Posted on 12/27/2009 3:28:50 PM PST by blam
Global Food Crisis 2010 Means Financial Armageddon
Commodities / Food Crisis
Dec 25, 2009 - 04:12 PM
By: Eric deCarbonnel
If you read any economic, financial, or political analysis for 2010 that doesn’t mention the food shortage looming next year, throw it in the trash, as it is worthless. There is overwhelming, undeniable evidence that the world will run out of food next year. When this happens, the resulting triple digit food inflation will lead panicking central banks around the world to dump their foreign reserves to appreciate their currencies and lower the cost of food imports, causing the collapse of the dollar, the treasury market, derivative markets, and the global financial system. The US will experience economic disintegration.
The 2010 Food Crisis Means Financial Armageddon
Over the last two years, the world has faced a series of unprecedented financial crises: the collapse of the housing market, the freezing of the credit markets, the failure of Wall Street brokerage firms (Bear Stearns/Lehman Brothers), the failure of Freddie Mac and Fannie Mae, the failure of AIG, Iceland’s economic collapse, the bankruptcy of the major auto manufacturers (General Motors, Ford, and Chrysler), etc…
In the face of all these challenges, the demise of the dollar, derivative markets, and the modern international system of credit has been repeatedly forecasted and feared.
However, all these doomsday scenarios have so far been proved false, and, despite tremendous chaos and losses, the global financial system has held together.
The 2010 Food Crisis is different. It is THE CRISIS. The one that makes all doomsday scenarios come true. The government bailouts and central bank interventions, which have held the financial world together during the last two years, will be powerless to prevent the 2010 Food Crisis from bringing the global financial system to its knees.
Financial crisis will kick into high gear
So far the crisis has been driven by the slow and steady increase in defaults on mortgages and other loans. This is about to change. What will drive the financial crisis in 2010 will be panic about food supplies and the dollar’s plunging value. Things will start moving fast.
Dynamics Behind 2010 Food Crisis
Early in 2009, the supply and demand in agricultural markets went badly out of balance. The world experienced a catastrophic fall in food production as a result of the financial crisis (low commodity prices and lack of credit) and adverse weather on a global scale. Meanwhile, China and other Asian exporters, in an effort to preserve their economic growth, were unleashing domestic consumption long constrained by inflation fears, and demand for raw materials, especially food staples, exploded as Chinese consumers worked their way towards American-style overconsumption, prodded on by a flood of cheap credit and easy loans from the government.
Normally food prices should have already shot higher months ago, leading to lower food consumption and bringing the global food supply/demand situation back into balance.
This never happened because the United States Department of Agriculture (USDA), instead of adjusting production estimates down to reflect decreased production, adjusted estimates upwards to match increasing demand from china.
In this way, the USDA has brought supply and demand back into balance (on paper) and temporarily delayed a rise in food prices by ensuring a catastrophe in 2010.
[snip]
Land and sea shipping business is dying rapidly in the background. When they go under, the fleets are mothballed and unable to be re-activated easily.
All US grain is effectively transported on 2 rail lines.
A failed harvest is the least of our problems (and that is likely given the solar minimum we're in).
Get fat while you can.
The US CAN grow more food than we eat, but we choose to ferment and burn it instead. The US is now a net importer of food.
If you don’t believe me, go to the produce aisle and check the labels.
We are culling out the dairy herds out here in California. Too much milk. Agriculture in the US is still operating in the realms of weak markets and over production.
Luckily, we’ll all be enslaved by the Goa’uld before the food crisis hits...
Yup. He posted this on MarketSkeptics a few days ago.
I stocked up with abt 20lbs of dried goods, and a bunch more canned stuff today.
Had a yummy lunch (of the type I might eat if the SHTF) of pan fried egg noodles, with home grown Oregano, covered with beef gravy and peppercorns.
So I stock up on food and then the SHTF and all the yokels who spent their money on HDTV and Ipods come up the hill...
Life ain’t fair, I tell ya!!
That's a steaming pile.
The American Farmer produces FAR more food than we can eat, and has done so for more than 50 years.
We can waste our food production resources growing 'natural' foods, we can burn our food sources to heat our homes and power our cars, and STILL have mountains and mountains of surplus.
See my tagline.
Pork is a good example. Due to a surplus of corn and other feedstuffs, for the past 6 months the surplus of pork has grown to a unbearable level, driving many pork producers into bankruptcy
Brazil gets theirs from sugar, which is apparently several times for efficient an ethonol source than corn.
Regardless, it still diverts land usage for crops that feed people to produce fuel.
If he does the people will serve him up on a platter with an apple in his mouth.
I stand corrected. Last year the US exported $96 billion in agricultural goods while we only imported $73 billion.
http://www.ers.usda.gov/data/fatus/monthlysummary.htm
And that’s with a hard throttle placed on the American farmer.
Every farmer I know could ramp up production 10%, and do it for the 2010 crop.
Give him a serious financial incentive, and 15% for 2010 isn’t out of the realm of possibility.
By 2015 we could have some serious increase in production.
by 2020, it could nearly double from what is produced today.
The blessing of capitalism is alive and well in the American farmer
Thanks, a good visual of the self induced scourge of the average farmer.
The government uses, and fine tunes, that huge production to hang over the head of the farmer, limiting his downside risk, but keeping him captive to a limited profit margin.
That’s why most farmers have a family member who has an off-the-farm job.
*bookmark*
And that is not counting the CRP contracts that are ending. Piles and piles of corn and milo on the ground because the bins are full....If one wants to know what the weather is sometimes it is best to step into the real world.
I’ve been stockpiling cannes goods and also making sure I have lots of flour onhand. Looks like I might want to get busy and make sure I have more than I do now.
Thanks Balding Eagle.
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