{"id":196634,"date":"2008-04-07T16:35:00","date_gmt":"2008-04-07T21:35:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/04\/07\/world-food-crisis-approaching\/"},"modified":"2008-04-07T16:35:00","modified_gmt":"2008-04-07T21:35:00","slug":"world-food-crisis-approaching","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/04\/07\/world-food-crisis-approaching\/","title":{"rendered":"World Food Crisis Approaching"},"content":{"rendered":"<p>Paul Krugman notes that <a href=\"http:\/\/www.nytimes.com\/2008\/04\/07\/opinion\/07krugman.html\">we are in the middle of a major food crisis<\/a>, with the prices of staples such as wheat, corn, and rice skyrocketing, and he blames,  along with weather and energy prices,  biofuels.<\/p>\n<p>As he so eloquently states, &#8220;People are starving in Africa so that American politicians can court votes in farm states&#8221;.<\/p>\n<p>It&#8217;s a nice sound bite, but it is incomplete, which may be an unfortunate fact of life when one has only about 800 words to put forth an idea.<\/p>\n<p>Simply put, there is much more to this problem than simply the currently minuscule demand for feed stock for bio-fuels.<\/p>\n<p>First, he misses the very real possibility of <a href=\"http:\/\/www.guardian.co.uk\/environment\/2008\/apr\/06\/food.foodanddrink\">worries regarding social unrest<\/a>, possibly to the level of failed nation states from food riots, that may very result from this, which may be far more lethal the direct starvation deaths.<sup>*<\/sup><\/p>\n<p>Major exporters, such as China, India, Egypt, Vietnam and Cambodia have introduced export restrictions to forestall this, which, of course, worsens the problem for net food importers.<\/p>\n<p>More interisting is a <a href=\"http:\/\/www.bloomberg.com\/apps\/news?pid=20601087&amp;sid=a0fU0S8MSK64&amp;refer=home\">Bloomberg article showing the problems in the market being akin to the current credit crisis<\/a>.   The reporting is mind boggling simple here telling , &#8220;<span style=\"font-style: italic;\">Bad countries interfering with the free market by regulating their exports so that poor people don&#8217;t starve<\/span>&#8220;, story.<\/p>\n<p>The reality, and it can be teased out from the article, is that there is a lot of arbitrage generating volatility.   The quotes are from rice traders, and they are wringing their hands.  Let&#8217;s look at the various non-producing players in the market that were listed:<\/p>\n<ul>\n<li>Pfaffikon, Switzerland-based Mother Earth Investments AG<\/li>\n<li>Morgan Stanley Global Wealth Management<\/li>\n<li>Singapore-based rice broker Hermes Investments Pte Ltd. <\/li>\n<li>Padiberas Nasional Bhd.<\/li>\n<li>Global Commodities Ltd. in Adelaide, Australia<\/li>\n<li>Diapason Commodities Management SA<\/li>\n<\/ul>\n<p>To the best of my knowledge, ot one of these companies owns a farm, nor processes the grain, they make their by extracting fees on trades, and while that can be useful to buy a contract for future delivery, the reckless Anglo-Saxon trading model that is at the core of the current credit crunch, where numerous people buy and sell contracts to generate trade profits is making things worse.<\/p>\n<p>In fact, until we move back to depression era regulators to reign in this activity, it will continue to get worse.<\/p>\n<p><sup>*<\/sup><span style=\"font-size:85%;\">Yes, I&#8217;m looking at this cold blooded construct, and realizing that it means for many people the end of the world as they know it.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Paul Krugman notes that we are in the middle of a major food crisis, with the prices of staples such as wheat, corn, and rice skyrocketing, and he blames, along with weather and energy prices, biofuels. As he so eloquently states, &#8220;People are starving in Africa so that American politicians can court votes in farm &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[973,1004,1012],"tags":[],"class_list":["post-196634","post","type-post","status-publish","format-standard","hentry","category-economy","category-finance","category-food"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196634"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=196634"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/196634\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=196634"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=196634"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=196634"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}