If there still exists a being somewhere who is capable of being shocked by the predations of Goldman Sachs and its fellows in the parasite industry, a story in today's New York Times about how Gold Mansacks squeezes profits out of the aluminum industry by ruining its distribution channels will surely rattle them to their bones.
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.Are these truck drivers deranged? No. Gold Mansacks is exploiting a loophole in commodities regulations to "ship" aluminum back and forth to and from its own warehouses without actually having to deliver it to the customers that, you know, own it. While they make their customers wait for THEIR OWN GODDAMN ALUMINUM, you see, they get to charge them rent for every day they delay. The result, you will not be surprised to learn, is more profit for Mansacks—and for their customers, delays of almost unimaginable magnitude.
Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than 20-fold — to more than 16 months, according to industry records.If this were just between Mansacks and the poor suckers it managed to hoodwink into storing aluminum with them, it would be bad enough, but as the article explains, this petty little tactic actually raises the price of aluminum for everyone.
Because Metro International charges rent each day for the stored metal, the long queues caused by shifting aluminum among its facilities means larger profits for Goldman. And because storage cost is a major component of the “premium” added to the price of all aluminum sold on the spot market, the delays mean higher prices for nearly everyone, even though most of the metal never passes through one of Goldman’s warehouses."All of this could come to an end if the Federal Reserve Board declines to extend the exemptions that allowed Goldman and Morgan Stanley to make major investments in nonfinancial businesses," the article says, "although there are indications in Washington that the Fed will let the arrangement stand." Indeed, late last year the SEC approved new rules that would allow Mansacks, JPMorgan, and BlackRock to control 80 percent of the copper on the market—a metal so necessary to modern life that methheads tear the plumbing out of old buildings to sell to recyclers—by buying it on behalf of investors and storing it in warehouses.
Aluminum industry analysts say that the lengthy delays at Metro International since Goldman took over are a major reason the premium on all aluminum sold in the spot market has doubled since 2010. The result is an additional cost of about $2 for the 35 pounds of aluminum used to manufacture 1,000 beverage cans, investment analysts say, and about $12 for the 200 pounds of aluminum in the average American-made car.
“It’s a totally artificial cost,” said one of them, Jorge Vazquez, managing director at Harbor Aluminum Intelligence, a commodities consulting firm. “It’s a drag on the economy. Everyone pays for it.”
Anyway, read the whole thing. You'll be glad, and sorry, you did.