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Veteran Advisor

Judge:CFTC covered up market manipulation

http://www.thedailybell.com/1461/Retiring-CFTC-Judge-We-Covered-Up-Market-Manipulation.html

 

I don't know that I agree with 100% of the above narrative but it is worth a read.

 

Gramm- Phil and Wendy, Wendy and Phil- the first couple of American bamboozlement.

 

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8 Replies
Senior Contributor

Re: Judge:CFTC covered up market manipulation

Palousar is going to love this....... p-oed

 

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Frequent Contributor

Re: Judge:CFTC covered up market manipulation

About like when either Bear Stearns or Lehman went down (think it was Bear) and they (CME, CFTC) allowed them to give their commodity positions to Goldman Sachs or offset with a large commerical outside of the trading pits (live and electronic), instead of having to sell out of them outright in the open market.  I mean why kick them when they are down?

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Senior Contributor

Re: Judge:CFTC covered up market manipulation

The fox that I had guarding the henhouse told me that my eyes must be getting bad as there were just as many hens as there was the week before according to the fox.  Not only has the CFTC covered up market manipulation, they have in essence promoted it by allowing index long only funds to trade with zero position limits.  I'm still waiting to see who bails out the banks and others overspeculating in these markets now once the party is over?   

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Senior Contributor

Re: Judge:CFTC covered up market manipulation

There was no question that Wendy Gramm was suspect. When she went to the Enron board she profitted immensely, and apparently knew when to get out. Her committee assignment at Enron? 'Audit' committee. Phil quickly resigned from Congress to avoid scrutiny, which appears to have worked to avoid investigations into possible conflicts of interest. Given Phil's 'political' convictions this is all the greatest irony.

 

There can't be any question that the biggest rip off artists of the century haven't even been investigated. The idea that the rich and powerful can assume they will not be subjected to the indignity of following the laws, as ordinary citizens are expected to, undermines the purpose and meaning of the benefits of the best of capitalism in a society supposedly ruled by law, and undermines democracy. Regardless of the troubles economic conspiracies have caused us, we appear to still be moving toward an economic exceptionalism for oligarchs that we might fairly draw parallels to of the absolute extremism in modern day Russia.

Senior Contributor

Convergence is back in the news

This is from the Farmdocs site at the University of Illionis,

 

"Darrel Good
Department of Agricultural and Consumer Economics
University of Illinois, Urbana-Champaign

Lack of convergence of cash and futures prices at locations approved for delivery of the CBOT corn, soybean, and wheat contracts emerged in mid 2005, as cash prices generally remained well below futures prices at delivery locations at contract maturity. Since late 2008, convergence has generally occurred for the corn and soybean contracts. Except for the September and December 2007 and March 2008 contracts lack of convergence persisted for the wheat contract.

The Chicago Mercantile Exchange made a number of changes to the wheat contract in 2009 and 2010 to address the general lack of convergence. These included an increase in the maximum storage rates on futures contracts, the implementation of a higher seasonal rate from July 18 through December 17, and eventually the implementation of a variable storage rate that provides a mechanism for changing rates based on the carry in the futures market. The delivery instrument was changed from a warehouse receipt to a shipping certificate and additional locations were approved for delivery.

Convergence performance for the CBOT wheat contract gradually improved from September 2008 through the July 2010 contract, when convergence was achieved. It appeared that the changes in the specifications of the contract were successful in solving the convergence problem. However, convergence did not occur with the September 2010 contact. Cash bids on the first delivery day for that contract at river delivery locations ranged from $.50 to $1.25 under the September futures price. In addition, there was a lack of convergence with the September 2010 corn contract. Cash corn bids at Illinois River locations approved for delivery ranged from $.20 to $.40 under the September futures price on the first delivery day for that contract.

While convergence had not become a widespread issue for the KCBOT and MGEX wheat contracts, poor performance at both exchanges has occurred since late 2007. The extremely weak basis at non-delivery locations in these markets at harvest time this year resulted in a sudden concern about convergence performance for both of those contracts.

While performance during the maturity of one or two contracts may not be indicative of further problems, non-convergence is back in the news."

 

http://farmdoc.illinois.edu/announcements/agrinews/Sep_2010/agrinews_Sep_2010.html

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Frequent Contributor

Re: Convergence is back in the news

I thought convergence was when the futures price = the cash price.  I don't think we've had that lately.  Especially in wheat but I could be wrong.

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Frequent Contributor

Re: Convergence is back in the news

zman....you will note that the fine economist at U of I (controled by the CBT fwiw) points to convergence in Chicago wheat and ends the time line with June/July 2010. At that time, right before the market finally realized that Palouser was correct in his s&d numbers, the basis in wheat was indeed very tight. A condition that lasted for at most 20 days until the spec flow of funds drove futures well above cash values again. Sept did not converge like July did, and it is very doubltful that Dec will either. So, the fine professor is correct in his analysis, but picked a very peculiar moment in time to draw a conclusion. Maybe a it would be fair to say that he picked a very "convenient" moment in time to end the analysis.

 

Palouser is so right on all this stuff.  As well, I have been writing about the unregulated nature of unlimited speculation in limited supply foodstuffs and its long-term destructive impacts on producers and users. But hey, don't listen to me, the specs have just driven corn to $6 BE HAPPY! ....massive flows of funds from somewhere into everything, bonds, stocks, commodities, everything, going into the election. Just saying if Bush was president someone on here would wonder about it. The year continues to follow the 1980 analog perfectly. Not much reason for the trend to change at this point.

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Frequent Contributor

Re: Convergence is back in the news

Oh, and before Palouser, or someone else, takes exception. Everyone who has followed me over the years knows that I have been ravenously critical of the Bush administration for selling out our country on these issues. I even succeeded in getting Ind Pork to take a resolution to the natioanl convention about these issues only to have the big boys from NC, and IA, laugh at it. Some of them are no longer in the business. So, please I was not being political, Bush and his cronies did in fact create this one and it is not surprising to me that Gramm was a central player....she or he were from TX if I recall correctly.....hmmm..

 

This of course does NOT exclude the current ruling elite from fault. Much like Afgan, they are just making it worse, so far. I would love to see a change in course to something liike what Palouser has indicated, from the administration. Maybe they will. I'll keep hoping.

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