John, the rice news is true. We're seeing actual hoarding as commoditiy prices continue to rise. My extended family are rice farmers in eastern AR and rice prices have doubled since the end of last summer.
What's going on in the commodity markets, mainly soft commodites, i.e. farm products, is sickening. I can live with market speculation and will always try to profit from it, but this is gagging me because people will die across the world from rising food prices and it just doesn't have to happen this way.
We, this country sets prices on our exchanges....our exchanges, not farmers like my family. We have no control over anything....weather, prices, etc. All we can do is try to manage risk.
People assume prices reflect fundamentals such as cost of production, rising demand, etc. and in the long run this is true. But in the short run, this country sets prices for the rest of the world....prices that are nothing more than us saying this is the price, take it or leave it. No other country's exchanges are powerful enough to withstand what a relatively small group of wealthy people in this country can do to work prices ever higher and higher.
The markets are running right now on the greater fool theory and not fundamentals. No big deal if it's gold, silver and to some extent, even oil. Most can drive less or turn down the heat.
But food is such a different thing. With food, all you can do is eat less if you already live close to subsistence levels. If we had an engaged president, he would be in the middle of this.... threatening, cajoling, and if that failed, arbitrarily setting margin requirements sufficient to put the fear of god in speculators.
I'm sickened that my country is such a pitiful world citizen. Anyone who doesn't appreciate how wealthy, amoral groups can manipulate prices in all the financial markets need only to keep in mind that last year 50 hedge fund managers made 29 billion dollars. Fifty groups, a small number, who can sit quietly in the Cayman Islands and consort with each other to swing markets however they want.
Now and then the SEC chases a couple of them down, slaps on some fines, and the group just morphs away into something else.
And the commodities trader groups are an even smaller, less transparent group of individuals. To assume they don't collude is nonsense.
And it's us, our exchanges, who tell the rest of the world just how much they have to pay for a barrel of oil or a bushel of wheat. After infecting banks and hedge funds across the world with our toxic financial derivatives, our traders make their second act one of whipping commodity prices into a speculative frenzy.
Today, most commodity related companies have fallen sharply in price across all areas.....oil, steel, fertilizers, etc., even though the entire stock market is moving higher. This behavior often indicates tops. Hopefully the news out of Brazil re. rice is triggering an end to this speculative excess. Often one small event can lead to a cascading of prices....hopefully down in this case.
Sorry for the rant, and maybe I'm stating what most people already know. It's just that I know most people will look at oil prices and mutter things about the Saudis are doing this or that, or conservationists are doing this or that....when the reality is that the price of a barrel of oil is really what a bunch of traders on exchanges have more or less arbitrarily set it at that day.
At any rate, when the price of a basic staple like rice doubles in less than a year, this is not for fundamental reasons. Price moves like this have always been nothing more than market manipulation and I see nothing different right now. |
