Banksters Inflate Speculative Food Bubble, U.N. Offers Global Governance Solution

Never let a good crisis go to waste. The international bankers are taking advantage of the “food crisis” by driving up food prices in what is shaping up to be a classic case of a manufactured bubble. It is also looking like a clear model of Problem-Reaction-Solution methodology. Create the food inflation problem (of course profiting all the way up), force an enraged reaction among the public, and take more sovereignty away with the solution of global food regulation.

On July 1st, I wrote an article titled USDA Reports Food Shortages: Wall Street ‘Caught Off Guard’ by Severity, quoting a USDA report “Commodity professionals were caught off guard Wednesday by a U.S. Department of Agriculture report showing 1 million fewer acres of corn planted this year than earlier projected, and almost 300 million fewer bushels of corn in storage.” Well, the banksters seem to have made up some of their losses since being “caught off guard” by the severity of the global food crisis.

Take a look at the commodity price charts for wheat and corn. Pay particularly close attention to what has happened since July 1st:

Wheat Prices – Source: Commodity Charts

Corn Prices – Source: Commodity Charts

These charts look like a technical trader’s dream, almost as if a computer program was set to incrementally increase the prices as to not make too many headlines on the way up. The recent market speculation has now driven food commodity prices for corn and soybean to their 2-year highs. An emergency meeting Friday by the U.N.’s Food and Agriculture Organization in Rome to address the urgent shortages and sudden surge in prices had this to say:

In the past few weeks, global cereal markets experienced a sudden surge in international wheat prices on concerns over wheat shortages prompted by the drought in the Russian Federation. These unexpected events raise important questions not only about the stability of markets but, even more importantly, about the accuracy of production forecasts and ultimately the overall supply and demand prospects. However, with an increasing proportion of world grain supplies originating from the Black Sea region, an area known for large variations in yields, unexpected production shortfalls are likely to emerge more as a common feature rather than an exception in the years to come.

The Guardian reported on the meeting that, “Environmental disasters and speculative investors are to blame for volatile food commodities markets, says U.N.’s special adviser.” The article went on to quote from a research paper by the U.N.’s “special rapporteur” on food, Olivier De Schutter, which summarizes how speculation is inflating a food bubble:

‘[Beginning in ]2001, food commodities derivatives markets, and commodities indexes began to see an influx of non-traditional investors,; De Schutter writes. ‘The reason for this was because other markets dried up one by one: the dotcoms vanished at the end of 2001, the stock market soon after, and the US housing market in August 2007. As each bubble burst, these large institutional investors moved into other markets, each traditionally considered more stable than the last. Strong similarities can be seen between the price behaviour of food commodities and other refuge values, such as gold.’

He continues: ‘A significant contributory cause of the price spike [has been] speculation by institutional investors who did not have any expertise or interest in agricultural commodities, and who invested in commodities index funds or in order to hedge speculative bets.’

Certainly, the flurry of reports about the growing concerns over global food production, extreme weather, and a record-weak dollar have offered sufficient excuses for the speculation. While at the same time, the human ramifications of these events are immeasurably awful. Here’s just a few headlines from this week alone:

These are very real concerns for feeding the human population. And indeed, they are urgent matters to be solved. However, it seems too convenient to see the banksters profit, the public suffering turn to outrage, and the bank-owned government agencies to scramble for a “solution.” Haven’t we seen this Three-card Monte game enough by now? It’s a scam.

Almost right on cue, here comes the reaction from the food aid groups desperately calling for “swift action.” An ActionAid‘s hunger campaigner, Alex Wijeratna, was quoted in the Guardian article: “The emergency U.N. meeting in Rome is a clear warning sign that we could be on the brink of another food price crisis unless swift action is taken. Already, nearly a billion people go to bed hungry every night — another food crisis would be catastrophic for millions of poor people.”

If we believe Jacques Diouf, Director-General of the UN Food and Agriculture Organization, we can expect to be offered the solution of global food regulation. In June of 2009, in response to the 2008 food crisis, he called for “bolstered global governance system for world food security” under the cover of feeding the hungry. He said, “We have to build a more coherent and effective system of governance for world food security; we have to correct the policies and international trade system that have resulted in more hunger and poverty.”

Incidentally, the organization’s plans for increased global governance seem to mainly focus on divvying up the elite’s table scraps to the poor hungry nations. Under this governance, we will likely see food continue to be used as an economic weapon. It is also likely that more “free trade” agreements will be forced for food. And, finally, we can expect more focus on increasing crop yields — no doubt with the help of big agribusiness. The one thing that we are most likely NOT to see is the prosecution or regulation of the banking speculators who hold the real power to starve the poor.