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How Goldman Sachs Created the Food Crisis

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19 Replies
Senior Contributor

Re: How Goldman Sachs Created the Food Crisis

endless need to find someone to blame.

 

In 1900 it was JPMORGAN"s fault !!      OH MY.

 

who ays tehre is a crisis?

 

people are willing to pay up?  let them.

 

I can eat rice and beans

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Re: How Goldman Sachs Created the Food Crisis

or cake.

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Contributor

Re: How Goldman Sachs Created the Food Crisis

I think regulation can be related to growing up into maturity.  Mature folks really don't need a lot of rules and boudarys - their parents gave them those as they grew up, and as they accept these boundaries as their own it's less of the parents responsibility to enforce those rules.  In society maybe there are some areas where what's right and wrong is not as easily defined and rules/laws get agreed upon that generally work for good of the individuals that are participating (not always society at large).  Often these rules keep important boudaries in place that less than mature people would run right over.

 

The question is - is there a point at where the benefit of the few completely outweighs the benefit of the society (that the few wouldn't exist without btw)?  Should large sums of money be the only rulemaker?  Didn't previous 'rules' help make those larges sums of money and allow others to make money as well?  It's hard to say, but it does seem like we have some powerful, wealthy groups wanting to corner the market for themselves without any thought of what comes next.  At some point castles get burnt down with the folks inside them and life doesn't really get better after that.  Instead a little maturity, remembering where you came from and how you got there goes a long way to making good long term decisions instead of I want it all right now (childish). 

 

It's like the ads stating "it's my money and I want it now" run by legal firms trying to get folks to take far less cash now instead of the full settlement they won.  I guess if the legal firm used the client's greed to get the case won, why not use it to it's fullest extent.  It's this type of immaturity that leads to ruin.  Unfortunately, immature folks really don't care about rules anyway, so even if limited/sensible regulation gets enacted will it matter. 

 

thanks,

 

Pat 

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Senior Advisor

Pure bunk!

There is a glaring flaw in this 'analysis'. It's huge! It's like staring at the sun and saying you don't see it! If you don't know what it is then it is a measure of your willingness to go along with anything that fits an ideology with complete disregard for objective information. Just a sign of the times though. No standards for objectivity.

 

By the way, they guy who wrote this said the wheat spike in 07-08 was caused by the funds also. Oddly, I called the wheat spike  several years out based on physical fundamental trends - with no regard to funds. So, this guy has some competition in causation.

 

It is sad that FP has so little expertise that is would casually print this commentary w/o rebuttal. Pretty ssad - but again, a sign of the times.

 

 

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Senior Contributor

Re: How Goldman Sachs Created the Food Crisis

The cold storage report came out a week ago.  Beef came in around 448 million pounds.  My curiosity got the best of me, so I decided to go back over the last 15 years or so and see how comparable this figure was with the third week of April comparing the same time frame.  One of the reasons I was interested in knowing is because we have the smallest cow herd in the past six decades.  One would assume the amount of beef we have in cold storage should be the smallest in the past 15 years.  Well, the data supported my belief all along.  We actually have the largest supply of beef in cold storage for the third week of April now.  It was higher than the third week in April as far back as 15 years.  In a lot of cases it was significantly higher.  The point of all of this is that we have the smallest supply in six decades, but we have the largest inventory in cold storage in the past 15 years.  This also coincides with our exports of beef being the best they've been since BSE which was several years ago.  Our exports are running almost as high as they were pre-BSE. 

 

While this may or may not have anything to do with grains, I do think it points to the bigger picture of meat consumption beef in particular and what the price values do to consumption.  The fear I have going forward with these high meat prices is that we're in jeapardy of losing a generation of meat consumers.  Once families alter their eating habits away from meat, it is very difficult to get them back.  While many believe people will eat regardless of price, people do change their eating habits.

 

While price does change peoples eating habits, high oil also changes peoples driving behavior.  We've witnessed less gasoline demand for seven consecutive weeks.  This does affect grain prices.  Less gasoline demand also means less ethanol demand.  The longer we continue to rally prices across the board, the higher the likelihood we duplicate a meltdown like 2008.   

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Veteran Advisor

Re: How Goldman Sachs Created the Food Crisis

Gored, if meat is in oversupply, then there is no reason to consider any change in the ethanol policy.   Since the main food use for corn is meat production, and if supplies are overstocked, no more demand there.  Gasoline is supposed to be short because of refinery problems, so maybe we should go to 15% ethanol blends. Let's see if I can get someone's blood pressure up.

 

Today's forecast, sunny.  Now, I am sure there is a sun up there...but the clouds are blocking my view.  And what is that green blob on radar in western IA?  I did see some field work being done today, could tell they sprayed by their nice deep tracks. Though with auto steer those are really straight tracks.

 

I was really hoping for more of a correction for a few days.  The day is not over yet, could still get it. 

 

A side note.  If perception is everything, the government has a big problem.  We keep reading about high fuel and food prices, and unemployment.  Companies say they can't pay health benefits like they use to, and then Wall Street just keeps putting out record earnings.  Health care reform really helped, I see one drug company reported their one quarter profit at 1.3 BILLION.  Yet, the guy punching the clock has less and less to show for it.

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Re: Pure bunk!

If physical sets price then long index funds serve no purpose whatsoever othr than to increase volume for the exchanges.

 

The problem is how to get rid of them once you have them.

 

I'm trying to think of any benefit that has come from the Greenspan/Clinton/Gramm/Gramm/Gramm  securities deregultion of the 90s.

 

Let's see, housing crashes, doomsday economy, TBTF hedge fund banks..........

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Senior Contributor

Re: How Goldman Sachs Created the Food Crisis

I think you might have misunderstood.  The cow herd is the smallest in six decades.  This doesn't scream oversupply.  The oversupply comes in the beef in storage.  It is in oversupply because of the price.  There's been a huge demand shift away from beef. 

 

Where do you get that gasoline supplies are short?  According to the EIA, we're above average since 1995 for gasoline inventories meaning 50% or more of the time since 1995 supplies have been lower.  A couple of months ago, gasoline inventories were at two decade highs.  Did we have the cheapest gasoline prices in two decades?  Three weeks ago, we had the largest supply of ethanol in history.  Do you suppose three weeks ago etanol prices were the lowest in history?  Of course not. 

 

I wasn't aware that healthcare reform had anything to do with drug companies.  I was under the impression that it dealt with providing a means to insure those who currently can't afford health insurance.  The only entities I've read about recently saying they can't pay health benefits are state governements.  Private entities have absolutely zero problem with this as they just move jobs overseas where they don't have to worry about providing health insurance and pensions. 

 

   

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Senior Advisor

Re: Pure bunk!

I think you hit on it. The whole purpose of the exchange is not price discovery but volumes of trade. Volume means money to the exchange and all involved in it. Price discovery would require delivery capability to give it some degree of integrity.

 

As it is the volume of trade grossly exceeds and relationship to physical supply. Tell me the difference between the grain trade and the local casino. Possibly, the traders are given some title of respect with a name like investors, hedgers or specs.

 

 

 

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