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Generational Dynamics Web Log for 7-Jan-2011
7-Jan-11 News -- Food riots begin again as food prices reach historic highs

Web Log - January, 2011

7-Jan-11 News -- Food riots begin again as food prices reach historic highs

China's military developments catch Americans by surprise

Food riots begin again as food prices reach historic highs

Riots over rising food prices and chronic unemployment spread across Algeria on Thursday, with youths torching government buildings and shouting "Bring us Sugar!" according to Associated Press.

The food price index of the U.N. Food and Agriculture Organization (FAO) has risen 32% in just the last half of 2010, according to Bloomberg.

Here's a graph that I posted in November, showing food prices through October:

FAO Food Price Index versus CPI, 1990 to October 2010

FAO Food Price Index versus CPI, 1990 to October 2010

It had been hoped at that time that food prices would start to fall again, but they didn't. Instead, the price index continued to climb, reaching new highs in December.

Food prices rose rapidly in India during December (Calcutta Telegraph)

Food prices rose rapidly in India during December (Calcutta Telegraph)

In India, food inflation increased to 18.32% for the week ending December 23, primarily due to a steep rise in onion prices, according to the Business Standard (Delhi). This was about twice the rate in November. Chief Economic Adviser Kaushik Basu said: "It is an utter mistake to think that it is fully within the control of the government to move prices of food up and down."

It had been hoped that food inflation would moderate in 2010, after a significant rise in 2009. During the summer it did moderate, but in recent weeks it's surged.

Pakistan's government, which is in near total paralysis after the assassination of Salman Taseer that we've been reporting on, banned onion exports to India over land routes on Thursday, in order to lower onion prices in Pakistan. This move, which was completely unexpected, is being criticized in both India and Pakistan, according to the Calcutta Telegraph.

Food prices are now higher than they were in 2008, when surging prices caused food riots around the world. Officials are claiming that the situation is not as bad today, since there are larger stocks of wheat and other commodities available. (However, I'm not sure why food prices are increasing, if there are these huge stocks available.)

From the point of view of Generational Dynamics, what we're seeing is what I call the "Malthus effect," a continuing increase in the price of food as the population grows faster than the supply of food. (See "Food: Green revolution v Malthus effect.")

As you can see from the above graph, food prices were steady or declining until 2002. Since 2002, food prices have been surging much faster than inflation.

The survivors of World War II (GI and Silent generations) were well aware of the horrors of famine and starvation that occurred during the war, and they developed the Green Revolution to make sure that everyone in the world would be fed.

It's really not surprising that the surge in food prices occurred in the same time frame as the tech, real estate and credit bubbles that have developed into the current global financial crisis. The same generational greed and nihilism that led to the debauched use of credit has also led to the collapse of the Green Revolution.

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American officials have been caught by surprise by China's development of a stealth fighter, along with news of advances in anti-ship missiles. The fighter is only a prototype that won't see service for years, but the missile is nearly operational. As we've said many times, China is preparing to lead a new world war against the United States and the West. LA Times

The assassination of Pakistani Punjab's governor Salman Taseer by his "Elite Force" bodyguard is raising concerns in Washington and around the world that a similar assassination attack may give al-Qaeda linked terrorists access to Pakistan's nuclear arsenal. Times of India

Thousands of Coptic Christians packed churches across Europe and the Middle East to celebrate Christmas Eve mass on Wednesday evening. Tensions were high after last week's bombing of a Coptic church in Alexandria, and continued internet threats by al-Qaeda linked groups that more churches would be bombed. Muslims had offered to visit churches in Egypt to act as "human shields" against further attacks, but church officials said that the presence of Muslims would be harmful to "the feelings and the sensitivities of the relatives of the victims." Al-Jazeera

Floods in Australia, the worst in 50 years, have affected about 200,000 people and caused $5 billion. The coal industry has been particularly hard hit, and coal exports have been brought to a standstill. Reuters

Homeowners who would like to reduce mortgage payments, but don't qualify for refinancing, can use a little-known strategy called "recasting" or "re-amortization." NY Times

New research says that when a woman cries, a man's sexual desire for her decreases. Australian

(Comments: For reader comments, questions and discussion, see the 7-Jan-11 News -- Food riots begin again as food prices reach historic highs thread of the Generational Dynamics forum. Comments may be posted anonymously.) (7-Jan-2011) Permanent Link
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Generational Dynamics Web Log for 7-Jan-2011 7-Jan-11 News -- Food riots begin again as food prices reach historic highs

Food riots begin again as food prices reach historic highs

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Generational Dynamics Web Log for 7-Jan-2011
7-Jan-11 News -- Food riots begin again as food prices reach historic highs