Wall Street Fleecing Main Street, Gaming Commodities

    While the public is thoroughly distracted with unending news and commentary on phone call logs, metadata, roller coaster accidents or the lack of accountability for the murder of a teen in Florida, one lonely article in the New York Times discusses how Goldman Sachs, JP Morgan and Blackrock are fleecing the consumer on Main Street with a game of merry go-round played with 1,500 lb. bars of aluminum in the environs of bankrupt Detroit:

    ...The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum. 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....

    By owning the warehouses for aluminum bars and increasing the delivery time for them to producers of cans from 6 weeks to nearly a year and a half, Goldman Sachs gains in rent charges which are 48 cents per day per ton.

    The amount of metal in these warehouses of Metro International, bought by Goldman in 2010 for $550 million, has risen from pre-Goldman levels of 50,000 tons to 1,500,000 tons today. Every ton giving Goldman a rent charge passed on to the consumer when they buy a can of soda.

    A study mentioned in the article said commodity gaming added $10-20 per fill-up when Wall Street was gaming the oil market in 2011.What next? Futures on the air we breathe?

    Similar gaming has been done with oil, wheat, cotton, coffee and the Securities and Exchange Commission gave Wall Street firms the go ahead to buy up 80% of the copper supply:

    ...JPMorgan, which also controls metal warehouses, began seeking approval of a plan that would ultimately allow it, Goldman Sachs and BlackRock, a large money management firm, to buy 80 percent of the copper available on the market on behalf of investors and hold it in warehouses The firms have told regulators that these stockpiles, which would be used to back new copper exchange-traded funds, would not affect copper prices. But manufacturers and copper wholesalers warned that the arrangement would squeeze the market and send prices soaring. They asked the S.E.C. to reject the proposal. After an intensive lobbying campaign by the banks, Mary L. Schapiro, the S.E.C.’s chairwoman, approved the new copper funds last December...

    As one commenter said at the NYT article:

    The ongoing willingness of the U.S. Government to allow financial institutions too loot the economy can only lead to the conclusion that the entire system is corrupt. Top regulators don't have to do anything so obvious as accepting bags of cash since they know their next job will be at Goldmans or Morgan or one of their many enablers. American corruption just operates at a higher level of sophistication. Eventually there comes a point where corruption destroys the common values that bind a society together. We seem to be determined to discover where this point is.

    If this country is destroyed from within, it won't be by 2-bit players like Clapper and the trove of digital metadata in the Utah desert.  It will be from the greedy fat cats and shareholders on Wall Street, as they quietly, openly and legally, with the approval and acquiescence of the law, Fed regulators and bought/sold politicians, drain the nation dry of capital needed to meet the enormous challenges the country faces in this century. We must demand and vote for politicians who want to raise taxes on the 1%, and tighten controls on banks and Wall Street, and it ain't the Republican Party that will move us in that direction.


    Reuters had an 8 page pdf report from March of 2012, on BHC, bank holding companies, and commodity gaming at this link.

    18 hours ago Reuters ran a piece Fed rethinking move allowing banks to trade physical commodities that says the Senate Banking Committee, with Elizabeth Warren will hold hearings on banks and commodity owning/trading this Tuesday on this issue.

    On Tuesday, the Senate Banking Committee is holding its first hearing on the issue, asking whether so-called "Too Big to Fail" banks should be taking on additional risks like moving tankers of crude oil or operating power plants.

    Members of the Senate Banking Committee with links to their webpages is here.

    Goldman and other Wall Street firms and BHC get almost free money to 'play ' with at the Fed discount window, are 'too big to fail' so are backed by taxpayers and trade on the stock market on the same commodities on which they may control the physical market. 

    It's a game Main Street can only lose. Contact your Senator if they are on the Committee and see if the Senate on it's own, or by pressure on the Fed, can stop this outrageous racket, played with taxpayer backed money, serving only to suck billions from the American economy and put it in the pockets of rapacious sociopaths on Wall Street.


    Report on the July 23 Senate hearing on taxpayer guaranteed 'too big to fail' banks gaming the commodity sector, Reuters:

    ...The Senate Banking Committee hearing comes as Goldman Sachs, Morgan Stanley and JPMorgan Chase - which generated an estimated $4 billion in commodity revenues last year - face growing pressure from a number of investigations into their operations, and as the Federal Reserve reviews Wall Street's right to operate in raw material markets.

    Big aluminum buyers represented by MillerCoors, the second largest brewer in the U.S., told the packed hearing that the banks' control of metal warehouses that are part of the London Metal Exchange network drove up their costs by as much as $3 billion last year by distorting supplies....

    MSM did not cover this 'Wall Street rips-off Joe Sixpack' news as far as I know, or the fact that as stated above the GOP is OK with the practices of Wall Street.

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