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one more reason to

Posted by inkognito (My Page) on
Sun, Apr 1, 12 at 8:12

despise those fat cats

Before it was deregulated in the year 2000, the agricultural commodities futures market was used mainly by farmers and food buyers seeking to insure themselves against changes in the prices of products such as wheat, maize and sugar. When George W Bush passed the Commodities Futures Modernization Act 12 years ago, there was an influx, led by Goldman Sachs, of purely financial players who had no interest in ever buying food, but who sought solely to profit from changes in food prices, says Olivier De Schutter, the UN special rapporteur on the right to food.

Here is a link that might be useful: high food prices


Follow-Up Postings:

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RE: one more reason to

If the ignorance works for the "speculation drives up oil prices", then, of course, the same "logic" would apply to the food market.

It's the same nonsense.

And to back up the claim? Get one idiot to quote another idiot as their source.

" says the United Nations' leading expert on food."

My cousin, Vinnie, who runs the meat department at the local STop and Shop Meat Market, says that it's all nonsense.

"purely financial players who had no interest in ever buying food, but who sought solely to profit from changes in food prices, says Olivier De Schutter, the UN special rapporteur on the right to food."

My cousin, Vinnie, who took an Economics 101 course before he dropped out to become a butcher, says that makes some sense. He says the "speculators" are basically just a bunch of old retired men who like to sit in the brokers office betting on just about anything. They're pretty harmless, Vinnie says. As long as you don't see barges of wheat unloading in their backyard, everything should be OK.

" who are purely interested in the short-term monetary gain and are not really interested in the physical thing -they never actually buy the ton of wheat or maize; they only buy a promise to buy or to sell."

Vinnie says that these bettors ought to just keep their transactions quiet and nobody would ever know. ("Psst... you want to make a bet on the weather tomorrow. We won't tell anyone. It'll be our little secret.") Just don't let that barge unload a big pile of wheat in your backyard and no one should ever know.

I'd go on, but my cousin, Vinnie, the guy I always go to when I want to understand the meat market, said that he's bored with the topic and has real work to do.

Wish I could tell you more.

Hay


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How many reasons do you really need?

OK, I guess I'm on my own. Vinnie's kinda tired of tying to explain all this to me.

Who is this UN "expert"?

He's a lawyer. Lawyers know everything.

If I want to understand the oil market, I go to a lawyer. If I want to understand the food market, I go to a lawyer. If I need legal advice, I go to Vinnie.

"In his work, he seeks to link the human rights principles of participation, accountability, and non-discrimination, with the idea of learning-based public policies, that are permanently tested and revised in the light of their impact on the poorest and most vulnerable. He also seeks to explore the relationship between regulatory frameworks and economic analysis, developing a form of experimentalism that tests economic propositions against the possibility of different institutional arrangements, and that tests legal rules against their impacts on livelihoods."

Of course!!!

Why didn't I think of that?!?

It's all starting to make more sense to me now.


Hay


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RE: one more reason to

"These funds", write the authors, "Have plowed tens of billions of dollars into agricultural commodities as a way to diversify their assets and improve returns for their investors. The amount of fund money invested in commodity indexes has climbed from just $13-billion (U.S.) in 2003 to a staggering $260-billion in March 2008, according to calculations based on regulatory filings. Michael Masters, a veteran U.S. hedge fund manager, warned a Senate hearing this month that this number could easily quadruple to $1-trillion, if pension funds allocate a greater portion of their portfolio to commodities, as some consultants suggest they are poised to do. Because agricultural markets are small - relative to stock markets - the amount of cash pouring in gives these funds substantial clout. Mr. Masters estimated that that these big institutional investors control enough wheat futures to supply the needs of American consumers for the next two years, and blamed the "demand shock" from these recent entrants to the commodities markets as arguably the primary factor behind the sudden take-off in food prices."

wheat, rice, soy, sugar, etc.

No, hyperinflation of food prices, with 3 - 4 fold increases in price, suddenly plummeting and rising, is just that good ol' supply and demand. Its just a coincidence that it all started to occur following the deregulation of the commodities markets by the Bush Administration, and the sudden influx of huge amounts of money from non-consumers.


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RE: one more reason to

Its just a coincidence that it all started to occur following the deregulation of the commodities markets by the Bush Administration

Despite the various disasters that have taken place after deregulation, that's still the mantra of the GOP.

You can fool some of the people all of the time.


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RE: one more reason to

According to Wiki, the Commodity Futures Modernization Act was signed into law by President Clinton in 2000.

Too bad bloggers don't bother to check their "facts" with a 20-second Google (or any other search engine). Why should we accept as gospel anything else Ms Livingstone has to say when her work is so sloppy and lazy right from the get-go?

Here is a link that might be useful: Wiki on CFMA


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RE: one more reason to

It doesn't matter to me whodunnit, the effect is the same, this wasn't intended as another us vs them thread.


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RE: one more reason to

My mistake. that should have read the deregulation rammed through by the republican congress in the last few months of the Clinton Administration, and with the lassaz-faire, free-market ideologues of the Bush Administration, led to the mess.


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considered one of the most devastating decisions ever

When it entered the world in the final days of 2000, almost no one cared a jot about the Commodity Futures Modernization Act. In hindsight, the CFMA turned out to be one of the most momentous pieces of legislation passed during the entire Clinton administration - and one of the darkest spots on the record of Treasury Secretary Lawrence Summers. It began with a simple question: who should regulate derivatives, the Commodity Futures Trading Commission or the Securities and Exchange Commission? By answering "none of the above," the CFMA essentially deregulated the entire derivatives market, including energy derivatives, as abused by Enron, and credit-default swaps, which allowed AIG Financial Products to binge on unlimited amounts of risk. Enron became the largest corporate fraud in history (and any Californian will be able to tell you about the consequences for energy prices in the state, which were pegged to market prices being manipulated by Enron traders), while AIG's bailout cost U.S. taxpayers hundreds of billions of dollars that were desperately needed elsewhere. But the most invidious effect of the CFMA wasn't so much financial as political. It marked the point at which Washington became completely captured by Wall Street. Those who opposed the act were ousted; those who pushed it through, rewarded. Financial laws still can't get passed unless and until the banks want them enacted. And we're all suffering the consequences. " that from newsweek

at the link, a lengthy article about how that bill came to be - with some comments about food prices at the end

Here is a link that might be useful: link


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RE: one more reason to

"No, hyperinflation of food prices, with 3 - 4 fold increases in price, suddenly plummeting and rising, is just that good ol' supply and demand. Its just a coincidence that it all started to occur following the deregulation of the commodities markets by the Bush Administration, and the sudden influx of huge amounts of money from non-consumers."

In the middle of the 1900's something like 50 million people starved to death in China under the reign of the communists. Without looking, I'm guessing that there was no commodity futures trading going on in China at that time. Who do you blame?

Meanwhile in the USSR in the early 1930's, under Stalin and his Commies, something on the order of 5 million or so Ukrainians starved to death under that "progressive" called Stalin. Of course, they didn't call themselves "progressives" back then.

Now, tell me again when the "wild flucuations" in food prices started.

And for those who go to the Bible for their inspiration, what was it about 7 good years followed by 7 bad years?

(Your ideas are religious in nature, so maybe you should read the Bible.) Tell me again when the "wild flucuations" in food prices started.

And the dumb Mormons. Why are they so intent on making sure they keep a year or so of food on hand. They must have seen this deregulation coming?

Tell me again when all this "wild flucuations" caused by speculation got started.

And those Pilgrims needing help from the Indians...

Oh, why bother. I swore I'd never try again to argue with a religionist, but here I am.

Fact: The commodity "speculator" has little, if any, influence on the prices you pay for anything. Food, oil...

Fact: The commodity markets, the underlying market, will be LESS, not more volatile with the "speculators" involved in the markets.

Go read about China and the USSR if you still have doubts.

Hay


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RE: one more reason to

Not to mention what passes for food, itself... eh, David?

Over processed, high fructose laden, sodium indulged, chemical loaded and dyed, saturated with fat, with a little wood pulp thrown in for good measure... yum yum.

Obesity, heart disease, high blood pressure and cholesterol, diabetes, and an unending list of poor health issues... all kept partially maintained by big pharma and their friendly insurance conglomerates... on top of the high prices for all of it.

What's not to like?


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RE: one more reason to

Jodi, I'm sorry but I find comments like this from a person who smokes to be a tad ...the right word escapes me.... but when you poison your body, willingly, like you do it's hard for me to take what you say seriously.


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RE: one more reason to

Enron started selling its stock on line in 1998 or 1999, if I recall correctly. Lot of folks were rushing to buy that stock.

Increases in grain commodities are primarily due to increased cost of energy (for planting/growing and transportation to market and consumer) and the whole bio-fuel mistake. Too many western countries -- the Americas and Europe -- rushed into expanding bio-fuel programs. This increased the value of grain to investors because, after all, bio-fuels were being touted as a big answer to the the energy issue. As much as 70% of the increase in grain prices can be attributed to the bio-fuel debacle.


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RE: one more reason to

Thats true for corn. Rice, wheat, and to some extent soy is speculation.

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and wheat

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note this corresponds to the speculative bubble with oil in 2008


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RE: one more reason to

Hayhay, I'M listening, and I agree with you. No offense, David, but you can't blame a party for everything.

That's certainly my opinion.


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RE: one more reason to

Compare David's ten year period 2001-2010 when the ratio between the lowest price and the highest price, roughly 1.20 to 4.30 or a ratio of roughly 4.3/1.2=3.6.

to the chart of the wheat prices from 1920 to 1930. The ratio of highest to lowest price is roughly 2.49/.49 or 5

Here's an easy question for you. Which is larger: 5 or 3.5?

I'm going to take a nap now.

David, maybe you could dig up a price chart for potatoes in Ireland in the 10 year period from roughly 1845 to 1855 while I take a nap?

Thanks,

Hay


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RE: one more reason to

Using corn as a bio fuel means that other grains are used to feed animals.

Another problem is the WTO doesn't allow the USA and Europe to stockpile wheat anymore, so the prices are more volatile. When there's a drought in China or when the Russian wheat crop is destroyed by wildfires, competition for the limited wheat supply increases and that drives up the price. There are no longer any stockpiles to minimize the loss and smooth out the price, so the price skyrockets.


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RE: one more reason to

Take your time, Dave.

Could you add the price of rice in the ten year period around 1950 in China to my request? I'd like to compare that to the chart of rice prices you presented above.

Nice nap I had.

Another part of David's post above:

""These funds", write the authors, "Have plowed tens of billions of dollars into agricultural commodities as a way to diversify their assets and improve returns for their investors. The amount of fund money invested in commodity indexes has climbed from just $13-billion (U.S.) in 2003 to a staggering $260-billion in March 2008, according to calculations based on regulatory filings. Michael Masters, a veteran U.S. hedge fund manager, warned a Senate hearing this month that this number could easily quadruple to $1-trillion, if pension funds allocate a greater portion of their portfolio to commodities, as some consultants suggest they are poised to do. Because agricultural markets are small - relative to stock markets - the amount of cash pouring in gives these funds substantial clout. Mr. Masters estimated that that these big institutional investors control enough wheat futures to supply the needs of American consumers for the next two years, and blamed the "demand shock" from these recent entrants to the commodities markets as arguably the primary factor behind the sudden take-off in food prices."

I love it that we start a thread about

"one more reason to despise those fat cats", and to support our contentions...

we turn to... a despicable fat cat. They're despicable, cheating, thieving, conniving, greedy mothers... until we need them to back up our claims, and suddenly...everything they say is the Gospel.

Mike Masters you ask?

Deja Vu

Then it was oil: Same story, different commodity.

"Meet Michael Masters.

He invests in stocks that are hurt by rising gas prices, he blames speculative traders in the oil market, and he subtly lobbies the government to do something about it.

...

Masters, who has criticized commodities "speculators" for at least the past 3 years, told Rather that speculators are to blame for rising gas prices. Then on April 21, as gas price hit $5 per gallon, President Obama announced that he was putting a team together to investigate illegal speculation in oil markets on Wall Street.

Now before we go on, you need to check out his latest 13f, a report of what Masters' hedge fund.

Here's what he's investing in:

American Airlines
Delta
General Motors
US Airways
Advanced Battery Technologies, a maker of electric car batteries
Private equity companies like KKR and Och Ziff
Almost Masters' entire portfolio of investments are affected by the price of oil (the PE companies, not so much)"

Personally, I believe every word he says.

Speaking of deja vu, check out this post from almost precisely one year ago.

Same ole.

Soon, Jodik will expound on the virtues of greed, Maddie will link to some "progressive" site, Demi will take it personally, Marshall will babble a bit and bboy will leave us with a one-liner that fails.

Deja vu all over again.

Hay


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RE: one more reason to

Hay, the international, 24/7 nature of world-wide commodity trading didn't exist during the Potato famine and these other examples you wish me to research for you. Thats sort of the point, here, that local markets, with a functioning supply and demand structure, are irrelevant these days when a speculator in Hong Kong can buy up the wheat futures in Ukraine and trade that with some dude from Goldman Sachs working out of London.

Lionheart, I haven't heard of the WTO stopping countries from stock-piling wheat, and couldn't find anything with a quick search: this thread is #4 on google. Quite a few countries have an official food stockpile policy - varying all the way from Gvt silos to just monitoring private stocks. Following the huge run-up in the price for rice, several of the major exporting countries - Thailand, Vietnam, slapped a ban on exporting it.

This is an area where we need to balance the disconnect between first world propaganda justifying and rationalizing the *new* capitalism of huge banks and mutual funds trading speculative paper representing the basic necessity of life - food - on a world-wide basis means billions of people suddenly have to pay twice as much to survive. Or they starve. This isn't just a theoretical discussion, recall the food riots following the price spikes of 2008.

Several billion people are paying the price, they aren't exactly convinced that deregulated commodity markets are in their best interest. They look at it as a huge transfer of wealth - from their pockets to the pockets of foreign speculators. I think it unwise to dismiss their concerns and beliefs.

There is what I think a reasonable movement underway (G20) to limit the amount of money and number of contracts that speculators may hold.

Link is an article about that

Here is a link that might be useful: link


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RE: one more reason to

"Hay, the international, 24/7 nature of world-wide commodity trading didn't exist during the Potato famine and these other examples you wish me to research for you. Thats sort of the point, here, that local markets, with a functioning supply and demand structure, are irrelevant these days when a speculator in Hong Kong can buy up the wheat futures in Ukraine and trade that with some dude from Goldman Sachs working out of London."

You lost me there.

On the one hand you want to say that the markets, today, are wild because we have unregulated international commodity markets. So, in the good ole days, say, the Irish potato famine. who do you blame for the wild fluctuations? Was there unregulated international commodity markets in potatoes that we can blame? And the China famine? Ukraine?

I just woke up, so maybe my brain is still a little fuzzy.

Time to fix breakfast, so take your time.

Hay


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RE: one more reason to

Hay, you must be suffering an overdose of fraudulence seriously affecting your logic, maybe because you are afflicted with a continuing addiction to Communist propaganda and myopia. And the Irish Potato Famine. Did the Maine and Nova Scotian potato farmers suffer too at the time? You seem fixated on the political climate of the 70 years leading up to the fall of the Soviet Union and controlled economies of the Soviet sphere. Those times, in terms of capital flow and manipulations of markets/supply and demand, are so far removed from modern, cyber-facilitated trading. The purpose of such contemporary trading is financial profit, not political. Do get a grip and quit Hay-ing us with irrelevant but well presented graphics. One could wonder at your massive grasp of reams of information whipped up in minutes to support your position. All from a sleepy fella.


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RE: one more reason to

Thanks for you insight, Marshall.

"Soon, Jodik will expound on the virtues of greed, Maddie will link to some "progressive" site, Demi will take it personally, Marshall will babble a bit and bboy will leave us with a one-liner that fails."

One down, four to go.

Hay


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RE: one more reason to

Well then, Chase, you have not been paying attention... I've all but quit. Without the help of any drug or patch or gum, or any other substance.

I set my time limit, and began to attain it. I'm almost there.

Therefore, that was rather uncalled for, and coming from you, who are usually very fair and pay close attention, it feels a bit of an affront... even more so when it's by far THE most difficult addiction to end.


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Those who don't learn from history.....

"All from a sleepy fella."

Even half asleep I can see through your arguments.

"...you must be suffering...

...

You seem fixated on the political climate of the 70 years leading up to the fall of the Soviet Union and controlled economies of the Soviet sphere."

Deja vu. I've been suffering from it for a long time now.

Oh, Jodi's here!!!! Can Demi and Maddie be far behind???

Hay


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RE:Hay one more reason to

What magnificent retorts, Hay-fella!


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RE: one more reason to

Was anyone suggesting that commodity speculation caused the Irish potato famine and not mono cropping or that the cause of the Russian disaster was anything other than mismanagement of farming? Wall Street is not the only cause of food shortages but it is one that could be controlled.


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RE: one more reason to

Ink, you're making too much sense.

Repeat after me:

Capitalism can do no wrong.


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RE: one more reason to

Jodik, I absolutely did miss any information that you shared about quitting. Believe me I know exactly how hard it is to do because I went through it. I guess reformed smokers are the worst!

It is your business, not mine and I was annoyed at myself the moment I posted.

I wish you continued success, it's a hard road but one that many have taken and so can you.


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RE: one more reason to

  • Posted by bboy USDA 8 Sunset 5 WA (My Page) on
    Mon, Apr 2, 12 at 15:07

How great that you have quit! Good luck!!

By now it seems pretty clear capitalism as practiced today is screwing things up. I don't bother to read the recurring, long-winded counter-arguments - especially with the condescending tone that the fundamentally wrong-headed so often seem to adopt.

I have no doubts about my position, therefore you're an idiot for challenging anything that is part of my belief system - and deserve to be talked down to


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RE: one more reason to

Hay-morphing is designed to drive the topic into the nearest toilet or its cyber equivalent.


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RE: one more reason to

The price of commodoties including oil are impacted in some measure, by speculation.
That is how the commodidty traders make a living.
Sometimes it is hard to seperate out speculation from other factors that impact price, especially when speculation drives the market and creates a self fulfilling prophecy.

If people aren't making money on speculation, and speculation is not impacting prices, why not just end that game?


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RE: one more reason to

Hey, David. Not much time, but the link below is the long and short of it.

The WTO rules change the way in which the US and Europe can or cannot subsidize farmers. This causes the lack of wheat stockpiles.

Yet, in another way, it probably makes it (A) possible for other countries to enter into the wheat/grain market, and (B) levels the playing field for farmers in countries who are not receiving government subsidies.

So there's an upside and a downside, just like with everything else.

Most poor countries are more sensitive to the success or failure of local harvest and they are less dependent on global food market, according to this excerpt:

"That's partly because many of the world's poorest people simply have no money and no access to food. Many live in countries where wars and other crises make it hard to get food to people. They would be hungry even if the price of food had not spiked."

"What's more, in many poor countries, the local harvest is a more important factor than the price of global commodities. And many countries in Africa have had strong harvests of staples such as white corn and cassava."

They go on to say that Central Asia is far more vulnerable to increases in commodity prices.

Anyhow, is the problem one of price or distribution? It's not easy to distribute food (or anything else) in a country that is politically unstable or in frequent upheaval.

Here is a link that might be useful: NPR's Planet Money


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RE: one more reason to

"By now it seems pretty clear capitalism as practiced today is screwing things up. I don't bother to read the recurring, long-winded counter-arguments"

OK, good for you. You've made your mind up. It's called religion. Makes life so much easier to deal with.

"Ink, you're making too much sense."

Believe what you want, but I'm not stupid. Really and truly. I've asked YOU, you with your snarky little commie comments, as I have the other "progressives", to show me how it works so we can go to Vegas. But, no, I've been stuck here in Connecticut for a year...

(" Hay-morphing is designed to drive the topic into the nearest toilet or its cyber equivalent.")

...waiting for Mr. Charmer-Lover-Boy, ("Oh, he's mine." "No, he's mine!!") to explain it all to us so he and I could go to Vegas, but, no, he can't, (nor will you), and so he tries to see how many words he can tack on to the end of my name. I want to go to Vegas so bad. PLease explain it to us, Nancy-Snarky. PLEASE, I'd really rather go with YOU!!!

"Wall Street is not the only cause of food shortages but it is one that could be controlled."

Or maybe it's the Tooth Fairy. So far, there is just as much evidence to support the idea that the Tooth Fairy comes in the middle of the night and takes food from our pantry as there is that speculation has anything to do with the higher price of food.

There are some really decent academic studies out there that will give you quite reasonable explanations for the oil market prices and the food market prices. There are some really reasonable studies out there that will give you an evolutionary explanation for the life forms we see in nature, but if you want to believe that some ether god out there put two of each creature on the earth 7,000 years ago, then you won't... like bboy has chosen to do...have to muddle your brain by thinking and reading difficult explanations.

(It's interesting that in the thread from a year ago that I linked, I pointed out that one of Nancy's gods, Krugman, was reported to have said, in one of the links that INK had linked us to, that he didn't think that speculation was the reason for the high prices in the oil market, but INK ignores that to quote some idiot who has absolutely no clue. And in one of the links above, there was a similar reference to Krugman that never made it to this thread. Nancy, you want to find that for us?? I've seen that Buffet has said something similar.)

"The price of commodoties including oil are impacted in some measure, by speculation.
That is how the commodidty traders make a living."

Not that it's really relevant here, but there is actually nothing wrong with making a living. And if the price of commodities is actually impacted in a positive way, then God bless them.

I'm going to be having frozen strawberries over my French Toast this morning. I'm going to say a little thank you to the speculator who bought the strawberries last summer when they would have been rotting in the fields otherwise and stored them over the winter. I'm not going to be paying last summer's price for the strawberries, and that's too bad, but I'm sure as hell not going to be clamoring to shut down that speculative market. (That's essentially what the Koch brothers did with their 4 tankers: bought oil after the price had plummeted and released it when the price went back up. Thank you, Koch brothers.)

I love French Toast with frozen strawberries in the Winter.

Hay


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RE: one more reason to

Thank you, Chase... and Bboy. It's been a little tough, but not bad. I allow myself a certain amount, and I don't take them with me when working outside, which I'm doing a lot of at this time of year. It should go as planned... so far, so good! It's the last bad habit I need to quit... I don't drink, or do anything else that is not prescribed by my doctor. ;-) The older you get, the more you realize you need a weekly pill keeper so you don't forget to take anything you're supposed to take!

Marshallz said: "Hay-morphing is designed to drive the topic into the nearest toilet or its cyber equivalent."

Well, it's not as effective as it could be... as long as you bypass the posts.

Capitalism could work fairly well if the ethics and honesty hadn't been sucked out along the way.


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Commie thinking.

Commie logic

Are office betting pools next? Could Heri and I go to jail if we bet on Jeb Bush? If Intrade is still up and running, does it make any sense to limit the betting in this country?

Is there anything that the Commies don't want to regulate?

"If people aren't making money on speculation, and speculation is not impacting prices, why not just end that game?"

Guess not.

Hay


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More commie 'thinking'

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Some things are pretty certain...

"Well, it's not as effective as it could be... as long as you bypass the posts.

Capitalism could work fairly well if the ethics and honesty hadn't been sucked out along the way."

Could you elaborate on that?

"ethics and honesty hadn't been sucked out along the way."

Is that the same thing as Greed?

Hay


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RE: one more reason to

Gosh, Hay-lofty, are Canadian little banks allowed to play the commodity markets with depositors' Loonies? If so, they would practice like the big boys of Commodity Traders and bet both ways with both long and short trading positions, weighted as the odds favor.

I'm sure the Canadian banking regulators would be pleased.


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RE: one more reason to

Yummy. French Toast with Speculated frozen strawberries. Thank you, Mr. Dole.

"weighted as the odds favor"

You don't understand, Mr. Marshall-Half-Wit.

They put together a "wash trade", ie. paired the EXACT opposite positions, between two of their subsidiaries, and then went down to the exchange and "crossed" this trade. One subsidiary bought from another subsidiary. No other players were involved. But, that would show up as two new "speculative" positions.

Don't just look at one half of the trade, Mr. Marshall-Half-Wit. Now, tell me which way this impacted prices.

Sincerely yours,

Hay-Patience.


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RE: one more reason to

one more reason to.... ignore this thread, I think it is quite a feat to profess superiority at the same time as making yourself look foolish but hay has managed it. So all that remains is anther three posts from him calling everybody names and accuse me of stalking and we can let this thread die.


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RE: one more reason to

I agree, ink. Out of here. Hay accomplished his mission.


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RE: one more reason to

Thats interesting, Lionheart - the move from Gvt stockpiles to direct subsidies to farmers effectively removing the stock piles. From your link:

snip begin quote/ "Abbassian attributed the price rise to several factors - some familiar to me (and probably to you), some less familiar.

1. The rise of biofuels, like ethanol made from corn. This market, driven largely by government subsidies, has created demand that is what economists call "price inelastic" - demand stays strong even as prices rise.

2. More demand from the developing world, particularly for meat. Livestock eat grain, so increasing demand for meat means increasing demand for grain. This source of demand has also been price inelastic, Abbassian said.

3. Disappearing stockpiles.

Because of WTO rules, the U.S. and Europe have been moving away from subsidies that led to vast reserves of wheat and corn.

Subsidies still exist in the U.S. and Europe, but they've taken a different form. Governments used to buy and stockpile surplus food from farmers. Now it's more common for governments to give farmers subsidy payments without actually buying any of the food they produce, Abbassian told me.

This sounds super wonky, but it has a huge impact on the price of food.

Big stockpiles mean that the supply of food remains relatively constant, even when there are disasters like the vast fires that destroyed last summer's Russian wheat crop.

But in the absence of stockpiles, unexpected shocks like those fires in Russia last summer have a huge impact on supply. That, in turn, contributes to huge price spikes.

"What you get is a world market that is increasingly tight, without much of a buffer," Abbassian told me. "Without a buffer, you have volatility. It's as simple as that."

4. Speculation

The volatility created by declining stocks is in turn compounded by speculation - traders betting on the rise or fall of prices.

Abbassian argued that bringing more transparency to commodities futures markets might mitigate this issue.

"If we know who is buying it and what are they buying it for, that may get those who are just there to gamble to be more cautious about their positions," he said.

Who is going to go hungry?

At any given moment, there are about a billion people in the world who don't have enough food to eat. When food prices go up, more people do go hungry - but the increase isn't as dramatic as you might think.

That's partly because many of the world's poorest people simply have no money and no access to food. Many live in countries where wars and other crises make it hard to get food to people. They would be hungry even if the price of food had not spiked.

What's more, in many poor countries, the local harvest is a more important factor than the price of global commodities. And many countries in Africa have had strong harvests of staples such as white corn and cassava.

One often overlooked region likely to be hit hard by the price increases is Central Asia, Abbassian said. This recent FAO report has lots of region-by-region detail. " snip end quote

Ah, but quite a few impoverished countries depend on food imports - Egypt, eg, for wheat.

Add to the list above the declining value of the Dollar and climate change effecting world production as well.

I can see the guy's argument that down at the village level in rural Africa, they don't worry about the world price of wheat - they're subsistence farmers and don't enter into the equation. However, he doesn't quantify this.

I'd say that in practice, and for politically practical reason, look at the vast urban populations in 3rd world countries which do depend on world prices, and where the political upsets occur.

It's interesting to put this in the context of the huge land grabs for massive industrial farming going on in Africa, we've discussed before.

At the link is an interactive thing where one can plug in import/export of assorted food stuffs. It goes by volume, not percentage - which excludes the really poor places. I have it set on wheat imports - Egypt being far and away #1. So when their price triples, they get riots. Which in turn upsets the whole middle east political cart.

Here is a link that might be useful: link


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RE: one more reason to

So, if the choice is Put UP or Shut UP, you choose to Shut up. Good choice given the alternative.

"I agree, ink. Out of here. Hay accomplished his mission."

"Good, maybe we can have an intelligent conversation, now."

"Good point, Hay."

"Thanks."

Hay


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RE: one more reason to

  • Posted by kwoods Cold z7 Long Is (My Page) on
    Tue, Apr 3, 12 at 11:18

"one more reason to.... ignore this thread,........ and we can let this thread die."

Totally disagree Ink.

Both David and Lion have presented interesting points with links to support their positions. Good jumping off points for discussion and opportunity to further explore one's own rationale re: regulation of speculation in derivative markets, world food price fluctuation cause and impact.


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RE: one more reason to

Yes, David and Lion have contributed very interesting links and commentary. We've had prior OT on the same or similar subjects, most of which have featured Hayhayhay as counterpoint to "diffuse" the issue. Hayhayhay seems never to have seen an investment "bubble" that he could not justify.


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Praise the Lord and pass the ammunition

"to further explore one's OWN rationale re: regulation"

Religion will never die.

Nor will this thread. Demi and Maddie haven't even gotten on the scene yet.

Gotta go work. Have fun.

Enjoy it while you can.

Hay


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thinking

  • Posted by kwoods Cold z7 Long Is (My Page) on
    Tue, Apr 3, 12 at 11:48

"never to have seen an investment "bubble" that he could not justify."

I guess I don't quite understand why that becomes the point of the thread. There are so many interesting views, ideas, so much consideration given to facts, research. People really think about this stuff and it IS important and weighty. When someone doesn't have anything interesting to contribute they are easy to spot and just as easily ignored, as this post probably should be.

Just would rather not see a thread die when I'm getting good intellectual ammunition from it.


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RE: one more reason to

I take your point kwoods but the irritant factor kills it for me, I don't like flies and mosquitoes for the same reason. I posted this topic in the first place was as a jumping off point for discussion, not to prove that I am right. I found the information and posted it and I am quite prepared to listen to other points of view on the subject but, the Irish potato famine? fetch me the Deet.


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RE: one more reason to

Hay, it's obvious you are very intelligent and I think you could be such an interesting participant in here if you would do just that and not load your weapons to target shoot just for the fun of it.

It was a good topic Inky, thanks for that - I was following it, trying to learn something.


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RE: one more reason to

I don't particularly care one way or the other if the world market for gold, silver, platinum, copper, pork bellies, etc gyrate all over the place due to massive speculation. Most people don't depend on this stuff, and the end result to a consumer is a few pennies for a new cell phone.

But when it comes to food and fuel, thats something else. What we are seeing, due to these huge price increases, is a massive transfer of wealth from the vast majority of the population into the hands of a few. And thats the way the vast majority of the world's population view this. Look at the profits for oil companies and their share holders - who represent what, 2% of the population?

We here on the forum can exchange high-falutin' arguments about the neutral effect of shifting capital from traditional investments in production and infrastructure into betting on paper - price changes on something or other, insurance derivatives, and repackaged mortgages, all grossly and deliberately subsidized by our tax policy and regulation structure.


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RE: one more reason to

"gyrate all over the place due to massive speculation..."

If the thought bothers you, stop believing it. Because, just about the only "reason" you believe it is that you believe it.

I was hoping Nancy would go fetch her God, Krugman, for us so I wouldn't be wasting my limited number of visits to the New York Times on his trash. But, no. I'm going to take one for you guys. I love you and I want to do what's right here.

God, aka, Krugman, speaks. (But, you don't need to waste your allocated visits to the NYT. I've got it for you.)

Krugman is wrong about 99% of the time. Here's some of the 1%. Not his logic, but his conclusion. Take what you can get.

******************

"Signatures of Speculation
With food prices on the table again, we're going to have another debate

about the role of speculators. Yves Smith will no doubt be on the attack

again, which is fine. But let me restate my basic position on all this.

First of all, I don't have any particular faith that markets necessarily

get things right. Some readers may remember that I was almost all alone

back in 2000-2001, declaring that the California energy crisis reflected

market manipulation, not fundamental shortages; and I took a lot of heat

back in 2005 for warning that we had a huge housing bubble.

So this isn't about a priori belief in markets; it's about whether we

see the "signature" of a speculation-driven price surge.

Many people on the "speculators did it" side like to point to financial

data, especially large purchases of futures by various players. But food

is a physical commodity, and plays in the financial markets can only

move the price to the extent that they affect physical flows and stocks.

Here's my exotic model of the market for a physical commodity:

OK, how can speculation affect this picture? The answer is, it has to

work through accumulation of inventories - physical inventories. If high

futures prices induce increased storage, this reduces the quantity

available to consumers, and it can raise the price. And you can, in

fact, argue that something like this has been happening for cotton and

copper, where there are apparently large and growing inventories.

But for food, it's just not happening: stocks are low and falling.

My experience in these debates is that the response consists of a

blizzard of statistics about the size of forward positions, etc.. But

remember, every purchase of a futures contract is also a sale - there's

someone on the other side. And neither the purchase nor the sale changes

the physical quantity of the commodity available to the market.

So if and when I see signs that speculation is really driving up prices,

I'll say so. But the signature just isn't there right now."

******************

My goodness. If I say it, it's to be ignored. If God says it, what are you going to do?

"Nice post, Hay. You're smarter than even I thought. Sounds like Krugman must be hearing what you have to say.

"Oh, thanks, Hay."

"You're welcome."

"Nightie night. Will you turn out the light?"

"Sure, Sweetheart. I'm glad it's just you and me again. Good night."

"Love you!"

Hay



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RE: one more reason to

I'm a fan, Hay, just the way you are. Goodnight, dear.


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feb 7, 2011

That article, relating to food, is from Feb. 7, 2011. Just so you know.

Here's another article of Krugman's

This time it's not the NYT, so you wouldn't be eating up your NYT time to go see the article.

It's about oil this time and you can see the pictures and all that is missing from my post above, but you can see that the pictures wouldn't have helped you understand any thing more.

Anyhow, it's the same logic. Just about oil in this post.

Dated, in this case: June 24, 2008.

Bottom line for those that don't read links:

"And here’s the thing: the actual data we have on crude oil don’t show the signatures of a market
driven by speculative demand."

God has spoken. Ignore him at your peril.

Hay


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RE: one more reason to

(((Hay-Sweetie)))


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link this, baby

The link in my previous post didn't take for some reason. I'll try again.

Try this if it doesn't work for you.

http://www.princeton.edu/~pkrugman/Speculation and Signatures.pdf

But, Here's another try.

Hay


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RE: one more reason to

The link doesn't work, although I've read his comments on the subject elsewhere.

The G20 is moving to limit the positions of financial speculators on commodity markets. The US banks and speculators are fighting this hand over fist. What with their well-known concern for the poorest people that share the planet, they're standing for the 'little people'.

From January 2011

"A grim report prepared by France's General Directorate for External Security (DGSE) obtained by Russia's Foreign Intelligence Service (SVR) states that president's Obama and Sarkozy have "agreed in principal" to create a joint US-European military force to deal exclusively with a Global uprising expected this spring as our World runs out of food.

According to this report, Sarkozy, as head of the G-20 group of developed Nations, called for and received an emergency meeting with Obama this past Monday at the White House wherein he warned his American counterpart that the shock rise in food prices occurring due to an unprecedented series of disasters was threatening the stability of the entire World and could lead to the outbreak of Total Global War.

Just last week French Prime Minister Francois Fillon underlined that one of France's top G-20 priorities was to find a collective response to "excessive volatility" in food prices now occurring, a statement joined by Philippe Chalmin, a top economic adviser to the French government, who warned the World may face social unrest including food riots in April as grain prices increase to unprecedented highs.

The fears of the French government over growing Global instability was realized this past week after food riots erupted in Algeria and Tunisia and left over 50 dead. So dire has the situation become in Tunisia that their government this morning rushed in massive amounts of troops and tanks to their capital city Tunis and instituted a Nationwide curfew in an order to quell the growing violence.

The United Nations, also, warned this past Friday that millions of people are now at risk after food prices hit their highest level ever as Global wheat stocks fell to 175.2 million tons from 196.7 million tons a year ago; Global corn stocks are said may be 127.3 million tons at the end of this season, compared with last month's USDA outlook for 130 million tons; and Global soybean inventories will drop to 58.78 million tons at the end of this season, from 60.4 million tons a year earlier.

Robert Zoellick, president of the World Bank, further warned this past week that rising food prices are "a threat to global growth and social stability" as our World, for the first time in living memory, has been warned is just "one poor harvest away from chaos".

Important to note about how dire the Global food situation has become is to understand the disasters that have befallen our World's top wheat growing Nations this past year, and who in descending order are: China, India, United States, Russia, France, Canada, Germany, Ukraine, Australia and Pakistan.

snip and the article goes on to list what weather-related events happened.

Here is a link that might be useful: link


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RE: one more reason to

"The G20 is moving to limit the positions of financial speculators on commodity markets. The US banks and speculators are fighting this hand over fist. What with their well-known concern for the poorest people that share the planet, they're standing for the 'little people'."

I was lying in bed with Hay last night and we were talking about these "little people" and who's "standing" for them. Mother Teresa came to mind.

(God rest her troubled soul. Amen.) Now she, no doubt, stood for the little people, but, you know, as much love as she had in her little socialist heart, in the end, it's the capitalist pigs like Warren Buffet and Bill Gates that will end up having done so much more for the poor "little people" in the world. Bill and Warren have already made enormous contributions by their outstanding innovations. I'm here spreading the word on one of those innovations right this moment. And when they pass from this earth to a better place, they will leave all that wealth behind, in this case, to a charity. Billions and billions of dollars. Mother Teresa gave about $200,000--her Nobel Prize money.

If I had to wait for a "progressive"/socialist/Commie to help me get my breakfast, I'd starve to death waiting. Thank you, Mr. Dole.

The really troubling part, Deja Vu, is that this "progressive"/socialist/Commie talk is so appealing to the masses. It gets them all riled up and, before you know it, they've picked up their pitchforks and fallen in line behind the Lenins and the Mao's of the world. Soon thereafter, they're starving to death.

Hay


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How many reasons do you need?

"The United Nations, also, warned this past Friday that millions of people are now at risk after food prices hit their highest level ever as Global wheat stocks fell to 175.2 million tons from 196.7 million tons a year ago..."

How can you post something like this and then totally ignore it and go on about "speculation"? How can you read what Krugman, aka God, says, ignore it, and post what some totally unknown idiot quotes about another idiot about "speculation".

"Occam's razor."

Your just-posted article gives us a nice, concise, totally reasonable explanation for the rise in food prices. Why the need to concoct some nonsense about the "despicable fat cats" and "speculation"?

Go read the rest of the article that Dave linked. Here's some more from where he left off. Who needs "speculators" to blame?

"From China's disaster: 2010 China drought and dust storms were a series of severe droughts during the spring of 2010 that affected Yunnan, Guizhou, Guangxi, Sichuan, Shanxi, Henan, Shaanxi, Chongqing, Hebei and Gansu in the People's Republic of China as well as parts of Southeast Asia including Vietnam and Thailand, and dust storms in March and April that affected much of East Asia. The drought has been referred to as the worst in a century in southwestern China.

From India's disaster: A record heat wave and growing water crisis in India are forcing politicians to consider implementing user fees and other measures to conserve water. Sri Lanka's President Mahinda Rajapaksa yesterday instructed ministers and officials to prepare a strategic plan to face an impending food crisis as there were signs that the World is to confront a food shortage by next April.

From Russia's disaster: (10% of total World's output, 20% for export) they were hit by the highest recorded temperatures Russia has seen in 130 years of recordkeeping; the most widespread drought in more than three decades; and massive wildfires that have stretched across seven regions, including Moscow.

From France's disaster: The French government lowered their wheat crop forecast by 2.7% over last year due to drought and cold weather.

From Canada's disaster: Record setting drought has affected their main grain producing provinces in the Western part of their Nation.

From Ukraine's disaster: (the World's top producer of barley and sixth biggest of wheat) hit as hard as Russia by fire and drought to the point they have halted all their exports of grains in 2011.

From Australia's disaster: Fears of a Global wheat shortage have risen after the Queensland area of Australia was hit by calamitous flooding. Andrew Fraser, Queensland's State Treasurer, described the floods as a "disaster of biblical proportions". Water is covering land the size of France and Germany. It is expected to reach over 30 feet deep in some areas in coming days.

From Pakistan's disaster: Floods have submerged 17 million acres of Pakistan's most fertile crop land, have killed 200,000 herd of livestock and have washed away massive amounts of grain and left farmers unable to meet the fall deadline for planting new seeds, which implies a massive loss of food production in 2011, and potential long term food shortages.

Not only have the vast majority of our World's top wheat producers been affected, but also one of the main grain producing regions on the Planet, South America, has been hit by disasters too where an historic drought has crippled Argentina and Bolivia, and Brazil, that regions largest Nation, has been hit with catastrophic floods that have killed nearly 400 people in the past few days alone.

Even the United States has been hit as a catastrophic winter has seen 49 of their 50 States covered by snow causing unprecedented damage to their crops in Florida due to freezing weather, and record setting rains destroying massive numbers of crops in their most important growing region of California.

And if you think that things couldn't get any worse you couldn't be more mistaken as South Korea (one of the most important meat exporters in Asia) has just this past week had to destroy millions of farm animals after an outbreak of the dreaded foot-and-mouth disease was discovered.

To how horrific the Global food situation will become this year was made even more grim this past month when the United States reported that nearly all of their honey bee and bumblebee populations have died out, and when coupled with the "mysterious" die-off of the entire bat population in America means that the two main pollinators of fruit and vegetable plants will no longer be able to do their jobs leading to crop losses this report warns will be "biblical and catastrophic".

With all that is going on in this world---all the crazy weather and such---it's likely to get a lot worse. Certainly for all of us lazy fat cats in the USA. Scary, but I can deal with it. It's the modern-day "progressive"/Socialist/Commies that really scares me the most.

The first volley, regulating the "financial speculators" has been fired.

Hay


 o
Let's all ignore Swanz so we can talk about....

I pay taxes. I need to focus on that, so I'm going to do what INK suggests: ignore you for the rest of the day.

"Hay"

"Yes?"

"Remember that campaign that Ink started a long time ago to try getting us all to ignore Swanz so we could all talk about interesting stuff..."

"Yeah, that was funny. Ink's a real comedian, isn't he?"

"Yeah, you can always count on him for a laugh."

"Bye for now."

Hay


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RE: one more reason to

Uh, Hay, that article, pointing out the devastation that climate change will bring to world food supplies, dates from two years after the 2008 huge price spike.


 o
SAme ole, same ole.

"Uh, Hay, that article, pointing out the devastation that climate change will bring to world food supplies, dates from two years after the 2008 huge price spike"

Uh, DAve, it's all the same. In 2008 you would have been making the same argument. Krugman's analysis, the last one I posted that you can't link to about oil, dates back to 2008. Krugman's article that I did link, dealing with food, goes to his analysis from February 07, 2011.

It's all the same stuff. Just the dates change.

Now, I really am going to ignore you. I hate taxes and the sooner I get them done, the happier I'll be.

Hay


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RE: one more reason to

It is not fear of fear we have to fear but the pinko-commie-liberal economists and their theories and their suppression of the profit-minded among the Few.

In a world adverse to addressing the causes of these terrible series of crop losses or to make orderly plans to ease the effects of these losses, governments will turn to force to suppress unrest. We were warned of the possible consequences of WTO limits on government stockpiling of grains and other food commodities, but global free trade was more important for the short-term profits of the Few.

The Few will make a killing during these troubled times too.


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RE: one more reason to

Goldman Sachs has a World Hunger Exploitation Fund* - yes you too, the small investor, can take part in this highly profitable opportunity.

*goes by an innocuous name like commodity futures, but hey, same thing.


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RE: one more reason to

"Goldman Sachs has a World Hunger Exploitation Fund* - yes you too, the small investor, can take part in this highly profitable opportunity."

Sometimes, with one of my buddies, just for fun, I'll make a little bet on a football game or something. Just for fun.

Who gets exploited in this little bet?

Name names if you don't mind.

Hay


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I didn't even have to sell my house to bet.

I still go to my job and Vinnie still keeps the customers happy down at the Stop and Shop. The next time I run into him, we settle up with the bet.

See any problem with that?

Me neither.

Hay


 o
Don't worry 'bout it!!!!

My cousin, Vinnie, also likes to remind me "that he knows where I live" so there's never any question about whether I'm going to make good on my bet if I lose. (It's a little joke we got running.)

Hay


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Big Numbers.

Ink's original link:

"Purely financial players, for example, account for 61 per cent of investment on the wheat futures market, according to the World Development Movement report Broken Markets.

Speculative investment in agricultural commodities in 2011 was 20 times the amount spent by all countries on agricultural aid."

Dave, up above, from one of his links gives us another version:

""These funds", write the authors, "Have plowed tens of billions of dollars into agricultural commodities as a way to diversify their assets and improve returns for their investors. The amount of fund money invested in commodity indexes has climbed from just $13-billion (U.S.) in 2003 to a staggering $260-billion in March 2008, according to calculations based on regulatory filings. Michael Masters.."

BIG NUMBERS!!!!!

Yeah, so what?

Hay


 o
A major theme of this story we're writing.

"Speculative investment in agricultural commodities in 2011 was 20 times the amount spent by all countries on agricultural aid."

That's part of the running theme about why all this "speculation" is so bad. It's "money" invested in "nonproductive" activities. Where's the factory!!!

I mean, "YOU COULD HAVE SPENT THIS MONEY BUILDING A FARM IN DOWNTOWN FKHEONE IN THE MIDDLE OF AFRICA!!!" That's the theme.

From one of the sources in INk's original post:

"Margins are a sum of money
that is paid to the exchange for all futures
contracts to cover the risk the trader has taken on
through this contract."

More money that could have built a farm!!!!

No!!!!

IN this World Hunger Exploitation Fund, no money got diverted away from "productive" activities. No farms were not built. No factory doors were kept from being opened.

When Goldman goes down to the floor of the Mercantile Exchange and "buys" a contract for the World Hunger Exploitation Fund, they don't take any money with them.

Instead, they will usually do something along the lines of "investing" that money in a US Government Treasury Bill. Money that means the government can keep sending you Social Security checks each month, money that pays your Medicare bills. "Productive".

Goldman then will put these Treasury Bills aside as collateral on their little bet.

"Speculative investment in agricultural commodities in 2011 was 20 times the amount spent by all countries on agricultural aid."

No money was diverted in this process.

Not much different than the little football bet with my cousin, Vinnie. We made the little bet and still went to our jobs that day.

Which is what I need to do today.

Bye for now. Tomorrow we'll talk about what this has to do with the price of tea in China. Maybe you already know the answer to that.

Hay


 o
RE: one more reason to

"Goldman then will put these Treasury Bills aside as collateral on their little bet."

Yes, gambling that the farm will fail, perhaps.


 o
RE: one more reason to

Ann Rand would turn in her grave.


 o
RE: one more reason to

Ayn. Ayn Rand. Who says I don't contribute? :)


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RE: one more reason to

"Hay"

"Yeah?"

"They're both starting to babble now."

"You have any idea what they're trying to say?"

"No, and it's not clear to me that they do either"

"Let's go dancing."

"Good plan. I love dancing with you. You follow so well. So smooth."

"I think that's because you're such a good lead. Smooth as silk."

"Let's go. Maybe we can get Marshall to explain what Dave was saying and Dave could explain what Marshall is babbling on about. That'd be fun. Let's check in later tonight when we get back."

"OK, see you on the dance floor!!!"

Hay


 o
RE: one more reason to

We've been Hay-glided again. Couldn't possible be an abject failure at Hay-guilding, perchance?


 o
I blame the EASTER Bunny!!!!!

Eggs are on sale this week.

You'd think, with the Easter Bunny out there buying up all the eggs, there'd be a huge spike in prices, but actually, it's the other way around.

Speculators. Thank one the next time you see a little kid with an Easter Egg.

Hay


 o
Exploit this!!!!

"But remember, every purchase of a futures contract is also a sale - there's someone on the other side. And neither the purchase nor the sale changes the physical quantity of the commodity available to the market."

Understanding that concept seems to be difficult for some people.

That's Krugman from above, one of the "progressive"/Socialist/Commie gods speaking.

Finally he makes some sense and he gets ignored. (I know that feeling. Poor fella. (Marshall doesn't share that problem.))

So, in the World Hunger Exploitation Fund, Goldman "buys" (I wish they'd used the word "bet". I think we you might understand what's going on better if we called it what it is.)a futures contract for wheat. Let's say they buy a futures contract for wheat in September, 2025. (2025? Hard for me to imagine how that's going to be affecting the price of wheat in Eygpt in 2013...But, then I'm not a "progressive". They have wilder imagination than I do in this matter. )Who sold took the other side of this bet? You guessed it: another speculator.

Who got exploited?

Hay


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RE: one more reason to

Take your time. I finished most of my taxes. Enough to see that I need to go do some more work to keep you all happy.

Bye.

Hay


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RE: one more reason to

Poor Hay-owl, trying to simplify and put aside those nagging issues related to the size of the bets and the psychological reactions among lesser human beings trying to plan feeding of their people and putting fuel in the national fleet of vehicles and supplying power to homes and industries.

I mean: these trades exist in the rarified commodity and other trading exchanges and impact only the trading partners. Right Hay-mind?


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RE: one more reason to

"I mean: these trades exist in the rarified commodity and other trading exchanges and impact only the trading partners. Right Hay-mind?"

No, actually they impact our lives outside the trading partners....in a good and positive way, but, if you can't get beyond the basics, I don't think it's time to start that conversation yet.

Hay


 o
I'm a patient man. Hay-Patience.

The basics should keep us busy until 2024 at which time the
World Hunger Exploitation Fund will look ahead and see that they have a 2025 contract in wheat.

And to quote Ink's OP,

these"purely financial players who had no interest in ever buying food will decide that they'd like to "roll over" their 2025 wheat contract into a 2030 contract.

They go to the exchange and simultaneously BUY the 2030 contract and SELL the 2025 contract. A speculator took the other side of the trade.

Who got exploited?

Hay


 o
RE: one more reason to

So what happens when the people who actually want to buy the food to eat, instead of hold it as an investment, enter the market? Aren't they competing with the speculators?


 o
Friday night and all's well.

Dave:

"So what happens when the people who actually want to buy the food to eat, instead of hold it as an investment, enter the market? Aren't they competing with the speculators?"

Krugman:

"My experience in these debates is that the response consists of a blizzard of statistics about the size of forward positions, etc.. But remember, every purchase of a futures contract is also a sale - there's someone on the other side. And neither the purchase nor the sale changes
the physical quantity of the commodity available to the market.

My cousin Vinnie:

"My cousin, Vinnie, who took an Economics 101 course before he dropped out to become a butcher, says that makes some sense. He says the "speculators" are basically just a bunch of old retired men who like to sit in the brokers office betting on just about anything. They're pretty harmless, Vinnie says. As long as you don't see barges of wheat unloading in their backyard, everything should be OK."

Hay:

"It's Friday night and there are plenty of beautiful women in the world."

Hay

PS.

Hay:

"So, in the World Hunger Exploitation Fund, Goldman "buys" (I wish they'd used the word "bet". I think you might understand what's going on better if we called it what it is.)"

How much money do you suppose I'd have to bet at INtrade saying that Obama won't win in 2012 to keep Obama from being elected?

Bye.


 o
RE: one more reason to

Exactly. So the people who want to eat the rice are trying to outbid Goldman Sachs for the limited quantity of rice.


 o
RE: one more reason to

David, the same amount of rice is available, just not a prices the poor can afford. The speculators are not interested in taking long-term possession of rice or other commodities. The cost of renting secure space and all that.


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RE: one more reason to

"Exactly. So the people who want to eat the rice are trying to outbid Goldman Sachs for the limited quantity of rice."

Goldman Sachs is located at 200 West Street in NYC. Labrea or Maggie, would you mind going by there and taking a few pictures for us. I'd love to see what a billion or so tons of rice sitting out in the middle of New York City streets looks like.

Thanks,

Hay


 o
I blame the EASTER bunny.

"David, the same amount of rice is available, just not a prices the poor can afford. The speculators are not interested in taking long-term possession of rice or other commodities. The cost of renting secure space and all that."

At this point, the World Hunger Exploitation Fund has taken one side of a bet. They've taken the side of the bet in the futures market for the price of wheat in 2025. That's done. Now they want to roll it over and so they sell the 2025 contract and buy the 2030. Buy and Sell. Bet it will go up, bet it will go down.

I'm still trying to understand how a bet on the price of wheat in 2025 affects the price of wheat in downtown Cairo in 2010, and, assuming I get an explanation for that, my next question is which way this rollover trade affects the markets in downtown Cairo for this year.

Thanks,

Hay-Patience.


 o
Never too old to learn new tricks.

On the day the Supreme started its deliberations on Obamacare, I was listening to the news on the way home and was impressed that the Honorable Justices were being perceived as being a little harder on Obamacare than they had been expected to be.

I thought to myself, "Hay, let's check on The BETTING market at Intrade for the Obamacare case when we get home."

Me and Hay got what we expected to see: the BETTING public might have had a big swing on the day about their perceptions of the odds of Obamacare being defeated. Worth checking out.

So we checked it out.

Sure enough. You can see the day's exact activities. Suddenly the probability of Obamacare being struck down swung from not very likely to pretty likely.

At the time I thought this was probably a reaction to the proceedings of the day at the Supreme Court.

But now I have my doubts. Maybe it's the other way around.

"David, the same amount of rice is available, just not a prices the poor can afford. The speculators are not interested in taking long-term possession of rice or other commodities. The cost of renting secure space and all that."

Marshall-Old-Wise-One, tell me how those BETTORS at INtrade managed to get the Supreme Court Justices to talk like they did on that first day.

Good Trick to know.

Thanks.

Hay-Patience


 o
Knock, knock.

While we're quoting Zorba. (I love Zorba.)

"Alexis Zorba: On a deaf man's door, you can knock forever!

MARSHALL, YOU HOME!?!?! WAKE UP!!!!!!

Hay


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RE: one more reason to

Hay-dense, no more pre-tense. Gamblers follow their own arcane rules. I know nothing about INtrade nor do I care how gamblers pursue their addictions. More misdirections from the Hay-master-of-diversion.


 o
RE: one more reason to

"Hay-dense, no more pre-tense. Gamblers follow their own arcane rules. I know nothing about INtrade nor do I care how gamblers pursue their addictions. More misdirections from the Hay-master-of-diversion."

The first step, understanding that you know nothing is the hardest.

I'm here to help you with the next steps.

But, it'll have to hold for a while. I got work to do: I like slipping old golf balls in with the cheap eggs that the Easter Bunny leaves around.

Hay


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