Baltic Dry Index. 1269
LIR Gold Target by 2019: $30,000. Revised due to QE.
"When billions of dollars of capital is being put to work in small markets like this, it amplifies price rises and if financial flows amplify prices of food stuffs and energy, it's not like real estate and stocks – when food prices double, people starve."
Michael Masters. Hedge fund manager.
Today, Great Britain and much of Europe are on holiday celebrating the ”worker’s paradise” wherever that may be. America leads the world in celebrating the death of mass murderer and moslem fanatic Osama bin Laden, “Mission (finally) Accomplished”, to borrow an earlier phrase. It would have been more satisfactory to have captured him, tried him and executed him, as the mass murderer he certainly was, but death in a bunker hiding in Pakistan with disposal of the body at sea, will do just as well. Who in Pakistan knew he was there?
Meanwhile, in the markets, precious metals are in something of a freefall this morning in response, presumably, to last week’s Comex margin increases. The leveraged metals game is ever rigged against the over leveraged, but with nothing changed in the fiat money game, the relentless price advance will resume again once lower prices attract back in new buyers who missed out earlier. Huge volatility was a more or less permanent feature of the giant commodities bull markets of the 1970s. Bear raids in bull markets are as old as the markets. Until the underlying cause of the bull market is fixed, sell-offs merely become temporary entry points for those who missed the earlier opportunity. This time round, precious metals are reacting to the failure of fiat currency “money”. The metals have remonitised themselves, a process that shows no sign of ending, as the central banks, lead by the Fed, continue mismanaging the fiat currencies. Later this week, the EU and IMF meet in Athens to try to head off a Greek default. More good money will likely be poured after bad. Default will be delayed but not averted.
So today, we take a look at another unintended consequence of fiat money. With central banksters everywhere creating masses of new money out of thin air, the great vampire squids have set off an a tangible asset acquisition binge. As we will see below, this has unfortunate consequences in foodstuffs. As we see all across the middle east and fear about China, food price inflation triggers unrest. It’s one thing to put up with tyrants while life is relatively good. It’s quite another when putting food on the table becomes a plaything of the squids.
There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.
John Maynard Keynes.
Should food be a protected commodity?
They've already been bashed over high pay, tax avoidance and complex derivatives that helped cause the financial crisis. Now banks are under the spotlight over their agricultural trading.
By Garry White 5:56PM BST 01 May 2011
The banks have been here before, but pressure is growing once again as observers become increasingly worried about rising food prices and food shortages.
Barclays was last week's punchbag, as protesters from the World Development Movement (WDM) took it to task for being the biggest player in food commodity trading. Deborah Doane, WDM's director, attended the Barclays annual meeting to argue that food should not be treated like any other asset class. It's essential for survival, she said, so any hint food is effectively being hoarded by investors should be stamped on.
Feelings run high on both sides of the debate. There are those who argue that freely traded commodities keep prices down. Others claim that the market is not transparent enough to be sure it's working properly and believe a glut of financial speculators creates false demand – in other words, a bubble.
Banks argue that they are simply providing liquidity, saying that food prices are fundamentally driven by a rising global population and crop shortages brought about by extreme weather. In this vein, an OECD study has concluded financial market speculation did not cause the price bubble in agricultural markets in 2007-08 that led to rioting. It's also common for investors to claim that the charities and NGOs are criticising a system they don't understand.
However, people inside the financial industries have also spoken out of their concern. Food prices rose 25pc in 2010, they point out, and there has to be a cause beyond rising demand, which is growing at 1.6pc a year.
Michael Masters, the hedge fund manager who gave testimony to the US Senate on speculation and food prices in 2008, said: "Financial speculation now accounts for more than two-thirds of the market, and only about 30pc is physical hedgers.
"When billions of dollars of capital is being put to work in small markets like this, it amplifies price rises and if financial flows amplify prices of food stuffs and energy, it's not like real estate and stocks – when food prices double, people starve."
More.
http://www.telegraph.co.uk/finance/commodities/8486698/Should-food-be-a-protected-commodity.html
Great seed robbery
April 27, 2011 By Vandana Shiva
The seed, the source of life, the embodiment of our biological and cultural diversity, the link between the past and the future of evolution, the common property of past, present and future generations of farming communities who have been seed breeders, is today being stolen from the farmers and being sold back to us as “propriety seed” owned by corporations like the US-headquartered Monsanto.
Under pressure from the Prime Minister’s Office, various state governments are signing MoUs (memorandums of understanding) with seed corporations to privatise our rich and diverse genetic heritage. For example, the government of Rajasthan has signed seven MoUs with Monsanto, Advanta, DCM-Shriram, Kanchan Jyoti Agro Industries, PHI Seeds Pvt. Ltd, Krishidhan Seeds and J.K. Agri Genetics.
The Rajasthan government’s MoU with Monsanto, for example, focuses on maize, cotton, and vegetables (hot pepper, tomato, cabbage, cucumber, cauliflower and water melon). Monsanto controls the cottonseed market in India and globally. Monsanto also controls 97 per cent of the worldwide maize market and 63.5 per cent of the genetically-modified (GM) cotton market. DuPont, in fact, had to initiate anti-trust investigations in the US because of Monsanto’s growing seed monopoly. Sixty Indian seed companies have licensing arrangements with Monsanto, which has the intellectual property on Bt. cotton.
In addition, Monsanto has cross-licensing arrangements with BASF, Bayer, DuPont, Sygenta and Dow to share patented, genetically-engineered seed traits with each other. The giant seed corporations are not competing with each other. They are competing with peasants and farmers over the control of the seed supply. And, in effect, monopolies over seed are being established through mergers and cross-licensing arrangements.
Monsanto, which controls 95 per cent of the cottonseed market, has pushed the price of seed from `7 per kg to `3,600 per kg, with nearly half being royalty payments. It was extracting `1,000 crores per annum as royalty from Indian farmers before Andhra Pradesh sued it in the Monopolies and Restrictive Trade Practices Commission.
The commodified seed is ecologically incomplete and ruptured at two levels: First, it does not reproduce itself, while, by definition, seed is a regenerative resource. Genetic resources are thus, through technology, transformed from a renewable into a non-renewable resource. Second, it does not produce by itself; it needs the help of purchased inputs. And, as the seed and chemical companies merge, the dependence on inputs will increase.
The failure of hybrid sunflower in Karnataka and hybrid maize in Bihar has cost poor farmers hundreds of crores of rupees. There are no liability clauses in the MoUs to ensure farmers’ rights and protection from seed failure. The seeds that will be used for essentially derived varieties by corporations like Monsanto are originally farmers’ varieties. The Farmers’ Rights and Plant Genetic Resources Act is a law to protect farmers’ rights, but nothing in the MoUs acknowledges, protects or guarantees farmers’ rights. It is, therefore, violative of the Farmers’ Rights Act.
The MoUs are one-sided and biased in favour of corporate intellectual property rights. The Monsanto MoU states: “Monsanto’s proprietary tools, techniques, technology, know-how and intellectual property rights with respect to the crops shall remain the property of Monsanto although utilised in any of the activities outlined as part of the MoU”. So the issue here is not technology, but seed monopoly.
More.
http://www.deccanchronicle.com/editorial/dc-comment/great-seed-robbery-394
"A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him. It is necessarily part of the business of a banker to maintain appearances, and to confess a conventional respectability, which is more than human. Life-long practices of this kind make them the most romantic and the least realistic of men."
John Maynard Keynes. "The Consequences to the Banks of the Collapse in Money Values", 1931
At the Comex silver depositories Friday, final figures were: Registered 33.31 Moz, Eligible 68.62 Moz, Total 101.93 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Time to put the Fed on the wrack again. What if you’re wrong, Dr. Bernanke?
The inflationism of the currency systems of Europe has proceeded to extraordinary lengths. The various belligerent governments, unable or too timid or too short-sighted to secure from loans or taxes the resources they required, have printed notes for the balance. In Russia and Austria-Hungary this process has reached a point where for the purposes of foreign trade the currency is practically valueless. The Polish mark can be bought for about [three cents] and the Austrian crown for less than [two cents], but they cannot be sold at all. The German mark is worth less than [four cents] on the exchanges....
Bernanke Must Have Lost My List of Questions: Caroline Baum
By Caroline Baum - Apr 28, 2011
Federal Reserve Chairman Ben Bernanke took questions from the press for 45 minutes yesterday. His answers were direct, as complete as they could be (given the vagaries of economic forecasting) and even at times groundbreaking.
We learned, for example, that when the Fed assures us of low interest rates for an “extended period,” it means for “a couple of meetings.” “We don’t know with certainty,” Bernanke added.
There was a lot left unanswered -- and unasked
----Herewith is my list of still unraised questions for Bernanke:
1. When does the Fed plan to start raising its benchmark rate and/or start shrinking its balance sheet? OK, then a follow-up: What’s your best guess when that will be?
2. How low does the unemployment rate have to go before you will be comfortable raising interest rates without risking the wrath of Congress for betraying your dual mandate to pursue stable prices and maximum employment?
3. Speaking of Congress, how do you put up with those self- serving monologues from committee members that pass as questions without saying, “Go stuff it?”
4. What keeps you up at night: concern about deflation or tulip bulbs -- and I’m not referring to the state of your garden?
5. Your predecessor, Alan Greenspan, prided himself on his ability to obfuscate. Today transparency is the rage. Has the art of central banking changed enough in the past two decades to justify the Fed’s 180-degree turn?
6. The Fed lowered its benchmark rate to a range of 0 to 0.25 percent in December 2008. Zero was considered appropriate at a time when the economy was hemorrhaging jobs, credit markets were frozen, banks were on the verge of insolvency and panic was in the air. If zero was the correct setting for the economy then, how do you justify it now?
7. In your widely quoted 2002 speech, “Deflation: Making Sure ‘It’ Doesn’t Happen Here,” you explained that the Fed has “a technology called a printing press that allows it to produce as many dollars as it wants at essentially no cost.” In December 2010, you told “60 Minutes” correspondent Scott Pelley that the Fed was not printing money. Please discuss.
8. The “extended period” language in the Fed’s statements about low interest rates was designed to anchor market rates. How do you expect to remove it and hint at the long process of normalizing rates without upending the markets? Do you have economists -- or etymologists -- working on this issue?
9. A dollar today buys only 45 cents worth of the goods and services it bought in the early 1980s, according to the Bureau of Labor Statistics. Can you explain why, in a time when prices are supposedly stable, the dollar has lost half its purchasing power?
10. Do you attach any significance to the fact that the security identification number on the Treasury’s new two-year note, auctioned this week, ends in QE3?
In answering the questions he did get, Bernanke reiterated his belief that the current rise in inflation is transitory, a result of higher food and energy prices, not the Fed’s overly aggressive monetary policy. Which brings me to one last question: What if you’re wrong?
But while these currencies enjoy a precarious value abroad, they have never entirely lost, not even in Russia, their purchasing power at home. A sentiment of trust in the legal money of the state is so deeply implanted in the citizens of all countries that they cannot but believe that some day this money must recover a part at least of its former value.... They do not apprehend that the real wealth, which this money might have stood for has been dissipated once and for all. This sentiment is supported by the various legal regulations with which the governments endeavor to control internal prices, and so to preserve some purchasing power for their legal tender....
John Maynard Keynes. "The Consequences to the Banks of the Collapse in Money Values", 1931.
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