Demonstration outside major high street bank (From York Press)

How many people turned up to protest? Five or Six. What a waste of time. Every week these people seem to have something different to protest about. I don't even think they truly believe in what they are protesting about, I think it's a current fashion within the student community to protest . . . . . .

What a joke. They would be better looking at governments and the EU who subsidise biofuels or set-aside land. Allow free-trade and the agriculture industry to respond fairly to meet demand through arbitrage rather than state interference.

Idiots. They should all be locked up.

Locked up for peaceful protest? Hmm, I wonder where you sit on the political spectrum...

As for 'these people' - I've taken part in plenty of protests in York and elsewhere, and I can't say I recognise the people from the picture - or the name of the main chap. Why do you assume it's always the same people protesting when clearly it is not?

Also, food speculation kills. It's probably worth repeating that message.

@OwenC drop your dim-witted protest rhetoric and look at the facts. You'll find food price rises are due to failed harvests (climate related), biofuels (agripolicy), protectionism (subsidies and trade barriers) and global demand (due to population growth and expectations) are all to blame. It's got stuff all to do with 'speculation' which is just a market mechanism that helps arbitrage. The irony being that most problems are caused by state interference rather than the free market.

http://www.economist
.com/node/10252015?s
tory_id=10252015

Elephant wrote:
@OwenC drop your dim-witted protest rhetoric and look at the facts. You'll find food price rises are due to failed harvests (climate related), biofuels (agripolicy), protectionism (subsidies and trade barriers) and global demand (due to population growth and expectations) are all to blame. It's got stuff all to do with 'speculation' which is just a market mechanism that helps arbitrage. The irony being that most problems are caused by state interference rather than the free market.

http://www.economist

.com/node/10252015?s

tory_id=10252015

Typical free market dogma. Yes of course those other things are factors but so is food speculation.

Speculation is not simply about supply and demand but about the creation of market bubbles. And when bubbles burst in this instance, people starve.

http://www.independe
nt.co.uk/opinion/com
mentators/johann-har
i/johann-hari-how-go
ldman-gambled-on-sta
rvation-2016088.html

@OwenC - talk about dogma!

This comment sums up Hari's dodgy Independent article perfectly:

"It's pretty clear to anyone doing even a cursory bit of research into this subject that the cause of the tragic happenings in Ethiopia described by Hari had absolutely nothing to do with the trade in agricultural derivatives. The reason why 2006-07 saw a spike in the price of certain kinds of agricultural produce was that the market was anticipating a surge in demand for such products due to their increased use for making biofuel. The reason why, as the article says, the price of millet, cassava, and potatoes remained relatively stable is simply because demand for biofuel was not expected to have the kind of massive effect on demand for those products as was the case with the likes of wheat or maize. "

As for your futures speculation causing bubbles nonsense, you need a basic understanding of markets:

"Commodities futures that do not result in physical delivery (i.e. 99% of commodity futures) are a zero sum game. They are created in pairs: one buy contract and one sell contract. They are also time-limited: they expire on a given day within the expiry month.

That structure limits the effects of futures on delivery prices: financial speculators may affect the price within the month (they can and do increase volatility) but they have to close their futures positions before the delivery date.

This means that the actual physical delivery price is only set by those who take physical delivery. If you look at the monthly delivery prices you will see confirmation for this: it’s much smoother than the intra-month charts.

If a speculator wants to manipulate the price then real physical delivery of thousands of tons of material has to be organized and tankers, silos or warehouses have to be rented and filled – and the risk of holding an actual physical commodity has to be assumed (which, for food, is substantial: food commodities lose value with time.)

That is something that is visible in the real world: flotillas of tankers parking off the coast for months without entering harbour, tanker rent rates spiking, etc. There are few signs of such physical speculation in food and futures trading has nothing to do with it."

Once again: what's really starving people are simple straightforward causes like crop failures, population growth, changing diets, biofuels, subsidies, trade-barriers, agripolicy and government interventions.

Are they too difficult to understand?

The biofuels point is a point about bubbles! I would have thought that would be obvious.

Speculation does not have to be physical - it happens on the stock market, buying futures, hedging, and derivatives and so on.

Food prices have shot up dramatically in recent years as a result of financial speculation. This has happened over just a few years, so the population argument doesn't hold (convenient though it is for those neo-Malthusians who like to blame the poor for their own deaths).

http://www.counterpu
nch.org/mazzei021420
11.html

http://ipsnews.net/n
ews.asp?idnews=54274


As for not understanding markets, I think you are under the incorrect impression that a market is somehow a natural or neutral mechanism. Try this:

'We first became aware of this in 2006. It didn't seem like a big factor then. But in 2007/8 it really spiked up," said Mike Masters, fund manager at Masters Capital Management, who testified to the US Senate in 2008 that speculation was driving up global food prices. "When you looked at the flows there was strong evidence. I know a lot of traders and they confirmed what was happening. Most of the business is now speculation – I would say 70-80%."

Masters says the markets are now heavily distorted by investment banks: "Let's say news comes about bad crops and rain somewhere. Normally the price would rise about $1 . when you have a 70-80% speculative market it goes up $2-3 to account for the extra costs. It adds to the volatility. It will end badly as all Wall Street fads do. It's going to blow up."

http://www.guardian.
co.uk/global-develop
ment/2011/jan/23/foo
d-speculation-banks-
hunger-poverty

Oh dear, i'm afraid you are well out of your depth. After all why let facts get in the way of your ideology?

I suggest you (and other readers of this thread) read this FT article http://ftalphaville.
ft.com/blog/2010/07/
05/278451/its-a-zero
-sum-game-mr-hari/ that covers the points along with links to OECD and other authoritative reports concluding that market demand, oil prices and the rush to biofuel caused the price increase, not speculation.

You misunderstand the Masters point: speculation can affect volatility (short term price fluctuations), but that volatility is a very small fraction of the overall price (less than 1%).

The 2009 US Senate report explains that by far the main drivers of price increases were due to biofuels and oil price increases. As oil prices fell, so too did food prices - but you conveniently forget that price goes both ways.

Mind you, I don't expect any of these facts will stop you believing that Barclays bank causes starvation. Why don't you just admit you are fashionably anti-capitalist and protest about that, rather than some lame unsupported hypothesis on matters you don't understand.

Well you've managed to be consistently rude and ad-hominem, which I can only take to mean that you are feeling defensive.

The article misrepresents the critique Hari makes - he doesn't suggest that Barclays 'single-handedly' starves millions, in the same way that I have not suggested that things like oil price are not also factors in food prices (in fact, I explicitly said that this is a factor). Classic straw-man argument.

(Notably though, you fail to acknowledge that the oil price spike was itself caused by speculation.)

The blog you reference tales the view that 'futures should at least theoretically always converge to the cash price'. But this most recent manifestation of Smith's 'invisible hand' metaphor is by far from being accepted by all economists, a point that neither you nor this blog acknowledge.

This is a fairly level-headed view:

http://docs.google.c
om/viewer?a=v&q=cach
e:itxKfQNdIA8J:www.m
akefinancework.org/I
MG/pdf/henn_2011_spe
culators_bread_embo.
pdf+futures+should+a
t+least+theoreticall
y+always+converge+to
+the+cash+price&hl=e
n&gl=uk&pid=bl&srcid
=ADGEESju_Ac9dSFlWB8
1n3Qw13tQcjgbpCjffVt
idUqBat8A3wmxYUmbRtm
3TAVYjjSvAHo7BOQcSvJ
yU3CDX-7bcBInNYM9PeX
9_xD3kmqgXV78Hzkp4Et
sGg4XWGA1Wo1cAFWrihY
l&sig=AHIEtbSqoHygFP
34LmmGAj9-DWd1CO9fCg


Now are you going to respond properly or just call me names again?

I quote trusted and authoritative sources like the OECD, US Senate reports and Financial Times. You quote Hari (a socialist hack) and a so-called 'political scientist' (whatever that is) in a macrobiology journal!

Here's the International Monetary Fund:

"Despite recent financial innovation in commodity markets, such as indexing, which has allowed investors to benefit from rising commodity prices without having to maintain physical inventory holdings, there is little discernable evidence that the buildup of related
financial positions has systematically driven either prices for individual commodities or price formation more broadly"

On Oil, a Joint Task Force by the US Commodities and Futures Trading Commission, UK Financial Services Authority and ICE Futures Europe found:

"that speculation had not caused significant changes in oil prices and that fundamental supply and demand factors provide the best explanation for the crude oil price increases. The primary reason for the price increases was that the world economy had expanded at its fastest pace in decades, resulting in substantial increases in the demand for oil, while the oil production grew sluggishly, compounded by production shortfalls in oil-exporting countries. The report stated that as a result of the imbalance and low price elasticity, very large price increases occurred as the market attempted to balance scarce supply against growing demand, particularly in the last three years. The report forecast that this imbalance would persist in the future, leading to continued upward pressure on oil prices, and that large or rapid movements in oil prices are likely to occur even in the absence of activity by speculators"

To sum up, that's the IMF, OECD, US Senate, FT, and US/UK/European regulators all concluding that futures speculation has little discernible impact on overall pricing in commodity markets.

Although do feel free to continue believing what you like.