Donal's picture

    What does it mean when you don't find something to eat?



    I tuned into The Takeaway at 7:10, while waiting for the bus. The topic was food inflation, and the hook was whether common American breakfast foods would be luxuries in a few years. Coffee, orange juice, grains, sugar all have risen sharply. An analyst from the NY Times, Louise Story, noted that common measures of inflation exclude food and energy, which amused the radio hosts, but said that was something economists debate a lot. She discussed whether Bernanke's Quantitative Easing 2 was to blame for rising food prices, thus for the revolutions in Tunisia, Egypt and unrest throughout the Arab world. Bernanke denies that, claiming that a weaker dollar means a stronger Egyptian currency for buying food. Story blames, "a little bit global warming, a little bit economic recovery, a little bit politics." 

    I put John Michael Greer's article, Overcoming Systems Stupidity, in the news section yesterday. He notes that, "Plenty of factors feed into the surge in food costs, but one major factor is a string of failed harvests in some of the world’s important grain-producing regions, which in turn has been caused by increasingly unstable weather."

    The Takeaway links to a Fortune Finance article How inflation is turning breakfast into a luxury item :

    Here are the 6-month price percentage moves in some of the things people need to live with:

        * Cotton = +125.7%
        * Sugar = +82.6%
        * Corn = +59.0%
        * Coffee = +41.4%
        * Rice = +40.5%
        * Oats = +36.6%
        * Copper = +36.1%
        * Lumber = +33.8%
        * Oil = +25.1%



    In the next Takeaway segment, one Arab analyst, Brookings fellow Tarik Yousef, said the dissatisfactions with Mubarak's regime preceded the food scarcity. Egypt, he says has underperformed for twenty years in jobs, education, infrastructure, and health issues. Tarik used the magic word, "Infrastructure," but I really perked up when Max Rodenbeck, Middle East correspondent for The Economist, said that in many ways the economic pressures are affecting the more well-to-do Pro-Mubarak crowd more than the anti-Mubarak protesters.  "One of the things that the government managed to do in the last ten days of unrest, is to paint a picture of the protesters being the reason behind economic problems." It certainly sounds like those thugs are from an Egyptian version of our own Tea Party.

    Both analysts agreed that Middle East governments will stockpile food and fuel to head off future revolts, which will drive up Western prices in a manner that reminds me of Jeffrey Brown's Export Land Model. Brown predicted that oil depletion effect would precede the actual peak of production as oil-producing countries reserved oil for their immediate future.

    Later, reporters interviewed a woman in the street, who provided the title of my post, "He's been there for thirty years. Since I was fifteen, so we are used to him. But it's only the last ten years that are really collapsing. This generation, the thirty year generation doesn't know what is famine, what does it mean when you don't find something to eat? They don't know it."

    I put Stuart Staniford's Early Warning article, Misflation, in the news section a few days ago. Staniford feels that we are seeing both commodity inflation - because demand for commodities exceeds supply - and labor deflation - because supply of labor exceeds demand. In America, we have always paid a lot for certain foods because we also pay for processing, handling, inspecting, packaging, and a lot of advertising. So while the commodity prices of the raw foodstuffs are going up globally, all those labor prices are being forced down locally by vendors like WalMart. Buying generic or store brands even forces down the cost of advertising.

    So, on the one hand, we have oil prices clearing their throats as though thinking about attempting a new run at a peak, and we have food commodities higher than any time in the last thirty years.  And yet, we have prices of finished goods very weak.

    It seems like the theme is the the world has not quite enough resources to run society as currently configured, but overcapacity in the ability to turn resources into finished goods (relative to subdued final demand, anyway).  Hence we have inflation in commodities, but deflation in finished goods.


    One might also call it Mixflation, or Camoflation, as I did, or perhaps Overpopuflation, but discussion is finally becoming more evident in the general media.

    Comments

    Donal, do you think this is all just a temporary effect of the Fed's liquidity program?  The Fed pumps money into the banking system.  Banks want returns.  They don't want to lend the dollars to unemployed Americans, though.  So they're investing in emerging markets companies and sovereign debt.  Emerging markets tend to be commodities producers, so that's a lot of money going into the production of commodities and the assets are all getting bid up.  Eventually, somebody will borrow too much money to try and take advantage of this, their scheme will collapse and prices will come back down to Earth.  Oh, and when that happens it will suck to live in an emerging economy.


    It might be a confluence of QE2, oil prices and and a particularly unsuccessful year of farming. But while QE2 may end, and oil prices may decline, climate change will stay with us for a long time.


    Krugman blames climate:

    So what’s behind the price spike? American right-wingers (and the Chinese) blame easy-money policies at the Federal Reserve, with at least one commentator declaring that there is “blood on Bernanke’s hands.” Meanwhile, President Nicolas Sarkozy of France blames speculators, accusing them of “extortion and pillaging.” But the evidence tells a different, much more ominous story. While several factors have contributed to soaring food prices, what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate — which means that the current food price surge may be just the beginning.

    At Automatic Earth, Ilargi blames speculation, or Zombie Money:

    Food prices are rising ... because we have elected to kill off the principles of our own western economic systems, which were once supposed to be based on free market ideas, that dictate that success is rewarded and failure punished. ...

    The consequence is that the zombie money is now allowed to drive up food prices to levels which make sure that millions of people around the world will go hungry, and will revolt as a result of that. Blankfein, Dimon et al have long since realized that they can't maintain their velvet “God's work" thrones just by robbing Americans of all they're worth. Their losses are far too great. They need to have access to everyone's wealth all over the world.

    And since oil and food are traded on international commodity markets, and they have gotten hold of all the money America is worth, and then some, they can play these markets as much as they want, whether it’s wheat or natural gas or gold. People like to claim that gold will rise as the US dollar becomes worth less, but they forget that it’s zombie money that has been buying gold, and that has thus lifted gold prices. Once daylight comes and the zombies are gone, there's only one way left to go for gold prices too.


    This is a simple cut-n-paste from wikipedia, but it's the answer to your question you don't want to hear. Bu$h had some forewarning about the financial collapse and possibilities that could happen coincidentially so he took precausions in case things when Tango Uniform before he left office.

    Posse Comitatus Act

    The statute generally prohibits federal military personnel and units of the National Guard under federal authority from acting in a law enforcement capacity within the United States, except where expressly authorized by the Constitution or Congress.

    Homeland security

    On October 1, 2008, the US Army announced that the 3rd Infantry Division’s 1st Brigade Combat Team (BCT) will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command (NORTHCOM), as an on-call federal response force for natural or man-made emergencies and disasters, including terrorist attacks.

    This marks the first time an active U.S. Army unit will be given a dedicated assignment to NORTHCOM, where it is stated they may be "called upon to help with civil unrest and crowd control or to deal with potentially horrific scenarios such as massive poisoning and chaos in response to a chemical, biological, radiological, nuclear or high-yield explosive (CBRNE) attack." These soldiers will also learn how to use non-lethal weapons designed to "subdue unruly or dangerous individuals" without killing them, and also includes equipment to stand up a hasty road block; spike strips for slowing, stopping or controlling traffic; shields and batons; and beanbag bullets.[9] However, the "non-lethal crowd control package [...] is intended for use on deployments to the war zone, not in the U.S. [...]".[9]


    For those not familiar with the lingo, I thought I'd provide the following:

    Tango Uniform = Tits Up = broken and cannot be fixed


    If the public gets restless whether over gas prices or food prices and/or shortages of either or both, the Federal government now has the authority to send in the military troops to keep order using battle-proven equipment meant for nulifying military forces. Our tax dollars hard at work, perfected on the battlefield so as to yield instaneous results against the homefront. We may be transitioning from a Tango Uniform situation to a FUBAR one depending on what Wall Street and the GOPer's in Congress do.


    You quote The Economist's Max Rodenbeck. Totally OT, but his now-decade-old book, Cairo: The City Victorious, is probably the definitive historical portrait of a city that he loves and considers his home. I dug out my copy as the current unpleasantness erupted. Very readable.


    Shouldn’t WE the People become familiar with what our rights are under Marshall law? 

    I prefer to know, that the Private First Class, knows what the heck he’s doing and that he’s handling the law aright.

    But I guess “the man with the gun over there” Rules; so don’t “step out of line”.

    What’s the line that I shouldn’t step out of?     

    http://www.youtube.com/watch?v=f5M_Ttstbgs 

    Thanks Donal for this link  ....I put John Michael Greer's article, Overcoming Systems Stupidity  

    Excerpts 

    Lao Tsu’s Tao Te Ching. ....."The Book of Integral Process" is a good translation of the title.
    Chapter I: A process as described is not the process as it exists;
    The terms used to describe it are not the things they describe.
    That which evades description is the wholeness of the system;
    The act of description is merely a listing of its parts....... 
    Without intentionality, you can experience the whole system;......
    With intentionality, you can comprehend its effects…….”


    Latest Comments