Is anyone else reminded of the prime banks, Goldman Sachs in particular, by virtue of their GSCI, using their "commercial" status in the commodity markets to assist their "long-only index investor" clients, the giant public employee pension funds (think CalPERS et al) to evade speculative position limits or outright conceal the positions by way of swaps etc.?
Remember how that ended up?*
From the Guardian:
Institutions including Harvard and Vanderbilt reportedly use hedge funds to buy land in deals that may force farmers out*Congress threatened investigations, and GS, knowing that the J. Aron trading division is the crown jewel of the company threw the endowments and pension funds under the bus.
Harvard and other major American universities are working through British hedge funds and European financial speculators to buy or lease vast areas of African farmland in deals, some of which may force many thousands of people off their land, according to a new study.
Researchers say foreign investors are profiting from "land grabs" that often fail to deliver the promised benefits of jobs and economic development, and can lead to environmental and social problems in the poorest countries in the world.
The new report on land acquisitions in seven African countries suggests that Harvard, Vanderbilt and many other US colleges with large endowment funds have invested heavily in African land in the past few years. Much of the money is said to be channelled through London-based Emergent asset management, which runs one of Africa's largest land acquisition funds, run by former JP Morgan and Goldman Sachs currency dealers.
Researchers at the California-based Oakland Institute think that Emergent's clients in the US may have invested up to $500m in some of the most fertile land in the expectation of making 25% returns.
Emergent said the deals were handled responsibly. "Yes, university endowment funds and pension funds are long-term investors," a spokesman said. "We are investing in African agriculture and setting up businesses and employing people. We are doing it in a responsible way … The amounts are large. They can be hundreds of millions of dollars. This is not landgrabbing. We want to make the land more valuable. Being big makes an impact, economies of scale can be more productive."...MORE
We followed the story more than most.
Here's the dénouement, Goldman had the funds long oil all the way up to the $147 top-tick.
And long all the way down:
Nov. 20, 2008
It’s official, Goldman capitulates on oil
Oil is below $49/Bbl, $48.70 down $4.00 last I saw.
From FT Alphaville:
Goldman’s latest commodities note is out, and this is all you need to know:
Closing our oil trading recommendationsTranslation: We were wrong and we’re sorry. Ouch.
Although we have emphasized in the past few weeks that continued weak oil demand exacerbated by constrained credit conditions will contribute to soften near-term fundamentals keeping WTI prices, timespreads and gasoline cracks under pressure, we have left our oil trading recommendations open, expecting that high volatility would provide a better exit point to our trades. The volatility in the past few weeks has mostly been to the downside and the pressure on the oil complex has increased. In the near term, we do not expect significant upside potential and as a consequence we are closing all of our oil trading recommendations.
Goldman Backs Off Its Oil ‘Super Spike’ Theory
TURNS OUT, $200 CRUDE WAS TOO AGGRESSIVE A CALL
That ‘’super spike” in oil prices that Goldman insisted would lift crude to $200 a barrel ….? Turned out to be a dagger that has pierced Goldman itself. It never really turned out to be that prescient: instead of the 50% jump in oil that Goldman anticipated back in May, when it made the call with crude trading at $132, the price of a barrel never got more than 11% higher. And has since, of course, lost fully two-thirds of that price in the intervening four months....MORE
Some of the best links are in ""REVISITING SPECULATIVE COMMODITY BUBBLES" (GS)".
and "Goldman, Morgan Stanley Threatened by CFTC Review (GS; MS)".
See also: "Are Goldman's Oil Swaps Clients Piling Back Into Oil?":
...If you recall, this was one of the vehicles whereby CalPERS, the university endowments and other GS clients were able to avoid speculative position limits. Goldman using their designation as a 'commercial' would buy the actual futures. They would then enter into unregulated private swaps agreements with the institutions Et voilà, the institutions could have as large a position as they wanted, bless their hearts....Oil: the Market is the Manipulation