Politics
Out of context: Reply #13242
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- TheBlueOne0
"Free Markets" and "Financial Capitalism", or why whatever these assholes say about "capitalism", markets and invisible hands, it has absolutely nothing to do with letting markets freely operate. Ever.
http://www.democracynow.org/2010…
"...we have to understand...a lot of these banks, are not interested in the particular structure of any of these markets. I think it’s a lot of mistake people make when they think about how these bankers are working. We think that they’re actually interested in the markets. We think that they’re—no. What they’re after are very large pools of cash for themselves. They’re after accumulating huge pools of money that they can do with whatever they like on a day-to-day basis. Right? And so, Goldman, in 1991, came up with this idea of the commodity index fund, which really was a way for them to accumulate huge piles of cash for themselves. It wasn’t really about the markets, anyway. The market was just an excuse. And so, the fact that they threw these wheat markets out of whack didn’t really matter to them.
How did this work? Instead of a buy-and-sell order, like everybody does in these markets, they just started buying. It’s called "going long." They started going long on wheat futures. OK? And every time one of these contracts came due, they would do something called "rolling it over" into the next contract. So they would take all those buy promises they had made and say, "OK, we still—we’re just going to—we’ll buy more later. And plus we’re going to buy more now." And they kept on buying and buying and buying and buying and accumulating this unprecedented, this historically unprecedented pile of long-only wheat futures. And this accumulation created a very odd phenomenon in the market. It’s called a "demand shock." Usually prices go up because supply is low, right? That’s the idea. There’s not a lot of supply, so the price goes up. In this case, Goldman and the other banks had introduced this completely unnatural and artificial demand to buy wheat, and that then set the price up. Now, a lot of people are saying, "Oh, it was biofuel production. It was drought in Australia. It was floods in Kazakhstan." Let me tell you, hard red wheat generally trades between $3 and $6 per sixty-pound bushel. It went up to $12, then $15, then $18. Then it broke $20. And on February 25th, 2008, hard red spring futures settled at $25 per bushel. This is completely beyond the pale, particularly at a— in 2008, it was the greatest wheat-producing year in world history. The world produced more wheat in 2008 than ever before.
And here’s the other outrage of it, which is that at the time that Goldman and these other banks are completely messing up the structure of this market, they’ve protected themselves outside the market, through this really almost diabolical idea called "replication," which is what I discovered when I was looking into how they had structured this. What they do—let’s say, Juan, you want me to invest for you in the wheat market. You give me a hundred bucks, OK? Well, what I should be doing is putting a hundred bucks in the wheat markets. But I don’t have to do that. All I have to do is put $5 in. Good-faith promise. And with that $5, I can hold your hundred-dollar position. Well, now I got ninety-five of your dollars. What am I going to do with them? Well, what Goldman did with hundreds of billions of dollars, and what all these banks did with hundreds of billions of dollars, is they put them in the most conservative—no fools, they—they put them in the most conservative investments conceivable. They put it in T-bills. And then what did they do? Well, now that you have hundreds of billions of dollars in T-bills, you can leverage that into trillions of dollars. This is what I’m talking about, large pools of cash for themselves. And then they take that trillion dollars, they give it to their day traders, and they say, "Go at it, guys. Do whatever is most lucrative today." And so, as billions of people starve, they use that money to make billions of dollars for themselves. And the result was, as the price went up, that there were food riots around the world. there were food riots in more than thirty countries. The global price of food rose over 80 percent. This had an effect not only on wheat, but on corn, on soy, on cooking oil, on rice. You know, people talk about globalization. "We don’t need to set prices or have tariffs, because we’re globalized. You know, people can buy their wheat, anyway." Well, gee, guess what happened. When the price of wheat started to go through the roof, something new, which was something old, came up, called "nationalism," and people said, "OK, sorry, we’re closing our wheat, and we’re setting up tariffs." And you had—you had riots. You had hunger. You had a disaster. You had a global disaster, because, remember, in America, we’re spending maybe 15 percent of our weekly paycheck on food, right? I mean, maybe you remember, a couple years ago, why was that dozen eggs so expensive? Why was that milk so expensive? Why was that meat so expensive? That’s 15 percent. For most people on the earth, they’re spending more than 50 percent of their daily income on their daily bread. And when their daily bread moves up 80 percent, they’ve just moved right into the ranks of the food insecure. And it was not only in Burkina Faso. This was in America. You had 49 million hungry families in America. You had one out of five children in America at soup kitchens. You had a million hungry people in Los Angeles.So, I mean, it is unconscionable that Wall Street has completely lost touch with the reality."
- No, but let's focus on the size of Obama's head. Because that's really important for you fuckers in the Clown cars.TheBlueOne
- BIG HEAD, you too eh?********
- sounds a lot like cap and trade********
- They just don't care anymore, it is like a game to these bastards.DCDesigns