The Food Bubble [View all]

[MindMover]

The history of food took an ominous turn in 1991, at a time when no one was paying much attention. That
was the year Goldman Sachs decided our daily bread might make an excellent investment.

Agriculture, rooted as it is in the rhythms of reaping and sowing, had not traditionally engaged the attention of Wall Street bankers, whose riches did not come from the sale of real things like wheat or bread but from the manipulation of ethereal concepts like risk and collateralized debt.

But in 1991 nearly everything else that could be recast as a financial abstraction had already been considered. Food was pretty much all that was left. And so with accustomed care and precision, Goldman’s analysts went about transforming food into a concept.

They selected eighteen commodifiable ingredients and contrived a financial elixir that included cattle, coffee, cocoa, corn, hogs, and a variety or two of 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 thenceforward as the Goldman Sachs Commodity Index.

Then they began to offer shares. and the rest is pretty much a very sad story......

http://frederickkaufman.typepad.com/files/the-food-bubble-pdf.pdf

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Gasoline Speculation......

http://www.mcclatchydc.com/2012/02/21/139521/once-again-speculators-behind.html