• Posted: Oct 25, 2008 14:38:26
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For much of the last year world commodities prices have been at record highs, causing considerable disruption in local economies. Farmers scrambled to put in record crops to take advantage. That scrambling involved taking on debt. Commodities prices have since fallen drastically and farmers may now have trouble paying off all that debt. Why did commodities prices spike?
One explanation is that on 11/17/06 the BBC's World Business Report and other media outlets interviewed Jim Rogers regarding his new book Hot Commodities. In that book Rogers claimed "A new bull market is under way, and it is in commodities." Not long after that commodities prices began their historic rise wherein the price of everything from corn, wheat, soy beans, rice, and oil nearly doubled. But was all that price inflation justified by the fundamentals? Clearly, no. Worldwide demand did not double overnight. Worldwide supplies did not halve overnight. Pure speculation motivated by gambler's greed fueled that rise in prices and all of us paid and are continuing to pay dearly.
Commodities contracts are not cheap. To get into a trade requires a minimum of $5000 and to make serious money one need invest many multiples of that amount. The relatively few people with that kind of money include the managers of huge funds of cash: big oil companies with record profits, big oil producers with record profits, and sovereign wealth funds including those of China, Singapore, Norway, Russia, Kuwait, and United Arab Emirates. The rest of us are merely victims.
In fact, in an 11/12/07 interview on NPR's Fresh Air, Robert Kuttner, author of The Squandering of America, discussed his thesis that unregulated financial markets don't work. Today, we all feel the truth of that fact. The concentration of wealth and power in relatively few hands is recipe for economic slavery. And we the potential slaves vote for that reality with every dollar we spend. Buy from a huge chain like WalMart and you put your neighboring farmer, manufacturer, and retailer out of business by concentrating power in the hands of WalMart. The story is the same with every worldwide industry that is "consolidating assets" to supposedly "increase efficiencies".
It is not efficient for the rest of us as individual consumers to concentrate power over the choices and jobs we have into the hands of relatively few among us motivated solely by greed. All of us want a better more secure life. All of us participate in the construction of the economic reality we face. Consider carefully your vote with the money remaining in your wallet or purse. The future is quite literally a consequence of every single dollar we spend.
Wednesday, October 10th, 2007
20.2 mm 96 mm