Getting Used to Life Without Food, Part 1

Wall Street, BP, Bio-Ethanol and the Death of Millions

Grain Storage Wikimedia Image

William Engdahl
Financial Sense

My late grandfather, a man of sturdy Norwegian-American farm stock, who later became a newspaper editor and political activist during the First World War, used to say, 'A man can get used to pretty much anything with time, except dying...and even that with some practice.' Well, as fate has it, it seems we, the vast majority of the human race, are about to test that adage in regard to the availability of our daily bread itself.

Food is one of those funny things it's hard to live without. We all tend to take it for granted that our local supermarket will continue to offer whatever we wish, in abundance, at affordable prices or nearly so. Yet living without adequate food is the growing prospect facing hundreds of millions, if not billions, of us over the coming years.

U.S. May Have `Problem' Meeting Surging Global Demand for Wheat, UN Says

Luzi Ann Javier
Bloomberg

The U.S., the world’s largest wheat shipper, may not have the logistical capacity to meet rising global demand after rains cut the quality of the harvest in Canada and Australia, the United Nations said.

As much as 8 million metric tons of Australia’s wheat harvest may be downgraded because of excessive rains and Canada’s output suffered from wet weather, pushing importers to seek alternative suppliers, said Abdolreza Abbassian, an economist at the UN Food & Agriculture Organization, citing government estimates.

“Right now, the only country that would have such supply to compensate for the downgrade of Australia and also Canada would be the U.S.,” Abbassian said in an interview. “The problem is that the capacity in the U.S. for terminals to absorb enough milling wheat for shipment, it’s just not there.”

Increased demand from the U.S. may lead to supply bottlenecks, delaying deliveries and intensifying competition among importers, said Park Yang Jin, business manager at Seoul- based Daehan Flour Mills Co., South Korea’s largest milling wheat importer. This would help sustain a rally in Chicago futures, he said. The U.S. accounts for 27 percent of global wheat trade.

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CHART OF THE DAY: Global Food Prices About To Break An All Time High

Gregory White
Business Insider

Inflation in emerging markets is hitting food prices hard, and now we have raw data from the UN to confirm.

The latest report from the UN Food and Agricultural Organization shows prices are back at 2008 levels, and have increased for five months in a row.

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Wholesale food prices soar as commodity costs rise

Despite the sharp rise in food prices, annual input price inflation - manufacturers' raw material costs - slowed to 8% from 8.7%

Julia Kollewe
Guardian

Soaring wheat and other commodity costs on world markets have pushed up UK wholesale food prices at the fastest rate in two years, official figures showed this morning.

Prices of food produced in the UK were 9.8% higher last month than a year ago, the biggest annual increase since October 2008, the Office for National Statistics reported. Imported food prices climbed 4.5% on the year, the fastest rate since October 2009.

Food prices are likely to be pushed even higher in coming months, with refined sugar surging to a record peak of $783.90 a tonne today.

Consumers are now starting to pay more for bread and meat as a result of sharp increases in the price of wheat and corn following poor harvests, the British Retail Consortium reported this week. Vegetable oil and margarine showed double-digit price hikes, while fruit showed its biggest price increases since April 2009. This helped push up food prices overall at 4.4%, the BRC said, the fastest rate in more than a year.

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Fed's Quantitative Easing to Starve Middle Class Americans

Dees Illustration

National Inflation Association

The Federal Reserve today announced that they will be implementing $600 billion in additional quantitative easing by the end of June 2011. The Federal Reserve will maintain its current policy of reinvesting principal payments from its security holdings and will expand its balance sheet by an additional $75 billion per month. The total announced balance sheet expansion was $100 billion higher than the public consensus of $500 billion. The Federal Reserve will continue to hold interest rates at record low levels of 0% to 0.25%, where they have been for nearly two years.

Quantitative easing is nothing more than the Federal Reserve printing money and creating inflation. This quantitative easing steals from the purchasing power of the incomes and savings of all Americans. While Americans are distracted by the mainstream media with daily debates by the Democrats and Republicans about taxes, U.S. taxes have almost no where near the effect on the lives of middle class Americans as does the Federal Reserve’s monetary policy and quantitative easing. Instead of millions of Americans attending “tea party” events in Washington with Glenn Beck and Sarah Palin, they should be marching outside of the Federal Reserve building in New York chanting “End the Fed”.

As highlighted in NIA’s new documentary ‘End of Liberty’, which just surpassed 170,000 views in three days, prices of nearly all agricultural commodities have been spiraling out of control in recent months just in anticipation of today’s quantitative easing announcement. In the past 60 days alone, cotton prices are up 54%, corn prices are up 29%, soybean prices are up 22%, orange juice prices are up 17%, and sugar prices are up 51%. Meanwhile, the Dow Jones has only gained 9%.

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Will food riots end the currency wars?

Food Shortages Sri Lanka: REUTERS image

Simon Black
Sovereign Man

In ancient Sanskrit, the name means “venerable island,” and the Arabs used to refer to it as “Serendib” for serendipity. Sri Lankans tend to agree– they find their small island of 20 million to be littered with good fortune, and many foreigners will concur.

Sri Lanka is perhaps most famous for its multi-decade civil war between government forces and the separatist Tamil group, which comprises about 10% of the island’s population.  The war was long and bloody with both sides carrying on vicious extermination campaigns involving large groups of civilians.

In 2009, the government of Sri Lanka finally declared an end to the war against the Tamils after successfully neutralizing the opposition’s leadership. Left without a cogent head, the Tamils capitulated and the entire country endeavored to rebuild its war-torn economy.

(enthused by the news, international investors bid Sri Lanka’s stock market up by over 100% in 2009; P/E valuations are now in the mid-20s and dividend yields around 1%… not exactly a screaming buy…)


For years, textiles and agriculture dominated the economy, particularly the production of rubber, cinnamon, tea, coffee, grains, and ganja– hey, it’s for medicinal purposes…

The country is now feeling the effects of significant inflation, however, no doubt the result of its policy to keep its currency cheap against the US dollar. Its exports may be strong, but Sri Lanka is importing inflation from the US courtesy of quantitative easing, and locals on the ground are feeling the pinch.

The Sri Lankan rupee has remained artificially suppressed against the dollar while agricultural commodity prices have been steadily rising in dollar terms. This makes food more expensive to locals in Sri Lanka.

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The Food Crisis of 2011

Addison Wiggin

Forbes

Every month, JPMorgan Chase dispatches a researcher to several supermarkets in Virginia. The task is to comparison shop for 31 items.

In July, the firm’s personal shopper came back with a stunning report: Wal-Mart had raised its prices 5.8% during the previous month. More significantly, its prices were approaching the levels of competing stores run by Kroger and Safeway. The “low-price leader” still holds its title, but by a noticeably slimmer margin.

Within this tale lie several lessons you can put to work to make money. And it’s best to get started soon, because if you think your grocery bill is already high, you ain’t seen nothing yet. In fact, we could be just one supply shock away from a full-blown food crisis that would make the price spikes of 2008 look like a happy memory.

Fact is,  the food crisis of 2008 never really went away.

True, food riots didn’t break out in poor countries during 2009 and warehouse stores like Costco didn’t ration 20-pound bags of rice…but supply remained tight.

Prices for basic foodstuffs like corn and wheat remain below their 2008 highs. But they’re a lot higher than they were before “the food crisis of 2008” took hold. Here’s what’s happened to some key farm commodities so far in 2010…

• Corn: Up 63%
• Wheat: Up 84%
• Soybeans: Up 24%
• Sugar: Up 55%

What was a slow and steady increase much of the year has gone into overdrive since late summer. Blame it on two factors…

• Aug. 5: A failed wheat harvest prompted Russia to ban grain exports through the end of the year. Later in August, the ban was extended through the end of 2011. Drought has wrecked the harvest in Russia, Ukraine and Kazakhstan – home to a quarter of world production.

• Oct. 8: For a second month running, the Agriculture Department cut its forecast for US corn production. The USDA predicts a 3.4% decline from last year. Damage done by Midwestern floods in June was made worse by hot, dry weather in August.

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Baby Boomers: Get Out of the Stock Market Now, the Rug is Being Pulled Out By Insiders

CNBC reports insider selling-to-buying ratio for top firms is a staggering 3177 to 1

Eric Blair

Activist Post

If you're a baby boomer who still believes in the stock market since the financial collapse of 2008, listen up. The floor of this Ponzi scheme is about to drop out, leaving you punching a clock for some time to come and holding an empty retirement bag for your effort.  The engineered crash is coming and the elite are jumping ship in droves -- you should join them and get out ASAP.

Stock market insider selling has now reached record highs.  The trend has been increasing for the last several years, but now the ratios are getting beyond ridiculous.  Earlier this month, Zero Hedge reported that the insider selling-to-buying ratio is 2341 to 1.  Tyler Durden wrote:

After last week saw an insider selling to buying ratio of 1,411 to 1, this week the ratio has nearly doubled, hitting a ridiculous 2,341 to 1. And while Wall Street's liars and CNBC's clowns will have you throw all your money into "leading" techs like Oracle and Google, insiders in these names sold a combined $200 million in stock in the last week alone.

Today, CNBC reported that the insider selling activity at some of the largest traded companies is at an all-time high.  This can't be a good sign of things to come.  The article points to the analysis of Alan Newman, a market strategist who tracks insider trading: "The overwhelming volume of sell transactions relative to buy transactions by company insiders over the last six months in key leading sectors of the market is the worst . . . ever."  CNBC reported that industry leaders have a staggering 3177 to 1 insider sell-to-buy ratio:

The largest companies in three of the most important leading sectors of the market have seen their executives classified as insiders sell more than 120 million shares of stock over the last six months. Top executives at these very same companies bought just 38,000 shares over that same time period, making for an eye-popping sell to buy ratio of 3,177 to one.

The grand total for the three sectors are “as awful as we have ever seen since we began doing this exercise years ago,” said Newman, who was ahead on such trends as the dangers of high-frequency trading and ETFs before the ‘Flash Crash’. “Clearly, insiders are seeing great value only in cash. Their actions speak volumes for the veracity for the current rally.”

Also quoted in the CNBC piece was Simon Baker, CEO of Baker Asset Management, who said the insider data “is good reason for considerable caution once the price action fades,” and “insiders normally buy early and sell early too. Longer term -- 12 months out -- it is more of a red flag.”

It's pretty difficult to excuse these levels of insider looting, but the experts are doing their best to claim that these poor executives (the titans of their industries) must take profits from stock sales because their salaries and bonuses have been cut.  Who do they think they are kidding?  Wall Street is still paying record salaries and bonuses, reportedly worth $144 billion (about a $1000 for every working American).  There also has been very little news of other industry executives taking pay cuts, as American companies are holding record levels of cash to the tune ofover a trillion dollars.  In fact, the flush-with-cash CEOs continue to blame the consumer class for joblessness.

Despite the mass exodus of executives from their own company's stock, the S&P continues to remain somewhat stable since gaining 16% from July lows.  Well, those gains seem somewhat pathetic since the value of the dollar -- measured against the human inflation indexes such as food and oil -- has plummeted.  Major food commodities are up over 50% since their July lows, while oil prices have climbed $10 to over $81/bbl, or around 14% for the same time period, with predictions to break the $100/bbl mark very shortly.  

Barely covering the cost of real inflationary measures is hardly success, especially with the current risks involved with being in the stock market.  These risks have only increased since the 2008 financial collapse that eventually caused the stock market to bottom out the mid-6000 range.  The market has been propped up with TARP funds and driven by scandalous front-running by Goldman Sachs and other large firms leading to 70% of stock purchases to be held for an average of 11 seconds. Consequently, these robo-trading programs have also been blamed for the freak "Flash Crash" in May where the stock market plummeted over 900 points in just minutes.

The charade is almost up, as the bad-but-getting-even-worse main street economy is not remotely factored in to Wall Street's casino calculations.  Truth is, most states are approaching bankruptcy, unemployment continues to worsen, and yet another major scandal is playing out with Fraudclosure Gate. Newman, the insider trading expert, says, “At the risk of sounding like a broken record, we expect a significant correction."

Unless you are an ultra-sophisticated trader with access to front-running software, it is time to follow these insiders out of the stock market and into real assets.  As the Fed announces plans for QE2, which the stock market actually views as a good thing, the elite seem to be flocking to precious metals, commodities, and large agricultural land purchases on the expectation of an even weaker dollar.  This appears to make gold, food, and oil pretty safe bets for the average bloke.

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