Monday, February 28, 2011

Food Price Inflation at Record Highs

Notice, this record-setting food inflation is not being driven by supply-demand.  It is a product of our tottering economic/financial system.  As the article puts it: "agricultural commodities are attracting excess liquidity in international markets." 
That means all the extra money printed out by the Fed is being exported as inflation in commodities.   It is exacerbated due to the fact that most foreign nations are "net food importers", not producing anywhere close to the amount of food they need to feed themselves. 
The fact that America is a "net food exporter" means that we have an extra layer of insulation from the food prices rises.  The way we feel about oil prices is the way foreigners feel about food prices: an out-of-control skyrocketing import item.
There is also talk about placing capital controls on food commodities, to help prevent international investors from driving up prices on captive populations.  Of course, only America could do that, as the producer of most of the world's food, and it would involve a major repudiation of free-market principles.  Free-market principles meaning the elite investors can freely drive up food costs as a profit source, well.... maybe that repudiation would be a good thing.  
Certainly it should be the economic policy of any food-importing nation to achieve food sovereignty and gain control over its own food supply.  One major step in that direction would be to place import restrictions or tariffs on food imports, which of course, the international globalist community is fighting against.  
When you get down to brass tacks like this, it is hard not to look at the international economic system as a big enterprise in exploitation and parasitism:
--The advanced economies, with their mechanized agriculture, drive local food producers out of business... 
--Which then forces them to import most of their food... 
--Leaving them at the mercy of their international speculators...  
--International laws are written to prevent any defense against this process...
Without factories to build things, what exactly are they supposed to do for economic development???  Hell if I know...  
I guess if they are lucky (and they keep their wages low enough), some international company will set up a factory there... Meaning that profits will be "internationalized", i.e. extracted into foreign "ownership" hands.  What a clusterfuck!     
The world is living through another major upswing in food prices.
World food prices surged to a new historic peak in January, for the seventh consecutive month, as the FAO Food Price Index reached 231 points, up 3.4 percent from December 2010.
The accumulated increase in food prices during 2010 amounted to 25% relative to the 2009 level.

Price movements are no longer determined only by the basic driving forces of supply and demand: agricultural commodities are attracting excess liquidity in international markets and other factors, far less transparent and constantly changing, such as expectations and appetite for risk, start to play an important role in determining the direction of the prices.

Furthermore, food markets are more and more intertwined with financial and energy markets, both of which are characterized by greater volatility. Facing these multiple sources of uncertainty, agricultural commodity markets tend to overreact to any changes in the demand or supply projections, as it happened in mid-2010 in the case of wheat.

Although the world produces enough food, global production needs to be gradually increased to keep pace with the growing population. Chronic underinvestment in agriculture throughout the years, in developing countries in particular, made them more vulnerable to risks associated with the new dynamics that rule the world market. Investment in agriculture, which would allow to increase productivity and improve resilience to climatic risks, together with strengthening of rural institutions and better governance of commodity markets, are needed to reduce the incidence of price spikes.

Russia Demonstrates Economic Common-Sense

Russia is providing an example for how sane societies conduct economic policy.    The funny part is, they are doing what America did in the 1980s, in response to the Japanese car invasion.  They are saying, if you want access to our market, you have to open up factories on our soil.  
Of course, China has been doing that for the last 20 years as well, so their economy is booming while ours continues to shrink. 
The iron rule of economics remains the same: production comes before consumption.  If you don't make something, you have nothing to trade.  It is common sense: productive jobs have to come first.    The basis of any sane economic policy has to be providing people with productive jobs. 
Here is the article about Russia:

MOSCOW (Reuters) – The world's biggest carmakers have until the end of Monday to sign up for Russia's latest scheme to entice major players and strengthen its local industry ahead of any future crisis.

Russia was on the verge of overtaking Germany to become Europe's biggest car market before the country's 2009 recession caused annual sales to collapse by half.

A sharp recovery in 2010 -- aided by a government sponsored scrappage scheme -- has revived industry optimism about future Russian growth and prompted state attempts to pin down foreign players to invest and support the domestic industry.

Friday, February 11, 2011

Mortgage Reform set to benefit the Banks - a Jubilee Counter Proposal

The federal government is currently in the position to implement large scale mortgage jubilee, since it has nationalized the organizations that own all the mortgages.  Instead, they are going to modify the rules so that banks will be set for greater profits!  I guess we should not be surprised.  The bankers own the government, so of course they make rules to benefit themselves. See the story here
The one thing this article doesn't account for is the fact that, absent government guarantees, the demand for housing goes down, and therefore, the price goes down along with it.    Thus, while interest rates go up, real estate costs actually go down, if government stops subsidizing its purchase. 
Cheaper real estate benefits everyone!  Well, except the parasitic bankers who reap more interest payments on higher-value purchases.   If you have less or no rent/mortgage payment, you have more money to spend in the real economy for goods and services.  Our entire concept of mortgaging residential property needs to change.  The whole system is set up to keep people on a perpetual treadmill of debt enslavement. 
That is the secret reason why real estate is not being allowed to reach its natural equilibrium level, much lower than today.  Expensive real estate overwhelmingly benefits the parasitic banking class.  The last thing they want is for people to be able to buy land without mortgages.   How can the parasites suck their blood if people don't always have to finance everything? 
A good example of a deceptive program that is supposed to benefit the people but really benefits the parasites is the mortgage interest deduction.  It benefits banks to have people take out bigger mortgages!  The government subsidy in effect goes straight to the bank, in the form of higher purchase costs.  The tax payer is just a pass-through vehicle.
Of course, the interest deduction doesn't even kick in until you buy a high value house.  For someone with an affordable mortgage, the standard personal deduction is greater than the mortgage interest deduction.  In other words, the mortgage interest deduction disproportionately benefits the wealthy, with a sliding scale of more benefit the wealthier you are!
A mortgage itself is one of the biggest scams in history!  A typical mortgage pays the bank twice as much in interest as the amount of the original purchase price.   What a scam, huh?   And god forbid you have a downturn in your ability to pay... in the next 30 YEARS of your life....  because then they get the whole property back totally free and can "sell" it again, without having to pay you back a cent that you'd been putting in all those years!    95% of your payments in those first few years goes to interest payments...  95% interest sounds like illegal usury to me!    At least it was before the bankers got the anti-usury laws thrown out...
Non-Exploitative Housing Policy Makes Us All Richer:  Interest-Free Mortgages
The government, as representative of the people, should make their housing policy benefit the people, not the parasite classes. The right to exist on this earth without paying for the privilege is what separates free men from serfs.  Unfortunately, our government works continually for our enslavement, having been taken over by the parasite classes.       
Imagine you didn't have to pay interest payments on your house...   100K house, paying 1k a month... You would pay the thing off in 8.3 years!      If you wanted to pay off that same 100k house in the same 8.3 year period, under a mortgage of 10%, you would have to pay over $1,480 a month!  Even under a 5% mortgage, you would have to pay over $1,225 a month to pay it off in that period.  If you only had $1,000 a month to spend, you would end up paying it over 18 years under a 10% mortgage!    In other word, the bank would skim tens of thousands of dollars off of you. 
Here's the big mind-blowing question of the day: why doesn't government simply provide interest-free mortgages?    Would the country come crashing down if people weren't spending huge amounts of their earned cash on interest payments???  The same free market in housing would still apply, you could still only buy the house you could afford, you could still lose it if you didn't make payments... What would change???  Nothing! Except the parasites would be shut out of the equation!    People who sit around, doing nothing to improve the world or make anyone's life better, just pushing papers around, skimming off the hard work of others... in other words, economic parasites! 
Please tell me one reason why the government doesn't simply issue interest free mortgages???   Along with leaving you more money to spend on the real economy, the best thing about interest-free mortgages is that THEY WOULD KILL THE PARASITES!!!   Not being able to sit around and skim money off other people's accounts, they would actually have to go out and produce something!    Rather than being parasites, being forced to provide some good or service, they would be contributing to the common good, increasing our wealth, making our lives better!     Banking parasitism is not only a drain in and of itself, it is a huge lost opportunity cost.  Supporting parasites make us all poorer!
Other reforms are possible as well, such as a policy of keeping land costs low.  Land ownership statutes could include preventing land ownership concentration, or perhaps providing for homestead ownership as a right of citizenship, maybe actual land giveaways.   If the government represented the people, these are the types of reforms we'd be talking about, not more policies that serve the parasitic banks.   

Wednesday, February 9, 2011

Corporate Loyalty to the Global Market, not the U.S.

Charles Hugh Smith presents an excellent analysis of why the U.S. middle class is being destroyed, at his website here:
In a nutshell, corporate profits are now increasingly from overseas consumers, almost half of all revenues.  Due to the logic of corporations, being abstract entities whose sole purpose is to deliver profits to shareholders, they have no loyalty to America.   
Yet, amazingly, they are allowed to make contributions to political candidates.  In fact, they have come to dominate the political process, hijacking the national parties so that the government essentially becomes captive to their globalizing agenda. 
As Smith puts it:
The erosion of the American middle class is of little concern for one simple reason: it no longer matters much on the global stage. All that Global Corporate America needs from America is a stable foundation that won't offer up any surprises or spots of bother.
Policy Reforms Needed
Obviously, corporations should not be allowed to make campaign contributions.  This is a basic no-brainer.  Only U.S. citizens should be allowed to make campaign contributions.  Corporations, which by definition, have no loyalty to the U.S. should not be influencing its economic policy.
Corporations should also be taxed differently.  A sliding scale of taxation should apply based on the percentage of U.S. domestic workers.  Perhaps the percentage of revenues from foreign sources should also be taxed at a higher rate.  
Our tax policy should reward domestic businesses, and handicap corporations that offshore jobs. 
There seems to be little hope of reform at this point, as economic elites have utterly hijacked the political process.  As Smith points out, the irony is that increasingly, it is international profits which allow global corporations to exert greater influence on domestic policy:
The concern for domestic jobs is mere political expediency. U.S. corporations are pulling $500 billion in profits from non-U.S. sales, and they hold $1 trillion in stashed overseas profits in various tax havens. All the growth in their revenues and profits are coming from non-U.S. sources. Spending $3-$5 billion on lobbying and campaign contributions is an "investment" with extremely high returns: for that small sum, U.S.-based global corporations make sure the U.S. government and citizenry don't become overly burdensome or obstructive.
Something needs to be done, and it needs to be done now.   We are in desperate needs of a people's political uprising to challenge the unholy alliance that has hijacked our political process.  Unless people start to organize in their own self interest, we will continue to get more of what we are getting: the cancerous growth of poverty.