June 25 (Bloomberg) -- Governments would be ``foolish'' to limit participation in commodity markets and curb speculation because prices are based on supply and demand, London Metal Exchange Chief Executive Officer Martin Abbott said.
Surging prices for commodities such as crude oil, corn and copper have prompted lawmakers including U.S. Senator Joseph Lieberman to suggest more regulation is needed to limit the role of speculators in the markets.
``There is no way that any speculator wants to be the person driving the market,'' said Abbott, who heads the 130- year-old LME. ``Anyone can think of a strategy that would drive a market, but not many people have managed to think of a strategy that would get them out of that strategy with a profit. That's one of the things that keeps markets safe.''
Blaming price swings on traders could lead them to abandon regulated exchanges ``and use their investment dollars elsewhere,'' the International Swaps and Derivatives Association, the Futures Industry Association and the Securities Industry and Financial Markets Association said in a letter to Congress on June 18. ``Such an exodus threatens the healthy functioning of the markets and the economy.''
Excellent points by Abbot. Lieberman, of all people, has now decided he is smarter at "fixing prices" than the market. Let's hope that this despicable politician, who is always trying to ride some kind of populist wave, stays away from the commodities market. All he is doing is adding short fuel for the next leg up.
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