Sneeuwbalinflatie

Wanneer de wereld zijn ogen zal openen voor inflatie, zullen de schellen eraf vallen. Sommige economen vrezen nu een self-fulfilling prophecy. Wat een zeikerds. Die economen die jarenlang inflatie ontkend hebben, het nu amper nog kunnen, zullen de schuld op een zelf-vervullende voorspelling steken. Ze zullen de schuld op de schouders van de burger schuiven, want die had "irrationele inflatieverwachtingen". Ik hoor het ze zeggen. Wat een bullshit zal het zijn. Ze zullen het blijven ontkennen. Het zal mij niet kunnen schelen. Inflatie zal 'ass kicken' en goud zal compleet door het dak gaan. De massa zal volgen. Schapenvlees. Tariffs slashed as food inflation bites By Javier Blas in London Published: December 16 2007 22:24 Last updated: December 16 2007 22:24 Import tariffs for major agricultural commodities, in particular cereals, vegetable oils and rice, are being slashed in an effort by developed and developing countries to cushion their local markets against rising food inflation. The move comes as food inflation, which hit countries over the summer, shows signs of resurgence, with cereal prices rising sharply, boosted by strong demand, in particular from China, and tumbling inventories. Turkey is the latest country to announce a reduction in custom duties, having recently cut its import tariff for wheat from 130 per cent to 8 per cent, for corn from 130 per cent to 35 per cent and scrapped the previous 100 per cent duty for barley. The European Union – the world’s top importer of wheat and one of the largest buyers of soyabean and corn – has also announced that it will set zero import duties for cereals until next June. This follows cuts in countries such as China, Russia, Mexico, Morocco, Azerbaijan, Bosnia, Egypt, Philippines, Taiwan, Bangladesh, India, Nigeria, Azerbaijan, Ghana and Peru. Some have said these will be short-term measures. Ali Arslan Gurkan, head of the commodity market division at the UN’s Food and Agriculture Organisation in Rome, said the reduction in the tariffs was the latest sign that policymakers were trying to cope with rising food costs. “Governments are finding it politically inevitable to reduce local food prices and this situation is likely to continue,” Mr Gurkan said. Earlier this year, Morocco cut its wheat import tariff from 130 per cent to 2.5 per cent after suffering a drought that halved its own crop. China has cut its soyabean import tariff from 3 to 1 per cent in an effort to increase local supplies after rising food costs pushed inflation to the highest in 11 years. The reduction has boosted imports and pushed the oilseed crop price to a 34-year record. Russia will cut its import tariff for soya oil and rapeseed oil from 15 per cent to 5 per cent this month while Nigeria is set to slash its rice import tax from 100 per cent to just 2.7 per cent at the beginning of next year. Sorin Vasloban, of the Paris-based cereal trading house Plantureux, said: “The prices of agricultural commodities have stabilised at very high levels and countries need to resort to these measures [cutting tariffs] to control inflation.” However, the reduction in import tariffs has been offset by higher export tariffs – which aim to help keep local markets well supplied – in several key exporting countries. Argentina this month joined the path taken earlier in the year by Russia and Kazakhstan. The tariff cuts will not have an impact on the Doha trade negotiations, as the talks apply to bound tariffs – the legal upper limits – rather than applied duties. The latest tariff cuts come as cereals and soyabean prices climb to new highs propelled by a warning by the US Department of Agriculture early this month that unabated demand from emerging countries is denting inventories dramatically. In Chicago, wheat futures for March 2008 delivery rose to an all-time high of $9.79½ a bushel, just below the summer’s all-time high of $9.61¾. Corn futures for March moved to $4.38¼ a bushel, within a whisker of a 11-year high, while soyabean for January is trading at a 34-year high of $11.54 a bushel. Soaring food prices drive Chinese inflation to 11-year high By Richard McGregor in Beijing Published: December 12 2007 02:00 Last updated: December 12 2007 02:00 Chinese inflation reached an 11-year high of 6.9 per cent in November, a level that will harden Beijing's resolve to tighten monetary policy and probably further delay energy price reform. The inflation rate, which hit 6.5 per cent in October, is driven primarily by food prices, which rose by 18.2 per cent from a year -earlier, mainly because of a shortage of pigs and rising global feed costs. But underlying inflation was also up to 1.4 per cent from 1.1 per cent in October - the sharpest rise this year - because of higher oil and coal prices. Utility prices, including water, electricity and gas, rose 5.6 per cent. China economists said the continuing upward pressure on inflation was likely to prompt further government pressure on banks to control lending, as well as interest-rate rises and increases in reserve ratios, the amount banks must keep on deposit with the central bank. The government has already refused to lift fuel prices in line with rising -global costs, and has increased subsidies to some sectors for oil as part of an array of measures to restrain inflation. China is also expected to allow the renminbi to appreciate faster over the next 12 months in an effort to correct imbalances in the economy and reduce incentives for exporters. The trade surplus, a prime cause of excess liquidity in the economy, was $26.3bn (€17.9bn) in November, only slightly lower than the record $27.1bn, according to figures released yesterday. Although growth in exports to the US has slowed, increases in sales to Europe, the Middle East and other markets have helped keep the surplus high. In a potentially significant move for global trading in steel, China's chief economic co-ordination ministry said it might impose quotas for exports next year as part of a raft of efforts to limit the trade surplus. Steel exports are up by 55 per cent year on year in the 11 months to November and have contributed significantly to the swelling surplus. They have begun to slow in recent months because of tax imposts. The People's Bank of China announced last week that monetary policy would move from "stable" and "moderately tight" to "tight", primarily because of concern over inflation and possible overheating. China has lifted interest rates five times and reserve ratios 10 times this year, with little impact so far on either the pace of economic growth or inflation. Mr Zhou said another reason for moving into a tightening cycle was the five-yearly change of governments in Beijing and the provinces early next year, which in the past has seen a huge jump in lending as new leaders attempt to spur growth.

Het verkeerde plan van de centrale bankiers

Ben Bernanke & company van de FED hebben zeker een plan. Hun plan is deflatie bestrijden en ervoor zorgen dat de Grote Depressie nooit meer terugkomt. Die Depressie werd volgens Bernanke veroorzaakt door het restrictieve beleid van de Fed in die tijd. Rentevoeten werden toen snel en sterk verhoogd om de dollar te redden. De rentestijging veroorzaakte een bankencrisis, waarbij vele banken failliet gingen, en werd gevolgd door een economische crisis, onvergelijkbaar in tijd en ruimte. Om dit niet meer opnieuw te moeten meemaken, stelt Bernanke voor om de rentes zo vaak en zo snel mogelijk te verlagen in geval van problemen. De banken worden ondersteund, de dollar wordt ontwaard. Compleet in tegenstelling met wat in de jaren dertig als oplossing werd gebracht. De lage dollar is niet ons probleem herhaalt Bernanke nu. Dit is op kosten van het buitenland en op kosten van de burger, via inflatie wat een vorm van verborgen belasting is. Dit durft hij natuurlijk niet zeggen. Maar de ogen van het buitenland én van de burger beginnen langzaam te openen om dit fenomeen door te hebben. Het plan van Bernanke is duidelijk: verlaag de rente, offer de dollar, kost wat kost en zorg voor een ongebreidelde creatie van krediet tot in de oneindigheid. Bernanke vergeet echter veel belangrijke zaken. Ik zal het er nog over hebben. Bernanke maakt in elk geval een historische fout en daar zal men in het licht van de geschiedenis niet lichtjes over oordelen. Hold tight, the central banks have no plan By Wolfgang Munchau Published: December 16 2007 16:03 Last updated: December 16 2007 16:03 This has been the year when many deeply held beliefs have been challenged. One such belief was that central banks have the toolkit to sort out any conceivable economic or financial crisis. Last week’s co-ordinated liquidity action by five central banks taught us that this is not the case. The idea was that a co-ordinated response would reassure the markets, but it had the opposite effect. It turned out that market participants are not infinitely stupid. They know by now that this is not a liquidity crisis at its core. If it had been, it would be over by now. It is a fully fledged solvency crisis that has arisen because two giant and interlinked bubbles burst simultaneously – one in property, one in credit – leaving banks and investors on the brink of bankruptcy, some hanging on by their fingertips. Yet there is nothing the central banks are offering at this stage to alleviate a solvency crisis. So the message from last week is that central banks have no game plan. Expect continued stress in financial markets for most of next year and possibly beyond. Expect also further declines in property prices in the US and the UK and spill-overs to the real economy. As the European Central Bank correctly noted in last week’s financial stability report, the crisis is not going to be over until and unless there is a turnround in the property sector. But we are not going to see this for quite some time, not even in the US where the property market downturn began in 2006. In the UK, property prices have only recently started to fall. I looked at the Nationwide house price index for the UK, which goes back to the early 1950s. After adjusting for inflation, the result is a line with two interesting characteristics. The first is that there is a surprisingly stable linear trend, with only a moderate upward shift. Real prices go up over time but not by much, and any deviations from the line are followed by a return to trend. The second is that past bubbles were relatively symmetric – both in extent and in time. In the UK the latest upward movement has lasted 10 years and on my calculation prices started to rise above the trend line somewhere between 2000 and 2002. That would suggest that the downturn phase is going to last as long – possibly longer since downward moves often undershoot the trend line. Unless there has been some structural shift, there is going to be one of the most serious housing downturns ever. Homeowners and mortgage lenders are always clinging to the hope that there may have been a structural shift. But even then, it is not at all clear whether such a shift would necessarily raise the position or the slope of the trend line. For example, an increase in housing supply or some regulatory restriction on credit may well lower it. In an environment in which central banks target a low rate of inflation, the lion’s share of the adjustment will have to come from falling nominal house prices. That was different in the 1970s, when high inflation took care of the real price adjustment. But an inflation-targeting central bank cannot allow that to happen. This raises the question of whether central banks, or governments, should consider raising their inflation targets. That would be a huge mistake, in my view, but I expect such a debate to hit us next year. Higher inflation would make it easier for indebted mortgage holders to cope with a multi-annual fall in real house prices. Here is the basic arithmetic. Let us assume that the housing downturn is going to last eight years. A 2 per cent annual inflation rate – the target of many central banks today – adds up to 17 per cent inflation for the entire period; and a 4 per cent annual rate adds up to 37 per cent. So if UK house prices have to fall 40 per cent in real terms – which is not exaggerated given the extent of the bubble – an annual inflation rate of about 4 per cent would take care of the problem. Nominal houses prices would then not have to fall. This is an experiment I would dearly love to watch, though preferably from outer space. A hypothetical increase in inflation targets would, I think, turn the current episode of turmoil into an uncontrolled financial crisis. Bonds would become the next asset class to crash and we could also expect violent adjustments in global exchange rates. I suspect that central banks would dearly love to choose the semi-soft option – to allow a temporary overshoot in inflation targets and pray that people do not raise their inflation expectations. But that option has already been over-stretched, given that inflation expectations are already rising everywhere. The bottom line is that inflation-targeting central banks will end up doing little more than swamp the financial markets with liquidity, and defend themselves against accusations that they had anything to do with this mess.

Inflatie voedselprijzen

Dit is nog maar het begin van inflatie. De monetaire inflatie zal langzaam maar uiteindelijk sneller en sneller voor een inflatie van de prijzen zorgen. Het is een wereldwijd fenomeen en zal na verloop van tijd niet meer ontkend kunnen worden door centrale bankiers en politici. Bernanke, Mishkin & co zullen nog een tijd blijven zweren bij hun gemanipuleerde cijfers van kerninflatie. Volgens hen is de stijging van de voedselprijzen niet structureel en mogen die prijzen, wegens te volatiel, daarom uit de index worden gehaald. Het is je reinste bullshit met een uit de pan swingende groei in de opkomende markten zoals China, Brazilië en Indië. France escapes surge in food prices By Ralph Atkins in Frankfurt Published: December 13 2007 22:02 Last updated: December 13 2007 22:02 France has largely escaped the surge in European processed food prices that has heightened inflation fears at the European Central Bank – while German and Spanish consumers have borne far more of the brunt, according to a study published by the bank on Thursday. The impact of the global food price “shock” varies significantly across the 13-country eurozone, the ECB study concludes – adding to uncertainty about the economic outlook. The ECB looked at prices of processed food, including bread, cereal and dairy products, as a guide to the impact of higher global food prices. Surging eurozone inflation, which hit 3 per cent in November, led the ECB to hint last week that it might yet increase its main interest rate from the current 4 per cent – despite the global credit squeeze. The Frankfurt-based institution aims to keep inflation “below but close” to 2 per cent. Reiterating the upside risks to overall inflation, which has also been lifted by high oil prices, the ECB’s monthly bulletin yesterday noted that financial market prices implied a “significant” rise in longer-term inflation expectations since the start of the year. However, such data could have been distorted by financial market turmoil, and overall professional forecasters’ expectations had remained “broadly unchanged”, even if the risks of inflation rising above 2 per cent had increased. France’s relatively mild experience with processed food inflation is puzzling, given rising public concern about increasing living costs. These concerns were underlined yesterday when the country’s annual inflation rate was shown to have risen to 2.6 per cent in November on a European Union-harmonised basis, the highest recorded for 3½ years, although this was largely because of higher fuel costs. According to the ECB bulletin, French processed food prices were rising at an annual rate of just 1.3 per in October. Finland, at 1.1 per cent, saw even more modest growth. But Spain and Germany saw processed food prices rising at annual rates of 6.8 per cent and 5.2 per cent. The ECB suggested prices were likely to rise less in countries where retailers were prepared to use profit margins as a buffer, especially if fears about the economic outlook made them reluctant to pass on price increases. In Germany, by contrast, fierce price competition, especially among discount supermarkets, has probably reduced the scope for rises to be absorbed through lower profit margins – and German economic optimism remains upbeat. The ECB expected food price inflation to increase in the short term before falling back towards the historical average. It believed the supply of agricultural products would catch up with demand, but stressed the unpredictability of prices. Copyright The Financial Times Limited 2007

Food prices: Cheap no more
Dec 6th 2007 From The Economist print edition
Gerrit Buntrock

Rising incomes in Asia and ethanol subsidies in America have put an end to a long era of falling food prices. One of the odder features of last weekend's vote in Venezuela was that staple foods were in short supply. Something similar happened in Russia before its parliamentary election. Governments in both oil-rich countries had imposed controls on food prices, with the usual consequences. Such controls have been surprisingly widespread—a knee-jerk response to one of the most remarkable changes that food markets, indeed any markets, have seen for years: the end of cheap food.
In early September the world price of wheat rose to over $400 a tonne, the highest ever recorded. In May it had been around $200. Though in real terms its price is far below the heights it scaled in 1974, it is still twice the average of the past 25 years. Earlier this year the price of maize (corn) exceeded $175 a tonne, again a world record. It has fallen from its peak, as has that of wheat, but at $150 a tonne is still 50% above the average for 2006.
As the price of one crop shoots up, farmers plant it to take advantage, switching land from other uses. So a rise in wheat prices has knock-on effects on other crops. Rice prices have hit records this year, although their rise has been slower. The Economist's food-price index is now at its highest since it began in 1845, having risen by one-third in the past year.
Normally, sky-high food prices reflect scarcity caused by crop failure. Stocks are run down as everyone lives off last year's stores. This year harvests have been poor in some places, notably Australia, where the drought-hit wheat crop failed for the second year running. And world cereals stocks as a proportion of production are the lowest ever recorded. The run-down has been accentuated by the decision of large countries (America and China) to reduce stocks to save money.
Yet what is most remarkable about the present bout of “agflation” is that record prices are being achieved at a time not of scarcity but of abundance. According to the International Grains Council, a trade body based in London, this year's total cereals crop will be 1.66 billion tonnes, the largest on record and 89m tonnes more than last year's harvest, another bumper crop. That the biggest grain harvest the world has ever seen is not enough to forestall scarcity prices tells you that something fundamental is affecting the world's demand for cereals.
The meat of the question
Two things, in fact. One is increasing wealth in China and India. This is stoking demand for meat in those countries, in turn boosting the demand for cereals to feed to animals. The use of grains for bread, tortillas and chapattis is linked to the growth of the world's population. It has been flat for decades, reflecting the slowing of population growth. But demand for meat is tied to economic growth (see chart 1) and global GDP is now in its fifth successive year of expansion at a rate of 4%-plus.
Higher incomes in India and China have made hundreds of millions of people rich enough to afford meat and other foods. In 1985 the average Chinese consumer ate 20kg (44lb) of meat a year; now he eats more than 50kg. China's appetite for meat may be nearing satiation, but other countries are following behind: in developing countries as a whole, consumption of cereals has been flat since 1980, but demand for meat has doubled.
Not surprisingly, farmers are switching, too: they now feed about 200m-250m more tonnes of grain to their animals than they did 20 years ago. That increase alone accounts for a significant share of the world's total cereals crop. Calorie for calorie, you need more grain if you eat it transformed into meat than if you eat it as bread: it takes three kilograms of cereals to produce a kilo of pork, eight for a kilo of beef. So a shift in diet is multiplied many times over in the grain markets. Since the late 1980s an inexorable annual increase of 1-2% in the demand for feedgrains has ratcheted up the overall demand for cereals and pushed up prices.
Because this change in diet has been slow and incremental, it cannot explain the dramatic price movements of the past year. The second change can: the rampant demand for ethanol as fuel for American cars. In 2000 around 15m tonnes of America's maize crop was turned into ethanol; this year the quantity is likely to be around 85m tonnes. America is easily the world's largest maize exporter—and it now uses more of its maize crop for ethanol than it sells abroad.
Ethanol is the dominant reason for this year's increase in grain prices. It accounts for the rise in the price of maize because the federal government has in practice waded into the market to mop up about one-third of America's corn harvest. A big expansion of the ethanol programme in 2005 explains why maize prices started rising in the first place.
Ethanol accounts for some of the rise in the prices of other crops and foods too. Partly this is because maize is fed to animals, which are now more expensive to rear. Partly it is because America's farmers, eager to take advantage of the biofuels bonanza, went all out to produce maize this year, planting it on land previously devoted to wheat and soyabeans. This year America's maize harvest will be a jaw-dropping 335m tonnes, beating last year's by more than a quarter. The increase has been achieved partly at the expense of other food crops.
This year the overall decline in stockpiles of all cereals will be about 53m tonnes—a very rough indication of by how much demand is outstripping supply. The increase in the amount of American maize going just to ethanol is about 30m tonnes. In other words, the demands of America's ethanol programme alone account for over half the world's unmet need for cereals. Without that programme, food prices would not be rising anything like as quickly as they have been. According to the World Bank, the grain needed to fill up an SUV would feed a person for a year.
America's ethanol programme is a product of government subsidies. There are more than 200 different kinds, as well as a 54 cents-a-gallon tariff on imported ethanol. That keeps out greener Brazilian ethanol, which is made from sugar rather than maize. Federal subsidies alone cost $7 billion a year (equal to around $1.90 a gallon).
In theory, what governments mandate, they can also scrap. But that seems unlikely with oil at the sort of price that makes them especially eager to promote alternative fuels. Subsidies might be trimmed, of course, reducing demand occasionally; this is happening a bit now. And eventually, new technologies to convert biomass to liquid fuel will replace ethanol—but that will take time. For the moment, support for the ethanol programme seems secure. Hillary Clinton and John McCain used to be against ethanol subsidies, but have changed their minds. Russia and Venezuela are not the only countries that like to meddle in food markets for political reasons.
So demand for grain will probably remain high for a while. Demand, though, is only one side of the equation. Supply forms the other. If there is a run of bumper harvests, prices will fall back; if not, they will stay high.
Harvests can rise only if new land is brought into cultivation or yields go up. This can happen fairly quickly. The world's cereal farmers responded enthusiastically to price signals by planting more high-value crops. And so messed-up is much of the rich world's farming systems that farmers in the West have often been paid not to grow crops—something that can easily be reversed, as happened this year when the European Union suspended the “set aside” part of its common agricultural policy. Still, there are limits to how much harvests can be expanded in the short term. In general, says a new report by the International Food Policy Research Institute (IFPRI), which is financed by governments and development banks, the response tends to be sticky: a 10% rise in prices yields a 1-2% increase in supply.
In the longer run, plenty of new farmland could be ploughed up and many technological gains could be had. But much of the new land is in remote parts of Brazil, Russia, Kazakhstan, the Congo and Sudan: it would require big investments in roads and other infrastructure, which could take decades—and would often lead to the clearing of precious forest. Big gains could be had if genetically modified foods were brought into production or if new seed varieties were planted in Africa. But again, that will take time. Moreover, GM foods will not live up to their promise unless they shed the popular suspicion that dogs them, especially in Europe. And some of the new land—dry, marginal areas of Africa, Brazil and Kazakhstan—could be vulnerable to damage from global warming. By some measures, global warming could cut world farm output by as much as one-sixth by 2020. No less worryingly, high oil prices would depress the use of oil-based fertilisers, which have been behind much of the increase in farm production during the past half-century. It is risky to predict long-run trends in farming—technology in particular always turns out unexpectedly—but most forecasters conclude from these conflicting currents that prices will stay high for as much as a decade. Because supplies will not match increases in demand, IFPRI believes, cereal prices will rise by between 10% and 20% by 2015. The UN's Food and Agriculture Organisation's forecast for 2016-17 is slightly higher. Whatever the exact amount, this year's agflation seems unlikely to be, as past rises have been, simply the upward side of a spike. If prices do not fall back, this will mark a break with the past. For decades, prices of cereals and other foods have been in decline, both in the shops and on world markets. The IMF's index of food prices in 2005 was slightly lower than it had been in 1974, which means that in real terms food prices fell during those 30 years by three-quarters (see chart 2). In the 1960s food (including meals out) accounted for one-quarter of the average American's spending; by 2005 the share was less than one-seventh. In other words, were food prices to stay more or less where they are today, it would be a radical departure from a past in which shoppers and farmers got used to a gentle decline in food prices year in, year out. It would put an end to the era of cheap food. And its effects would be felt everywhere, but especially in countries where food matters most: poor ones.

A blessing and a curse

If you took your cue from governments, you would conclude that dearer food was unequivocally a bad thing. About a score of countries have imposed food-price controls of some sort. Argentina, Morocco, Egypt, Mexico and China have put restraints on domestic prices. A dozen countries, including India, Vietnam, Serbia and Ukraine, have imposed export taxes or limited exports. Argentina and Russia have done both. In all these places governments are seeking to shelter their people from food-price rises by price controls. But dearer food is not a pure curse: it produces winners as well as losers. Obviously, farmers benefit—if governments allow them to keep the gains. In America, the world's biggest agricultural exporter, net farm income this year will be $87 billion, 50% more than the average of the past ten years. The prairie farmers of the Midwest are looking forward to their Caribbean cruises. Other beneficiaries are in poor countries. Food exporters such as India, South Africa and Swaziland will gain from increased export earnings. Countries such as Malawi and Zimbabwe, which used to export food but no longer do so, also stand to gain if they can boost their harvests. Given that commodity prices have been falling for so long in real terms, this would be an enormous relief to places that have suffered from a relentless decline in their terms of trade.
In emerging markets an income gap has opened up between cities and countryside over the past few years. As countries have diversified away from agriculture into industry and services, urban wages have outstripped rural ones. Income inequality is conventionally measured using a scale running from zero to one called the Gini coefficient. A score of 0.5 is the mark of a highly unequal society. The Asian Development Bank reckons that China's Gini coefficient rose from 0.41 in 1993 to 0.47 in 2004. If farm incomes in poor countries are pushed up by higher food prices, that could mitigate the growing gap between city and countryside. But will it?

Guess who loses:
According to the World Bank, 3 billion people live in rural areas in developing countries, of whom 2.5 billion are involved in farming. That 3 billion includes three-quarters of the world's poorest people. So in principle the poor overall should gain from higher farm incomes. In practice many will not. There are large numbers of people who lose more from higher food bills than they gain from higher farm incomes. Exactly how many varies widely from place to place.
Among the losers from higher food prices are big importers. Japan, Mexico and Saudi Arabia will have to spend more to buy their food. Perhaps they can afford it. More worryingly, some of the poorest places in Asia (Bangladesh and Nepal) and Africa (Benin and Niger) also face higher food bills. Developing countries as a whole will spend over $50 billion importing cereals this year, 10% more than last. Rising prices will also hurt the most vulnerable of all. The World Food Programme, the main provider of emergency food aid, says the cost of its operations has increased by more than half in the past five years and will rise by another third in the next two. Food-aid flows have fallen to their lowest level since 1973. In every country, the least well-off consumers are hardest hit when food prices rise. This is true in rich and poor countries alike but the scale in the latter is altogether different. As Gary Becker, a Nobel economics laureate at the University of Chicago, points out, if food prices rise by one-third, they will reduce living standards in rich countries by about 3%, but in very poor ones by over 20%. Not all consumers in poor countries are equally vulnerable. The food of the poor in the Andes, for example, is potatoes; in Ethiopia, teff: neither is traded much across borders, so producers and consumers are less affected by rising world prices. As the World Bank's annual World Development Report shows, the number of urban consumers varies from over half the total number of poor in Bolivia, to about a quarter in Zambia and Ethiopia, to less than a tenth in Vietnam and Cambodia. But overall, enormous numbers of the poor—both urban and landless labourers—are net buyers of food, not net sellers. They have already been hard hit: witness the riots that took place in Mexico over tortilla prices earlier this year. According to IFPRI, the expansion of ethanol and other biofuels could reduce calorie intake by another 4-8% in Africa and 2-5% in Asia by 2020. For some countries, such as Afghanistan and Nigeria, which are only just above subsistence levels, such a fall in living standards could be catastrophic. So it is no good saying “let them eat cake”: there are strong welfare arguments for helping those who stand to lose. But the way you do it matters. In general, it is better to subsidise poor peoples' incomes, rather than food prices: this distorts price signals the least and allows farmers to benefit from higher prices. Where it is not possible to subsidise incomes (because to do so requires a decent civil service), it is still possible to minimise the unintended consequences if food subsidies are targeted and temporary. Morocco fixed bread prices (the food of the poor) during Ramadan, the Muslim month of fasting; at the same time, it cut tariffs on food imports to increase competition.

But a problem too
In contrast, Russia shows how not to do it. It imposed across-the-board price controls on milk, eggs, bread and other staples, benefiting everyone whether they needed help or not. Food is disappearing from shelves and farmers are bearing the brunt. As Don Mitchell of the World Bank points out, “if you want to help consumers, you can do it without destroying your producers but only if you go about it in the right way.” In reality, many of the recent price controls are blatant politicking. About half the countries that imposed price controls did so before elections or other big political events. Russia's are due to run out just after next year's presidential election. Funny, that.
There is one last important knock-on effect of agflation. It is likely to help shift the balance of power in the world economy further towards emerging markets. Higher food prices have increased inflation around the world, but by different amounts in different countries. In Europe and America food accounts for only about one-tenth of the consumer-price index, so even though food prices in rich countries are rising by around 5% a year, it has not made a big difference. There have been clucks of concern from the European Central Bank and a consumer boycott of pasta in Italy, but that is about all. In poor countries, in contrast, food accounts for half or more of the consumer-price index (over two-thirds in Bangladesh and Nigeria). Here, higher food prices have had a much bigger impact. Inflation in food prices in emerging markets nearly doubled in the past year, to 11%; meat and egg prices in China have gone up by almost 50% (although that is partly because pork prices have been pushed up by a disease in pigs). This has dragged up headline inflation in emerging markets from around 6% in 2006 to over 8% now. In many countries, inflation is at its highest for a decade.

Central bankers are determined to ensure that what could be a one-off shift in food prices does not create continuing inflation by pushing up wages or creating expectations of higher prices. So they are tightening monetary policy. China increased interest rates in August, Chile in July, Mexico in May. The striking thing about these rises is that they are the opposite of what has been happening in some rich countries. The Federal Reserve reduced rates by 50 basis points in September and 25 points in October; the Bank of Canada cut rates this week. The indirect effect of food-price rises has therefore been to widen the interest-rate differential between rich and emerging markets. And all this is going on as the economic balance of power is shifting. Growth in America and Europe is slowing; China and India are going great guns. Financial confidence in the West has been shaken by the subprime-mortgage crisis; capital flows into emerging markets are setting records. This shift will be tricky to handle. Such transitions always are. The risk is of a bubble in emerging markets. As Simon Johnson, the IMF'S director of research, wryly notes, “every bubble starts with a change in the real economy.” Food markets are an obvious place to start. How emerging countries fare—and how poor consumers cope—depends on their economic policies. The imposition of food-price controls was not exactly a good start.

The end of cheap food
Dec 6th 2007

Rising food prices are a threat to many; they also present the world with an enormous opportunity. For as long as most people can remember, food has been getting cheaper and farming has been in decline. In 1974-2005 food prices on world markets fell by three-quarters in real terms. Food today is so cheap that the West is battling gluttony even as it scrapes piles of half-eaten leftovers into the bin. That is why this year's price rise has been so extraordinary. Since the spring, wheat prices have doubled and almost every crop under the sun—maize, milk, oilseeds, you name it—is at or near a peak in nominal terms. The Economist's food-price index is higher today than at any time since it was created in 1845 (see chart). Even in real terms, prices have jumped by 75% since 2005. No doubt farmers will meet higher prices with investment and more production, but dearer food is likely to persist for years (see article). That is because “agflation” is underpinned by long-running changes in diet that accompany the growing wealth of emerging economies—the Chinese consumer who ate 20kg (44lb) of meat in 1985 will scoff over 50kg of the stuff this year. That in turn pushes up demand for grain: it takes 8kg of grain to produce one of beef.
But the rise in prices is also the self-inflicted result of America's reckless ethanol subsidies. This year biofuels will take a third of America's (record) maize harvest. That affects food markets directly: fill up an SUV's fuel tank with ethanol and you have used enough maize to feed a person for a year. And it affects them indirectly, as farmers switch to maize from other crops. The 30m tonnes of extra maize going to ethanol this year amounts to half the fall in the world's overall grain stocks.
Dearer food has the capacity to do enormous good and enormous harm. It will hurt urban consumers, especially in poor countries, by increasing the price of what is already the most expensive item in their household budgets. It will benefit farmers and agricultural communities by increasing the rewards of their labour; in many poor rural places it will boost the most important source of jobs and economic growth.
Although the cost of food is determined by fundamental patterns of demand and supply, the balance between good and ill also depends in part on governments. If politicians do nothing, or the wrong things, the world faces more misery, especially among the urban poor. If they get policy right, they can help increase the wealth of the poorest nations, aid the rural poor, rescue farming from subsidies and neglect—and minimise the harm to the slum-dwellers and landless labourers. So far, the auguries look gloomy.
In the trough
That, at least, is the lesson of half a century of food policy. Whatever the supposed threat—the lack of food security, rural poverty, environmental stewardship—the world seems to have only one solution: government intervention. Most of the subsidies and trade barriers have come at a huge cost. The trillions of dollars spent supporting farmers in rich countries have led to higher taxes, worse food, intensively farmed monocultures, overproduction and world prices that wreck the lives of poor farmers in the emerging markets. And for what? Despite the help, plenty of Western farmers have been beset by poverty. Increasing productivity means you need fewer farmers, which steadily drives the least efficient off the land. Even a vast subsidy cannot reverse that.
With agflation, policy has reached a new level of self-parody. Take America's supposedly verdant ethanol subsidies. It is not just that they are supporting a relatively dirty version of ethanol (far better to import Brazil's sugar-based liquor); they are also offsetting older grain subsidies that lowered prices by encouraging overproduction. Intervention multiplies like lies. Now countries such as Russia and Venezuela have imposed price controls—an aid to consumers—to offset America's aid to ethanol producers. Meanwhile, high grain prices are persuading people to clear forests to plant more maize.
Dearer food is a chance to break this dizzying cycle. Higher market prices make it possible to reduce subsidies without hurting incomes. A farm bill is now going through America's Congress. The European Union has promised a root-and-branch review (not yet reform) of its farm-support scheme. The reforms of the past few decades have, in fact, grappled with the rich world's farm programmes—but only timidly. Now comes the chance for politicians to show that they are serious when they say they want to put agriculture right.
Cutting rich-world subsidies and trade barriers would help taxpayers; it could revive the stalled Doha round of world trade talks, boosting the world economy; and, most important, it would directly help many of the world's poor. In terms of economic policy, it is hard to think of a greater good.
Where government help is really needed
Three-quarters of the world's poor live in rural areas. The depressed world prices created by farm policies over the past few decades have had a devastating effect. There has been a long-term fall in investment in farming and the things that sustain it, such as irrigation. The share of public spending going to agriculture in developing countries has fallen by half since 1980. Poor countries that used to export food now import it.
Reducing subsidies in the West would help reverse this. The World Bank reckons that if you free up agricultural trade, the prices of things poor countries specialise in (like cotton) would rise and developing countries would capture the gains by increasing exports. And because farming accounts for two-thirds of jobs in the poorest countries, it is the most important contributor to the early stages of economic growth. According to the World Bank, the really poor get three times as much extra income from an increase in farm productivity as from the same gain in industry or services. In the long term, thriving farms and open markets provide a secure food supply.
However, there is an obvious catch—and one that justifies government help. High prices have a mixed impact on poverty: they hurt anyone who loses more from dear food than he gains from a higher income. And that means over a billion urban consumers (and some landless labourers), many of whom are politically influential in poor countries. Given the speed of this year's food-price rises, governments in emerging markets have no alternative but to try to soften the blow.
Where they can, these governments should subsidise the incomes of the poor, rather than food itself, because that minimises price distortions. Where food subsidies are unavoidable, they should be temporary and targeted on the poor. So far, most government interventions in the poor world have failed these tests: politicians who seem to think cheap food part of the natural order of things have slapped on price controls and export restraints, which hurt farmers and will almost certainly fail.
Over the past few years, a sense has grown that the rich are hogging the world's wealth. In poor countries, widening income inequality takes the form of a gap between city and country: incomes have been rising faster for urban dwellers than for rural ones. If handled properly, dearer food is a once-in-a-generation chance to narrow income disparities and to wean rich farmers from subsidies and help poor ones. The ultimate reward, though, is not merely theirs: it is to make the world richer and fairer.

The sound of Revolution

Mensen, Om jullie te informeren & Please feel free to forward. De aanloop naar de Amerikaanse presidentsverkiezingen 2008 zijn begonnen. En er is misschien iets uitzonderlijks aan het gebeuren. (Vergeet Leterme) Een complete underdog, Ron Paul, krijgt de steun vanuit alle lagen van de maatschappij, vanuit alle politieke strekkingen, van anarchisten tot conservatieven. Hij is immens populair op het internet aan het worden omdat hij door de Amerikaanse (en Europese) massamedia wordt genegeerd. De massamedia acht hem geen winstkansen toe. En in veel polls wordt hij genegeerd..hoe lang nog? Aan alle ambtenaren die dit lezen: Shove it up your ass! (want deze kandidaat wil de overheid inperken.) Enkele filmpjes op You Tube: Hoe de massamedia Ron Paul probeert te breken: http://www.youtube.com/watch?v=ZJDqneN4weE&feature=related Boston Tea Party: What is all the fuss about?: http://www.youtube.com/watch?v=oG_OwTthS-E&feature=related Enkele standpunten uitgelegd door Ron Paul: http://www.youtube.com/watch?v=IWfIhFhelm8&feature=related Europa voor Ron Paul/ Strasbourg Tea Party: http://www.youtube.com/watch?v=07TVBLFroSM België voor Ron Paul: http://www.youtube.com/watch?v=Az2lhPhBCUo Who is Ron Paul? De Amerikaanse presidentsverkiezingen voor 2008 worden zéér interessant met dank aan 1 persoon: Ron Paul. Hij is presidentskandidaat voor de Republikeinse partij en houdt er enkel uitzonderlijke standpunten op na. Less government Hij doet niet denken aan andere Republikeinen zoals Bush & co Ron Paul is van de libertarische strekking en vrijheid, liberty, staat bij hen centraal. Vrijheid voor het volk gaat niet samen met een steeds groter wordende overheid. Government is not the solution, it is the problem, zoals Ronald Reagan zei. De overheid legt de mensen teveel op. De vrijheid moet terug naar de mensen keren. Ron Paul brengt een hoopvolle visie, samen met jarenlang consequent stemgedrag in het Congres, hij is tegen de oorlog en voor persoonlijke vrijheid zonder gereguleer van de overheid. Als congreslid stemt Ron Paul consequent tegen alle wetten die de overheid meer macht geven en groter maken. Ron Paul is tegen een groter wordende overheid want de geschiedenis leert dat dit altijd leidt tot het failliet van de staat. Hiervoor boeten uiteindelijk enkel de burgers van de middenklasse en de onderste klassen. Ron Paul is tegen government spending. Ron Paul wil de belasting op inkomen afschaffen. Hij wil de IRS afschaffen. Hij wil de Amerikaanse centrale bank afschaffen. Als de overheid veel minder belastingen kan innen, hoe kan ze dan nog rondkomen? Simpel, zegt Ron Paul, de overheid moet minder geld uitgeven. Ron Paul stemde tegen de oorlog in Irak en herhaalde dit consequent, in tegenstelling tot de meeste andere kandidaten zoals Hillary Clinton. Ron Paul wil alle Amerikaanse troepen in de wereld (niet enkel uit Irak) terugtrekken. Ron Paul is voorstander van non-interventionisme. De oorlogen kosten te veel offers, mensenlevens en geld, van het Amerikaanse volk. De oorlogen leiden Amerika naar het bankroet. Ron Paul wil het monetaire systeem onder de goudstandaard herstellen. De goudstandaard is het enige eerlijke monetaire systeem dat door de overheid niet kan gemanipuleerd worden, dit in tegenstelling tot het huidige fiat monetaire systeem dat van kracht is sinds Bretton Woods. Het fiat systeem creëert inflatie en inflatie is een verborgen vorm van belastingen. Ron Paul heeft nog vele andere standpunten omtrent gezondheidszorg, tegen de nationale identiteitskaart, etc. Als gynaecoloog bracht hij duizenden kinderen ter wereld. Hij is tegen abortus. Op die manier begrijpelijk. Ron Paul is immens populair aan het worden. Er onstaat een golf van enthousiasme via het internet waar Ron Paul dé populairste kandidaat is. Amerikaanse president word je enkel als je veel geld kan inzamelen om campagne te voeren. Ron Paul vindt weinig steun bij grote bedrijven, in tegenstelling tot Clinton, Obama, Giuliani. Maar de massa steunt hem! Op 5 november (Remember, remember!) 2007 haalde hij op 1 dag de het grootste bedrag aan inkomsten in van alle kandidaten, dankzij een zogenaamde 'money bomb' waarbij een massa aan mensen persoonlijke bijdragen gaven van 100 $. Op Amerikaanse televisie komen de eerste debatten. Ron Paul wint hard maar de mainstream media trekt het succes in twijfel en denkt dat de internetgemeenschap sjoemelt met de cijfers. Het succes van geldinzameling van 5/11 liegt er nochtans niet om. Niet alleen zamelde nog nooit iemand zoveel geld in op 24 uur. Het geld kwam ook van tienduizenden verschillende personen, géén grote geldschieters maar gewone mensen. Nu blijft de pro Giuliani-Clinton massmedia Ron Paul in twijfel te trekken ondanks zijn succes. Op 5 november werd Bonfire Night of Guy Fawkes Night herdacht. Op 5 november 1605 zorgde Guy Fawkes voor vuurwerk in het Britse Parlement. Letterlijk! Deze gebeurtenis wordt ook aangehaald in de film 'V for Vendetta'. De ganse wereld begint Ron Paul te steunen. In Europa komt er de Strasbourg Tea Party op 16 december 2007 waar de Boston Tea Party wordt herdacht. De Boston Tea Party (16 december 1773) betekende het begin van de Verenigde Staten van Amerika. De VSA staat op dit moment voor een immense uitdaging. Ofwel komt er een revolutie waarbij de overheid grondig wordt veranderd ofwel zal het met de VS van kwaad naar erger gaan. De Strasbourg Tea Party zal op 16 december plaatsvinden voor het Europese Parlement om aan te tonen dat de Europese Parlementsleden hun volk NIET meer vertegenwoordigen. Big Government is niet alleen een bedreiging in de VS, het is een bedreiging in gans Europa. Het leidt geen twijfel dat de Belgen hier nog het meest onder leiden. België dat belachelijk kleine land met 6 regeringen… Hoe lang laten de mensen zich zo nog beroven? (natuurlijk lijkt een groot deel van de mensen mee te profiteren, want veel te veel mensen werken voor deze overheden. Deze ambtenaren betalen echter ook de prijs, onder de vorm van inflatie. Dé verborgen belasting.) Een politicus, Ron Paul, tegen een grote overheid. Het lijkt onwaarschijnlijk. Ron Paul is géén politicus. Hij is een staatsman! Ron Paul wil de fundamenten van de Amerikaanse staat herstellen zoals de founding fathers het bedoeld hadden. Was ik een Amerikaan én niet gebrainwasht door massamedia, ik stemde op Ron Paul. Ik ben het niet helemaal eens met zijn visie op het buitenlands beleid. Maar zijn economische visie en zijn idee over wat de overheid moet inhouden, is er 'boenk' op! Voor de fans nog een filmpje van Ron Paul over Monetaire inflatie: http://www.youtube.com/watch?v=nj9KHJRRUbQ&feature=related En voor de jongens die de moed hadden om tot naar beneden te scrollen: De Ron Paul girl! http://www.youtube.com/watch?v=sIC81MJfWXQ&feature=related De media over Ron Paul girl: http://www.youtube.com/watch?v=A6mBCC4dt0Y

Slechtste beursadvies voor 2008!

Het wordt tijd dat ik er werk van maak om wat meer informatie over de stierenmarkt in goud bijeen te pennen. Héél veel mensen weten niet waarover het gaat en wat het allemaal zal teweeg brengen. Ik zal proberen de komende maanden hierover meer verduidelijking te verschaffen. It is time to give people more information about the bull market in gold. A lot of people still do not know what is going on and what we are heading for. It it time to clear some things up. In advance, I invite you to read the latest advice on gold by Goldman Sachs. After reading, go to your bank and do the exact opposite transaction. Banks are in big trouble. It is time to stop trusting them. It is in gold that we should trust! Do not believe the decline in the dollar is over. There is a long term trend and it is down. The dollar is loosing its status as a world currency. Gold will profit from this big time. Gold, Silver Fall as Dollar Rebounds, Goldman Sachs Says `Sell' By Pham-Duy Nguyen Nov. 29 (Bloomberg) -- Gold and silver fell for a third straight day after a gain in the value of the dollar reduced demand for the precious metals as alternative investments. The dollar rose after a report showed U.S. economic growth surged in the third quarter. Goldman Sachs Group Inc. said the currency's decline is nearing an end and urged investors to sell gold. The metal still has gained 26 percent this year after the euro climbed to a record against the dollar. ``Gold's raving rally is over,'' said Frank McGhee, the head metals trader at Integrated Brokerage Services LLC in Chicago. ``The euro is pulling back. We're going to see an easing of inflation and geopolitical issues.'' Gold futures for February delivery fell $5, or 0.6 percent, to $802.30 an ounce on the Comex division of the New York Mercantile Exchange. The price reached a 27-year high of $848 on Nov. 7. Silver futures for March delivery fell 8.8 cents, or 0.6 percent, to $14.445 an ounce. The metal still is up 12 percent this year. Gold may decline 15 percent to 20 percent next year as turmoil in financial markets eases and a slump in the dollar will slow, Goldman Chief Economist Jim O'Neill said. Dollar Rally The dollar rose as expectations for another interest-rate cut this year eased. Interest-rate futures showed a 68 percent chance the Federal Reserve will lower the overnight lending rate to 4.25 percent by Dec. 11, compared with a 94 percent chance yesterday. The Fed cut its benchmark rate by 0.25 percentage point to 4.5 percent on Oct. 31, the second reduction this year. Gold may be too costly for jewelers, the biggest buyers of the metal, some analysts said. Jewelers accounted for about 67 percent of purchases last year, according to the producer-funded World Gold Council. ``We continue to consider gold expensive at $800 an ounce,'' said John Reade, an analyst for UBS AG in London. ``We continue to look for an opportunity to get tactically long of gold again, but need to see speculative positioning reduced and jewelry demand return.'' UBS expects gold to fall to $750 within a month. Speculative long positions, or bets prices will rise, outnumbered short positions by 172,390 contracts on the Comex in the week ended Nov. 20, data from the U.S. Commodity Futures Trading Commission show. Net-long positions fell by 18,395 contracts, or 10 percent, from a week earlier. Gold is headed for the seventh straight annual gain. Last year, the metal rose 23 percent as the dollar fell 10 percent against the euro. Investment demand in the StreetTracks Gold Trust, an exchange-traded fund backed by bullion, has risen 34 percent this year to a record 609 metric tons.

Today was a disappointing day for goldwatchers. As everyone was looking for gold to break above 700$/ounce, gold fell almost 10$ back around 680$. Now momentum seems gone to have a break out in the coming days. Although the dollar is at historically weak levels, gold fell back during this trading session, first in Asia and Europe, and when the NY session began, it took a second hit down. It began in rumours in Asia where stockmarkets fell a 3 percent. Chinese growth sparks rate fears, the yen rose versus the dollar, fears of unwinding carry trade, cot commercial traders dumped some positions. At the time of this writing, gold is staying strong in the aftersession going up to 684. Gold didn't fell below 680 what is very positive. Tomorrow will be a very important day for the short term. Dollar and hedge funds will be the ennemies. Now every man and his dog is bearish on the dollar but what would happen if the dollar takes the turn and rises up from these low levels? Hedge funds can beat up tommorows gold price if they don't have the guts to stay through the weekend at the goldprices. This happened several times the last months and it happened most of the times on friday. Anyway this is very short term chat, the goldchart is a stairway to heaven. Since the last high of May 2006 we saw four significant moves from gold. The goldprice attacked three times the levels of 685$. We had three big corrections but the lows were always higher. It strenghtens our believe that gold will not fall far from here. And if it would, it will be another great opportunity to catch up some bullion at bargain prices. But if gold recovers tommorow it will take the 2006 record down. We should look at the chart of last years ultimate spike. Last year in mid April, on one particular day, gold was taken down from 640 to the price of 620 dollars. The next day it was able to beat the negative sentiment and the following weeks it spiked to 730. Will the same happen tommorow?

Hier gaat het om.

De filosofie achter goud. Waarom goud? Goud heeft een intrinsieke waarde. Het is zeldzaam en schaars. Papier is dat niet (of toch véél minder) Papier kan zomaar worden bijgedrukt. Goud kan niet worden bijgedrukt. Er kan ook maar zoveel worden ontmijnd als er in de grond zit. En dat is niet veel! Het aanbod is dus klein. Goud is dus enkel weinig waard als er niet veel vraag naar is. De laatste jaren stijgt die vraag echter. Centrale banken die zich willen ontdoen van de dollar zoals die van Argentinië, Rusland, China, Arabische landen, etc. zijn van plan hun goudreserves op te drijven. Ze doen dit met mondjesmaat. En zonder dit teveel bekend te maken aan de buitenwereld. Stel je voor dat China, de sterkst stijgende economische grootmacht, zou zeggen dat ze liever goud hebben dan dollars. De dag dat dit gebeurt, stijgt goud enorm. En die dag komt eraan. De goudprijs staat in tegenstelling tot de dollar. Als de dollar in waarde daalt, stijgt de goudprijs. Dat is al decennia zo. De laatste jaren is goud zelfs in waarde gestegen wanneer de dollar niet daalde! Dit is veelzeggend. De goudprijs gaat mee met de inflatie. Als er een grote inflatie is, vluchten men naar goud. Goud is een toevluchtsoord in barre tijden. Dit is altijd al zo geweest. De goudprijs heeft ook een hoge correlatie met de prijs van olie. Als olie duur wordt, wordt goud veel waard. Dit is al altijd zo geweest. De goudprijs stijgt ook sterk bij onrust in de wereld. Als er schokkende politieke gebeurtenissen bijvoorbeeld. Ik heb het over terroristische aanslagen, atoomproeven, oorlogen, et cetera. Wanneer is goud veel waard geweest? Namelijk veel waard in nominale waarde. De hoogste waarde van goud in dollar was in 1980. Toen was goud eens iets meer dan 800 dollar waard. (De goudprijs in dollar wordt berekend per ons goud. De ons is een eenheid voornamelijk gebruikt voor goud. Eén ons weegt 31,1 gram. Als je dus 31,1 gram goud koopt, betaalde je dus in 1980 meer dan 800 dollar daarvoor.) Daarna is het in dollarwaarde gedaald. Het is tot in de jaren negentig gedaald tot 250 dollar. Vandaag is 1 ons goud 680 dollar waard. De laatste vijf jaar is goud meer dan verdubbeld in waarde. In mei 2006 was het zelfs al even meer dan 700 dollar waard. Dat verdient dus meer dan op een spaarboekje. Een spaarboekje is trouwens een gigantisch slechte belegging. De inflatie is jaarlijks volgens de overheid 2% (In werkelijkheid zeker dubbel zo veel!) Een spaarboekje brengt amper zoveel op. Je geld wordt dus nog steeds minder waard! Waarom zeg ik dat goud een goede belegging is in de komende jaren? Omdat de dollar zal dalen, zal goud stijgen. Omdat de inflatie zal toenemen, zal goud stijgen. Omdat de olieprijs zal stijgen, zal goud stijgen. Omdat goud een baissemarkt van twintig jaar heeft overleefd. De trend is al enkele jaren omgekeerd. Maar de goudprijs heeft nog een lange weg (bergop) af te leggen. Geniet van het klimmen!