THE SECRET CLUB THAT RUNS THE WORLD

CNBC business reporter Kelly (Street Fighters: The Last 72 Hours of Bear Sterns, the Toughest Firm on Wall Street, 2009) takes on the world of commodity traders and the controversies swirling around it.

The author profiles a world in which large-scale bets on market volatility and careful calculation of hedged positions are often upset by unexpected developments: geopolitical or other kinds of crisis, human overconfidence, bad luck, etc. Kelly introduces many world-class market movers, including Marc Rich, the longtime fugitive and former owner of trading company Glencore, and Gary Cohn, the president and COO of Goldman Sachs, which was investigated for manipulating supplies of aluminum. The dizzying rise of oil prices in the late 2000s and their equally precipitous slide provides a frame in which Kelly takes up the question of whether commodity trading is speculative and/or beneficial. Traders like London hedge fund operator Pierre Andurand move billions of dollars with their intuitive bets and lead excessively lavish lifestyles. The author provides insight into the various levels of the world of commodities, from raw materials production to futures contracts and the derivatives based on them. Kelly chronicles efforts to regulate these markets—especially during Gary Gensler's tenure at the Commodity Futures Trade Commission—and she also details the depths of continuing opposition. Especially intriguing is the underlying narrative regarding the persistence of the chaotic feedback from the combined effects of disparate individuals, markets and events. “A true knack for wagering on the price vicissitudes of crude, copper, or cotton remain[s] a profitable skill in almost any environment—especially when only a handful of individuals in the world [can] really do it well and on a large scale.”

A lively contribution to an ongoing debate that features the unforeseen as much as the deliberate.