Category Archives: Resource Depletion

Glencore and their ilk are screwing the world

The system is wrong, not the people. The financial sector is out of control and is screwing the rest of us. We know traders will trade in anything that looks like making a profit. We know they make profits out of rising prices, and falling prices, it’s just a matter of betting correctly. And we know, if they’re big enough, or close enough to one that is, they can start stories going which affect prices and then bet accordingly. Though we might have thought that was illegal. This month the Financial Times has run a series of articles on Glencore showing how they influence commodity prices for their own profit and everyone else’s loss, and how they are expected to increase their stranglehold in key areas.

Glencore, the world’s largest commodity trader, is in the news because its initial public offering of shares to the London Stock Exchange, scheduled for late May, is expected to value the company at between £60 billion and £73 billion, putting it comfortably in the FTSE100 index on its first day of trading. It may be big but the FT reports that Glencore has paid “almost no corporate taxes on its trading business for years in spite of bumper profits.” That may be no surprise since that’s how these financial sector firms are allowed to work, but the way it trades, revealed in relation to Russian wheat and corn, is more interesting.

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Osborne’s Wasted Opportunity

In the context of UK’s indebtedness, it might seem that any morsels in the new budget to benefit the real economy, for start-ups, small businesses, for technology and innovation, should be thankfully received. But the real opportunity, the one the now toothless Vince Cable made so much noise about, has been totally ignored. For the financial sector, it really is business as usual. Its rape of the real economy can continue for another year at least without fear of interference.
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Shared Value: another variation on the neo-classical theme

An article in the current issue of Harvard Business Review, by eminent Harvard Business School economist, Michael Porter, and his business partner, consultant Mark Kramer, claims to be showing ‘how to reinvent capitalism – and unleash a wave of innovation and growth’. The secret is “Creating Shared Value”.

It criticises the ‘outdated approach to value creation that has emerged over the past few decades’. That ‘outdated approach’ might be summarised as short term shareholder value maximisation – the target of much criticism in other posts on this site. Porter and Kramer propose a “new conception of capitalism”. But, despite the rather breathless, teenage language, it all boils down to an increased orientation to the usual candidates: concern for the wellbeing of customers, employees, suppliers, local communities, and also for the firm’s role in depletion of key resources, especially water and energy, and its role in polluting the atmosphere and thus, probably, contributing to climate change. So what’s new?

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Business as Usual and Stuff the Planet

The desire to return to business as usual isn’t restricted to the obscenity of bankers’ bonuses. That same desire is shared by unemployed potters in Stoke on Trent, car workers in Detroit, and the governing politicians in London and Washington who are presiding over their people’s misery.

However, for the millions in China’s (not to mention India’s and Brazil’s) rural hinterland who have never lived much above the bread-line, some having experienced genuine famine, working on an iPad production line in Shanghai, or the like, may not pay much by Western standards, but it’s a huge improvement on business as usual.

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