You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.
Rahm Emanuel
Commodity speculators are driving grain prices higher and globalists are not about to let a crises go to waste. Via Spiegel Online:
SPIEGEL: Are you saying that someone who buys a life insurance policy is ultimately supporting speculation in wheat or cocoa?
Braun: That needs to be qualified. In a crisis like the current one, speculative behavior pervades the entire population. The millions of mothers who are now keeping 20 kilograms instead of 5 kilograms of rice in their pantries are also speculators, in a sense, because they are essentially stockpiling. Speculators involved in real grain trading fulfill an important function, because their activities signal to the market whether a given commodity is scarce and expensive or cheap and therefore available in abundance. The speculation driven by financial markets is different, because it has decoupled itself from the real market and is distorting prices.
There are several macroeconomic issues at play that investors (speculators) are factoring in. It appears that institutional investors are looking at the sideways movement in the stock market and the war on capitalism taking place in western economies and shifting their money to commodities, driving prices up. Also, the declines in value (inflation) of reserve currencies are driving prices up as well.
Capitalism is not creating food scarcity, the lack of free markets and governmental interference are driving prices up.
SPIEGEL: From a moral standpoint, it’s hardly justifiable to gamble on the scarcity of food products.
Braun: That is certainly a question we have to ask ourselves. If the prices reflect as much excessive speculation as we assume, the additional increase in prices is costing millions of people their health or even their lives, because they can simply no longer afford their staple foods.
Of course the fix to the problem we need a a cartel… I mean ‘club’… to smooth out the economic cycles.
SPIEGEL: What can be done to curb such speculation?
Braun: We have to establish a club of the key grain exporting countries. Its members should establish a reserve at the global level, a true world grain reserve, as well as a virtual granary.
SPIEGEL: What do you mean by that?
Braun: The virtual grain reserve could consist of a capital fund in the vicinity of $20 to 30 billion (about €15 to 24 billion), which could be used in crisis. For instances, when prices go haywire, this club would buy futures contracts on all the major exchanges, in Chicago, London and Paris. The money in this fund would be sufficient to buy about half of the wheat, rice and corn being traded internationally, products which are critical for poor people. In other words, the club would assume the role of a central bank for the world’s grain.
SPIEGEL: That would be a substantial intervention in global markets.
Braun: We’re talking about capping extreme price spikes in conformity with market conditions. This would probably be too much regulation for the Americans. Nevertheless, we need a global institution whose members can reliably help each other out with open grain trading during crises.
First off, this level of regulation is just the ticket for the “hope” and “change” crowd in Washington today.
To help with prices and stability, Mr. Braun is advocating creating an OPEC style ‘Club’ (cartel) to control the world’s grain market. This will make things much, much worse.
About the moral angle and the greedy speculators. They are investing in futures that not only set the price for grain, they help bring it to market. The contracts (speculation) for the purchase of grain offsets the risks that the farmer assumes because the farmer already knows what the grain is worth before it is planted and harvested. If there was no futures markets (speculation) there would be a lot less grain and it would be much more expensive.
This story reminded me of a great special about greed that John Stossel put together a few years ago:
