“Commodity players are a shrewd and indomitable lot. And the contracts they trade are still so loosely regulated that the correct combination of money and skill creates irresistible opportunity. That’s why I’m only half joking when I call them the secret club that runs the world.”
When most people think of the drama of global finance, they think of stocks and bonds, venture capital, high-tech IPOs, and complex mortgagebacked securities. But commodities? Crude oil and soybeans? Copper and wheat? What could be more boring?
That’s exactly what the elite commodity traders want you to think. They don’t seek the media spotlight. They don’t want to be as famous as Warren Buffett or Bill Gross. Their astonishing wealth was created in near-total obscurity, because they dwelled either in closely held private companies or deep within large banks and corporations, where commodity profits and losses weren’t broken out.
But if the individual participants in the great commodities boom of the 2000s went unnoticed, their impact did not. Over several years the size of the market exploded, and so did prices for raw materials—raising serious questions about whether the big traders were intentionally jacking up the cost of gasoline, food, and other essentials bought by ordinary people around the world. What was really driving all those price spikes?
Now Kate Kelly, the bestselling author of Street Fighters, takes us inside this secretive inner circle that controls so many things we all depend on. She gets closer than any previous reporter to understanding these whip-smart, aggressive, and often egomaniacal men (yes, they are nearly all men). They work hard, play hard, flaunt their wealth, and bet millions every day on a blend of facts, analysis, and pure gut instinct.
Kelly’s narrative focuses on one of the most extraordinary periods in financial history. Though the practice of gaming out price changes in commodities goes back to ancient Mesopotamia, it had never before reached the extremes of the early to mid-2000s. Kelly exposes the role of the hedge funds, banks, brokers, and regulators in this volatile market, through fascinating stories of “secret club” members such as . . .
Pierre Andurand, a self-made multimillionaire who generated the winningest annual performance ever for an oil trader in 2008 and hired Elton John to perform at his wedding.Ivan Glasenberg, whose secretive Swiss commodities giant, Glencore, founded by the infamous American fugitive Marc Rich, orchestrated a massive merger with the help of former UK prime minister Tony Blair.Jon Ruggles, a brash know-it-all—recruited by Delta Air Lines to revitalize the airline’s fuel hedging business, he continued to make trades in his personal account, a questionable practice given his position.
Drawing on her exclusive access to the secret club, and following the trail from New York to Houston, London, Dubai, and beyond, Kelly reveals the immense power in the hands of a few, and the so-far contentious efforts by the Obama administration to rein in the cowboys.
CNBC reporter Kelly (Street Fighters) offers brief portraits of successful traders from the lightly regulated world of commodity trading, where deals for oil, copper, and livestock are engineered for billions in profits. Much of the action described took place during a post-2001 boom that prompted major investment banks to get in on the action, and spurred regulators to try curbing the potential fallout from wild market swings that "created kings in the trading world's empowered class and drove other people and companies into financial ruin." Kelly presents mostly admiring portraits of obscure but rich financiers. There's a false familiarity with these elites, as seen in details of extravagant wedding costs, and efforts to provide balance through sketches of would-be reformers such as Gary Gensler, former head of the Commodity Futures Trading Commission, fail to round out the choppy narrative. Apart from references to $4 per gallon gasoline during speculation-fueled price spikes and rising costs to Coca-Cola after a bottleneck in aluminum supplies, Kelly does not fully demonstrate the practical costs to the rest of the world. The need for access to her subjects forces her, like much of the rest of the financial press, to pull her punches.
Customer ReviewsSee All
Very good read with plenty of detail about recent commodity trading events. The end result seems similar for all the traders involved.
Lots of Promise but Let's Down in End
The title is sexy, and Kelly writes in an interesting way. She builds suspense, but in the end a story never materializes. It's as though the whole book introduces a cast of characters- but alas act two and three are missing. Too bad. The characters seem interesting (and many are known personalities). Just wish more time was spent on the actual commodities, how the markets work and somehow bringing the cast of institutional and personal characters together. As my title says, there was lots of promise.
This is a very well written and entertaining book about some of the major players, both commercial and speculators, in physical commodities.
This is not a conspiracy theory book about alleged market manipulation or a how to trade book, but rather a vivid novel of the people that made the headlines in the early part of this century.