Friday, September 02, 2011

Profiting from Misery, Privation and Disaster

As families huddled to worry about jobs, food and rescuing the family home, Goldman Sachs was gleefully talking about financial crisis as profit opportunity. Who are these people? Are they the type who go through victims' pockets at the scene of an accident? It isn't limited to Goldman, or Wall Street. Many of the vultures lurk in hedge fund compounds in Connecticut, picking the bones of the fallen––when possible helping them fall before picking their bones. This story from BusinessInsider is particularly chilling.

This paragraph from the Guardian caught my eye.

"But a new theory is emerging among traders and economists. The same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are thought to be causing food prices to yo-yo and inflate. The charge against them is that by taking advantage of the deregulation of global commodity markets they are making billions from speculating on food and causing misery around the world."

In other words, crisis is more profitable than stability. If that's the opposite of what most modern economies base their prosperity on, that's fine with the speculators who profit. Picture a cat playing with a mouse.

Real Economics describes the center where global food speculation takes place, the Chicago Board of Trade. Some will point out the necessary mechanism of the Chicago Board; it gets food where it's needed in an efficient fashion through the market system. But what happens when the market makers realize they profit more from inefficiency, from shortage, from panic? Markets need to have a superego to rule their id, an Apollonian side to keep the Dionysian under control. We need responsible, humane governing institutions, which is exactly what Republican radicals in the U.S. Congress are trying to shut down and disempower.

The World Food Programme paints an ugly picture of the profitability of global hunger.

The role played by speculator manipulation of supply is no secret in the fuel category (from McClatchy News)

What is the result? More of our limited consumer dollars are locked into chasing fuel and food, leaving less for other areas of spending. It works like a heavy stone tied to the ankle of the economy. What makes it harder for 300 million Americans fills the pockets of the speculators, which means hedge funds, banks, Wall Street, the folks who fund the Tea Party.

Do market makers actively precipitate disaster in order to profit from it? There were plenty of shills pushing the profit opportunities in the BP oil spill––even if they didn't cause it.

But you have to wonder sometimes. In the week Dick Cheney's memoir hits the shelves this question should strike all of us: what influence did Dick Cheney, the former chair of Halliburton, have on the awarding of billions in war contracts to his old firm? Did he want the war to happen for private business reasons? Iraq was a war virtually made for Halliburton. The U.S. protectorate supervised the collapse of the Iraq system, the destruction of all its institutions and their subsequent privatization. Is Iraq the perfect model of Disaster Capitalism? (This Amy Goodman-Naomi Klein interview caught the drift as it was happening in 2005, but the reporting never reached the mainstream press.)

The ruling ideas behind what Naomi Klein called The Shock Doctrine aren't conservative. They are the opposite of conservative. They are radical. They are anti-patriotic. They are anti-institutional, anti-national, anti-citizen. They are against the notion of functioning societies and economies because breakdown is what makes these operators rich. Wide public failure is their opportunity. Your hunger is their feast. And increasingly, these are the people at the controls at the centers of the so-called Free Market.

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