Cereal Wars…and Zombie Wars…
Hey, how ’bout that Ben Bernanke… He’s a freedom fighter! Look what he’s done to North Africa!
Seems like every time we pick up the paper another dictator is toppling over. Where does it lead, we wonder? What would a world be like without dictators? Without them, who will the CIA and the State Department give our money to?
On the run this morning (but not quite given up) is Muammar Gaddafi of Libya.
Wait… Is this guy a friend or an enemy? We can’t remember. Wasn’t he a bad guy a few years ago? But recently we’ve heard that he is a good guy. He’s helped with the War on Terror. And he sells oil.
Friend or foe, we don’t know…but whatever he is, he’s beginning to look past tense. As of this morning, reports say he’s lost control of Libya’s second largest city. His troops are firing on protesters in the capital, where he and his loyal guards are holed up in a few government buildings.
His son vows to fight back. He says there will be “rivers of blood” before he gives up.
That “rivers of blood” image was used by Enoch Powell in Britain fifty years ago. It came from Virgil’s Aeneid, in which a character foresees “wars, terrible wars, and the Tiber foaming with much blood.”
Powell was referring to the effects of immigration into Britain from Africa and elsewhere. He thought he saw race wars and power struggles coming as a result.
But the younger Gaddafi uses the language as a threat, not a prophecy.
Still, it didn’t do Powell much good. Maybe Gaddafi will have better luck with it. Most likely, he’ll high tail it out of the country before the blood is his own. That will bring to three the number of regime changes in the last few weeks. Which leads us to ask: what’s up?
The answer comes from our old friend, Jim Davidson. He pins the revolutions on Ben Bernanke. Behind the popular discontent is neither the desire for liberty nor the appeal of elections. It’s food. And behind soaring food prices is Ben Bernanke.
The Arab world is a model Malthusian disaster, says Davidson. Populations have ballooned. Food production has not. Which makes Arab countries the biggest importers of cereals in the world. And when the price of food goes up, the masses rise up too.
From Jim’s latest newsletter, Strategic Investment:
Food prices hit an all-time high in January. According to the UN’s Food and Agricultural Organization (FAO) “the FAO Food Price Index (FFPI) rose for the seventh consecutive month, averaging 231 points in January 2011, up 3.4 percent from December 2010 and the highest in both real and nominal terms” since records began. Note that prices have now exceeded the previously record levels of 2008 that sparked food riots in more than 30 countries. “Famine-style” prices for food and energy that prevailed early in 2008 may also have helped precipitate the credit crisis that Federal Reserve Chairman Ben Bernanke described in closed-door testimony “as the worst in financial history, even exceeding the Great Depression.”
This time around, the turmoil surrounding commodity inflation has taken center stage with more serious riots and even revolutions across the globe. Popular discontent is not just confined to “basket case” countries like Haiti and Bangladesh as in 2008. High food prices have roiled Arab kleptocracies with young populations and US backed dictators such as Tunisia, Egypt, Bahrain and Yemen. Even dynamic economies have been affected. Indeed, all of the BRIC countries, except Brazil, have witnessed food rioting.
Well, how do you like that, Dear Reader? All those billions of dollars spent propping up dictators – $70 billion was the cost of supporting Hosni Mubarak in Egypt alone – and then the Fed comes along and knocks them down.
The Fed lowers the cost of money so speculators can borrow below the rate of inflation. And then it prints up trillions more – just to top up the worlds’ money supply.
Is it any wonder food prices rise? Imagine you’re a farmer…or a speculator. You can sell food. Or you can hold it in storage. You know the food is valuable. You know the world has more and more mouths to feed everyday. You know food production is limited. And you know Ben Bernanke can print up an unlimited number of dollars. What do you do?
Do you sell immediately? Or drag your feet…holding onto your valuable grain as the price hits new highs?
While Mr. Bernanke modestly declines the credit for de-stabilizing much of the world, close analysis confirms that he played an informing role. His QE2 program of counterfeiting trillions out of thin air has helped ignite a raging bull market in raw materials with food and commodities – up 28% in the past six months. The fact that the US dollar has heretofore been the world’s reserve currency means that almost all commodity prices are denominated in dollars. As a matter of simple math, when the dollar goes down, the prices of commodities tend to go up.
Today, Libya. Tomorrow…Yemen? Or Saudi Arabia.
In North Africa, Cereal Revolutions…
In North America, Zombie Wars…
Yes, the battle rages in the Dairy State. And yes, Nobel Prize winner Paul Krugman (Economics!) has no idea what is going on:
It’s “not about the budget. It’s about power.”
He thinks it is a battle between the rich and powerful, whom he calls the “oligarchy,” and the decent lumpenproletariat on the other. Wisconsin’s governor is trying to bust the union, says Krugman, so that the elite can ride roughshod over poor government workers, cut their pay, and reduce their benefits (thereby downsizing the state’s budget deficit).
It’s not about money, says the New York Times columnist. He’s wrong, as usual. The Zombie Wars are always about money. There is less money available and more zombies who want it.
In the present case, rather than hire honest people to work at market rates…Krugman wants the state to be forced to deal with a privileged union. Union zombies should bargain with government zombies, he says. Together, in cooperation, not in conflict, they should figure out how to rip off the taxpayer.
Stay tuned…the Zombie Wars are just beginning.
Bill Bonnerfor The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010.
The action in Libya is:
Bad for most stocks
Bad for dictators
Possibly bad for the U.S. economy
and potentially, very good for Democracy.
So a hit to our stocks seems a small price to pay… and may be temporary… and creates buying opportunities
Democracy,,,,the last stop before dictatorship… and everybody wants it!
Shawn, please –
I asked nicely last time. When are you going to start paying me for the free advertising here? Your last cheque bounced.
“and potentially, very good for Democracy.”
The problem is that most people think democracy is a good thing in itself. It’s only good when the people are educated, there’s freedom of speech, and solid institutions to work with (police, press, judiciary etc).
As I once read somewhere: “Democracy can be two wolves and a sheep deciding what’s for dinner.”
And I’m glad you gave up the silly idea that Bill would reply to any post here…
That’s the difference between a democracy and a republic. In a republic the sheep has a gun!
This was fun to read: “Well, how do you like that, Dear Reader? All those billions of dollars spent propping up dictators – $70 billion was the cost of supporting Hosni Mubarak in Egypt alone – and then the Fed comes along and knocks them down.”
The FED is a democratic whirlwind of change and hope we can believe in. Right?
There’s another reason why food prices are rising and that is most farmers have given up, they are tired of being ripped off, the money does not go to the farmer, so after many years of tring they come to there senses and live on the land doing other jobs other than being a farmer.
“people think democracy is a good thing in itself. It’s only good when the people are educated”
In between the devils and the deep blue sea, how do a highly educated guy pick his choice? When interest sticks to his skin, it is only admirable if he takes a selfless stance. How many educated chaps could achieve this? A cleanse soul or a tune-up conscience only decides the ultimacy of democracy, republic, feudalism or any other man made deceivable
paper (money) garnering systems.
Stop corn as biofuel
hey, land croc 1: english yer second language? lol
Verbose pontification. Tell us the price of a pound of bread and what percent of the population earns less than that price. Then tell us the average household number per breadwinner.
I’ll tell you the price of wheat delivered is $0.25/lb. Finished products such as bread generally cost double the materials. So $0.50/lb bread is a horseback estimate. Wages get confused with per capita income in nations without census and twelve to a family. Gross National Product numbers are deceiving when half is diverted to Swiss bank accounts.
We are told a substantial population live on $1-$2/day. That does not feed a family of twelve.
Contraception is illegal for Catholics and muslims. Both populations lack literacy. Famine is an inevitable consequence of religions attempting to expand their franchise.
Squirming biological populations that exceed the carrying capacity of the land come to the same end according to wildlife biologists. Sudden catastrophic population collapse of ninety percent or more is nature’s cure.
Revolution and riots are the first sign of population collapse. Cannibalism comes later.
It doesn’t matter whether english is second, third or fourth or fifth language.
Mouth and the 2 hands are attached to our bodies by some sort of heavenly body. There is an urgency for everyone to shed some light on the dark cloudy earth. The shot may not get the bulls eye, but getting close is better than no shot.
Have a nice day!
The eyes of my mistress are nothing like the sun.
“Revolution and riots are the first sign of population collapse. Cannibalism comes later.”
Bo, which end of the fork are you?
QE2 caused all of this mess . You can’t just say that other countries can deal with inflation thru their own policies when you have the RESERVE currency and those countries affected have to buy oil with PRINTED DOLLARS which are flooding them .
Bo Diddly, contraception is not illegal for Muslims. Not sure where you’re getting your info from. In Iran the government gave out free conraceptives for years (and may still be). For a time in both Pakistan and Iran, the government paid for vasectomies. Bangladesh, another Muslim-majority country, was so successful in its contraception campaign that it cut its fertility rate in half between 1980 and 2000.
Perhaps, distinct contribution of the printing pressing makes it affordable to possess an empire of mistress.
Google’s CEO Eric Schmidt supports Google CEO very, very proud of role in overthrowing government
Overthrow of government and total transparency? Yes, I think so…but who can trust a RAND, CIA and NSA Created Corporation’s CEO? A Google Run Rebellion and Uprising? Not Google rebellion Murdoch had in mind.
“And behind soaring food prices is Ben Bernanke.”
I consider him one of many parts in the machine that has produced this problem.
He may be spewing out extra dollars but cpi-type inflation in local currency is only going to happen if the dollar is used as the currency or they print their own money, in some cases to maintain exchange ratios under misguided mercantilist beggar-thy-neighbor thinking.
“Union zombies should bargain with government zombies, he says. Together, in cooperation, not in conflict, they should figure out how to rip off the taxpayer.” zombie police, zombie firefighters, zombie teachers – cant have them getting together and asking for fair pay. We might have to forgo cutting taxes on the rich and corporations!
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