May 9, 2011

EVEN WORSE...:

Fed Has Power To Pop Commodity Bubble (Mark Sunshine, 5/08/11, Forbes)

Last week the margin requirements for silver — a relatively minor commodity — were changed and triggered a widespread sell off. The evidence of a speculator driven bubble was unmistakable by the end of the week — crude oil was down almost 15%, corn down about 10% and wheat down almost 8%.

If margin rule changes for a minor commodity can trigger a general price run, imagine what would happen if a series of broad based rule changes were implemented.

Well I have a suggestion for our economic leadership in Washington — go crazy — change the rules for all commodities. I guarantee that the commodities price bubble will instantly pop.


...it was driven by the killing of OBL, demonstrating that the bubble is completely untethered from economic reality.

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Posted by at May 9, 2011 6:19 AM
  

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