Goldman,Using The Conservative-Libertarian Model, Made $5 Billion By Manipulating Inventories of Aluminum

 Goldman,Using The Conservative-Libertarian Model, Made $5 Billion By Manipulating Inventories of Aluminum

What sexual favors were exchanged so that the New York Times blunted the impact of an important, detailed investigative story on Goldman profiteering, this time in the aluminum market, by releasing it on a heat-addled summer Saturday?

On a high level, the story sets forth a simple and damning case. Not all that long ago, banks were prohibited from being in operating businesses. But the Federal Reserve and Congress have loosened those rules and big financial players have gone full bore backward integrating from commodities trading into owning major components of the delivery and inventorying systems. This doesn’t just give them a big information advantage by having better access to underlying buying and selling activity. It allows them to manipulate inventories, and thus, prices. And Goldman’s aluminum henanigans increased prices all across the market, not just for the customers who chose to use them for warehousing and delivery.

The article A Shuffle of Aluminum, but to Banks, Pure Gold by David Kocieniewski, tells us that the newly-permissive rules allowed Goldman to buy Metro International Trade Services, a concern in Detroit with 27 warehouses that handles a bit over 25% of the aluminum available for delivery. And here’s where the fun and games begin:

    Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.

    This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back–and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country…

    Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than 20-fold — to more than 16 months, according to industry records.

    Longer waits might be written off as an aggravation, but they also make aluminum more expensive nearly everywhere in the country because of the arcane formula used to determine the cost of the metal on the spot market. The delays are so acute that Coca-Cola and many other manufacturers avoid buying aluminum stored here. Nonetheless, they still pay the higher price.

The Times’s sources estimate the price impact across the market at 6 cents per pound, which adds $12 to the price of a typical car. Goldman piously claims it obey all the rules, but obeying the rules is far from operating in a fair or pro-customer manner.

The last thing conservatives and rightie libertarians want is a competitive market. They want total control and anyone who suggests using some regulation to stop that control is quickly gang piled on as a liberal pinko communists.

Conservative Culture: America's Wage Slaves Are Getting Crushed Making Corporate Plutocrats Rich

America's Wage Slaves Are Getting Crushed Making Corporate Plutocrats Rich

In cities all across the country, workers stand on street corners, line up in alleys or wait in a neon-lit beauty salon for rickety vans to whisk them off to warehouses miles away. Some vans are so packed that to get to work, people must squat on milk crates, sit on the laps of passengers they do not know or sometimes lie on the floor, the other workers’ feet on top of them.

This is not Mexico. It is not Guatemala or Honduras. This is Chicago, New Jersey, Boston.

The people here are not day laborers looking for an odd job from a passing contractor. They are regular employees of temp agencies working in the supply chain of many of America’s largest companies – Walmart, Macy’s, Nike, Frito-Lay. They make our frozen pizzas, sort the recycling from our trash, cut our vegetables and clean our imported fish. They unload clothing and toys made overseas and pack them to fill our store shelves. They are as important to the global economy as shipping containers and Asian garment workers.

Many get by on minimum wage, renting rooms in rundown houses, eating dinners of beans and potatoes, and surviving on food banks and taxpayer-funded health care. They almost never get benefits and have little opportunity for advancement.

Across America, temporary work has become a mainstay of the economy, leading to the proliferation of what researchers have begun to call “temp towns.” They are often dense Latino neighborhoods teeming with temp agencies. Or they are cities where it has become nearly impossible even for whites and African-Americans with vocational training to find factory and warehouse work without first being directed to a temp firm.

In June, the Labor Department reported [3] that the nation had more temp workers than ever before: 2.7 million. Overall, almost one-fifth of the total job growth since the recession ended in mid-2009 has been in the temp sector, federal data shows. But according to the American Staffing Association [4], the temp industry’s trade group, the pool is even larger: Every year, a tenth of all U.S. workers finds a job at a staffing agency.

The proportion of temp workers in the labor force reached its peak in early 2000 before the 2001 slump and then the Great Recession. But as the economy continues its slow, uneven recovery, temp work is roaring back 10 times faster than private-sector employment as a whole – a pace “exceeding even the dramatic run-up of the early 1990s,” according to [5] the staffing association.

The overwhelming majority of that growth has come in blue-collar work in factories and warehouses, as the temp industry sheds the Kelly Girl image of the past. Last year, more than one in every 20 blue-collar workers was a temp.

Several temp agencies, such as Adecco and Manpower, are now among the largest employers in the United States. One list [6] put Kelly Services as second only to Walmart.

“We’re seeing just more and more industries using business models that attempt to change the employment relationship or obscure the employment relationship,” said Mary Beth Maxwell, a top official in the Labor Department’s Wage and Hour Division. “While it’s certainly not a new phenomenon, it’s rapidly escalating. In the last 10 to 15 years, there’s just a big shift to this for a lot more workers – which makes them a lot more vulnerable.”

The temp system insulates the host companies from workers’ compensation claims, unemployment taxes, union drives and the duty to ensure that their workers are citizens or legal immigrants. In turn, the temps suffer high injury rates, according to federal officials and academic studies, and many of them endure hours of unpaid waiting and face fees that depress their pay below minimum wage.

The rise of the blue-collar permatemp helps explain one of the most troubling aspects of the phlegmatic recovery. Despite a soaring stock market and steady economic growth, many workers are returning to temporary or part-time jobs. This trend is intensifying America’s decades-long rise in income inequality, in which low- and middle-income workers have seen their real wages stagnate or decline [7]. On average, temps earn 25 percent less than permanent workers.

The CEO of Manpower is like a bandit without the risks. He made $5.5 million over 6 years for supplying wage slaves to other plutocrats. He, like the Walmart family take more out of the economy and suppress more economic activity than they create.

Welcome To Conservative Planet Where The World's Richest 8% Earn Half of All Income

Welcome To Conservative Planet Where The World's Richest 8% Earn Half of All Income

The lead research economist at the World Bank, Branko Milanovic, will be reporting soon, in the journal Global Policy, the first calculation of global income-inequality, and he has found that the top 8% of global earners are drawing 50% of all of this planet's income. He notes: "Global inequality is much greater than inequality within any individual country," because the stark inequality between countries adds to the inequality within any one of them, and because most people live in extremely poor countries, largely the nations within three thousand miles of the Equator, where it's already too hot, even without the global warming that scientists say will heat the world much more from now on.

[  ]...Wealth-inequality is always far higher than income-inequality, and therefore a reasonable estimate of personal wealth throughout the world would probably be somewhere on the order of the wealthiest 1% of people owning roughly half of all personal assets. These individuals might be considered the current aristocracy, insofar as their economic clout is about equal to that of all of the remaining 99% of the world's population.

Milanovich says: "Among the global top 1 per cent, we find the richest 12 per cent of Americans, ... and between 3 and 6 per cent of the richest Britons, Japanese, Germans and French. It is a 'club' that is still overwhelmingly composed of the 'old rich'," who pass on to their children (tax-free in the many countries that have no estate-taxes) the fortunes that they have accumulated, and who help set them up in businesses of their own - often after having sent them first to the most prestigious universities (many in the United States), where those children meet and make friends of others who are similarly situated as themselves.

For example, on 22 April 2004, The New York Times headlined "As Wealthy Fill Top Colleges, Concerns Grow Over Fairness," and reported that 55% of freshman students at the nation's 250 most selective colleges and universities came from parents in the top 25% of this nation's income. Only 12% of students had parents in the bottom 25% of income. Even at an elite public, state, college, the University of Michigan, "more members of this year's freshman class ... have parents making at least $200,000 a year [then America's top 2%] than have parents making less than the national median of about $53,000 [America's bottom 50%].'"

Most of the redistribution that favors more than just the top 1% has occurred in the "developing" countries, such as China. However, a larger proportion of the world's population live in nations of Central and South America, Africa, etc., where today's leading families tend overwhelmingly to be the same as in the previous generation. They, too, near the Equator, are members of the "club," but there are fewer of them.

Milanovic finds that globally, "The top 1 per cent has seen its real income rise by more than 60 per cent over those two decades [1988-2008]," while "the poorest 5 per cent" have received incomes which "have remained the same" - the desperately poor are simply remaining desperately poor. Maybe there's too much heat where they live.

This study, in Global Policy, to be titled "Global Income Inequality in Numbers: In History and Now," reports that economic developments of the past twenty years have caused "the top 1 per cent to pull ahead of the other rich and to reaffirm in fact - and even more so in public perception - its preponderant role as a winner of globalization."

Conservatism preaches that those are the top are there because they earned it, while those at the bottom are lazy moochers. This report verifies what most rational people se as obvious. Conservative economics in action are a form of thief from workers. Conservatism is not about merit and working hard, it is about redistributing wealth upwards to the 1%.