Jeffrey Harris – the CFTC’s chief economist is leaving the CFTC and returning to academia. This is unfortunate. Since his appointment in 2007, Harris was a sane voice in the CFTC that looked at facts and economic fundamentals rather than populist sentiment. He made the courageous (and correct) claim in 2008 that speculation was not the driving force behind rapidly rising commodity prices.
One can only speculate [pun intended] on why Mr. Harris is leaving just before the CFTC is supposedly getting ready to issue major regulation limiting “speculation”, but it would not surprise me if the commission’s direction – which has already started adversely affecting global commodities trading – played a role.
We have covered the potential ramifications of excessive CFTC regulation and its affects on fuel prices (especially with regards to aviation) many times in this blog. If Harris’ departure foretells the kind of regulation we (and others) warned against, 2010 might very well see increased volatility in commodity prices (including oil) and a weakening of the global position of US commodities markets – the best regulated and most transparent [or least opaque - depending on how you want to see it..] markets in the world.
Gad Barnea – CEO – FlyMiwok, Inc.
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