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Generational Dynamics Web Log for 4-Sep-2010
4-Sep-10 News -- Food prices soar around the world, causing food riots

Web Log - September, 2010

4-Sep-10 News -- Food prices soar around the world, causing food riots

Why college professors lie about the economy

Mozambique has food riots as world food prices soar

Seven people were killed in food riots in Maputo, the capital of Mozambique, on Wednesday and Thursday, according to VOA. The situation was calmer on Friday, thanks to a heavy police and military presence, but more demonstrations are expected on Monday. In the meantime, riots have spread to suburban cities outside the capital.

Mozambique is one of the poorest countries in the world, and the price of bread has risen 30% recently, triggering the riots.

FAO Food Price Index

FAO Food Price Index

In fact, food prices around the world have been surging, according to the UN Food and Agriculture Organization (FAO). According to the latest report (PDF), the jump in wheat prices is the main driver for the increase in food prices in August.

As you can see from the above graph, food prices in 2010 are already well above levels in 2006 and 2009, and are threatening to surpass the major food price crisis that occurred in 2008.

The recent jump in wheat prices was triggered mainly by the Russian once-in-a-century drought and wildfires that have been occurring for several months, causing Russia's wheat crop yield to fall significantly. Initially, Russia announced that it would ban exports until the end of 2010, but now Russian Prime Minister Vladimir Putin has announced that the export ban will remain in place until the end of 2011, according to the International Business Times.

The floods in Pakistan have also contributed to the food price surge. With 20% of the country covered by floods, many wheat crops and seed stocks have been destroyed.

The UN has called for an international meeting on September 24 to discuss the problem, though it's not clear to me how a meeting will solve the wheat shortages.

Tension is growing in countries around the world because of the rise in food prices, and it's feared that food riots will occur around the world, as happened in 2008.

Why college professors lie about the economy

In my posting yesterday on Prof. Jeremy Siegel, I discussed a conundrum that's bothered me in the 1950s, and is still bothering me today. In the 1950s, my teachers all told me that analysts were wrong for years during the Great Depression, predicting that "prosperity was just around the corner," when they kept getting it wrong, time after time after time. Why did that happen? And this is highly relevant today, since exactly the same thing is happening.

It's occurred to me since then that there's only one possible explanation that I can think of. I have no evidence that this applies specifically to Jeremy Siegel, but I feel pretty confident that it applies to a lot of the analysts spouting nonsense on CNBC and Bloomberg TV.

By way of introduction, let's recall that dishonesty and and lying are the norm today. The financial crisis was not caused by one or two "bad apples." It was caused by people in almost every financial institution in the world, creating synthetic securities that they knew were faulty, and fraudulently selling them to investors, in order to collect fat fees and commissions. This ubiquitous fraud was the result of a generational change, following the retirement of the Silent generation.

The same Boomers and Gen-Xers are still in charge today, still commiting fraud. A college professor who's invited to appear on CNBC or Bloomberg TV has an opportunity to turn it into real money. Since he's supposed to be an expert, he can generate fat consulting fees. By saying that prosperity is just around the corner, he'll be invited back to CNBC or Bloomberg TV time after time. Thus, he lies on TV in order to gain publicity for himself, and to get consulting clients.

I don't claim to have any proof that this is going on. But I don't really believe that all these financial experts are as stupid as the things they're saying. This explanation is consistent with everything else that's going on today, and actually explains what's happening.

Additional links

Egypt imports 40% of its wheat, much of it from Russia. Now that Russian wheat is cut off, Egypt is forced to spend millions of dollars to subsidize rising bread prices. Reuters

China has ordered local leaders to raise vegetable production, to keep food prices under control. Associated Press

The cost of food was almost 15% higher last week than it was a year ago in India, there have been good monsoon rains, so a good harvest is expected in the fall, which should stabilize food prices. The Hindu

People in Africa are eating weeds to try to prevent starvation, as rising food prices pur food out of their reach. Australian

The Mideast peace talks that began in Washington on Thursday are polarizing relations between Iran and Egypt. Egypt is cooperating with the peace talks, which Iran is calling for an destruction of Israel. The Hindu

There was another suicide bombing on a Shia group in Pakistan, this time in Quetta in southwest Pakistan. 53 people were killed. Police were forced to quell unrest from an angry mob after the bombing. Dawn

Why don't black Americans swim? BBC

As Americans withdraw from Iraq, Turkey and Iran are competing for influence in Iraq, with the potential for conflict over the Kurdish region in the north. The National (UAE)

(Comments: For reader comments, questions and discussion, see the 4-Sep-10 News -- Food prices soar around the world, causing food riots thread of the Generational Dynamics forum. Comments may be posted anonymously.) (4-Sep-2010) Permanent Link
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Generational Dynamics Web Log for 4-Sep-2010 4-Sep-10 News -- Food prices soar around the world, causing food riots

Mozambique has food riots as world food prices soar

Why college professors lie about the economy

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Generational Dynamics Web Log for 4-Sep-2010
4-Sep-10 News -- Food prices soar around the world, causing food riots