Abolish Futures Trading - It's a crime against humanity

2009-05-31T03:20:00.000-07:00

Commodity futures trading is a serious crime against humanity and it should be abolished. I'm starting this blog in hopes of sparking a groundswell movement to get stamp out the most heinous and destructive greed practice in the history of finances.

This is NOT a joke.

Have you ever mentally rendered down the rationale under why a commodity futures market exists and why speculators are allowed to gamble on it. (That's really all the futures market is - glorified high stakes gambling). I'll describe the dubious theory here and in future posts, in terms that a layman can understand. AND, I defy any investment professionals to try debating the real value (absolutely none) of commodity trading.

I'll start here with a 'nutshell' description. In the warped theory, a manufacturer wants to fix his raw material cost, so he buys a commodity contract for delivery at a future date. The raw material supplier similarly wants to lock in the price he will get for his future product, so he sells a futures contract. Then the area between becomes a wild-west playground for speculators to gamble, move the prices on dubious beliefs and crystal ball readings, to where they think prices might be on the contract date. And this hurts EVERYONE because the prices of goods are moved by other forces than the reasonable ones of supply, demand and costs.

And the commodity exchange process produces NOTHING of value. For each winner, there is a looser and the brokers act like casino dealers in raking off some commission for the house. So what about this supposed need of the manufacturers and producers? That is all just horse manure too. Hedging just means more profit for them if the futures price moves favorably and it replaces supply, demand, and cost with greed, unnecessary price fluctuations, and periodic lay-offs due to 'booms and busts'. In other words, the commodity futures markets only provide headaches for real people, while turning those hardships for everyone else, into more money for themselves. And it's wrong! It is a crime against humanity that needs to be examined, condemned and abolished.

People in the global economy are hurting right now because of this supposed 'credit crunch'. I strongly suspect the sub-prime mortgages were a factor but the cause of the greater urgency for the financial institutions (think of them here as bookies) stemmed from the staggering swings the price of oil underwent over the past two years. Were the futures market's biggest losers able to make their margin calls? Or were the the brokerages left n the hook for cash to pay the winners with? History may show this (if the financial records don't 'accidentally' get shredded). Whatever though, there's not much we can do about the past: let's move on and do what we should to make sure this greed ends.

The commodity futures markets need to be shut down and the activity of futures speculation must be deemed as crimes against humanity's property and livelihoods.

As I said. I DARE any financial person to try debating me on this important issue.