FIA president John Damgard’s letter campaigning against the Commodity Futures Trading Commission's proposed position limits on speculative energy trading contains the usual fallacies and fudges common to those who oppose controls on speculation.
1. The claim that “evidence” is needed before one can conclude that “speculation caused energy price distortions” is highly disingenous.
It is very difficult in any financial market, or economic situation of any kind, to prove precisely what caused what.
But what serious person would contend for a moment that speculation did not affect share prices? Or housing prices? Of course it does. Anyone who denied it would be laughed at as naive.
Yet Damgard would have us believe that commodity markets are somehow more virtuous and special than any other investable market in the entire world. Only here, he claims, does speculation not affect prices.