Global Famine? Blame the Fed

[Margo37]

http://www.informationclearinghouse.info/article19809.htm

Global Famine? Blame the Fed******** By Mike Whitney
*
25/04/08 "ICH" -- - The stakes couldn't be higher for Ben Bernanke. If*the Fed chief*decides to*lower rates at the end of April, he*could be*condemning millions of people to an agonizing death*by starvation. The situation is*that*serious; there's no*room for error. Food riots have broken out*across the globe destabilizing* large parts of the developing world.*China is experiencing double-digit inflation. Indonesia, Vietnam and India*have imposed controls over rice exports. Wheat, corn and soya are at record highs and threatening to go higher still. Commodities are*up across the board. The World Food Program*is warning of*widespread famine if the West doesn't provide emergency humanitarian relief.*The situation is dire.*Venezuelan President Hugo Chavez summed it up like this, "It is a massacre of the world's poor. The problem is not the production of food. It is the economic, social and political model of the world. The capitalist model is in crisis."**
*
Right on, Hugo. There is no shortage of food; it's just the prices that are making food*unaffordable.*Bernanke's*"weak*dollar"*policy*has ignited*a wave of speculation in commodities which is pushing prices into the stratosphere. The UN*is calling*the global food crisis**it a "silent tsunami", but its*more like*a flood; the world is awash in increasingly worthless dollars that are making food and raw materials more*expensive.**Foreign central banks and investors*presently hold*$6 trillion in dollars and dollar-backed assets, so when the dollar starts to slide, the*pain radiates*through entire*economies. This is especially true in countries*where*the currency is*pegged to the dollar. That's why most of the Gulf States are* experiencing runaway inflation.*This doesn't mean*that oil depletion, biofuel production, over-population, and*giant agribusinesses*don't add to the problem. They do. But the catalyst is the Fed's monetary policies; that's the*domino that*puts*the others in motion. Here's Otto Spengler's*summary in his recent article in Asia Times, "Rice, Death and the Dollar":**
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* "The global food crisis is a monetary phenomenon, an unintended consequence of America's attempt to inflate its way out of a market failure. There are long-term reasons for food prices to rise, but the unprecedented spike in grain prices during the past year stems from the weakness of the American dollar. Washington's economic misery now threatens to become a geopolitical catastrophe....The link between the declining parity of the US unit and the rising price of commodities, including oil as well as rice and other wares, is indisputable.
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*Never before in history has hunger become a global threat in a period of plentiful harvests. Global rice production will hit a record of 423 million tons in the 2007-2008 crop year, enough to satisfy global demand. The trouble is that only 7% of the world's rice supply is exported, because local demand is met by local production. Any significant increase in rice stockpiles cuts deeply into available supply for export, leading to a spike in prices. Because such a small proportion of the global rice supply trades, the monetary shock from the weak dollar was sufficient to more than double its price." ("Rice, death and the dollar", By Otto Spengler, Asia Times)
*
** The US is exporting its inflation by cheapening its currency. Now a field worker in Haiti who earns $2 a day, and spends all of that to feed his family, has to earn twice that amount or eat half as much. That's not a choice a parent*wants*to make. Its no wonder that six people were killed Port au Prince in the recent food riots. People go crazy when they can't feed their kids.

* Food and energy*prices are sucking the life out of the global economy. Foreign banks and pension funds are trying to protect their investments by diverting*dollars into things that will retain their value. That's why oil*is*nudging $120 per barrel when it should be in the $70 to $80 range.
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According to*Tim Evans, energy analyst at Citigroup in New York, “There’s no supply-demand deficit". None. In fact*suppliers are expecting an*oil surplus by the*end of this year.
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** "The case for lower oil prices is straightforward: The prospect of a deep U.S. recession or even a marked period of slower economic growth in the world’s top energy consumer making a dent in energy consumption. Year to date, oil demand in the U.S. is down 1.9% compared with the same period in 2007, and high prices and a weak economy should knock down U.S. oil consumption by 90,000 barrels a day this year, according to the federal Energy Information Administration." ("Bears Baffled by Oil Highs" gregory Meyer, Wall Street Journal)
*
There's no oil shortage; that's another ruse.*Speculators are*simply driving up the price of oil*to hedge their bets*on the falling dollar. What else can they do; put them in the frozen bond market, or the sinking stock market, or the collapsing housing market? The Fed has gummed up the entire financial system with its low-interest credit scam; now it's on to commodities where the real pain is just beginning to be felt. What a mess! *
* This is*what happens when there's too many dollars sloshing around the system; they all need a place to rest, and when they do, they*create equity bubbles. Sound familiar?*Indeed. This is Greenspan's legacy*in a nutshell; the dark*specter of Maestro will continue to haunt the world until all the hyper-inflated asset-classes (real estate, bonds, stocks, commodities)*return to earth and all the red ink is mopped up. That'll take time, but Bernanke could make things a lot easier if he accepted*some responsibility for the current turmoil*and raised*rates by 25 basis points. That would show speculators that the Fed was*serious about*defending the currency which would*send*the commodities bubble*crashing to earth.*Prices would go down overnight; guaranteed.
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*But Bernanke*won't raise*rates because he doesn't really*give a hoot*about the people in Cameroon who have to*scavenge through garbage-dumps*for a few morsels to keep their families alive. Nor does he care about the*average American working-stiff who*gets cardiac-arrest*every time he*pulls up to the gas pump. What matters to Bernanke is making sure that his fat-cat*buddies in the banking establishment get a steady stream of low interest loot so they can paper-over their bad investments and*ward off*bankruptcy for another day or two. Its a joke; it was the investment banks*that started this downward spiral with their rotten mortgage-backed securities and other debt-exotica. Still, in Bernanke's mind, they are the only ones who really count.
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And don't expect Bush to step in and save the day either. The "Decider" still believes in the unrestricted activity of the free market; especially when his crooked friends*can*make a buck on the deal.*
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* From the Washington Times:
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******** "Farmers and food executives appealed fruitlessly to federal officials yesterday for regulatory steps to limit speculative buying that is helping to drive food prices higher. Meanwhile, some Americans are stocking up on staples such as rice, flour and oil in anticipation of high prices and shortages spreading from overseas. Costco and other grocery stores in California reported a run on rice, which has forced them to set limits on how many sacks of rice each customer can buy. Filipinos in Canada are scooping up all the rice they can find and shipping it to relatives in the Philippines, which is suffering a severe shortage that is leaving many people hungry." (Patrice Hill, Washington Times)
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The Bush administration knows*there's hanky-panky*going on, but*they just look the other way.*It's Enron*redux, where*Ken Lay*Inc. scalped the public with utter impunity while regulators sat on the sidelines applauding. Great.*Now its*the Commodity Futures Trading Commission (CFTC) turn; they're*taking a hands-off approach*so Wall Street sharpies make a fortune jacking up the price of everything from soda crackers to toilet bowls.**
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** "A hearing Tuesday in Washington before the Commodity Futures Trading Commission starts a new round of scrutiny into the popularity of agricultural futures, a once a quieter arena that for years was dominated largely by big producers and consumers of crops and their banks trying to manage price risks. The commission's official stance and that of many of the exchanges, however, is likely to disappoint many consumer groups. The CFTC's economist plans to state at the hearing that the agency doesn't believe financial investors are driving up grain prices. Some grain buyers say speculators' big bets on relatively small grain exchanges, especially recently, are pushing up prices for ordinary consumers.*("Call Goes Out to Rein In Grain Speculators", Ann Davis)


"The agency doesn't believe financial investors are driving up grain prices"?!?
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Prices have doubled, people are starving, and the Bush troop is still parroting the same worn party-mantra. Its maddening.
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The*US has been gaming the system for decades; sucking up two-thirds of the world's*capital*to expand its cache of*Cadillac Escalades and flat-screen TVs; giving nothing back in return except mortgage-backed junk, cluster bombs,*and crummy green paper.*Nothing*changes;*it*only*gets*worse.*But this is different. The world is now facing the very real prospect of*"completely avoidable"*famine*because twelve doddering old*banksters at the Federal Reserve would rather bailout their*sketchy friends and*preserve their spot*at the top of the economic food-chain then save the lives of* starving women and children.*Bernanke now has an opportunity to*do more damage*than Bush with one swipe of the pen. If he cut rates; the dollar will*fall, commodities will*spike, and people will starve. It's as simple as that.

(I couldn't find this posted elsewhere)

 

[josephadel_3]

Brilliant post. I don't understand the use of asterisks as quotation marks, though. You should condense that and send it to your local newspaper editor.

 

[AceNZ]

Food shortages are real

There is no shortage of food; it's just the prices that are making food*unaffordable.*Bernanke's*"weak*dollar"*policy*has ignited*a wave of speculation in commodities which is pushing prices into the stratosphere.

While the Fed's policies, and the resulting inflation, have certainly contributed to price increases for food, they are NOT the primary factor.

This is a blatant attempt to attack speculation as the cause, when it's not even close to being the real problem. In fact, it is exactly the attitude above that will end up causing people to die from starvation -- by either intentionally, or from sheer stupidity, pointing fingers in the wrong direction.

There IS a food shortage. Just look around at the industry reports if you don't believe me. Crop failures in Australia, late planting and low yields in India, wheat rust crop destruction in Africa, the loss of more than 30% of planting acreage over the last 10 yrs, etc, etc. Combine that with government interventions in the form of things like subsidizing biofuels, giving food to poor countries (which puts local farmers out of business), and you have the real story. Ignoring the real causes will only compound the problem in the long run.

Also, when speculation dominates a market, it goes into contango (higher future prices than spot). Although there are a couple of exceptions now, almost all of the commodity markets are still in backwardation (higher spot prices than futures). That CLEARLY shows the markets are dominated by real supply-and-demand and not speculation.

 

[Margo37]

I don't understand the use of asterisks as quotation marks, though. You should condense that and send it to your local newspaper editor.

I don't understand those either nor the red highlights, they didn't appear in the original link or on my copy/paste, they only appeared when posted. Seeing the post I thought I could edit them out but so many and possibly no one would even read it. Invisible HTML at the source? Never happened before, I ran it thru a program or two and they still don't come out.
Sorry about that, best to use the link at top.

 

[Zippyjuan]

Due to drought, Austrailia lost more than one fourth of their food production. Growing economies (and populations) in China and India have increased the demand for more food items beyond local rice and vegetables to meats and dariry and other items. In the US and UK, subsidies for production of ethanol from corn has driven up the prices of corn and caused other food stocks to be replaced by corn since farmers make more money off it- reducing their supplies like wheat and soy. Livestock feed is mostly corn and since their feed is up, the prices for meat and dairy items are also up. Oil price rises have increased costs from fertilizer (made from petroleum products) to the costs of tractors planting and harvesting the foods to the costs of transporting them to market. None of these has anything to do with any Fed actions.
http://www.nytimes.com/2007/12/18/business/worldbusiness/18supply.html?ref=worldbusiness

World Food Supply Is Shrinking, U.N. Agency Warns

By ELISABETH ROSENTHAL
Published: December 18, 2007
ROME — In an “unforeseen and unprecedented” shift, the world food supply is dwindling rapidly and food prices are soaring to historic levels, the United Nations’ top food and agriculture official warned Monday.

The changes created “a very serious risk that fewer people will be able to get food,” particularly in the developing world, said Jacques Diouf, head of the United Nations Food and Agriculture Organization.

The agency’s food price index rose by more than 40 percent this year, compared with 9 percent the year before — a rate that was already unacceptable, Mr. Diouf said. New figures show that the total cost of food imported by the neediest countries rose 25 percent in the last year, to $107 million.

At the same time, reserves of cereals are severely depleted, the agency’s records show. World wheat stores declined 11 percent this year, to the lowest level since 1980. That corresponds with 12 weeks of the world’s total consumption, much less than the average of 18 weeks’ consumption, in storage during the 2000-2005 period.

There are only 8 weeks of corn left, down from 11 weeks in the same five-year period.

Prices of wheat and oilseeds are at record highs, Mr. Diouf said Monday. Wheat prices have risen by $130 a ton, or 52 percent, since a year ago. United States wheat futures broke $10 a bushel for the first time Monday, a psychological milestone.

Mr. Diouf said the crisis was a result of a confluence of recent supply and demand factors that, he said, were here to stay.

On the supply side, the early effects of global warming have decreased crop yields in some crucial places. So has a shift away from farming for human consumption to crops for biofuels and cattle feed. Demand for grain is increasing as the world’s population grows and more is diverted to feed cattle as the population of upwardly mobile meat-eaters grows.

“We’re concerned that we are facing the perfect storm for the world’s hungry,” said Josette Sheeran, executive director of the World Food Program, in a telephone interview. She said that her agency’s food procurement costs had gone up 50 percent in the last five years and that some poor people were being “priced out of the food market.”

To make matters worse, high oil prices have doubled shipping costs in the last year, putting stress on poor nations that need to import food and the humanitarian agencies that provide it.

Climate specialists say the poor’s vulnerability will only increase.

“If there’s a significant change in climate in one of our high production areas, if there is a disease that affects a major crop, we are in a very risky situation,” said S. Mark Howden of the Commonwealth Scientific and Industrial Research organization in Canberra, Australia. Already “unusual weather events,” linked to climate change — like drought, floods and storms — have decreased production in important exporting countries like Australia and Ukraine, Mr. Diouf said. In southern Australia, a significant reduction in rainfall in the last few years led some farmers to sell their land and move to Tasmania, where water is more reliable, said Mr. Howden, one of the authors of a recent series of papers on climate change and the world food supply, published in the proceedings of the National Academy of Sciences.

“In the U.S., Australia and Europe, there’s a very substantial capacity to adapt to the effects on food — with money, technology, research and development. In the developing world, there isn’t.”

Ms. Sheeran said that on a recent trip to Mali she was told that food stocks were at an all-time low. The World Food Program feeds millions of children in schools and people with H.I.V. and AIDS. Poor nutrition in these groups increases the risk of serious disease and death.

Mr. Diouf suggested that all countries and international agencies would have to “revisit” agricultural and aid policies they adopted “in a different economic environment.” For example, with food and oil prices approaching records, it may not make sense to send food aid to poorer countries, but instead to focus on helping farmers grow food locally.

The food organization plans to start a new initiative that will offer farmers in poor countries vouchers that can be redeemed for seeds and fertilizer and will try to help them adapt to climate change.