Goddam Sachs is playing with your food

GoldmanGoddam Sachs is into speculating on everything, including something as innocuous as wheat futures prices. And, that's part of what's wrong with world food prices today.

For over a century, farmers in wealthy countries have been able to engage in a process where they protect themselves against risk. Farmer Giles can agree in January to sell his crop to a trader in August at a fixed price. If he has a great summer and the global price is high, he'll lose some cash, but if there's a lousy summer or the price collapses, he'll do well from the deal. When this process was tightly regulated and only companies with a direct interest in the field could get involved, it worked well.

Then, through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into 'derivatives' that could be bought and sold among traders who had nothing to do with agriculture. A market in "food speculation" was born.

The fallout? Soaring food prices is part of what fuels unrest in places like Egypt, as Truthout explains. It also notes that folks like Goddam Sachs can probably work around obstacles or through loophole in last year's financial regulation reform bill.