CFTC Commissioner: Speculators Are Applying Brakes on Economy

"For every $10 dollars a barrel of crude oil rises in the market" Bart Chilton told CNBC's Squawk Box, "our GPD slips by half a percent." The US Commodity Futures Trading Commissioner thinks speculators are applying undue pressure on commodity prices, and that is hurting the consumer. "We have estimated about $9 billion for the aviation industry and $29 billion for the transportation industry annually in increased cost due to speculative interest," he said, pointing out that this cost flows directly on the individual consumer's bottom line. "We are not against speculators, because there would not be a market without them," Mr. Chilton says, referencing regulatory action proposed by the commission he chairs on curbing speculative activity. "Our issue," he says, "stands with excessive speculation." His agency is proposing a regulation whereby individual speculators would be limited to trading a maximum of 10 percent of the total open interest of a particular commodity. "While there isn't necessarily exact data to tell us whether 20, 15, 10 or 8 percent would be the correct limit," he notes, "but what is clear is the damage to the everyday person when a single speculator is able to speculate with as high as 30 percent of the total market, which we have seen in oil, silver, gold etc." "And it is not just the everyman that suffers," Chilton continues. "Small businesses are starting to feel a lot more of the pain, and even governments, local and state, in the form of higher fuel cost." Commissioner Chilton thinks it is imperative for the CFTC to act, because the reinvigoration of the economy we are observing is still in its infancy, and thus easily derailed by adverse effects of market speculation.