A bezzle is the amount of assets built up between an act of embezzlement and later discovery. The gap can wax large, until a falling market exposes asset fakery. “Audits are penetrating and meticulous,” John Kenneth Galbraith writes in The Great Crash. “Commercial morality is enormously improved. The bezzle shrinks.”
And so to the Dagang wharves of Qingdao, China. Port authorities there have sealed off bonded metals warehouses after allegations that an onshore private trader pledged the same amount of copper and aluminium several times over for loans. The audit to determine whether, and how much, inventory has been double-counted will no doubt be penetrating and meticulous.
But in the short term, pricing will simply be painful and drastic. Spot copper has fallen 4.5 per cent on the London Metal Exchange over a week.