Sunday, June 13, 2010

How Goldman Sachs Commodity Speculation Starved 250 Million People in 2008

Tags: Stop Food Speculation, Goldman Sachs 2008 Food Bubble, Food Riots 30 Countries, Bread Red Spring Wheat Excess Starved 250 Million,

Harper’s Magazine, July 2010, The Food Bubble: How Wall Street Starved Hundreds of Millions and Got Away with It by Frederick Kaufman who previously wrote in Harper’s June 2009 issue “Let Them Eat Cash”

Subscribe at $16.97/year to read this extraordinary magazine on news, book reviews, and other articles not seen elsewhere. Rachel Maddow’s C-Street Republican mostly scandal was exposed by Harper’s Magazine about how power uses Christianity based not on Jesus, but from the Old testament selection of contradictory stories for political ends.

Excerpt from Harper’s Magazine, July 2010 I read last night.

… “Goldman’s analysts went about transforming food into a concept. They selected eighteen commodifiable ingredients and contrived a financial elixir that included 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 know thenceforward as the Goldman Sachs Commodity Index. They they began to offer shares.

As was usually the case, Goldman’s product flourished. The prices of cattle, coffee, cocoa, corn, and wheat began to rise, slowly at first, and then rapidly.” …

Copy cats soon emerged which led to rising food prices regardless of he yield of the harvest wheat, coffee, cocoa, corn, and especially hard red-spring wheat,a high protein variety, necessary for bread production of which half is grown in Saudi Arabia and goes through “the Minneapolis Grain Exchange which remains the supreme price-setter.”

Its price on this exchange sets the price of a loaf of bread all over the world. I know that small bread makers went bankrupt because speculators, as high oil prices happened which went down rapidly when trading rules were put in place, as predicted by non-ideological oil price experts before congressional hearings to about $70-$80 per barrel.

“Then , in 2005, that price began to rise, along with the prices of rice and corn and soy and oats and cooking oil.

Hard red spring had long traded between $3 and $6 per sixty-pound bushel, for for three years Minneapolis wheat broke record after record as its price doubled and then doubled again.

No one was surprised when in the first quarter of 2008 transnational wheat giant Cargill attributed its 86 percent jump in annual profits to commodity trading. And no one was surprised when packaged-food maker ConAgra sold its trading arm to a hedge fund for $2.8 billion.

Nor when The Economist announced that the real price of food had reached its highest level since 1845, the year the magazine first calculated the number. …

Since Goldman’s innovation, hundreds of billions of new dollars had overwhelmed the actual supply of and actual demand for wheat, and rumors began to emerge that someone, somewhere had cornered the market. … “

The price of red spring wheat went up 460 percent after mid-2008. If the same happened to hamburger, it would be $20 a pound.

In 2008, riots for bread expanded to 30 countries with hungry people increased by 250 million, the greatest in world history! So much excess precious red spring wheat was being stored that they eventually had to be fed to animals. The same could happen in spades when all commodities such as pork, corn, or beef if all the predicted effects of Climate Change storm and drought effects become even more common when there is a real shortage of food for all of us.

That is why I support Senator Lincoln's proposal to ban naked speculation in farm commodities!

Jim Kawakami, June 13, 2010,

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