Cantwell has gotten her Commie bill passed, it will have a chilling and predictable effect on the futures markets, for it will mean less participation in a market where the government can arbitrarily label anyone as a market manipulator, and, since the cost of defending themselves against the government from these vague charges would probably bankrupt them, they will be forced to plead “no contest” to a crime they did not commit.

This latest financial Fascisism courtesy of our non-economist, lawyer Prez, the Fascist Pelosi, and anti-Capitalist and enabler of the great housing debacle, Congressman Frank, along with Senator Cantwell, will, by diminishing market volume, actually lead to far more volatility in the futures markets, since trading volume will be thinner, as a certain number of big players decide in the light of the new regulations that the flame is no longer worth the candle, especially with higher tax rates coming next year, and the reinstatement of the heinous and immoral “Death Tax” at a disgusting 55%. Time to drop out until we have a new Prez, and some Financially Sane people in Congress like Congressman Ron Paul and former Senator Bunning.

Like all the plans of the Financial-Fascist morons, this one will backfire, because we are dealing with politicians whose intelligence is so dim and feeble, and whose understanding of the average American’s plight is so non-existent and callous, that they can never understand the interconnection between Freedom, Liberty, Capitalism, and Free-Markets.

The Financial-Fascist Morons, like Obama, Pelosi, Frank, Geithner, Reid and Cantwell have, with this last nail through the right hand of the Commodity Futures Markets, reached their goal and finally crucified Capitalism. Without a Free Market in Commodities, they will see how long their little Socialist-Fascist mini-Mussolini State will last.

Without Free Commodity Futures Markets, not too long.

Hooooooooooooooooooooooooooooooowwwwwwwww! — Silverwolf