Wednesday, July 21, 2010

Goldman gambled on starvation. They won, humanity lost.,

While I am on the subject of banksters, particularly Goldman Sachs, let us take a look at the role Goldman played in the starvation of humanity.
If you took the time to read the linked article from yesterday's post -The Great American Bubble Machine- You would have come to the part Bubble #4- $4.00 a gallon.
The author of this piece directs attention to the manipulation of commodity prices, by Goldman-Sachs, which resulted in higher gasoline prices.

" the Street (Wall St) quietly moved the casino to the physical-commodities market — stuff you could touch: corn, coffee, cocoa, wheat and, above all, energy commodities, especially oil. In conjunction with a decline in the dollar, the credit crunch and the housing crash caused a "flight to commodities."

Background on the commodities market-

The commodities market was designed in large part to help farmers: A grower concerned about future price drops could enter into a contract to sell his corn at a certain price for delivery later on, which made him worry less about building up stores of his crop. When no one was buying corn, the farmer could sell to a middleman known as a "traditional speculator," who would store the grain and sell it later, when demand returned. That way, someone was always there to buy from the farmer, even when the market temporarily had no need for his crops.
In 1936, however, Congress recognized that there should never be more speculators in the market than real producers and consumers. If that happened, prices would be affected by something other than supply and demand, and price manipulations would ensue.

But all that changed in 1991, and behind that change was Goldman Sachs-

All that changed in 1991 when, unbeknownst to almost everyone in the world, a Goldman-owned commodities-trading subsidiary called J. Aron wrote to the CFTC and made an unusual argument. Farmers with big stores of corn, Goldman argued, weren't the only ones who needed to hedge their risk against future price drops — Wall Street dealers who made big bets on oil prices also needed to hedge their risk, because, well, they stood to lose a lot too. . It (CFTC) issued the bank a free pass, called the "Bona Fide Hedging" exemption, allowing Goldman's subsidiary to call itself a physical hedger and escape virtually all limits placed on speculators.

And for some unknown reason this bullshit argument was actually swallowed, hook, line and sinker. And a free meal ticket was issued to Goldman.

Armed with the semi-secret government exemption, Goldman had become the chief designer of a giant commodities betting parlor.
So the price of oil soared at the pump. But, not just oil, food prices soared causing widespread starvation.

Soaring food prices driven by the commodities bubble led to catastrophes across the planet, forcing an estimated 100 million people into hunger and sparking food riots throughout the Third World.
Now, I have connected the dots from Goldman to soaring commodities to starvation.
Here is more-

How Goldman gambled on starvation

Speculators set up a casino where the chips were the stomachs of millions. What does it say about our system that we can so casually inflict so much pain?

At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people – mostly children – couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it "a silent mass murder", entirely due to "man-made actions."

Well, I would call it bankster made actions.

Until deregulation, the price for food was set by the forces of supply and demand for food itself. (This was already deeply imperfect: it left a billion people hungry.) But after deregulation, it was no longer just a market in food. It became, at the same time, a market in food contracts based on theoretical future crops – and the speculators drove the price through the roof.

So while the supply and demand of food stayed pretty much the same, the supply and demand for derivatives based on food massively rose – which meant the all-rolled-into-one price shot up, and the starvation began.
What did the scum-banksters say about this?

Merrill Lynch's spokesman to comment on the charge of causing mass hunger, he said: "Huh. I didn't know about that." He later emailed to say: "I am going to decline comment."
Deutsche Bank also refused to comment. Goldman Sachs pointed out that "serious analyses ... have concluded index funds did not cause a bubble in commodity futures prices", offering as evidence a statement by the OECD.

Easy enough to demonstrate they are lying? Sure is!

As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period – but only a fraction as much as the ones affected by speculation. Her research shows that speculation was "the main cause" of the rise.

So it has come to this. The world's wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won. Their Wasteland moment created a real wasteland. What does it say about our political and economic system that we can so casually inflict so much pain?
Well, what does it say about or so called political and economic system? What master does it serve? Who is harmed by this casino gambling on everything from homes to fuel to food. Soon, to the carbon market?


  1. "Well, what does it say about or so called political and economic system?

    It's raison d'etre is exploitation.

    "What master does it serve?"

    This 'master' is called Mammon.

    Someone famously said many years ago, "Money is the God of this world and Rothschild is his prophet" (pun probably intended).

    Stunning post, Penny

    WV word = slugh

  2. wow Pen. way to go!

    back around may 2008 when this was going down, i came across a picture of these wall st traders and they were caught on camera laughing their asses off having the most wonderful time ever had at work. it was linked to this story:

    but then the photo had to go away. i think it was too revealing.

    as noted at the time, that Peak Oil theory didn't really explain a ten cent a gallon a day increase in the price of oil.

  3. Amazing post, and well done once again Penny . . . stunning research, especially the bit about Goldman Sachs getting the "Bona Fide Market Manipulation" exception.

    The part of the article I raised my eyebrows at is that the regulators "allowed" it to happen, as if it somehow got by them, or they missed it. It might have occurred to them to actually name names, connect the dots, investigate what pressures or gifts these people received, etc - you know, a real investigation as to how they got the ok to manipulate the market like never before.

    Not that I am giving you more work to do Pen . . . but it would be interesting to see where the regulators come from. I am sure it isn't much different than the foxes in the henhouse at the FDA . . .

  4. hey james, ap and of course slozo.

    I am on a bit of a goldman roll, in case you haven't noticed?

    "I raised my eyebrows at is that the regulators "allowed" it to happen, as if it somehow got by them, or they missed it."

    that is completely bogus, if they allowed it to happen, it did not get by them, it was simply allowed.

    Like in the newest piece, where the article is written "if washington doesn't get the rules right" blah, blah, blah that is such bullshit and leaves the door open for the usual "we didn't know"
    or "incompetence" excuses that always follow this type of actions.

    Be it 9/11, unwarranted attack on Iraq, or wall street bubbles.

    It is always, oh we didn't know, we made a mistake, faulty intelligence, whatever?

    They know, there is nothing faulty going on, if others can see the errors of these decisions, long before they are made then we can all be dam sure that politicians and banksters can too.

    I am plugging along, and the blog is a welcome respite, belive it or not, from thinking about, talking about, planning for what looks to be the soon coming death of my grandmother.

    It breaks my heart.

  5. And there I go forgetting my manners again . . . my best wishes to you as you go through this difficult time.

    I miss my grandma's, but for both of them, they had long and fruitful lives, both of them very strong ladies in their day, and into their old age.

    Thanks for the memory trigger, and hopefully it all goes quickly at the end.

  6. hey Pen. sorry for your troubles. i did want to point you over to Noor's site, she has a related story to this one you did:

  7. thanks slozo and ap

    I did check the link out that you left ap, yup does tie in nicely, I should add that to this one for additional info!