Yesterday’s New York Times has a story about hedge fund manager Anthony Ward cornering the market on cocoa:
Now, traders here are buzzing that Mr. Ward has placed an audacious $1 billion bet in the London market for cocoa futures. This month, he bought 241,100 metric tons of beans, they say.
His play has some people up in arms. While some see it as a simple bet that cocoa prices will rise on falling supply, others say Mr. Ward has created a shortage of cocoa simply to drive up the price himself.
Last month Harper’s did an excellent, in-depth story on how Goldman-Sachs’ Commodity Index created the global food riots of 2008 (for more on how international banks manipulate the price of food, see the World Development Movement.)
You know, didn’t all of this used to be illegal? Doesn’t it make anyone nervous that one trader--drunk or sober--can manipulate the global price of a commodity like wheat, cocoa, or oil? How is this a good thing?
Remember how after 9/11 we were all put on high alert over the security of our local water supplies? We were told all sorts of scary stories about how terrorists could poison the nation’s milk supply with botulism or slip a vial of something into the city reservoir. Dairy farmers were put on high alert and cities closed public roads and trails around reservoirs.
But I ask you: why would a terrorist need to do that? All they have to do is get one commodities trader drunk and get him to play roulette with these index funds. These traders can wreak havoc on the global price of food, causing price-created food shortages. Banks profit off of the starving, just because they can; how is this not terrorism?
And why isn’t this illegal? What are all these assholes at the G20, G8 G-whizz summits doing? Carving up the goodies and handing them out to their buddies? The ability of banks like Goldman Sachs to manipulate global food prices presents a far bigger danger to our security than someone slipping a vial of botulism toxin into milk.
Why aren’t we doing something about it?