Wall Street figured out another scam. Instead of creating a doomsday securitizing machine for the mortgage market, they are going old school – manipulating commodity prices for fun and profit. According to the New York Times, Goldman Sachs and other firms have been manipulating the aluminum market by moving the metal between warehouses and delaying the sale of it in order to drive the price up.
Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.
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.
Rent seeking in all its glory. Not only is Wall Street not producing anything, they are slowing the production process down to chisel a few more cents for themselves. This is their business model.
Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process “a merry-go-round of metal.”
Only a tenth of a cent or so of an aluminum can’s purchase price can be traced back to the strategy. But multiply that amount by the 90 billion aluminum cans consumed in the United States each year — and add the tons of aluminum used in things like cars, electronics and house siding — and the efforts by Goldman and other financial players has cost American consumers more than $5 billion over the last three years, say former industry executives, analysts and consultants.
What’s a few billion among friends? It was for a good cause, the cause of literally driving around in circles so consumers could pay more.
After Wall Street’s hostile takeover of the American government and economy in the 1980s, the manufacturing base has been shipped off and now money changers rather than producers sit at the top of the national economy. Unfortunately, finance has no social utility, Wall Street’s parasites who create nothing – they live off the buying and selling of others. So now, with finance in control, a once great industrial power is reduced to trying to profit off of driving metal around in circles rather than producing goods with it.