Just what is Soros getting at?

Good lord, haven't we already had enough preening and posturing by clueless lawmakers over the alleged "manipulation" of the oil markets?

But we're not done yet.   The Senate Commerce Committee hears today from none other than George Soros, who, according to the Financial Times, will "tell US lawmakers that 'a bubble in the making' is under way in oil and other commodities and that commodity indices are not a legitimate asset class for institutional investors."

Not that there aren't fundamental factors at work in the commodity boom, Soros believes, but the boom is being transformed into a bubble as institutional investors pile into commodity index funds.  According to his prepared remarks,  “When the idea was first promoted, there was a rationale for it … But the field got crowded and that profit opportunity disappeared.”

“Nevertheless, the asset class continues to attract additional investment just because it has turned out to be more profitable than other asset classes. It is a classic case of a misconception that is liable to be self-reinforcing in both directions.”

As I've pointed out before, a primary reason institutional investors are piling into these indices is that they're shelter from a falling dollar.  As fiat paper is inflated into infinity, hedge funds and pension funds seek shelter in real, tanigble stuff.

I'm sure Soros knows this.  Whether he'll actually address this aspect of it today is another matter.  Obviously, with such famous trades as his bet against the British pound in 1992, Soros knows a thing or two about falling currencies and how to make money off it.   So I'm not really sure what he'll be getting at today with his testimony.

And here's something even more puzzling: "Mr Soros will say a crash in the oil market 'is not imminent'. But he says it is desirable to discourage commodity index investing – or the 'elephant in the room' in the futures market – though not with more regulation."

If more regulation is not the solution — and surely it's not — what on earth is he doing testifying before a committee that's looking for scapegoats and excuses for more regulation?