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Laughing all the way to the bank while dancing on corpses

by IdiotSavant Fri Jul 2nd, 2010 at 07:31:28 AM EST

From No Right Turn - New Zealand's liberal blog:

Today's must-read: a truly horrifying article by Johann Hari in the Independent about how US investment bank Goldman Sachs set up a speculative bubble in food futures and caused mass starvation as a result:


In 2006, financial speculators like Goldmans pulled out of the collapsing US real estate market. They reckoned food prices would stay steady or rise while the rest of the economy tanked, so they switched their funds there. Suddenly, the world's frightened investors stampeded on to this ground.

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. The bubble only burst in March 2008 when the situation got so bad in the US that the speculators had to slash their spending to cover their losses back home.

Two hundred million people went hungry as a result, not because there wasn't any food - supply had in fact risen - but because futures market speculation had pushed prices beyond what they could afford to pay.  There were food riots in 30 countries, and at least one starvation-induced revolution. The UN Special Rapporteur on the Right to Food has called it "a silent mass murder" entirely caused by "man-made actions".  Another word for it would be genocide.

But hey, the bankers made money, so it must be OK, right?

This is the sort of shit which caused the French Revolution.  And if they'd done it in the places where people were actually starving, they would have been strung up.  But the joy of globalisation is that you can profit from a famine on the other side of the world, while being totally insulated from the angry, starving mobs you have caused.

Our bankers are genocidieres.  Time for some trials.


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I was only vaguely aware of the food price bubble (material circumstances govern outlook!) - thank you for bringing it to our attention.

We can't make progress until we've gotten rid of this class of new aristos.

by Pope Epopt on Fri Jul 2nd, 2010 at 08:54:17 AM EST
That was one of the sadder episodes of the crisis. To add insult to injury, because of high food prices last year, 18 million hectares more have been tilled this year, which will probably result in a global glut. Sounds good? It does, until you realise that causes quite a few Third World economies to go bye-bye, as farmers are forced out of business.

Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae
by Titus on Sat Jul 3rd, 2010 at 06:24:39 AM EST
Although I'm a great fan of food I look forward to privation coming to the US.  Without the military draft this is one of the few things that will get Americans off their fat asses and change their government.

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Sat Jul 3rd, 2010 at 07:38:26 AM EST
At the time, I was very focused on ecological limits and overshoot, and pretty much convinced that we were facing short-term, permanent disaster with food supply.

And it's actually true that there was a supply squeeze in 2006. Speculation can't work without the raw material of a tight supply/demand situation. World stockpiles were low -- partly because of "market" doctrine enforced by the World Bank and its likes, encouraging governments to get out of the food-supply management business, which is so much better managed by the market... and the Australian wheat harvest failed, among other things. Then governments in producing countries started reserving production for national use, taking quantities off the market, and other governments started bidding up prices to secure supply, and all this created an environment where speculators could add fuel to the fire and push prices up further.

Hence effectively turning a situation of tight, but probably adequate, supply into a disaster.

Rather similar to the oil price spike in 2008. Like many others, I thought that this was "the market" telling us that demand had definitively exceeded supply. This was only partly true; speculators, though they did not create the crisis, seriously exacerbated it.

I suspect that things have evolved quite fast since the 2006 crisis, in particular with respect to certain nations securing farm land, notably in Africa, in order to assure future food supplies. I'm not sure if this shows up quantitatively yet, but I suspec that it's one element that shows that mercantilist national policies have emerged to take the sharp edge off the tyranny of speculation.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Sun Jul 4th, 2010 at 02:05:23 PM EST


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