> [http://www.huffingtonpost.com]:
>
> "Wheat is up 75% in the last 12 months, corn up a little more. Coffee
> is up 85% and cotton a spectacular 140%.
>
> While flooding in Australia, a drought in Russia and weak harvests in
> India and China are the fundamental drivers for this upwards trend,
> there is little doubt that investors and traders looking to diversify
> and capitalize on the supply shortages are moving these prices much
> more significantly and faster.
>
As I believe I clearly showed ( http://theclearview.files.wordpress.com/2011/02/foodproductionvsprices2009-10b.png) , food production was either up or flat for all but wheat... yet they all spiked in price regardless of production and supplies.
I just checked cotton as well - production likewise is up - 14% over last year. But prices are up 140%. There is widespread government stockpiling and private hoarding in all these commodities (partly inspired by expected rises), which also again further affects price and availability.
This Huffington Post article is grossly mistaken as to the cause. As is Paul Krugman.
> P.S. No one want's to argue about the role of QE?
> ___________________________________
> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk
>
I'll let others with more 'gravitas' make the argument: http://blogs.wsj.com/source/2011/02/08/bernankes-chewbacca-defense
*"The Fed has consistently refused to acknowledge its role in causing speculative distortions in asset and goods markets during the past 15 years or so. The tech bubble was not fuelled by Alan Greenspan’s huge infusions of Fed liquidity in the wake of the LTCM crisis and amid fears of the Millennium Bug. The Fed’s response to the bursting of the tech bubble, the lower for longer policy, had little if anything to do with the buildup of the U.S. housing bubble. The Fed’s zero interest-rate policy has nothing to do with the current extreme inflation of commodities and emerging-market assets, not to mention a reinflation of the U.S. equity bubble.*
*"No. In each case, the fault has been laid at China’s feet, first because of its excess savings and now its excess consumption.*
*"China, no doubt, takes a share of responsibility. But for the Fed to keep denying that its policies have a pernicious effect on global financial markets is, well, straight out of South Park."*
-- Peter Fay
