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Senior Contributor

Time for a clean sweep! - CFTC and CME

First, the topic is not directly grain marketing, but a revelation of how the institutions (CME and CFTC) involved with grain marketing operate. It is a mess. It is unforgivable. It is corrupt in a most basic way.


http://www.nytimes.com/2010/12/12/business/12advantage.html?_r=1&hp


The accusations that our institutions have to put up with, and indeed encourage, 'good ol' boy clubs' to 'direct' the 'free market' is an outrage!  Just recently it was revealed that one of the CFTC appeals judges was instructed by Wendy Gramm, former CFTC chairman (wife if Phil Gramm of Texas, AND on the audit committee as a board member at Enron), to never rule in favor of defendant against the 'interests of the CFTC - and the good ol' boys (and apparently never did).


Gary Gensler [current chairman of the CFTC] either has no power or no gumption, and it is embarrassing that this administration doesn't either back him or get rid of him in an attempt to right this countries market institutions. Time's up!!!! The CME and CFTC are no longer legitimate institutions with a purpose other than a protection racket! This situation is an insult to the American people and the American dream and demonstrated beyond a doubt that this country DOES have favored classes base on wealth and influence - and intimidation. These are club operations for the benefit of a club and for the purpose of denying real participation by the marks they are taking advantage of. And it is in this that the CBOT grain market participates.


I do wish I lived close to Chicago for the sole reason of pointing out the obvious and showing how that kind of participation would get you thrown out of any forum they have.

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9 Replies
Veteran Contributor

Re: Never happen Palouser. When the usa "oldsters" finally have

the whole BK due to these trickle down deals, the young ones in the future here gonna work for the Chinese.

 

It's that simple. 

Anyone painting it a different color, either blind, or a liar.

 

 

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Contributor

CME Benefits...

Palouser,

Not even going to attempt to explain how the system functions - we have beat that dead horse.

 

1) - Farmers have the ability to transfer price risk to buyers at nearly any time they wish, and often well forward of the production cycle. 

2) - Producers have the ability to earn storage revenue against drastically oversupplied crops - where they once would have rotted.

3) - Grain elevators / processers / end users have a transparent system in which value can be determined, and risk exchanged - benefiting producers.

4) - yes -they are run for the exchanges, the participants have the investement in the market infrastructure, producers do not.

 

You could have it a lot worse.

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Veteran Contributor

Re: Time for a clean sweep! - CFTC and CME

Palouser--Actually  it appears that the CFTC and CME are caught in the crosshairs of globalization. They are pressured to lower regulations in order to compete with other foreign exchanges. However by lowering their regulations they parallel the problems that created the housing market bubble (i.e. unregulated credit default swaps).

 

End Result: A coming new bubble in the grains that will end up causing the government to bail out some ag businesses on a scale which will make the GM  loans look like a patsy affair.

 

Sadly, some of this forum excluded, most do not understand the complexity of the commodity world with all of its technical terms and activities, so it will be hard to raise the level of awareness needed to head off this monster of an event.

 

Your post is only one layer on the onion. Keep peeling if you can keep from cryin.

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Senior Contributor

Re: CME Benefits...

How ridiculous and outragous that would sound if the NYSE presented the same argument - and they could. Though the NYSE was buffeted by the collapse of Wall St it continued as a strong publically regulated exchange. There is little difference in substance with the CME.

 

As a publically regulated exchange the CME must be brought into the mainstream. The good ol' boy era is crumbling. The fact that the CME seems to like restricting access of full trading and contract rights to a select group is failing. The VSR policy is a good indication of what a cobbled up mess it's becoming. The CFTC is weak, unimaginative and hostage to the insiders. That can change. And it should.

 

The 'You could have it a lot worse' argument is as unimpressive as it is arrogant. Can't think of a single oligarchical situation that doesn't present exactly the same promise.

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Veteran Contributor

Re: Time for a clean sweep! - CFTC and CME

pal  you are  desperate.

 

producers are collecting great premium from the CBT

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Senior Contributor

Re: Time for a clean sweep! - CFTC and CME

Pritch, I don't think desperate would be the right description. I do fine marketing w/o the CBOT, saved a lot of money NOT using the CBOT this year and just sold the last of my '09 wheat today for January.

 

However, I have a sense about innefficient 'markets' that do not want to be fully transparent, fully free market and have taken captive the regulatory commissions that are supposed to be keeping the system from being manipulated by insiders for insiders.

 

Just the way I am.

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Veteran Advisor

Re: Time for a clean sweep! - CFTC and CME

Not very likely when prices are at levels that are very profitable for farming- or at least that farming interests are likely to join in such an effort in large numbers.

 

The Ag Econ boyz choked on reality when asked to comment on convergence, impact of indexers etc. They were afraid of possibly being blamed if the markets threw a fit and decided they liked their positions better than the truth.

 

Of course the freedom to comment on the broad public interest is precisely why we grant tenure to professors at public universities, but nevermind. Tenure is fairly meaningless today when everything is about external funding- it doesn't matter if you have tenure if you don't have funding- and funding is highly dependent on saying what fundres want said.

 

BTW, talk (that seems quite credible) is that the big banks are willing to abandon their prop trading operations as a ploy to keep their much more lucrative derivatives businesses intact- and of course they can continue most of the prop trading under the guise of derivatives trade anyway.

 

The system has been thoroughly captured by the highest bidder.

 

Speaking in generalities, you can keep a system rolling almost indefinitely with the serfs getting the pickle. It can probably even go quite a while with the knaves getting it. But when you start moving up to the knights not getting theirs, the head that holds the crown and those of the courtiers need to be worried.

 

Current political discourse is mostly about keeping the knaves believing that their interests are aligned with those of the crown.

 

Today's commercial farmer is most definitely a knight and has been treated very well by the crown in order to buy his allegiance. Again, don't expect much help from there until after TSHTF.

 

fwiw, h

 

 

 

 

Veteran Contributor

Re: Time for a clean sweep! - CFTC and CME

Complain , complain, complain.

 

Specs provide fat premia that are increasing farm income and can be harvested like a crop as well.

 

Palouser, you do not understand futures and never have.

 

Use’ em,

 

Let me guess you want to eliminate shorts!  

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Senior Contributor

Re: Time for a clean sweep! - CFTC and CME

Pritch, you are a funny adviser. You've walked in front of so many big market buses in the last few years your record could be unequaled, had you had money in the game.

 

What I want is a futures contract that any holder has the right to enforce the face value of. Including producer/hedgers. Convergence would be solved. No need for a VSR. Implied by that is the CBOT needs to build a stronger delivery system. The system would be more efficient and more affordable.

 

Perhaps the MGEX will surpass the CBOT in the future if the CBOT can't get its act together.

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