une version anglophone des conséquences de cette décision :
" The immediate peril as a result of this ruling, is that the gold and silver bull trends revived by the unlimited capital fabrication now underway will be teed up for another huge short that will send the prices tumbling whenever the colluding entities decide the time is ripe.
As Bart Chilton, one of the CFTC commissioners stated in response, “There’s no question that huge individual trader positions have the potential to influence prices in a way that hurts legitimate hedgers and ultimately consumers.”
Absent position limits, futures and forwards contract originators can create as many contracts as they can find buyers for to sell or buy gold at a fixed price in the future.
In a properly regulated market, (and by the simple logic of supply and demand economics) it would either be a) required that the originator of a forward sale actually have the commodity on hand to sell, or b) that the buyer of a forward sale actually take delivery.
This would imply that there could not be contracts issued representative of more gold, silver, or oil than is readily available for delivery i.e. not more than is produced.
The opposite is the case now, and looks like it will be going forward, thanks to the absence of position limits. With market participants able to create as much apparent and artificial demand and/or supply as they like, the prices of commodities are at the mercy, in large part, of the market participants. And, as we’ve seen by the recent LIBOR scandal, banks do not act in the interests of their clients, or the governments who make their larceny possible, or the general public.
Furthermore, without legislation to force reconciliation of dark market pools, where all kinds of commodities and other derivative instruments are traded on an unregulated basis in an invisible market, the massive nominal value of the entire derivatives market, estimated to be in excess of $600 trillion, calls into question the ability of regulators to protect the interest of the broader financial system against reckless betting.
With the death of the position limits rule, one must question the likelihood that other Dodd-Frank legislation will get shot down as a result of lobbying against it in the courts.
Businessweek reports that “Starting next year, new rules will force banks, hedge funds, and other traders to back up more of their bets in the $648 trillion derivatives market by posting collateral. While the rules are designed to prevent another financial meltdown, a shortage of Treasury bonds and other top-rated debt to use as collateral may undermine the effort to make the system safer.”
This rule will no doubt also see challenges from lobby groups backed by market participants. The incremental dilution of the Dodd-Frank act is a growing catalyst for more financial calamity.
If the rule stands, the stage is set for the necessity to fabricate more capital, to create enough “top rated” debt instruments to act as collateral in the grand derivatives casino. If it doesn’t get cancelled by a complicit court.
James West Ted
http://www.midasletter.com/
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