Kupferpreis

Price of copper.

After lobbying by firms claiming reducing copper supply would not drive up copper prices, in December 2012 exiting U.S. Securities and Exchange Commission chair Mary L. Schapiro gave the banks Goldman Sachs, JP Morgan Chase and BlackRock the S.E.C.’s approval to buy up 80% of the copper available on the market and hold it in warehouses as backing for new copper-based investment funds. The NYTimes.com article went on to say copper is used in so many manufacturing applications that it is sometimes tracked as an indicator for the economy as a whole.

(COOP fur prize.)

Spotmarkt

Spot market, where financial instruments or commodities are sold for immediate delivery, unlike the futures market where they are sold for delivery at a later date. Wikipedia said a spot market can be an organized market, an exchange or over-the-counter (O.T.C.).

Regarding the spot market price of aluminum: Goldman Sachs was accused of bottlenecking aluminum at Goldman’s Metro International aluminum warehouses outside Detroit, increasing customers’ delivery wait times since purchasing M.I. in 2010 from six weeks to sixteen months by first lowering prices to attract a stockpile (“50,000 tons in 2008” to “~1.5 million currently”) and then, actually, trucking a minimum daily regulatory-defined shipment amount of 3000 tons back and forth among the 27 warehouses. There were also accusations of understaffing, reduced shifts and prioritizing putting aluminum into storage over taking it out. The shuttle-shuffled delays raised a premium added to the price of all aluminum, driving up the spot market price “according to an arcane formula” even for metals bought directly from mines or refineries to bypass these warehouses. While delaying delivery the warehouses also continued charging rent on the stored metal. Perfectly legal according to current international regulations, apparently set by the London Metal Exchange.

The London Metal Exchange might need more disentanglement from the entities it is supposed to regulate. According to the NYTimes.com article, it still receives 1% of the rents collected by the ~700 warehouses it regulates around the world. Until 2012 it was owned by its member regulees, including Goldman Sachs, JP Morgan Chase, Barclays and Citigroup. Many of its metals warehousing regulations were written by a board populated by executives from banks, trading companies and storage companies. In July 2012 the L.M.E. was sold to Hong Kong Exchanges and Clearing, part-owned by the Hong Kong government, for ~$2 billion. A NYTimes.com description of the 2012 sale said it “will allow the Asian company to control the world’s largest futures trading exchange for metals like aluminum, copper and zinc, as emerging market demand for commodities remains strong.” In 2012 Hong Kong Exchanges and Clearing was supposedly hoping to get an exemption from Chinese laws preventing foreign companies from owning these sorts of metals warehouses in China.

The U.S.’s Federal Reserve Board could, said NYTimes.com, quit extending exemptions that allow banks like Goldman Sachs to invest in nonfinancial enterprises. Though the Fed’s stated conditions in allowing banks to diversify into commodities investment were “only if there was no risk to the banking system” and if the deals “could ‘reasonably be expected to produce benefits to the public, such as greater convenience, increased competition, or gains in efficiency, that outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices,'” yet many people would say its deregulation achieves the opposite effects, that big “diversified” banks’ risk management still appears to endanger U.S. and world economies and now banks’ having bought up important infrastructure might be presenting them with irresistable temptations such as artificial bottlenecking or even information advantages not all traders always refrain from using.

Update on 25 Jul 2013: The U.S. Senate’s banking committee has criticized that the Federal Reserve is not communicating well with them. However, wrote the F.A.Z., the U.S. Congress could pass its own banking reregulation rules without waiting for the Federal Reserve.

It’s unclear whether shadow trades are involved here, but it’s also unclear why everyone hasn’t gone broke if this is how they’re doing business:

“Industry analysts and company insiders say that the vast majority of the aluminum being moved around Metro’s warehouses is owned not by manufacturers or wholesalers, but by banks, hedge funds and traders. They buy caches of aluminum in financing deals. Once those deals end and their metal makes it through the queue, the owners can choose to renew them, a process known as rewarranting.”

If Goldman is indeed paying aluminum owners, fellow speculators, to rewarrant their metal and leave it in the warehouses piling up rent owed to Goldman, that might indicate some creative profits or at least useful losses are being made.

Aluminum is economically important enough that Chancellor Angela Merkel’s government has been giving aluminum refineries, notoriously high-volume electricity consumers, various electricity rebates that must be paid for by individual consumers or “ratepayers” in their home electricity bills because, Germany’s government said, the preservation of the aluminium supply was that significant for their economy as a whole.

(SHPOTT mocked.)

Salzgemahlte Metallfarben

“Salt-ground metal paints,” a technique used by sixteenth-century Mughal artists, who learned their craft from Persian painters, to create gold, silver and copper paints by first pounding the metal flat between layers of leather and then grinding the foil with coarse salt in a mortar. The salt was removed by rinsing with water, leaving behind metal powder.

(ZOLTS geh MOLT eh   met OLL fah ben.)

Das Vectoring

In the first of its two current scandals, Deutsche Telekom wants to use so-called “vectoring” technology to reduce interference between bundled strands in copper-wire DSL internet connections by increasing and decreasing signals to balance out a more efficient overall electric signal transmission. “Vectoring” requires the Kabelverzweiger, the “cable brancher” or “cross connect” gray box by the side of the street, to be connected to a fiber optic line. Powerful computing is required at the phone company end to “precalculate” the “error suppression” for all transmissions on all DSL lines in the bundle simultaneously in real time. Maximum efficiency requires one central administration of all DSL lines, by one company in other words.

Telekom claims its vectoring only works when a single company controls all the lines at the gray box; “no other companies could then install their own technology there,” the F.A.Z. wrote, voicing the worry about fairness to companies in competition with Telekom. Fairness at the consumer end is also an issue, inter alia because vectoring requires modems specially modified for vectoring technology. Manufacturers such as AVM are already shipping only “vectoring-friendly” modems.

Just before the long Christmas break in 2012, Telekom submitted a request to the Networks Agency (Bundesnetzagentur, BNetzA) to modify BNetzA rules to allow its vectoring. After receiving the petition, the Bundesnetzagentur asked companies in the sector to amicably agree on solutions amongst themselves in order to reduce regulatory intervention to a minimum. Deutsche Telekom also tried to calm remonopolization fears by e.g. saying that if competitor companies had connected their own fiber optic lines to gray branching boxes, they could use its vectoring technology too. It also had some new last mile products it wanted to rent out to them.

On 15 May 2013 the Bundesnetzagentur issued a draft approving the partial deregulation—which still must be approved by the EU Commission and the regulatory authorities of the Member States which would have one month to review the proposal after BNetzA’s 24 Apr 2013 hearing—allowing Deutsche Telekom and its competitors to use Telekom’s vectoring while imposing conditions intended to mitigate the old monopoly’s sole control of branching boxes, though the items in this list indicate apparently not to mitigate possible data privacy repercussions caused by the central computational process managing the balancing out of every DSL line. These conditions included:

  • Around questionable boxes, at least one other provider must market a fast internet connection, such as television cable.
  • For Telekom to use vectoring at a box, more than one competitor must be connected to that box.
  • Telekom’s competitors in turn are required to use Telekom’s vectoring in all boxes to which they have connected. Does this give Telekom’s servers access to all those end consumers and their data?

Alternatively, non-“vectoring” options for speeding up DSL connections include so-called “bonding,” bundling in which incoming data packets are distributed through two of the usually four available lines of a DSL connection rather than just being sent through one. Routers that can bundle the unsorted incoming packets will have two DSL inputs instead of just one. There is also a “phantom bundling” option that can take two (four-line) DSL connections and use one line from each connection to create a third, “phantom” circuit that will suffice to “modulate up” DSL signals. It is claimed that Deutsche Telekom’s “vectoring” would be faster than these bundling alternatives and/or speed them up by balancing away the signal bleed between copper wires.

Some Germans are concerned that their internet service providers already are claiming internet speeds they don’t actually deliver or secretly throttling cheap connections; to address these concerns the Bundesnetzagentur studied German broadband quality in 2012 and posted a link to a “broadband test” and a “net neutrality test” (that can’t be run on a wireless network) for consumers on an “Initiative Netzqualität” website scheduled to be shut down in late June 2013. The net neutrality test requires Java. Both tests are for stationary internet connections; neither can be run on a mobile network. Speaking of mobile internet: now that Deutsche Telekom has received approval from US antitrust authorities to merge T-Mobile with competitor Metro PCS, they plan to use some of Deutsche Telekom’s new cash liquidity to build mobile infrastructure in the USA.

Kupferschmied

“Coppersmith” is a straightforward term in German, but surprisingly to me these craftsmen were also called brownsmiths in English because of the colors of the metals they worked.

According to London’s 1891 census, blacksmiths worked iron, redsmiths gold, whitesmiths tin, greensmiths lead, and brownsmiths copper or brass.

(COOP fer shmeed.)

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