sutton038

Globalisation can lead to surreal situations. For example, several weeks ago I got a call from a Kenyan guy called Karim Ajania , who's based in San Francisco, and who runs a website for a Mozambican forestry project called Mezimbite. You'd think the website would be focused on, well, Mozambican forestry, but it features contributions on a variety of topics from some pre-eminent global economists, including Sir Partha Dasgupta and Oxford's Paul Collier . Karim told me that h e'd managed to get respected Harvard professor  and former economic advisor to Bill Clinton,  Jeff Frankel , to write him a short blog on commodity speculation. Karim wanted me to write a reply. Karim had seen a  previous article  I'd written on food speculation , where I'd suggested that excessive involvement of financial players in agricultural futures markets could distort prices of real food, potentially leading to negative impacts on the welfare of the world's most...

On Thursday I made my first appearance in the Ecologist , by all accounts one of the world’s leading environmental publications, founded in the 1970s. Yeah, airpunch! The subject of the article was food speculation . It sounds obscure, but concerns around speculation on agricultural futures have been seeping into the mainstream agenda over the last few months in the context of rising global food prices. There is rising suspicion that the activities of financial players in commodity futures markets could have a distorting effect on futures prices, and thus that food price increases might be linked to computer algorithms running in some hedge fund in Mayfair. WHEATBIX FUTURES Having had experience in the world of derivatives, I’m always prepared to accommodate the idea that irrational behaviour in financial markets could distort prices. That said, I’ve remained cautious about populist arguments about why speculation must necessarily be a negative force. Thus, in late 2010, I attended a ...