Speculators Worsening World Food Crisis? -BusinessWeek - Worsening - how about CAUSING IT?

[JohnWxy]

http://www.businessweek.com/globalbiz/content/apr2008/gb20080423_366709_page_2.htm

"Sudden price hikes since last January have been alarming. The UN estimates that at least $500 million (€312 million) in immediate aid will be needed by May 1 to avoid serious famines. Agricultural scientists at the world body's Educational, Scientific and Cultural Organization (UNESCO) have presented a report on the world food crisis. And criticism is growing that hedge funds, index funds, pension funds and investment banks bear part of the blame. "

~~
~~

"What we normally have is a predictable group of sellers and buyers—mainly farmers and silo operators," he says. But the landscape has changed since the influx of large index funds. Fund managers seek to maximize their profits using futures contracts, and prices, says Warner, "keep climbing up and up."

He's calculated that financial investors now hold the rights to two complete annual harvests of a type of grain traded in Chicago called "soft red winter wheat."

Wagner is stunned by such developments. He sees them as evidence that capitalism is literally consuming itself.

[madrchsod]

1. no more sucking the money out of the housing market

now it`s commodities and no one cares to stop them. 2.5% margin so raise the margins up to 50%(?) and listen to the babies cry

[JohnWxy]

2. IF you are saying they only have to put up 2.5% of the total contract price no wonder

prices are going crazy.

[pscot]

3. This completely misconstrues what is going on

most of these so-called speculators are highly trained economists. What they are doing is for our ultimate good. They are just helping the markets find the ideal price points to encourage maximum efficient production. Pricing is merely the mechanism by which supply and demand are brought into balance. Derivatives are the mechanism that removes the operations of economics from the plane of human understanding. In order for the markets to "clear" some traders are forced to accept huge profits, just as some "consumers" are made to do with a little less, or maybe nothing, to eat. This is all governed by the natural laws of economics, which were discovered by Milton Friedman, who died before he could be hanged.

[JohnWxy]

4. "before he could be hanged." LOL. He did have that effect on people whenever he was talking on tv.