17 May 2011

Can we blame Goldman Sachs?

JWT sent me this op/ed that claims that Goldman Sachs and Wall Streeters have "caused" high food prices by speculating on futures markets.

I don't believe it. Even if GS et al. have increased prices by demanding more delivery contracts in the short run, they cannot use that food in the long run. The real market is between farmers and eaters. If GS et al. take delivery at a high price per ton, they can only turn around and sell it at a loss. (Unless they are dumping the food in the ocean, making a bigger loss.)

What am I missing here?