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In a span of 24 hours I came across two articles forwarded to my email id by Baskar. Both are disturbing and at the same time intriguing. They are disturbing because both touch upon the powerful and the super rich and how they manipulate the rules and the world to get even richer, all under government supervision. Intriguing because why on earth people owning yacht's, islands etc. would want to benefit from what governments earmarked for needy and how are they so insensitive to people lives when it comes to money.
The first article exposes the big black hole in American farm subsidy and how the super rich (likes of Rockfellers, Ted Turners etc) make the most of it. Between 1995- 2006, American government had spent $200 billion in farm subsidy and nearly 75% of it had gone to the super rich of America, who own farm lands. This besides the tax exemption they get from agricultural income and holdings. The word subsidy rings words like needy, for public benefit, support, protect in my ears. On what count the super rich deserve to avail farm subsidy, earmarked for true farmers? A billionaire worth $200 billion, availing $54,500 per annum as farm subsidy is a clear indication of a rot in the system. If this is what we can expect from America, just think of India and other developing countries.
The second article brings to light the effect of speculation in commodity derivatives. What effect? Death by starvation of millions of children in under developed and poor countries. This besides the impact on poor in all countries. Commodity derivatives came into existence with a purpose. It helped farmers and processors of commodities to hedge their risk of exposure to changing prices of commodities. On the other end it also helped buyers of these commodities to hedge their risk in fluctuating prices. Only when it moved beyond protecting real risks that the problems started. As long as real risk was hedged (involving farmers / processors, buyers of commodities) prices reflected expected supply and demand. But nowadays, irrespective of supply and demand it is the amount of investor (note, not farmer or buyer, investor) interest in a commodity that determines prices of commodities.
Speculation, where people without any risk in commodities are allowed to buy and sell commodity derivative products, is the main culprit of rising prices of commodities (Wheat, Coffee, Pulses, Wheat, Cotton, Oil etc) worldwide. Commodity exchanges nowadays primarily serve the interests of greedy investors more than needy farmers and buyers. The article linked here clearly establishes the link between speculation and price rise in commodities. Though it is organisations like Goldman Sachs that deal in commodity derivatives, they do it for high net worth individuals.
The wealthy wants to become more wealthy even if it means death of children in some East African nation. Many of these people can spend million a day for their lifetime and yet remain wealthy, without any additional income. A mere concentration on their businesses and their primary line of activity would ensure excellent growth of their wealth. Why on earth these rich people want to make profits in a market that acts as a barometer for commodity prices? It beats my understanding. May be the gambling pleasures. How else could this be explained. This world, its institutions, systems and the very structure of governance of the world (barring few countries) is made to make the rich richer and poor, poorer.
The least one could do now is to stay away from agents / brokers who chase us to invest our hard earned money in commodity derivatives.
The least one could do now is to stay away from agents / brokers who chase us to invest our hard earned money in commodity derivatives.
Thanks for the informative post.
ReplyDeletearasiyalla idhellaam ellaa idaththulayum sadharanama?
ReplyDeleteThat's why it is 'Arasiyal' Giri. No politician is different from the other. Only the degree of loot and methods change.
ReplyDelete