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1 freetoken  Wed, Feb 9, 2011 10:53:03pm

This meme, which didn't start with Schultz - he's just riding it, that somehow it is all the speculators' fault (for high food prices, and high oil prices), is just wrong, and proven so by looking at long term production of various commodities.

The FAO, which tracks food supplies around the world, has shown that dangerously low stocks existed when the last food spike hit, and now again, while the food stocks are not in quite as bad supply as a couple of years ago, food stocks look to be in a precarious position.

Similarly with oil. Petroleum production has been on essentially a plateau now for 7 years, while world population continues to grow and even more importantly the expansion of industrialization and vehicle use in Asia exploded.

Schultz and others like him who want to blame speculators for all the problems are just too lazy (or too boughten off) to look into the fundamentals.

2 Bob Levin  Wed, Feb 9, 2011 11:15:22pm

I don't think any of this is accurate. Wall Street invests in anything and everything.

The reason food prices are rising is the same reason that oil prices rise, scarcity. But there didn't have to be scarcity if these nations put some resources into growing food in the same way that the US could have put resources towards alternative energy. Also, if these nations were growing the food they needed, that would have affected world markets, and Wall Street wouldn't have found commodities so appealing.

It doesn't take a rocket scientist to know that if your country is importing most of its food then the population is in a precarious position. Weather, crop disease, any number of factors could cause the nation to go hungry. This phenomenon shows up in countries that are run by monarchs or tyrants. A perfect example of this is Liberia under Charles Taylor. Egypt practically invented modern agriculture--how can they get into a position importing 80% of its wheat?

There might be more similarity between these events and the Oklahoma dust bowl, where farmers knew that they weren't taking care of the soil, which eventually could not produce crops. This crisis is the result of the same bad decisions made year after year.

3 Bob Levin  Wed, Feb 9, 2011 11:16:30pm

re: #1 freetoken

Oh that's just scary. We were typing the same thing at the same time.

4 Bob Levin  Wed, Feb 9, 2011 11:18:11pm

re: #1 freetoken

Oh, and by the way, brilliant comment. ;-)

5 freetoken  Wed, Feb 9, 2011 11:32:11pm

re: #4 Bob Levin

Thanks.

There was even an important news story today that really bears on all of this:

Grain Prices Rally Toward 2008 Records on Shrinking World Supply

Corn, wheat and soybean futures jumped to the highest since 2008 after a U.S. government report showed smaller crops and rising demand are eroding global inventories as food prices surge.

[...]

I'm surprised at how quickly pundits dismiss supply and demand.

Egypt has had quite the population boom, and that has cause a huge increase in demand for food there. Without an ability to equivalently increase their food production they have had to rely on imports. And, that has been true for most of these nations in arid countries.

6 Bob Levin  Thu, Feb 10, 2011 12:50:29am

re: #5 freetoken

There you go. That's another factor, population increases.

I guess supply and demand diminishes their genius. Too obvious. I think we can invent a word here: Beckian. If you're listening to something and you begin thinking that a blackboard might help you follow the explanation, you're hearing something Beckian.


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