Infinite Unknown

- Reality Check: The Dow Jones Industrial Average vs. Bananas (Sovereign Man, March 8, 2013):

Reporting from Santiago, Chile

The Dow Jones Industrial Average, one of the key benchmarks of the US stock market, has soundly surpassed its all-time high. And most of the investing world is toasting their collective success and celebrating the recovery.

It’s a funny thing, really. Most investors only think in terms of ‘nominal’ numbers, i.e. Dow 14,000+ is 40% higher than Dow 10,000 (back in November 2009). But few think in terms of ‘real’ numbers… inflation-adjusted averages.

Everyone knows that inflation exists. We can all look back on prices from the past and realize instantly how much more expensive things have become. Conversely, though, most people don’t think about the stock market like this.

The reality is, though, that when you adjust for inflation, the Dow is well below its highs from over a decade ago. Continue reading »

Tags: Bananas, Beef, Dow Jones, Economy, Food, Food Prices, Global News, Inflation, Stock Market

- The Reflation Party Is Ending As China Withdraws Market Liquidity For First Time In Eight Months (ZeroHedge, Feb 19, 2013):

Since institutional memories are short, it is time to remind readers that it was the threat, and subsequent reality, of China overheating in the spring and summer of 2011 (when record high food prices sent the entire North African region in a state of coordinated revolt and gradually moved far east), when even the Great firewall of China could not block news of frequent break outs of localized violence from hungry and angry mobs, that halted and broke the spine of the great reflation trade then (and yes, 2013 has so far been a carbon copy replica of 2011 as we summarized in “It’s Deja Vu, All Over Again: This Time Is… Completely The Same“).

Furthermore, as only Zero Hedge forecast back in mid-2012, when ever other commentator was shouting over the rooftops that an RRR or interest rate cut out of Beijing was imminent, the PBOC would be the last to stimulate the market with monetary easing as it was well-aware that an entire developed world reflating at the same time would hit none other than China the fastest as the hot money flew straight into Shanghai. Just as it did in 2011. So instead China proceeded to engage in a series of daily reverse repos, or ultra-short term liquidity injections that prevented the advent of wholesale inflation: after all the Fed, the BOJ, the ECB and soon, the BOE, were doing it for them. And the last thing the country with the highest allotment of CPI, or book inflation, to food and energy can afford, is to let foreign central banks dictate its price level. After all, it has more than enough of its own.

Well, the Chinese New Year celebration is now over, the Year of the Snake is here, and those following the Shanghai Composite have lots to hiss about, as two out of two trading days have printed in the red. But a far bigger concern to not only those long the SHCOMP, but the “Great Reflation Trade – ver. 2013″, is that just as two years ago, China appears set to pull out first, as once again inflation rears its ugly head. And where the PBOC goes, everyone else grudgingly has to follow: after all without China there is no marginal growth driver to the world economy.

End result: China’s reverse repos, or liquidity providing operations, have ended after month of daily injections, and the first outright repo, or liquidity draining operation, just took place after eight months of dormancy.

From the WSJ:

Chinese authorities took a step to ease potential inflationary pressures Tuesday by using a key mechanism for the first time in eight months.

The move by the central bank to withdraw cash from the banking system is a reversal after months of pumping cash in. That cash flood was meant to reduce borrowing costs for businesses as the economy slowed last year—but recent data has shown growth picking up, along with the main determinants of inflation: housing and food prices.

Continue reading »

Tags: Bank of China, Bank of England, Bank of Japan, Central Bank, China, ECB, Economy, Fed, Federal Reserve, Food, Food Prices, Global News, Government, Inflation, Politics, Yuan

- A Louisiana Grocery Store is Forced to Raise Milk Prices by State Regulators (Liberty Blitzkrieg, Jan 27, 2013):

You might have to read this post twice to make sure your eyes didn’t deceive you.  This article is actually completely different from my recent pieces on stealth inflation, but is even more infuriating.  In this case, a grocery store called Fresh Markets decided to sell milk at a bargain basement price as part of a promotion, yet the state has deemed the price “too low.” As a result, the chain is being forced to raise the price.  Yep, at a time when millions are struggling every day to make ends meet, this is what the state of Louisiana has decided it a priority that the cost of milk is higher for consumers in the state.  This is exactly what happens when bureaucrats exert to much influence in our daily lives.

From the Daily Caller: Continue reading »

Tags: Economy, Food, Food Prices, Government, Milk, Politics, U.S.

Farmland is a good investment … if you know the future.

If you had invested in a nice organic farm in Fukushima Pref. your investment is now worthless.

Considering Agenda 21 and the plans of Big Agribusiness you do not want to invest heavily in farmland at the wrong place.

Never put all your eggs in one basket (unless you exactly know the future).

Food, water, gold, silver and survival gear come first.

If you then can still afford a remote farm without going into debt, then farmland is indeed a good investment.

- The Smartest Investment Of The Decade (ZeroHedge, Nov 12, 2012):

Here’s something crazy to think about.

Roughly 200,000 people were born today. That’s net world population growth, births minus deaths.

Each one of them constitutes a new mouth to feed. And when they come of age, those 200,000 people will consume, conservatively, about 1,250 Calories per day. Collectively, that’s 91.25 billion Calories per year for the entire 200,000 people that were born today.

Where will they get that food from?

Continue reading »

Tags: Environment, Food, Food Prices, Food shortages, Global News

Flashback:

- USDA: No strategic grain reserves … they sold them!

- Global Food Reserves Have Reached Their Lowest Level In Almost 40 Years (The Truth, Oct 16, 2012):

For six of the last eleven years the world has consumed more food than it has produced.  This year, drought in the United States and elsewhere has put even more pressure on global food supplies than usual.  As a result, global food reserves have reached their lowest level in almost 40 years.  Experts are warning that if next summer is similar to this summer that it could be enough to trigger a major global food crisis.  At this point, the world is literally living from one year to the next.  There is simply not much of a buffer left.  In the western world, the first place where we are going to notice the impact of this crisis is in the price of food.  It is being projected that overall food prices will rise between 5 and 20 percent by the end of this year.  It is becoming increasingly clear that the world has reached a tipping point.  We aren’t producing enough food for everyone anymore, and food reserves will continue to get lower and lower.  Eventually they will be totally gone.

The United Nations has issued an unprecedented warning about the state of global food supplies.  According to the UN, global food reserves have not been this low since 1974… Continue reading »

Tags: Agriculture, Drought, Environment, Food, Food Crisis, Food Prices, Global News, U.N., U.S.

- Food is the New Oil and Land the New Gold: Lester Brown (Yahoo Finance, Oct 5, 2012):

The United Nations food agency reports that food prices are rising again, reaching 6-month highs and nearing levels not since 2008. Higher prices then spurred food riots in the Middle East and North Africa, which fueled the Arab Spring.

There’s no sign of widespread food riots now but eventually there could be, says Lester Brown, president and founder of the Earth Policy Institute and author of the new book “Full Planet, Empty Plates: The New Geopolitics of Food Scarcity.”

“The term ‘food unrest’ will become part of our daily vocabulary,” Brown tells The Daily Ticker.It reflects the imbalance between the supply of food and demand for food globally.

Continue reading »

Tags: Economy, Food, Food Prices, Government, Unrest

- World Food Prices Rise, Stay Close To Crisis Levels: FAO (Reuters, Oct 4, 2012):

World food prices rose in September and are seen remaining close to levels reached during the 2008 food crisis, the United Nations’ food agency said on Thursday, while cutting its forecast for global cereal output.

The worst drought in more than 50 years in the United States sent corn and soybean prices to record highs over the summer, and, coupled with drought in Russia and other Black Sea exporting countries, raised fears of a renewed crisis.

Continue reading »

Tags: Economy, Environment, FAO, Food, Food Crisis, Food Prices, Global News, U.N.

Brace yourself for some painful “agflation”. That is the shorthand for agricultural commodity inflation, otherwise known as rising food prices.

Rabobank thinks the consumer impact could be less painful this time around compared to 2008, when there were severe shortages of wheat and rice. That is because today’s shortages are being seen more in crops used as animal feed, such as corn and soybeans. Photo: Reuters

- World on track for record food prices ‘within a year’ due to US drought (Telegraph, sep 23, 2012):

They are being driven upwards by the climb in grain and oilseed prices as US crops weather the country’s worst drought since 1936, while the farming belts of Russia and South America suffer through similar water shortages.

What we are seeing represents the third major rally in global grain and oilseed prices in just half a decade.

Continue reading »

Tags: Drought, Economy, Environment, FAO, Food, Food Prices, Global News, U.S.

- ‘We’ll make a killing out of food crisis’, psychopathic Glencore trading boss Chris Mahoney boasts (Sott.net, Aug 30, 2012):

Drought is good for business, says world’s largest commodities trading company

The United Nations, aid agencies and the British Government have lined up to attack the world’s largest commodities trading company, Glencore, after it described the current global food crisis and soaring world prices as a “good” business opportunity.

With the US experiencing a rerun of the drought “Dust Bowl” days of the 1930s and Russia suffering a similar food crisis that could see Vladimir Putin’s government banning grain exports, the senior economist of the UN’s Food and Agriculture Organisation, Concepcion Calpe, told The Independent: “Private companies like Glencore are playing a game that will make them enormous profits.”

Continue reading »

Tags: Drought, Economy, Environment, Food, Food Crisis, Food Prices, Global News

- Deep Fried Black Swan Lands As China Admits It Has A Food Inflation Problem, Releases Corn, Rice From Reserves (ZeroHedge, Aug 13, 2012):

Last week we wrote an article that to many was anathema: namely an explanation why everyone is deluding themselves in their expectation that the PBOC would ease, soft, hard, or just right landing notwithstanding. The reason? The threat that food inflation is about to read its ugly head which is “Why The Fate Of The Global Equity Rally May Rest In The Hands Of Soybeans.” This was merely a continuation of our observations from a month ago that as a result of the Black Swan being “deep fried” in 2012, that the threat of food inflation will keep key BRIC central banks in check for a long time. As of today the threat has become fact, because as China Daily reports “China will release corn and rice from state reserves to help tame inflation and reduce imports as the worst US drought in half a century pushes corn prices to global records, creating fears of a world food crisis…The release may prompt Chinese importers to cancel shipments in the near term and take some pressure off international corn prices, which set a new all-time high on Friday as the US government slashed its estimate of the size of the crop in the world’s top grain exporter.” Sure, as every other short-termist measure the world over, it may help with prices in the short-term, but will merely expose China, and thus everyone, to the threat of a much greater price spike in the future. Because just as the strategic petroleum reserve release did nothing to help gas prices, nor the short selling ban in the US and Europe did anything to help the underlying broken financial system, so this will merely force the local population to scramble and ration whatever food they can get asap, now that the government has admitted there is, indeed, a food inflationary problem.

Sure enough:

Bottom line – rationing is in full force, and given the continually declining state of the US corn crop, more will be needed,” said Christopher Narayanan, head of agricultural commodities research at Societe Generale. Continue reading »

Tags: Black Swan, China, Corn, Economy, Food, Food Crisis, Food Prices, Global News, Government, Inflation, People's Bank of China, Politics, rice, Society