Friday 2 July 2010

How Goldman gambled on starvation

Worthwhile read!


Johann Hari: How Goldman gambled on starvation

Speculators set up a casino where the chips were the stomachs of millions. What does it say about our system that we can so casually inflict so much pain?

By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You're wrong. There's more. It turns out that the most destructive of all their recent acts has barely been discussed at all. Here's the rest. This is the story of how some of the richest people in the world – Goldman, Deutsche Bank, the traders at Merrill Lynch, and more – have caused the starvation of some of the poorest people in the world.




Also on a sidenote, this from a Barclays report today I found interesting:

Financial markets’ focus on Europe switched from sovereign debt to the banks this week as the expiration of last year’s 12-month long-term repo operation loomed. Despite fears that the event might uncover severe stress in funding markets, the headline news was positive. The combined demand for liquidity in Wednesday’s 3-month operation and Thursday’s 6- day fine-tuning operation left the liquidity surplus in the eurosystem at about half of the level it had been recently. We believe that the normalisation of Eonia is likely to come ahead of the current market expectation of end-2011.

This is not to say that concerns about the European banking system have dissipated. It still seems likely that a number of Greek banks and Spanish Cajas, for example, are heavily reliant on the ECB for funding. The impending stress tests of European banks may shed further light on any latent vulnerabilities. If conducted effectively – which means applying appropriately designed and calibrated stress scenarios, with the details and results made public – the exercise has the potential to instil greater confidence in the banking system, even if (perhaps especially if) some governments have to provide capital injections to support fragile institutions. It remains unclear, however, how close the practice will come to this ideal, and there is a resultant risk that market concerns about the robustness of some segments of the European banking sector will not be fully dispelled.

2 comments:

  1. Possibly zero comments because it is very uncomfortable reading and difficult to know what to say?

    Thanks though for the link, even if it was unpleasant.

    L&W.

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  2. ;) my posts don't normally get a lot of comments... so I didn't think anything of none appearing.

    But yes reading it put like that certainly leaves an unpleasant feeling, even if one should probably take it with a pinch of salt.

    I see the argument for searching for investments (i.e. those commodities) that are somewhat of an inflation hedge, especially if you believe the US pile of debt won't go away...

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