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View Diary: Economic Terrorism and Krugman's Latest: "The clear and present danger...is what is happening now." (267 comments)

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  •  Blaming commoditization is foolish (3+ / 0-)
    Recommended by:
    shrike, Ryvr, EthrDemon

    A commodity index serves to bring buyers and sellers of commodities closer together and hence provide liquidity.

    There are a lot more people in the world in 2011 than in 1999. Many of these people live at a much higher standard of living (e.g. meat consumption rates in China have been steadily rising). Secondly, food depends on other commodity inputs such as oil which have also been rising in price.

    It's very satisfying to blame Goldman Sachs for all the evil that has ever occurred on the planet, but a more likely explanation for the rising prices is simply lots of people competing for fewer resources.

    The reality is that as long as population continues to increase and consumption per capita continues to increase, prices of all commodities are going to continue to rise as a general trend and show high volatility in the short term.

    But it's easier and more palatable to the DKos community to blame financial markets, so let's just do that instead.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Fri May 06, 2011 at 05:28:45 AM PDT

    •  GS isn't in the business of charity (8+ / 0-)

      They make money by anticipating price fluctuations.

      The huge drop in the price of oil yesterday was a speculative bubble popping.

      That said, the price today still seems high to most people but it reflects the reality of supply and demand. Growing population vs finite resources means higher commodity prices sooner or later. In the case of oil where supplies are around the peak, further price increases are inevitable.

      look for my eSci diary series Thursday evening. "It's the planet, stupid."

      by FishOutofWater on Fri May 06, 2011 at 06:22:41 AM PDT

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      •  Re (0+ / 0-)
        They make money by anticipating price fluctuations.

        Of course, however, they also mitigate the price fluctuations as a part of making the money. If GS thinks that the supply/demand relationship is such that oil prices will rise in the future, they buy oil now. That causes a slight rise today instead of a sharp rise in the future.

        Additionally, keep in mind that for every long there is a corresponding short.

        The huge drop in the price of oil yesterday was a speculative bubble popping.

        It may have been. Short term speculative bubbles can always occur, but the long-term price is a supply/demand thing. Remember that the price can crash too.

        That said, the price today still seems high to most people but it reflects the reality of supply and demand. Growing population vs finite resources means higher commodity prices sooner or later. In the case of oil where supplies are around the peak, further price increases are inevitable.

        Yup.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Fri May 06, 2011 at 06:35:40 AM PDT

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      •  It reflects the reality of ANTICIPATED (5+ / 0-)
        Recommended by:
        ohmyheck, 4Freedom, rick, YucatanMan, cpresley

        supply and demand.  It's all speculative.

        Stop clapping. Stop screaming. Open your mind. Listen.

        by Benintn on Fri May 06, 2011 at 07:41:27 AM PDT

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    •  I don't buy your argument. (6+ / 0-)

      I'm a buyer of commodities.  But there is absolutely no way I'm going to be able to compete with the scale and purchasing power of billionaires.

      The entry fees are too high.

      Commodities index is a giant game of keepaway.  It hurts small businesses, family farms, etc.  

      Stop clapping. Stop screaming. Open your mind. Listen.

      by Benintn on Fri May 06, 2011 at 07:40:49 AM PDT

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      •  What are you talking about (0+ / 0-)

        The big players pay the same price for commodities that you do. The market price.

        (-5.50,-6.67): Left Libertarian
        Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

        by Sparhawk on Fri May 06, 2011 at 07:46:48 AM PDT

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        •  Exactly - but they can (and do) manipulate (7+ / 0-)

          markets by betting short, retreating to derivatives when they want to avoid risk, and driving up food prices at exactly the time that the working class needs help the most.

          They're playing a game.  I'm trying to feed my fucking family.

          Stop clapping. Stop screaming. Open your mind. Listen.

          by Benintn on Fri May 06, 2011 at 07:52:19 AM PDT

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          •  They aren't playing a game (0+ / 0-)

            Most of the big commodity traders are people like airlines who fucking must know what price they'll be paying for oil on a given date.

            (-5.50,-6.67): Left Libertarian
            Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

            by Sparhawk on Fri May 06, 2011 at 08:25:41 AM PDT

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            •  The issue is about NON-commercial speculation... (2+ / 0-)
              Recommended by:
              cpresley, Betty Pinson

              ...not commercial commodities trading. Even Kaufman covers this. (But, even here, as Kaufman notes at the end of his article, very tight regulatory oversight must be maintained of commercial speculation to insure that non-commercial speculators don't use backdoor, commercial relationships to speculate in the marketplace.)

              "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

              by bobswern on Fri May 06, 2011 at 09:23:28 AM PDT

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            •  or else what? (0+ / 0-)

              What happens if a big commodity trader doesn't have certainty about price?

              Stop clapping. Stop screaming. Open your mind. Listen.

              by Benintn on Sat May 07, 2011 at 03:00:41 AM PDT

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              •  They sell airline tickets... (0+ / 0-)

                ...based on the price of jet fuel contracts for the date of the flight. Air travel is a horrendously low margin business: getting this wrong will mean massive losses.

                (-5.50,-6.67): Left Libertarian
                Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

                by Sparhawk on Sat May 07, 2011 at 09:32:40 AM PDT

                [ Parent ]

    •  Oh, please.... (5+ / 0-)
      Recommended by:
      4Freedom, rick, YucatanMan, cpresley, Badabing

      I have never, not even once, responded to a comment I disagree with, and thus have never even come close to writing anything that comes close to being offensive.  

      But...  please get off!  The deregulation of the commodities market has increased chances of bubbles.  Period.

      Grow up and recognize that even football needs rules in order to remain competitive rather than devolving into chaos.

      The Wild West of Food Pricing is horrifically immoral, not that people who put forth arguments like yours care cuz they're too blinded by ideology and any sort of pragmatism, read fiscal responsability, is drowned.

    •  Agree (1+ / 0-)
      Recommended by:
      Sparhawk

      Hence why I've moved beyond thinking about "peak oil" and on to "peak everything."

      Those who support banning cocaine are no better than those who support banning cheeseburgers

      by EthrDemon on Fri May 06, 2011 at 09:55:41 AM PDT

      [ Parent ]

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