Dear Friends,

Let’s see whether or not the CFTC can do what is so obviously needed in the metals markets. I have heard it repeated over and over that the establishment of position limits will hurt liquidity and drive this business overseas. In my opinion that is irrelevant to the very reason that limits were initially established, namely to prevent any entities or combination of entities from amassing so large a position size that they are able to artificially manipulate the price either upwardly or downwardly.

The goal of the CFTC is ensure that the playing field is level especially for the general public, not to ensure that the exchanges make as much money as possible.

Besides, the issue of liquidity is a red herring. There is always sufficient liquidity to get in or get out of a market in an active contract month provided that a trader is skillful in the manner in which they enter or exit a position of size. The best traders of the past would always test a market to see how it absorbed their buying or selling and were careful to move discreetly. Today’s hedge funds however are clumsy clunkers whose computers throw large sized orders into a market making no effort to move in or move out so as to avoid disturbing a market unnecessarily. In the past skilled traders would build or exit positions and do so in such a fashion that few were aware of their activities. It might take them several days or even weeks to complete their activities. That is not the case with the computer controlled goons who are too damn lazy to do anything for themselves but rely on their algorithms to get them out in milliseconds. That is what this issue of “liquidity” is really all about.

CFTC must act fast on metals limits – Chilton
By Christopher Doering

WASHINGTON, March 23 (Reuters) – The Commodity Futures Trading Commission needs to move quickly to establish position limits for metals such as gold and silver, Bart Chilton, the strongest proponent for position limits at the commission, said on Tuesday.

The CFTC, the country’s top futures regulator, already has proposed a plan to limit the number of speculative contracts a trader can hold in the energy sector. The agency will hold a hearing on Thursday on whether metals position limits are needed to avoid concentration and price manipulation.

"I think we should propose a rule on metals position limits now and move forward as swiftly as possible," Chilton, a Democratic commissioner at the CFTC, told metal investors.

"We need to get this type of regulation in place for these markets, to ensure that exchange-trading of metals accurately reflects the true economic prices of these commodities," he said in the remarks.

Chilton told Reuters in an interview he does not believe there is enough support now among commissioners to move forward on a proposal for metals position limits. <ReutersLink ID=’ID:nN22203339′ />

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Trader Dan’s Commentary

Here’s another reason for the rally in the equity markets. This undoubtedly is a sign of how much the real estate market has improved.

Homeowners Facing Foreclosure Take Own Lives
Mar 23, 2010 6:59 pm US/Eastern

PHILADELPHIA (CBS 3) ― The foreclosure crisis in Philadelphia is now becoming a matter of life and death. Eyewitness News has learned that in the past month, two homeowners took their own lives before sheriff’s deputies arrived to tell them that they were being evicted.

On March 5, deputies arriving to post an eviction notice on Lynda Clark’s South Philadelphia home found she had hung herself.

"It’s devastating for everyone. We’re not even family members and it’s just devastating to us," Captain Albert Innaurato of the Philadelphia Sheriff’s Office said.

Less than three weeks later, owner Gregory Bellows shot and killed himself shortly before deputies arrived to evict him from his Roxborough home.

Court records show Clark, whose debt topped $100,000, lost her home at a Sheriff’s Sale last October. Bellows, owing more than $240,000, had his home sold at a Sheriff’s Sale in 2008.

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Trader Dan’s Commentary

This situation in New York is becoming more and more frequent as states hit a brick wall due to falling tax revenues tied directly to the sluggish economy.

Wait until they begin coming to the cattle trough in Washington to feed.

Massive Job Cuts Projected For NYC
Mayor Says If Albany Slices City Aid, As Many As 19,000 Will Be Laid Off; 3,100 Less Cops, 1,000 Less Firefighters
Layoffs May Be Worst In Decades; Ball In State Government’s Court
Mar 23, 2010 5:56 pm US/Eastern

NEW YORK (CBS) ― It’s a game of high-stakes chicken — with thousands of New York City jobs on the line.

Mayor Michael Bloomberg released a doomsday scenario Tuesday, saying if Albany goes through with cuts to city aid he will be forced to make massive layoffs — possibly the worst in decades.

It’s a grim equation for a grim time. Bloomberg said that Albany’s threatened cut of $1.3 billion in state aid equals the elimination of 19,000 jobs.

"We believe that we have hit the point where further cuts mean cuts to personnel," Deputy Mayor Edward Skyler said.

And they are serious cuts. Without more money from Albany this is what the budget axe will do to the workforce:

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