That said, Masters has a good point. In fact, many good points about the impact of speculative hoarding on prices (not just by HFs but, by you&me through our Pension Funds GSCI Commodity Swaps and retail commodity-based ETFs). And the rub is: despite that they ARE all "right" and rational, because policy IS lame, and the long-term portfolio efficient frontier IS moved (at least on a modeled, and, a to-date implemented basis) to a more optimal level, (though tomorrow is always a new day) there is an most important point to be derived from Masters. That is, from a societal point of view, there is an enormous Composition Fallacy at work here. It simply cannot be better for everyone, (i.e. The Public Interest cannot be served) if everyone hoards their commodities two years forward, irrespective of how much sense it makes for anyone to do it individually (or within their hedge fund allocation) so long as others are increasing their hoarding. Skeptics would of course answer that if the price is so "wrong", then why don't the real sellers simply "sell"? This may, of course, be correct in the ultimate long-term, but coming from a commity trading background, this is nonsense in the short-term for there are too many imperfections and failures in current commodity markets for either instantaneous or near-perfect supply responses that would validate such a view, and numerous positive feedback loops that further prevent the same.
So what are we to make of such Congressional scrutiny? Part of me is naturally suspicious since these are the same irresponsible buffoons that got us here (or enabled our progression, or did nothing to stop our directional inertia) in the first place. That said, if one goes back to 1980, the slaying of the Silver Specs and some of the wildest and most unsettling of market edge was (according to Stephen Fay's account in "Beyond Greed") triggered by the Government's actions upon speculative activity, which was a precursor to the final inflationary Vampire Slaying undertaken by Volcker. Note, the proximity of the initial anti-speculative actions to the ultimate monetary policy change, and the proximity of the monetary policy change to advent of a new administration.
I cannot make a precise guesstimate of how "far along" we are. Or even whether the monetary holy cross will ever be used to move policy towards greater balance - both domestically and internationally. But, I can say that leveraged speculators and those riding the commodity-alpha wave should be concerned by the fact of the hearings, and Masters rather frank testimony to the potential lynch-mob . This is because the lesson from the Hunt Silver debacle was "Don't fuck with the people who make the rules, since the rules can be changed which will torpedo even the rightest and best-laid of market operations". You see, for elected lawmakers, speculators make the most excellent political sacrifices. This is because politicians can be seen to be doing something (anything!) to counter-act the real increasing cost of stuff, without actually doing anything that costs them aything (except a few campaign contributions), or more importantly asks their electorate to - heaven forbid - change their lifestyles. For this reason alone, leveraged specs should take specific note exactly where the fat-tail lay, for when pen hits paper in Executive Order or Rule-Change from above, there will be NO EXIT!