[ZZipZZipe]

Demand and supply certainly matter. But there's another reason why food across the world has become so expensive: Wall Street greed.


It took the brilliant minds of Goldman Sachs to realize the simple truth that nothing is more valuable than our daily bread. And where there's value, there's money to be made. In 1991, Goldman bankers, led by their prescient president Gary Cohn, came up with a new kind of investment product, a derivative that tracked 24 raw materials, from precious metals and energy to coffee, cocoa, cattle, corn, hogs, soy, and wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known henceforth as the Goldman Sachs Commodity Index (GSCI). http://www.foreignpolicy.com/article...isis?page=full

[Arrocousa]

I have read recently that farmland is one of the best investments long term one can make. If only I had $10 million to buy a 20k acre farm somewhere in Africa where it rains. That is what the conglomerates are doing. Making a killing, too.

[opelayday]

I have read recently that farmland is one of the best investments long term one can make. If only I had $10 million to buy a 20k acre farm somewhere in Africa where it rains. That is what the conglomerates are doing. Making a killing, too.

Lets pool our money together! *Reaches into pocket, unhappy face*

[Clarissa]

I read that twice and something does not make sense. You cannot keep continually buying long derivatives, without some underlying physical asset having to be owned. Sure, you can keep rolling over, but why would you? To have any value, the positions must be exercised at some point.

[Keendwainge]

I read that twice and something does not make sense. You cannot keep continually buying long derivatives, without some underlying physical asset having to be owned. Sure, you can keep rolling over, but why would you? To have any value, the positions must be exercised at some point.

Why?
Just roll, dude, roll.
We actually offer products that increase the performance of commodity trackers by enhancing the roll mechanism and optimising the timing of the roll.

[StanWatts]

Why?
Just roll, dude, roll.
We actually offer products that increase the performance of commodity trackers by enhancing the roll mechanism and optimising the timing of the roll.

Is the word 'bubble' banned on your trading floor?

Seriously, how are you funding the margin calls on such huge positions? I am pretty sure GSCI has been trending down for a while, the funding requirements must be huge. What are the hedges?

[Cigarsstoreonline]

Is the word 'bubble' banned on your trading floor?

Seriously, how are you funding the margin calls on such huge positions? I am pretty sure GSCI has been trending down for a while, the funding requirements must be huge. What are the hedges?

Client orders.
And you pass on the funding costs.

[codespokerbonus]

Client orders.
And you pass on the funding costs.

Are these PB clients, or just riff-raff?

[Dkavtbek]

Are these PB clients, or just riff-raff?

This is real money dude, PB, AM, retail.
We sell the product and hedge buying the futures. Simple delta1 business.

Check this one out for example: http://markets.rbs.com/EN/Showpage.a...N=NL0006066201

[Opperioav]

so essentially your job is to find stupid people

[Flankrene]

so essentially you job is to find stupid people

Exactly.

[gusecrync]

Exactly.

PWNT

[steevytraunse]

A food crisis can make the poor suffer, especially in poor nations, but also a great way to kickstart the economy of the poor nations, and expand on those already exporting a good bit of food. Desert nations will be more screwed over though.


I saw an interview on maybe CNBC? with some huge multi billion dollar investor and he said to be a farmer is where it is at. Said farmers in x amount of years time will be the ones driving the new porsche and ferraris.


Interesting read, thanks for the link!

[CGECngjA]

so essentially your job is to find stupid people

Go ahead, buy some corn futures as a private investor, I'd like to see how you achieve this.

I'll be waiting.

[VanDerSmok]

Go ahead, buy some corn futures as a private investor, I'd like to see how you achieve this.

I'll be waiting.

There was a piece on Radio 4 on this, and the journalist bought 1 lot of Futures (I think it was Oil actually) - after about 12 minutes (they did it live) he'd lost GBP 500 and had to make a margin payment, so sold the futures immediately. It was pretty funny, and he was genuinely scared at the volatility.

[Pharmadryg]

Go ahead, buy some corn futures as a private investor, I'd like to see how you achieve this.

I'll be waiting.

My point was that you sell people a product that they don't understand.

but my point is lost it seems, on a positive note I imagine you now as Ben Affleck in Boiler room

http://www.youtube.com/watch?v=zvICN8DNMpY

[baritkello]

My point was that you sell people a product that they don't understand.

This is new news? I don't think the creators of the trash they sold and resold during the subprime bubble knew what they were selling, either.

[fil_nurser]

Apples and oranges...

We actually sell products that are pretty easy to understand. We're being regulated to death, believe it or not. The difficult part of the trade, i.e. structuring, modelling, hedging, we're dealing with it. That's the beauty of retail structured products. We get very few complaints (if at all) from retail clients trying to sue us on the basis that we mis-sold them products (and we currently have about 60'000 products).

Sub-prime is something we've steered well clear of in our retail derivs world.

[MYMcvBgl]

Sub-prime is something we've steered well clear of in our retail derivs world.

LFR is still huge, which belies a lot of debt obligations at fixed rates coming out of the crises. Also x-currency float/float deals with people looking to offload or at least hedge Euro-debt.

It's still murky!