Commodities used to actually be virtual commodities. Nobody actually owned the pigs, or cared where they were located. Commodities, which in actuality are the most tangible of financial instruments ("Hey we're trading something that actually exists!"), were actually virtually named instruments representing those commodities. In other words, 'coffee' wasn't actual coffee that you could turn into a delicious beverage, but was a bet about what coffee would cost at some specified future date. Commodities trading was futures trading and shorting with hilarious names. Does that make sense dear readers? I'm happy to explain more if you'd like! Please request in the comments and I'll make an entire post about complex financial instruments. Or, knowing how this blog works I'll make a series of posts about complex financial instruments.
It seems though that our old friend, Goldman Sachs has turned this model on its head. With the price of land, and machine-gun clad 'security' at an all time low, it seems its more profitable to buy commodities outright rather than trade them. Why bother with the ins and outs of future pricing and speculation when you can just
buy one quarter of the world's aluminum and store it in a series of warehouses outside Detroit? Why bother with the middle man? Why bother with the markets? Why bother with the financial instruments you invented? Just debeers style that shit!
No comments:
Post a Comment