By MIKE WHITNEY /
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 ex****ts.
Wheat, corn and soy beans 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 pu****ng prices
into the stratosphere. The UN is calling the global food crisis 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.
The US is ex****ting 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 ****t 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 ****ging $120 per barrel when it should be in
the $70 to $80 range.
According to Tim Evans, energy analyst at Citigroup in New York,
=93There=92s no supply-demand deficit". None. In fact suppliers are
expecting an oil surplus by the end of this year.
"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=92s 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?
=46rom the Wa****ngton Times:
"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 re****ted 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
****pping it to relatives in the Philippines, which is suffering a
severe shortage that is leaving many people hungry."
(Patrice Hill, Wa****ngton Times)
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.
"A hearing Tuesday in Wa****ngton before the Commodity Futures Trading
Commission starts a new round of scrutiny into the popularity of
agricultural futures, 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 pu****ng
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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Mike Whitney lives in Wa****ngton state. He can be reached at:
fergiewhitney@[EMAIL PROTECTED]
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