Posts Tagged ‘speculation’
by stuartbramhall in The Global Economic Crisis
Professor Jem Blendell, founder of Lifeworth Consulting and member of the World Economic Forum, gave the following keynote address at the Rebuild21 conference in Copenhagen two weeks ago.
If video won’t play go to free link at http://www.youtube.com/watch?v=vWeQfNpW9sQ
A week later Blendell addressed the World Economic Forum in Istanbul about the urgent need to reform the world monetary system.
If video won’t play, go to free link at http://www.youtube.com/watch?v=6IGo6uLgLiY
Blendell goes into more depth in an article on his website How your company can help create more jobs that debunks the five most common myths about the cause of high global unemployment:
Myth 1: “Unemployment is due to falling demand.”
Are people’s needs really falling? Or just the amount of money in circulation to employ people/assets to meet those needs? Clearly, given the levels of human need in the world today, its the latter.
Myth 2: “Unemployment is due to technology displacing human labour.”
Could we not design systems of ownership and revenue distribution so that the income from technology frees us to work creatively and caringly for each other? How can we govern technology to release us to a world of service, not a life of redundancy?
Myth 3: “Unemployment is due to the cost of hiring and firing.”
Why then do some countries with high wages and labour standards, like Scandinavia, have less % unemployment? Where would competition between nations to lower costs of hiring and firing lead us? What will competition between nations for the same number of jobs worldwide lead to the total global level of unemployed? Clearly the loosening of employment law is not a systemic solution.
Myth 4: “Unemployment is due to a lack of skills and appetite for the new types of work.”
The world has more skilled labour than ever before, and more labour mobility than ever before, and many people with Masters degrees can’t get a job. The internet means that people can access knowledge more easily than ever before. Education is important, and a lack of education may be a problem for specific groups, but is not a critical factor in mass unemployment at present.
Myth 5: “Unemployment is due to the option to claim benefits.”
Why then was the existence of benefits not keeping people out of the workforce before the recession? Why do some countries with the most supportive welfare states, like Scandinavia, have less % unemployment?
According to Blendell the best way to tackle the jobs crisis is to:
- wind down non-reserve banking and replace private bank credit creation with government issuance of money, according to strict rules enshrined in law, to avoid inflation. In this situation governments could create credit to lend at low rates to banks who would then lend it to businesses.
- regulate bank lending and leverage to ensure a large share of lending goes into the real economy and not into consumer debt or speculation.
- create complementary currencies or exchange systems for communities and businesses, some of which could be issued or backed by local governments.
by stuartbramhall in Attacks on the Working Class, Challenging the Corporate Media
A UK company started in 1997 called Emergent Asset Management claims to be the largest speculative fund investing in African industrial agriculture. See http://media.oaklandinstitute.org/sites/oaklandinstitute.org/files/OI_EAM_Brief_1.pdf. It uses private equity to take control of large tracts of African farm land for transformation into factory farms. Their prospectus attracts investors by predicting a armed conflict between the West and China will trigger mass food shortages – accompanied by price spikes that guarantee a handsome return to investors. Emergent’s founders, Susan Payne and David Murrin are former high level traders for Goldman Sachs and JP Morgan – well-known as the architects of food derivative speculation. See http://www.wdm.org.uk/sites/default/files/hunger%20lottery%20report_6.10.pdf
Payne joined JP Morgan in 1986 and moved to Goldman Sachs International in 1993 as an Executive Director and Head of Sales and Trading. In the latter role, she was responsible for developing Goldman Sachs’ emerging markets debt business in Europe. David Murrin joined JP Morgan 1986, where he traded (i.e. speculated) on the major bond, interest rate, bullion, foreign exchange and equity markets.
Emergent’s direct control of large amounts of agricultural land – combined with its ability to attract investors through its equity fund – puts unprecedented control of the global food supply in private hands. It does so by creating a new type of vertical integration, in which a single company controls vast amounts of land, food production and processing – while simultaneously inflating global food prices due to the speculative nature of the fund. Click here to see the video Emergent uses in their pitch to investors: http://media.oaklandinstitute.org/emergent-video
The Perp Walk
On June 30, 2011, the Oakland Institute released a new report (http://media.oaklandinstitute.org/meet-millionaires-and-billionaires-suddenly-buying-tons-land-africa-0) fingering other millionaires and billionaires playing a major role in the African land grab. The report also details their unscrupulous deals with corrupt African leaders, who sign away land rights without consulting local residents – as well as the direct role some of these funds play in armed attacks on villagers who refuse to leave their land. Some of the names that stand out include:
Bruce Rastetter – CEO of Pharos Ag, which has bought more than 300,000 hectares in Tanzania for large-scale food crop, beef, poultry, and biofuel production. This project will displace tens of thousands of civil war refugees awaiting Tanzanian citizenship.
Leonard Henry Thatcher and David Neiman – who runs Nile Trading and Development (NTD), which has bought 600,000 hectares in South Sudan through a secret agreement with influential locals who went behind the backs of other community members.
Kevin Godlington – (close associate of former prime minister Tony Blair), CEO of Crad-l and Director of Sierra Leone Agriculture (SLA) and its parent company, the UK-based CAPARO Renewable Agriculture Developments. SLA has bought 43,000 hectares in Sierra Leone to plant palm oil plantations.
The CFTC Refuses to Implement the Financial Reform Act
For me the biggest scandal (which the US media has also spiked) is the refusal of the Commodity Futures Trading Commission to implement rules preventing speculation in oil and food futures that were part of the Dodd-Frank Financial Reform Act passed last July. As of May 27, the CFTC (under fierce pressure from Wall Street lobbyists) had yet to implement rules the Financial Reform Act required them to implement by January 17, 2011. See http://news.firedoglake.com/2011/05/27/sanders-accuses-cftc-of-breaking-the-law/
This flagrant disregard of Congressional authority is yet another example of the breakdown of democratic government in the US. It’s Obama’s role, as the executive branch of government, to enact the laws enacted by Congress. For him refuse to do so represents a major Constitutional crisis and is grounds for impeachment.
by stuartbramhall in Attacks on the Working Class, Challenging the Corporate Media, The Global Economic Crisis
In 2011, “food derivative” speculation has replaced financial derivatives as the hot new investment promoted by major investment banks like Goldman Sachs and JP Morgan. According to new research from the World Development Movement, the same banks that caused the 2008 economic crash are also responsible for skyrocketing food prices (see http://www.wdm.org.uk/sites/default/files/hunger%20lottery%20report_6.10.pdf and http://www.theecologist.org/News/news_analysis/931513/a_guide_to_food_speculation_how_to_argue_with_a_banker.html). They estimate that in 2010 Goldman Sachs made $1 billion in profits from speculating on food (http://www.theecologist.org/News/news_round_up/542538/goldman_sachs_makes_1_billion_profit_on_food_price_speculation.html). The really scary news is that in addition to speculating heavily on food commodities, these same private equity funds are also buying up huge tracts of land in the third world.
Trading in Commodities Futures
Individual investors have always had the ability to trade in commodities futures (i.e. buy a 2012 bushel of corn at a fixed price before it’s produced). However the commodities market has always been so unreliable that serious investors have viewed it in the same category as roulette and horse racing. Recently, however, Goldman Sachs, JP Morgan and other investment banks have used factors that appear to threaten food security – extreme weather events, water shortages and increasing demand due to the Asian economic boom – to aggressively pitch “agri” funds in a big way to investors. The ultimate effect of massive trading in food futures is to drive up the current cost of food, in the same way the subprime mortgage bubble massively inflated the cost of real estate prior to the 2008 economic crash.
The difference here is that high food prices are a life or death issue for billions of people around the world. Yet, as usual, the issue is virtually invisible in the US media.
The Great Land Grab
A 2009 research project by the Oakland Institute (The Great Land Grab http://media.oaklandinstitute.org/sites/oaklandinstitute.org/files/LandGrab_final_web.pdf) reveals startling facts about the corporate land grab in the third world – another major factor in skyrocketing food prices. The Spain-based non-governmental organization GRAIN first drew attention to the land grab issue in its October 2008 brief, Seized! The 2008 land grabbers for food and financial security. The International Food Policy Research Institute (IF PRI) has reported that foreign investors sought or secured between 37 million and 49 million acres of farmland in the developing world between 2006 and the middle of 2009. In addition to the role played by major investment banks, multilateral institutions like the International Financial Corporation (the private sector branch of the World Bank) are also major players in the “corporatization” of global agriculture. The IFC plays a dual role in increasing private investment in the third world – via direct investment and by lobbying developing countries to create “business enabling environments.” Another World Bank agency, The Foreign Investment Advisory Service (FIAS ), also plays a role in pressuring third world governments to improve their “investment climate,” by relaxing environmental, tenant rights and food security laws and abolishing tax and duties on foreign investments.
Africa is the major target, both for western investment banks and booming Asian economies, driving tens of thousands of subsistence farmers off land they have farmed for generations.
To be continued, with a look at specific private equity companies that are displacing African subsistence farmers.