Goldman Sachs and your beer cans

[Meresgi]

http://www.nytimes.com/2013/07/21/bu...nted=all&_r=1&

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.

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.

I get that in most cases, this type of tactic doesn't work but how is this still legal to do? Can you seriously just stockpile goods that are used in a myriad of facets of life and then bet against those same goods to up your profit? They also create delays in the delivery of aluminum as well apparently.

[BaneTheBrawler]

capitalism

[Draginhikari]

This is why assuming the industry can regulate itself is a futile idea, the moment a company has the ability to artifically increase prices by liternally not delivering already available product basically indicates they will never behave on their own accord.

[Mertron]

are they hiring drivers

[Meresgi]

are they hiring drivers

Only nascar drivers, you need experience only going left around their facility.

[quannum]

this is the same thing the koch brothers do with oil btw.

[Meresgi]

Obviously big business should be able to regulate itself even more w/o the interference of government! Also we should privatize most of our core services too!

[hey]

How exactly is this more profitable than just sitting around and doing nothing? If they want to create delays to increase the price, can't they just...ya know...delay?

[SamanosukeShiva]

They control the supply, they control the price.

[hey]

They control the supply, they control the price.

I get that, but what is the point of driving it around constantly instead of just doing nothing?

[SamanosukeShiva]

http://www.nytimes.com/2013/07/21/bu...nted=all&_r=1&



I get that in most cases, this type of tactic doesn't work but how is this still legal to do?

It is legal to do because the organization who regulates this, AKA London Metal Exchange, is owned by the banks namely, Goldman Sachs. That explains anything? lol

[Stumblingdrunk]

Not one of you read the article did you?

[SamanosukeShiva]

How exactly is this more profitable than just sitting around and doing nothing? If they want to create delays to increase the price, can't they just...ya know...delay?

It's complicated, but it basically formed a chain reaction from Supply->Demand.

It will increase the time it takes to deliver Aluminum from warehouse to factories, and because of that, they drive the demand up, therefore companies have to order bigger number of Aluminum at a time. And because they order more Aluminum at the time, the supplier can just say they're running low (which in fact they are not), and drive the price up. The amount of time it took to deliver Aluminum was increased from 6 weeks to 18 months.

[SamanosukeShiva]

They are literally charging us $5 Billion because they can. #MoneyOutofThinAir

[Serra]

I get that, but what is the point of driving it around constantly instead of just doing nothing?

The Daily Show did a segment on this yesterday (I think).

Metro International holds nearly 1.5 million tons of aluminum in its Detroit facilities, but industry rules require that all that metal cannot simply sit in a warehouse forever. At least 3,000 tons of that metal must be moved out each day. But nearly all of the metal that Metro moves is not delivered to customers, according to the interviews. Instead, it is shuttled from one warehouse to another.

Rules don't say where the metal has to go, just that 3,000 tons have to leave each warehouse each day. So, send it to another warehouse and it isn't breaking any rules.

[SamanosukeShiva]

Also, don't forget JPMorgan is doing the same thing with copper. They are literally holding 80% of the planet's copper supply.

[hey]

The Daily Show did a segment on this yesterday (I think).



Rules don't say where the metal has to go, just that 3,000 tons have to leave each warehouse each day. So, send it to another warehouse and it isn't breaking any rules.

Oh, i see.

[archibaldcrane]

Basically there is regulation in place to prevent sitting on metals, but it's stupidly written and therefore they can "ship them out" to other warehouses they own and it "counts" towards not letting them sit in one place.

[ronin sparthos]

So how long till someone stockpiles oil, intentionally sinks a tanker that disrupts global supply and makes trillions off their stockpile?

It's like those Bond villain plots.

[SamanosukeShiva]

Too late they already did, banks also own the tankers and drilling rigs, they just park them offshore instead.