Monday, May 19, 2008

hungry yet?

You may be soon. The food crisis worldwide is growing daily, creating desperate conditions for millions of people who rely on commodities of wheat and corn and rice. Almost everything I read mentions ethanol as a prime reason, but few sources note that the US has vast acreages of tillable land which could be turned to corn production if farmers weren't being paid to let it lie fallow.

Mr. Bush suggests that India is eating better, thus throwing the world into panic. India's justifiable response is "fuck you fat American pigs" and rightfully so. Nouveau riche China is increasing its consumption of meat and this, too, is blamed for the worldwide, spreading crisis in food.

But there's little discussion of how countries like Haiti lost their small farmers, because that is a tragedy that relates to mindnumbingly complex intervention by the never-benevolent IMF and World Bank, subsidized exports from this and other first world countries. It is mind numbing and important, because the destruction wrought upon Haiti and other 3d world nations by globalization and free market economics has been devastating. Another post, another day.

But almost none of the articles I read about the food crisis mention hedge funds and the speculation that is part and parcel of those secretive enterprises. They operate with billions and billions of capital with virtually no oversight or regulation. None of our presidential candidates, Democrat or Republican, have any interest in exploring the possibility of regulating these incredibly powerful financial institutions.

One hedge fund manager took home $3.8 billion last year. That's about $1.9 million an hour, assuming a standard work week of 40 hours and a standard (ha!) vacation of two weeks and that math takes me back to Teddy Kennedy's rant on the minimum wage, his desperate fight to get it raised to a little over $7 an hour for the lowest wage workers in this nation.

$3.8 billion in a year. That is, honestly, obscene. Obscene. And riches accumulated through hedge fund "work" are generally taxed at 15% ~ about what your average low- to mid-range wage worker pays in taxes.

I don't like hedge funds. I don't like the secretive nature of them, their ability to do on an incredibly damaging and very large scale what one-man-and-a-keyboard day traders were accused of doing to the stock market in the late '90s. That is manipulation on an unimaginable scale; having the ability to wreak havoc in the world's economy with no accountability at all. They can make money from things going well, but they can make as much, or more, when the economy goes to hell and the world is in crisis and it's a tiny little step to creating that very crisis in the interest of more profit.

Which brings me back to food. Britain's New Statesman says it far better than I.

This latest food emergency has developed in an incredibly short space of time - essentially over the past 18 months. The reason for food "shortages" is speculation in commodity futures following the collapse of the financial derivatives markets. Desperate for quick returns, dealers are taking trillions of dollars out of equities and mortgage bonds and ploughing them into food and raw materials. It's called the "commodities super-cycle" on Wall Street, and it is likely to cause starvation on an epic scale.

The rocketing price of wheat, soybeans, sugar, coffee - you name it - is a direct result of debt defaults that have caused financial panic in the west and encouraged investors to seek "stores of value". These range from gold and oil at one end to corn, cocoa and cattle at the other; speculators are even placing bets on water prices.

Just like the boom in house prices, commodity price inflation feeds on itself. The more prices rise, and big profits are made, the more others invest, hoping for big returns. Look at the financial websites: everyone and their mother is piling into commodities. It is the great bull market of the Noughties. The trouble is that if you are one of the 2.8 billion people, almost half the world's population, who live on less than $2 a day, you may pay for these profits with your life.

So we now have a food crisis, fast on the heels of a housing crisis, essentially created by the same conscienceless investment organizations whose sole aim is to turn a profit no matter the cost. I recognize that's the purpose of business; that's why the pure free market as proposed by Milton Friedman and other neoliberal economic asshats will never work. Unbridled greed is dangerous to living things.

At this point, there is little or no political interest in providing oversight of the hedge funds and their activities. No one is seriously proposing limiting them in any way; not in this country, never here, where we worship the myth of the free market, the very one subsidized by taxpayers in the form of corporate welfare.

In this country, most of us can suck it up and pay higher prices at the grocery store and cut back a little elsewhere. But we are fortunate, far more so than the world as a whole. What we can suck up and deal with, too many in the rest of the world cannot.

Just for one day ~ one single day ~ I would like to see Wall Street awash in the blood of innocents destroyed by greed. How much is enough for us? How much is enough for the man who takes home $3.8 billion dollars? How much is enough when that profit is taken at the cost of thousands of lives, of millions? And when will America wake up?

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Anonymous Anonymous said...

This comment has been removed by a blog administrator.

May 20, 2008 6:35 PM  
Anonymous Anonymous said...


May 20, 2008 7:29 PM  
Blogger Dusty said...

Troll meat..its what's for dinner!

Good analysis BaB..this puppy is going up on Sirens if you don't mind!

May 21, 2008 11:58 AM  
Blogger Lily's Mommy said...

Great post. I don't think we'll ever completely know how the world is run. I'm sure it's by special interest groups who really don't give a shit about the earth or her people.

I wonder if the current food shortage is a way of getting rid of some of those pesky poor people.

I also wonder if anyone has enough courage or strength left for a revolution?

May 21, 2008 2:17 PM  
Blogger Bad American said...

The hedge fund guys? Lamp posts. That's my solution. Hang them. And then confiscate.

Hell, I'm already on the Main Core list - what the hell else they gonna do to me? Shoot me twice? :)

May 22, 2008 1:22 PM  
Anonymous Anonymous said...

Your comments on hedge funds show an egregious lack of knowledge on how the financial system works. There are things that are ridiculous about them, no doubt, but keep in mind they also employ hundreds of thousands of people through their work.

The biggest problem with the food shortages comes from the ridiculous subsidies our government provides farmers with. Subsidies the congress just approved, yet again. Eliminating the subsidies would go a long way in bringing prices back down.

That being said, I'm not sure they need top come down. Americans are hardly starving, as our waste lines show.

May 23, 2008 9:09 AM  
Blogger BigAssBelle said...

anonymous, your comment on hedge funds shows an egregious lack of knowledge about what they are.

there isn't anyone in any governmental, regulatory or private agency who actually even knows what they do.

the fact that they secretively, without oversight, accountability or regulation, control massive sums of cash ~ nearly 2/3 of which may be leveraged ~ is a danger to all of us.

all is well when they are successful. but should they miss the boat and that leveraged cash come due, the disaster we've seen with the subprime debacle may be nothing.

the problem is not subsidies, nor is it that the free market isn't free enough. the problem is not nearly so simple, as i'm sure you really know in your heart.

like most others now, your suggestion that the problem is subsidies indicates a lack of information: everyone is dancing around the issue with both food and oil.

the issue is not suddenly biofuels or increased demand for oil or global warming, etc. etc. etc.

all of those factors may contribute somewhat. but what has happened in the world since early last summer is nothing more than speculation. by hedge funds. and it's driving the price of commodities sky high.

do you care only about Americans? that our waistlines are too large is your only concern? how tragic that you could ignore the millions and millions and millions who do not live here.

May 23, 2008 9:15 AM  
Anonymous Anonymous said...

Actually, I do care about more than Americans, though it's funny you state that, because a lot of the policies you seem to support seem to be primarily for the good of Americans to the detriment of the rest of the world. For example, There is a lot of talk about re-negotiating NAFTA (I'm not sure where you personally stand no that issue). And yet, by doing so, we'd be benefitting Americans to the detriment of Canadians and Mexicans. There is a lot of talk about protectionism and not allowing jobs to be shipped overseas, and yet by doing so, we are depriving people in other countries from having jobs and means of living. As you rightly point out, it's much more complicated than that. We have to understand that when we make decisions to manage the economy, we are making decisions about who will benefit- and who will not. And a simple "benfit the poor by taking from the rich" may sound good on the surface, but they are all interconnected, and it's just not that simple. Again, I point out, that the money controlled by hedge funds- right or not- keeps hundreds of thousands (if not millions) of people employed and able to put food on their tables, etc. So, if we suddenly stop allowing hedge funds to make money- again not judging whether or not that's right or not- we have to be prepared that the fallout from that is not that the rich will be hurt (they have enough money to last them a lifetime already) but rather the middle class who rely upon the spending of that capital to make a living. I know I depend on wealthy people to spend money on my products in order to make a living. I'm fine with that: I am doing something I love, I'm lucky. I also know the charity I volunteer for would not exist if not for wealthy people- some of them hedge fund managers- donating a lot of their money to the organization.

The problem with war- class or otherwise- is that there are no winners. Obama has said we must be willing to talk with our enemies and negotiate win-win situations through diplomacy. I view this as no different. Otherwise, we all lose.

May 23, 2008 1:55 PM  
Blogger Dusty said...

NAFTA hasn't done shit for Mexican citizens. Their standard of living is lower than it was before NAFTA for Christs sake. Lets get a handle on that bullshit lie ok?

May 23, 2008 3:47 PM  
Anonymous Anonymous said...

-Trade between the US and MEXICO increased from $81 billion to $232 billion dollars.

-NAFTA helped spur the election of the first opposition-party official in 71 years.

-Since NAFTA's implementation, Mexico has passed higher regulatory standards and better labor rights.

-Mexico's non-oil exports have grown 4 times and direct foreign investment in the country has increased by 14 times since NAFTA was implemented.

To me, those statistics (available on the USDA website) demonstrate ways in which NAFTA have helped Mexico. There may be some negatives as well (which I'd like to hear about), but that is just silly to say NAFTA hasn't "done shit" for Mexico and that it's a "bullshit lie" to say otherwise. Don't you understand that by being so extreme you actually end up turning people off? If you approach the situation with facts and reason, pointing out the bad with the good, then it's easier to move forward and find solutions that benefit everyone.

May 23, 2008 5:01 PM  
Blogger BigAssBelle said...

anonymous, i don't think the policies i'm talking about are good for anyone except the ultra rich.

please show me where you pull your data from re hedge funds. they employ "hundreds of thousands" and "millions" of people employed? where? who? in what country?

i'm not suggesting that hedge funds should be stopped from making money. i am only suggesting that for the good of all of us, the secretive nature of hedge funds should be reduced and there should be some ~ as opposed to none, zero, zilch ~ oversight as to their activities.

if they were operating as some little mom and pop day trading outfit, i wouldn't give a shit. but the kinds of $$ controlled by the funds has the potential of devastating the world ~ world ~ economy.

i am very, very uncomfortable with that, especially given the fact of the drastic and increasing rise in the prices of food and oil just in the last 6-9 months. the most common explanations don't make sense. speculation does.

when i speak of the rich, i am not talking about the comfortable, the upper class, folks who make a few hundred thousand a year or even a few million.

i am talking about the ultra elite and select top 1% who control the vast majority of the wealth in the world. i don't even personally know any of those folks; i doubt most of those people do either.

your argument that we must not rock the boat of the rich because the fallout will hurt the rest of us doesn't work for me. that's like telling the slaves not to fight for freedom because the slave owners might not feed them.

old data, and i don't have it at the moment, but i have read reports which indicate that as a percentage of income, middle class folks donate a greater portion of their $$ to charity than do the rich and undoubtedly the ultra ultra rich of whom i generally speak.

i disagree as to there being no winners. there are certainly no winners now, except that select, invisible few. there is nothing that prohibits a more fair and equitable world, nothing.


as to nafta. i have to agree with dusty. not a lot of improvement for the mexican citizens. a great deal of improvement for multinational corporations. much devastation to the mexican middle class who are being run out of business by the likes of wal-mart and home depot and staples.

i haven't time to look up all of the data, but here's just a bit:

Despite promises about the benefits of NAFTA, the average Mexican did not experience these benefits after the implementation of the agreement. During the first two months of 1995, interest rates rose from 35% to 59%, reportedly causing more than $2.5 billion in investments to flee the country. The stock market dropped 24%, hundreds of companies closed down, and more than 250,000 Mexicans lost their jobs. Since the devaluation, the peso has continued to decline, moving from 3.1 pesos to the dollar in January 1994 to 8.2 pesos currently.

Workers in the United States did not see the benefits of the trade agreement either. The first year and a half of NAFTA saw the U.S. trade deficit with Mexico grow by $4 billion and nearly 80,000 U.S. workers lost their jobs. Workers to the south were no better off: wages in Mexico declined by 40%-50%. While the cost of living rose by 80%, salaries increased by only 30%. The inflation rate in 1996 rose to over 51% and 20,000 small and medium sized businesses went bankrupt due to increased competition from multinational corporations. As of 1996, more than 2.3 million Mexican people had lost their jobs since the implementation of NAFTA. Prices of basic necessities such as gasoline, electricity and tortillas rose at an unprecedented rate. One year after the crash of the peso, three-quarters of Mexican families could no longer afford the basic foods and services required to keep them above the poverty line

May 23, 2008 6:26 PM  
Blogger BigAssBelle said...

oh, and of course, once the peso was devalued and mexico hit a major economic crisis, post-nafta, they needed to seek help and went, of course, to the usual suspects: world bank, IMF.

help was, of course, offered and it came, of course, with the typical strings: here's your money, now privatize this and privatize that and sell off this publicly owned institution (to outsiders, always, at firesale prices) and allow us this and allow us that.

on the subject of trade agreements, we have the one currently being discussed with Peru. Can you imagine any reason at all why there would be a provision in that agreement which would prevent ~ PREVENT ~ Peruvian citizens from reversing the mandated privatization of their social security system which HAS NOT WORKED?

Privatization was mandated in order for Peru to receive assistance. Just as would be the case here, it has not worked. The results have been dismal.

But in the Peruvian agreement is a clause which allows Citibank to SUE the government of Peru if they reverse the privatization of social security. A corporation is thus maintaining control of a sovereign government's and an independent peoples' activities. IT is an outrage.

May 23, 2008 6:31 PM  
Blogger BigAssBelle said...

link to a summary of discussion of this issue with Peru's trade agreement:

May 23, 2008 6:33 PM  
Blogger Dusty said...

Your statistics say nothing about how the wages and standard of living for the resident wage earner in Mexico have taken a huge shit.

Numbers are great, they can muddy the waters, as you just did. The fact remains that nothing has gotten better for the Mexican worker in Mexico since NAFTA came to town.

Quoting the USDA doesn't show anything as to the cause vs effect of what NAFTA did in the negative.Exports What benefit did the avg worker in Mexico receive from said Export increase? Nada...nada damn thing.

And don't you realize by being so cavalier about what NAFTA has wrought on Mexican wages and thereby affecting their standards of living shows how little you pay attention to the whole picture?

May 23, 2008 7:34 PM  
Anonymous Anonymous said...

I'm still waiting for anything empirical from you. Please support your argument with more than emotion.

May 23, 2008 11:07 PM  
Anonymous Anonymous said...

The overall benefits of NAFTA have been quantified by several economists, whose findings have been reported in several publications like the World Bank's Lessons from NAFTA for LA and the Caribbean, [(Lederman, Daniel; William F. Maloney & Luis Servén (2004). Lessons from NAFTA for Latin American and Caribbean Countries: A Summary of Research Findings. The World Bank. ISBN-10: 0821358138. )]

NAFTA's Impact on North America, [Weinstraub, S (2004). NAFTA's Impact on North America: The First Decade. CSIS Press: Washington, DC. ISBN-10: 089206451X. ]

and NAFTA revisited by the Institute for International Economics. [Hufbauer, G.C. & Schott, J.J . (October, 2005), "Chapter 1, Overview", NAFTA Revisited: Achievements and Challenges, Washington, DC: Institute for International Economics, pp. 1–78, ISBN 0-88132-334-9]

They assess that NAFTA has been positive for Mexico, whose poverty rates have fallen, and real income salaries have risen even after accounting for the 1994–1995 Economic Crisis. Nonetheless, they also state that it has not been enough, or fast enough, to produce an economic convergence nor to reduce the poverty rates substantially or to promote higher rates of growth. Some have suggested that in order to fully benefit from the agreement Mexico should invest in education and promote innovation as well as in infrastructure and agriculture.[(Lederman, Daniel; William F. Maloney & Luis Servén (2004). Lessons from NAFTA for Latin American and Caribbean Countries: A Summary of Research Findings. The World Bank. ISBN-10: 0821358138. )]

May 23, 2008 11:56 PM  
Blogger BigAssBelle said...

Anonymous, you don't bolster any argument by quoting World Bank economists. It's the World Bank and the International Monetary Fund that have been behind so many of the disastrous "help" which has decimated the economies of 3d world countries worldwide.

Mexico now imports more than it exports which is actually the point of the trade agreements, for the most part: to open up new markets for the biggest global corporations.

I won't cite the stats unless you want them. I don't think you're taking the time to read what I'm posting, so it's really kind of pointless. Happy to do so if you wish, though.

May 24, 2008 8:31 AM  
Blogger Dusty said...

Real wages for most Mexicans are lower than when NAFTA took effect. And Mexican wages are diverging from, rather than converging with U.S. wages, despite the fact that Mexican worker productivity has increased dramatically. From 1993 to 2003, worker productivity rose by 60 percent. In the same period, real wages declined by 5 percent.

As NAFTA intended, Mexico has become an export-dependent economy. But this has not benefited most Mexicans. Sandra Polaski of the Carnegie Endowment for International Peace points out that Mexican manufacturing is increasingly based on a production model in which component parts are imported, then processed or assembled and then reexported. In the maquiladora sector, which accounts for most exports, 97 percent of components are imported; only 3 percent are produced in Mexico. The spillover effect of such operations on the broader economy is very limited.

Quote from David Morris,co-founder and vice president of the Institute for Local Self Reliance

May 24, 2008 9:14 AM  
Anonymous Anonymous said...

I am reading everything you post, actually, and am very interested in getting all the data that's out there in order to make a comprehensive assessment. It seems there are some good things that have come from NAFTA. Again, there are bad things, too, but I'm not decided as to which outweigh the other or how to best make sure we increase the good things while eliminating the bad things. I think free trade is a good thing- maybe that's not happening here the best it can- but overall, access to other goods and markets is a positive from my experience as a small business owner.

May 24, 2008 9:38 AM  
Blogger Dusty said...

Sometimes, you have to look at who is injured by these types of plans to figure out if they are worth it.

Looking inward to your own needs is selfish.

NAFTA fills the coffers of businesses. That is the only plus to it. It has wrought havoc and a lower standard of living for many americans and all mexican citizens.

May 25, 2008 12:43 PM  
Anonymous Anonymous said...

Dusty, the coffers of busineses get filled and more people get paid as a result. IT's not always a bad thing. NAFTA has resulted in some jobs list, and some jobs gained. There's nothing selfish bout wanting to work. The selfish ones are those who want to get paid without working.

May 26, 2008 10:13 PM  
Blogger Dusty said...

Spin it however makes you feel good Anon..NAFTA has harmed more wage earners than it has helped.

May 27, 2008 1:06 AM  
Anonymous Anonymous said...

Can someone please provide data to back that claim up? The only data I've seen so far seems to indicate NAFTA has helped more than it's hurt.

May 27, 2008 12:46 PM  
Blogger Dusty said...

Then your not looking for it Pal, its all over the internets. Jesus, this isn't debate class, and none of us make this shit up.

Your pretty demanding for a friggin Anonymous troller aren't ya?

May 27, 2008 1:06 PM  
Blogger Dusty said...

Here ya go nimrod...just
a few from my delicious file:

May 27, 2008 1:13 PM  
Blogger BigAssBelle said...

sorry anon, i have to agree with dusty. you've quoted world bank data and we've provided you with a ton of other information which you apparently choose not to look at and/or consider. methinks you aren't sincere.

May 27, 2008 3:20 PM  

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