The big bankers of the world, who practice the terrorism of money, are more powerful than kings and field marshals, even more than the Pope of Rome himself. They never dirty their hands. They kill no one: they limit themselves to applauding the show."Wow," I thought. "The terrorism of money. That's a stiff charge." Then I read an article from Johann Hari today:
Their officials, international technocrats, rule our countries: they are neither presidents nor ministers, they have not been elected, but they decide the level of salaries and public expenditure, investments and divestments, prices, taxes, interest rates, subsidies, when the sun rises and how frequently it rains.
However, they don't concern themselves with the prisons of torture chambers or concentration camps or extermination centers, although these house the inevitable consequences of their acts.
The technocrats claim the privilege of irresponsibility: "We're neutral," they say. (E. Galeano, The Book of Embraces)
At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people – mostly children – couldn't afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it "a silent mass murder", entirely due to "man-made actions."Why did this happen? Neither supply nor demand changed enough to account for it. Biofuels production accounts for some of it, but only a fraction. The main cause is financial speculation.
This is not a matter of crop futures, which most of us are familiar with. With crop futures a farmer and a trader enter into a contract in which the farmer agrees to sell a share of his crop to the trader at a fixed price on a fixed date. Both the farmer and the trader share in risk, since the crop may or may not be worth the price fixed in the contract.
Futures did not cause this food crisis. In the 1990s, the investment banks (like Goldman Sachs, Merrill Lynch, and Deutsche Bank) won the right to trade derivatives on these futures contracts. That is, the trader could sell his contract to another investor, who could then sell it to another investor, and so on. Like the mortgage backed securities which were a prime cause of the 2008 meltdown, these derivatives have lost all real connection to meaningful transactions and become high priced lottery tickets. They don't produce anything of value. They only serve to enrich those who hold them.
So when the bankers started moving out of the collapsing real estate market in 2006 they moved into what they believed were safer investments, like these food contract derivatives. This increased demand, which increased the price of the derivatives, which pulled up the price of the crops. The price only fell when investors started pulling their money out of the market as part of the general meltdown.
Thus the financial speculators and investment bankers literally starved millions of human beings, practicing the terrorism of money.
The Pathologies of Power by Paul Farmer
"How Goldman gambled on starvation" by Johann Hari