How Goldman Sacks Created the Food Crisis

[marshabar1]

Demand and supply certainly matter. But there's another reason why food across the world has become so expensive: Wall Street greed.

It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there's value, there's money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each 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 known henceforth as the Goldman Sachs Commodity Index (GSCI).

www.foreignpolicy.com/articles/2011/04/27/how_goldman_sachs_created_the_food_crisis

[billisonboard]

Gosh dang government.

[Mad Dawg Wiccan]

Can you condense the article in layman's terms?

[straydog]

This stuff is extremely difficult to understand. Even my late father, who had a masters degree from an ivy league university had a hard time understanding all the games that wall st. played.

Isn't part of the problem that all these Goldman Sachs players end up in government positions after they leave the firm? Rubin, Paulson, and then there was some Indian fellow who served in the last days of the Bush administration. Rubin, who had a strong hand in the financial collapse, is now serving in the Obama administration. Ditto for ex Monsanto players - I hear that one is about to be placed in some regulatory agency by Obama. Both sides have their hands out.

I guess that the best way for someone like me to fight them back is to bake my own bread, make my own pancake batter, and to buy as little processed food as possible. But, I still have to buy the flour and the baking soda/powder from them.

[straydog]

Toughtimes:
It is not at all hard to understand. The commodities market was created to help farmers manage their crop production. If a farmer without a fancy college education can understand it, it is not out of reach of city slickers of average intelligence either.

SD:
My father and I were both Dyslexic, math was hard for him and nearly impossible for me, it was the reason that I flunked out of college. Some people can grasp some concepts better than others.

Toughtimes:
You cannot fight back by baking your own bread unless you find a way to use sawdust instead of wheat. The only way to fight back is to start asking our politicians very embarrassing questions and stop kissing up to villains just because they wear the right labels. Who cares if it is a left or right & Democrat or Republican if he is bending you over.

SD:
Agreed, both parties have their hands in the cookie jar. We should make it illegal for industry players to get government positions, likewise, make it illegal for ex government players (regulators, politicians) to lobby for the people they once oversaw.

Toughtimes:
Here in a nutshell is the example that the author of Griftopia used to explain this phenomena.

Imagine that a man is going around offering to buy 500K worth of cars. He does not care about the price. Just that he has 500K to spend. How long until he is offered ONE car at 500K. And what does that do to the people who actually want to buy a car to drive?

All that dumb money in the Index futures is a problem.

SD:
Even though Matt Taibbi is not one of my favorite people, I may still take the book out of the library and read it.

en.wikipedia.org/wiki/Griftopia