How Goldman gambled on starvation

[MitchCov]

Interesting Article. The guy basically says that Goldman (and other banks) are responsible for world hunger and jacking up the prices of certain commodities.

Do you guys agree with this? Do they actually have enough market power to drive the world into starvation?

Here's the link:

http://www.independent.co.uk/opinio...ow-goldman-gambled-on-starvation-2016088.html

 

[tylor]

i don't understand how trading derivatives affects the price. can someone explain?

 

[bigbadwolf]

i don't understand how trading derivatives affects the price. can someone explain?

In my humble opinion the writer of the piece doesn't know what he's talking about. He smoothly elides over any mechanism that might connect derivative trading to spot prices. The piece is meant to arouse cheap moral indignation among the liberal chattering classes of Britain against GS.

The real problems that cause or exacerbate mass hunger are left unmentioned. When land is concentrated in a few hands, when the IMF twists arms to encourage cash crops that then enter the global capitalist commodity markets at the expense of the nutritional needs of the local indigent -- that's where problems occur. Mass hunger is emerging from a global system of an agribusiness cartel, agrochemical cartel, commodified cash crops, concentrated land ownership, deteriorating land (waterlogging, desertification, erosion), and increasing population.

Spot prices can be affected if the commodity (rice, wheat, cocoa beans, soybeans, etc.) is storable and hence hoardable -- thus allowing speculative activity.

 

[elliot]

i don't understand how trading derivatives affects the price. can someone explain?

it affected the house prices in the US

 

[Andy Nguyen]

This is an interesting article along the line of what is being discussed here
Hedge funds accused of gambling with lives of the poorest as food prices soar | Environment | The Guardian

 

[bigbadwolf]

This is an interesting article along the line of what is being discussed here
Hedge funds accused of gambling with lives of the poorest as food prices soar | Environment | The Guardian

At least this much makes sense:

The charity's demands for the British financial watchdog to follow the US in cracking down on such speculation comes against a backdrop of cocoa prices jumping to a 33-year high as it emerged that a London hedge fund had snapped up a large part of the world's stock of beans. On Friday, traders say, Armajaro took delivery of 240,100 tonnes of cocoa – the biggest from London's Liffe exchange in 14 years and equal to about 7% of annual global production, according to the Financial Times.

The fund will take physical delivery, hoard it, and sell it strategically. So this will affect the spot price.