Food prices at record high - to stay high for extended period

[bigbadwolf]

As long as you can find an idiot seller, all is well ...

Knew about this -- but not its extent. Cheers. That's probably (part of) the reason Michael Hudson calls them "hot-potato dollars."

The US Treasury owes $4 trillion to foreign central banks, but there is no foreseeable way in which it can make good this foreign debt, given its chronic structural deficit of foreign military spending, import dependency and capital outflows. That is why so many countries are treating the dollar like a “hot potato” and trying to avoid holding them.

 

[gouchobob]

Knew about this -- but not its extent. Cheers. That's probably (part of) the reason Michael Hudson calls them "hot-potato dollars."

For those interested Michael Hudson writes a lot of stuff for a website called Global Research. Their stated purpose is "curbing the tide of globalization and disarming the New World Order". Kind of a new left website, anti-globalization is one of the new lefts core beliefs. Don't know what they mean by disarming the New World Order kind of far left code words I believe. I think the BBW gets lots of his ideas from this site and other new left writers that he frequently quotes in his other postings.

Actually I think Michael's quote is completely wrong in the current environment. If you believe there is going to be a significant slowdown in China then there is going to be big trouble there and in other commodity producing countries. When that happens people are going to bailout of their China and emerging market investments and going into dollar based investments. This has already started as people are becoming more and more uncomfortable with whats going on in China and the very high commodity prices. At least for now the U.S. looking better than the alternatives and some are predicting that people who invest now will do quite well over the next year or two. Long term the U.S. needs to clean up its finances but I don't think the situation is quite as dire as some of the posters here seem to indicate.

Here a link to an article on the outflow of funds in emerging markets.

http://www.ft.com/cms/s/0/1c3127b0-46ad-11e0-967a-00144feab49a.html#axzz1FsVWNRCc

 

[John.St]

Although a big increase in grain costs doesn't mean the cost of a loaf of bread is going up much as grain is only one component of the bread.
Food inflation (i.e. what people actually pay at the supermarket) in the U.S. is predicted to increase only 2 to 3 percent this year which is a far cry from 40%. A good article discussing food prices is linked below.

http://www.timesnews.net/article.php?id=9030300

Yeah, there is also water, 5% yeast and 0.3% salt plus the cost of heating the oven. There are only around 6.7 billion people who don't buy their food in US supermarket. For many of them a 40% increase in grain prices spells a 38% rise in bread prices.

 

[John.St]

Knew about this -- but not its extent. Cheers. That's probably (part of) the reason Michael Hudson calls them "hot-potato dollars."

"Many countries are treating the dollar like a “hot potato” and trying to avoid holding them" & "Balancing China’s international payments by buying foreign resources and assets" - exactly, pass them on! pass them on!

This helped doing the trick:

"The true cost of the [George Wingnut's] Iraq war: $3 trillion and beyond" Washington Post September 5, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/03/AR2010090302200.html

Of course this is fiercely disputed, especially by those who have "forgotten" that at the outset of the Iraq war, the Bush administration predicted that it would cost $50 billion to $60 billion to oust Saddam Hussein, restore order and install a new government. http://www.nytimes.com/2008/03/19/washington/19cost.html

So far direct war costs have been more than US$ 700 billion. What to do with the wounded, those with post traumatic disstress, etc. - kill them?

Let us not be too pessimistic, though. The US has huge store of natural resources and knowhow, far exceeding all debts.

The problem is how to stop the idiot partisan quarrel and start co-operating. The whole silly infight reminds me of two men arguing over who should pay the restaurant bill onboard the Titanic at 02:15 14 April 1912.

 

[gouchobob]

Well if what the article says is true i.e. wheat makes up 2% of a $1 loaf of bread in the U.S. then bread in the developing world must be 98% less or only 2 cents, quite affordable in just about any country.

I don't have a break down but say wheat harvested in Argentina goes to Eygpt. The actual cost of the wheat is probably minimal but when you add the cost of shipping, export taxes imposed by Argentina, probably import taxes in Eygpt, local distribution, markups by wholesalers, retailers, etc. I think you get my point. By the time it gets to Eygpt the wheat probably costs several times what the producer received in Argentina. Food costs in poor countries is a problem but it would be interesting to see an analysis of what the costs are added from the time the wheat leaves the field to the time it is sold to the ultimate consumer.

 

[John.St]

Well if what the article says is true i.e. wheat makes up 2% of a $1 loaf of bread in the U.S. then bread in the developing world must be 98% less or only 2 cents, quite affordable in just about any country.

World market price for 1 Metric ton of wheat was US$ 157.67 in June 2010 and US$ 341.16 on March 04, 2010
= 1 kg cost US$ 0.341
= 0.6 kg (for a 1 kg loaf) costs US¢ 20.5, in June 2010 the price was US¢ 9.4 - when you buy huge amounts, which the ordinary consumer doesn't.
http://www.indexmundi.com/commodities/?commodity=wheat&months=12

 

[bigbadwolf]

Yeah, there is also water, 5% yeast and 0.3% salt plus the cost of heating the oven. There are only around 6.7 billion people who don't buy their food in US supermarket. For many of them a 40% increase in grain prices spells a 38% rise in bread prices.

Just to add to your points, here is a link to one site, which shows that of a $2.99 loaf of bread, $0.17 goes to the farmer. More appropriate might be to cite that a 5-lb bag of wheatflour cost $2.89 of which $0.86 goes to the farmer. In the Third World, people are typically buying the flour and making bread of it themselves (as you point out, most of the world doesn't have access or money for US-style supermarkets). But in the Third World, a big chunk of the people is earning $2 a day or less (in Egypt it is 45% of the population), and anywhere from 50 to 80% of earnings are going on basic staples like flour, maize, vegetable oil, lentils, and potatoes (with meat maybe once or twice a week). Even sugar, eggs, and milk are a luxury. Any rise in the price of these staples means a rise in malnutrition: there's no slack in the budget. In "developing" countries like India, the per capita calorific intake is actually lower than it was twenty years ago (itself not much of anything). Child malnutrition has increased in India (something Tom Friedman won't point out).

 

[John.St]

You don't have to travel to Egypt to see this.

I have poor Argentino friends where dinner for three persons was e.g.

1 kg potatoes AR$ 1.20
1 egg AR$ 0.40 - they bought one! egg
Cheese AR$ 0.70 - they bought one small lump of cheese
A small amount of pan rallado made of old bread.

Dinner for three, delicious potato balls with soft cheese in the middle: AR$ 2.30 - I liked it, Ines is a darn good cook.

 

[John.St]

Knew about this -- but not its extent. Cheers. That's probably (part of) the reason Michael Hudson calls them "hot-potato dollars."

"Many countries are treating the dollar like a “hot potato” and trying to avoid holding them" & "Balancing China’s international payments by buying foreign resources and assets" - exactly, pass them on! pass them on!

This helped doing the trick:

"The true cost of the [George Wingnut's] Iraq war: $3 trillion and beyond" Washington Post September 5, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/03/AR2010090302200.html

Of course this is fiercely disputed, especially by those who have "forgotten" that at the outset of the Iraq war, the Bush administration predicted that it would cost $50 billion to $60 billion to oust Saddam Hussein, restore order and install a new government. http://www.nytimes.com/2008/03/19/washington/19cost.html So far direct war costs have been more than US$ 700 billion or half the total deficit. Add to that what it will cost to treat the wounded, those with post traumatic disstress, etc. - kill them?

Let us not be too pessimistic, though. The US has huge store of natural resources and knowhow, far exceeding all debts.

The problem is how to stop the idiot partisan quarrel and start co-operating. The whole silly infight reminds me of two men arguing over who should pay the restaurant bill on board the Titanic at 02:15 14 April 1912.

 

[gouchobob]

World market price for 1 Metric ton of wheat was US$ 157.67 in June 2010 and US$ 341.16 on March 04, 2010
= 1 kg cost US$ 0.341
= 0.6 kg (for a 1 kg loaf) costs US¢ 20.5, in June 2010 the price was US¢ 9.4 - when you buy huge amounts, which the ordinary consumer doesn't.
http://www.indexmundi.com/commodities/?commodity=wheat&months=12

I was only extending your logic to what a loaf of bread would cost in an underdeveloped country if only 2% of a loaf of bread is wheat in the U.S., i.e. you could buy the wheat and make it yourself for only 2 cents. You really haven't responded to my point that food costs are made up by a lot of items not just the food item itself.

Of course I see in your latter posts this is has really descended into kind of a let's hate the U.S. and Bush for the worlds problems. The new left major tenets I believe are anti-globalization, anti-anything U.S., anti-Israel (sometimes outright anti-Semitic in nature). Maybe you and the BBW could explain to the rest of the forum what it is you are in favor of. I confess I really haven't taken time to understand your movement. Do you want the world to move to some kind of Hugo Chavez/Fidel Castro model, or some other new and exciting form of government we don't know about yet.