Carrion Eaters and other Foul Beings

My jump from anonymous donations to highlighting the lack of morals and responsibility of unbridled capitalism was referring to the the grain traders at the world's largest commodity trading house which is about to go public, Glencore. For those of you unfamiliar with the Glencore story I recommend you look into it. At its core is Mr Marc Rich. Never one to let anything get in the way of making money Mr Rich is infamous for his alleged transactions with rogue states.

I say alleged, for although the mighty CIA, itself no strong friend of moral rectitude nor stranger to questionable operations accused Mr Rich of numerous UN and US trade embargo violation, they were never able to take him to court. Why you might ask. Well, thanks to the largess of then President Clinton, he was granted a presidential pardon the result of which is that he will never have to answer to any of the allegations against him.

But to the question of manipulation and transparency. According to reports in the Financial Times, during the early stages of the drought in Russia last summer and prior to making public statements to the Russian authorities exhorting them to impose an export ban on Russian grains, the grain traders as Glencore made large speculative bets that the price of wheat and corn would rise.

Now there is nothing wrong with making speculative bets. It is the basic tenet of every investment. Yes, every investment, except for fraud where the investment result is known before the bet is made.

In this instance, the distinction takes on a new twist. The bets were made, and then the traders at Glencore made an concerted effort to influence the Russian authorities to act in their favour. This was all made made public in the pre-IPO information being marketed by the investment banks bringing the deal.

I have to assume this was in an attempt to illustrate both the trading acumen and their willingness to be more transparent. In any event Glencore stated that "[Glencore's] agricultural team received very timely reports from Russia farm assets that growing conditions were deteriorating aggressively in the spring and summer of 2010, as the Russian drought set in".

So far so good. But then on August 3, 2010 Mr Yury Ognev, head of Glencore's Russian grain unit encouraged Moscow to ban wheat exports. Glencore tried to distance itself saying that the statements were Mr Ognev's personal views. Interestingly on August 5Moscow imposed the ban sending the price of wheat 15% higher in 2 days.

Now over to Mr Sarkozy. In a similar vein as the chairman of the German Social Democrat party Mr Muentefering who claimed that 'hedge funds are like a plague of locusts', Mr Sarkozy blames the rise in global food prices on speculators.

I don't agree with Mr Muenterfering, or Mr Sarkozy, for they are focusing on the symptom of unbridled capitalism rather than looking to the cause-weak regulation and poor enforcement.

In any event, the statements made by Mr Ognev/Glencore- I really can't separate the two-are certainly prime examples of market manipulation and of how the desire for profit by a few can cause widespread fear and unrest-just ask the Chinese.