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How GS Created the Food Crisis
Posted on 4/29/11 at 8:21 am
Posted on 4/29/11 at 8:21 am
quote:
In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI).
quote:
"I make a living off the dumb money," commodity trader Emil van Essen told Businessweek last year
Commodities
5
Posted on 4/29/11 at 8:34 am to Blakely Bimbo
I'm pretty sure GS also had something to do with that iceberg the Titanic hit.....
Posted on 4/29/11 at 9:25 am to Blakely Bimbo
Now that you say it, I do remember seeing lloyd on the grass knoll back in 63.
Posted on 4/29/11 at 9:26 am to Blakely Bimbo
Posted on 4/29/11 at 9:29 am to Athanatos
Amazingly prescient to create a crisis 20 years prior to it occurring, and do it by simply creating an index, on less. That is truly God's work. 
Posted on 4/29/11 at 9:30 am to Blakely Bimbo
I love articles like this.
So you are telling me there is absolutely no profit margin on this excess revenue? Cmon now
quote:
Near the bottom toils the farmer. For him, the rising price of grain should have been a windfall, but speculation has also created spikes in everything the farmer must buy to grow his grain -- from seed to fertilizer to diesel fuel.
So you are telling me there is absolutely no profit margin on this excess revenue? Cmon now
Posted on 4/29/11 at 10:14 am to igoringa
The headline:
Fail #1. Price change is based on marginal demand change. Americans consume a shitload of food, no doubt. We are not consuming xx% more in Jan 2011 as compared to (picking a number here)...Jan 2009. ON THE OTHER HAND, the rapid industrialization of China and India (who make up like, you know 30% of the world's population), they might have some incremental demand change. Maybe. That terrible mag the Economist has a 15 page report on food costs a few weeks ago, but its obviously crap since Michael Lewis said so.
They're obviously intertwined. Pretty sure we can blame literally anything on rising oil prices at this point.
Fail #2. Correct me if I'm wrong here, but didn't the Green Revolution raise yields exponentially (and lower costs, this came from aforementioned Economist article)? So an increase in supply and a decrease in input costs is somehow to "blame" for rising prices? Literally economically backwards. Maybe (again from slanted article) its because the GR has reached its inflection point and yields are not growing YoY anymore?
quote:
Don't blame American appetites, rising oil prices, or genetically modified crops for rising food prices. Wall Street's at fault for the spiraling cost of food.
quote:
Don't blame American appetite
Fail #1. Price change is based on marginal demand change. Americans consume a shitload of food, no doubt. We are not consuming xx% more in Jan 2011 as compared to (picking a number here)...Jan 2009. ON THE OTHER HAND, the rapid industrialization of China and India (who make up like, you know 30% of the world's population), they might have some incremental demand change. Maybe. That terrible mag the Economist has a 15 page report on food costs a few weeks ago, but its obviously crap since Michael Lewis said so.
quote:
rising oil prices
They're obviously intertwined. Pretty sure we can blame literally anything on rising oil prices at this point.
quote:
genetically modified crops
Fail #2. Correct me if I'm wrong here, but didn't the Green Revolution raise yields exponentially (and lower costs, this came from aforementioned Economist article)? So an increase in supply and a decrease in input costs is somehow to "blame" for rising prices? Literally economically backwards. Maybe (again from slanted article) its because the GR has reached its inflection point and yields are not growing YoY anymore?
Posted on 4/30/11 at 10:00 am to igoringa
quote:
So you are telling me there is absolutely no profit margin on this excess revenue? Cmon now
No I'm not saying that, the article states it. I knew this article would cause a stir. My point in posting the article is that the markets are NOT really Free markets. They have been tampered with through financial engineering and investment products. Question is how much of the rise in the price of food and other necessities is demand and how much is speculation.?
A natural rise in demand from improving markets would cause a rise in the demand for food around the world. The problem is that when one can speculate on a commodity WITHOUT TAKING DELIVERY, then that becomes gambling as sure as sitting at a blackjack table in vegas. It is an artificial demand.
The housing bubble was acerbated by the financial products that were engineered to move the markets. Same with commodities.
Posted on 4/30/11 at 3:12 pm to Blakely Bimbo
To call that comparison laughable would be an insult to laughable things.
Posted on 5/1/11 at 2:58 am to Blakely Bimbo
GS creating a derivative 20 years ago created the economic growth in China and India while also making Al Gore and Congress insane enough to pass ethanol legislation? Did they do this before or after their Illuminati meeting?
This post was edited on 5/1/11 at 2:59 am
Posted on 5/1/11 at 9:21 am to Bard
Actually, it wa right after.
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