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Albert Edwards Explains Why Bernanke And China Are Engaged In A Game Of Global Chicken Whose Downside Is A Hungry Revolution
In his latest letter, in addition to again broaching the subject of the upcoming Eurozone collapse, SocGen's Albert Edwards shares his increasingly high level of conviction that the US will slip into recession and also explains why Ben Bernanke's trashing of the dollar is just a devious ploy to force a real exchange rate revaluation on the Chinese via rampant food price inflation. Keep in mind, in China food prices are actually important, noted and measured, and were the primary reason for the October spike in inflation which oddly caught so many by surprise, probably more for the reason that the government actually agreed to disclose it. In essence, Albert argues that the Chairman has raised the stakes on the global monetary game to such a level, that he risks social discontent either in the US or in China, or both, should China refuse to blink in what has quickly become the most important game of chicken in the history of modern economics.
First, with everyone convinced that the US economy can only continue chugging ever higher, here is the simple counterargument. And it is the old one - inventories.
...Many clients we have spoken to do not believe that the US economy can drop into recession because most of the key cyclical elements of the economy, such as housing and consumer durables, remain depressed. In addition, with profit levels so high and corporates flush with cash, clients remain confident that deep falls in the cyclical elements of the economy cannot now occur. They have forgotten the mathematics of inventories.
Remember, this is an economy that has enjoyed the biggest ever peacetime stimulus, yet has seen the weakest ever rebound in final sales (see left-hand chart below). With final sales so weak, it will not take much in the way of a negative contribution from inventories to send the economy into decline- even without further weakness in the moribund cyclical sectors.
Inventories have surged in recent quarters (see right-hand chart above), and their contribution to GDP growth has been considerable (see left-hand chart below). But wait! As my good friend James Ferguson from Arbuthnot pointed out to me the other day, it is already clear from the ISM data that a slowdown in the inventory build is imminent (see right-hand chart below).
All those who discount the impact of inventories: pay attention.
Now you won't need reminding that it is the change in growth in inventories that counts towards GDP growth. So even if inventories rise another $110bn in Q4, as they did in Q3, the contribution to GDP growth is zero. If inventories rise a still strong $60bn in Q4, for example, inventories will deduct 1.5% from annualised GDP growth. With final sales rising a sickly 0.75% annualised (!!) over the last two quarters, you don't have to be a genius at maths to realise a recession is entirely possible, even without sharp declines in housing or consumer durables.
Over the last quarter, production has exceeded new orders in the ISM survey by the most in 20 years. Hence the mismatch between new orders and inventories is such that the headline ISM falling into the recessionary sub-44 range is likely (see chart below). I feel very confident that the markets have a big growth shock to the downside coming down the tracks. I am confident because I can now hear the toot of the train's whistle above the roar of the engines.
If Edwards is correct, and he is, that the ISM will plunge by almost 10 points shortly, another important observation is that inflation expectations will likely tumble (although that assumes that inflation is still measured in traditional metrics, and not under the post-QE2 regime in which every action by the Fed is solely to weaken the dollar and generate a stock surge). The good thing is that it would validate QE2, and likely lead to QE3 and so forth, further accelerating the endgame to the painful muddle through process.
And in this environment, what do you think will happen to inflation expectations which have been rising recently in the lead-up to QE2? If the ISM is heading back down to recession territory, it will be a strange occurrence indeed if inflation expectations and bond yields do not plunge (see chart below).
And here is the kicker in today's Edwards letter: by risking commodity price inflation, which he realizes all too well is being exported to China first and foremost, Blackhawk Ben is simply forcing China to either unpeg or raise rates sooner rather than later. Of course, in the process he is also hurting 80% of the US population which actually does care about such things as food and energy costs. In essence Bernanke has orchestrated a massive gamble, akin to a game of chicken in which he he poiased popular domestic discontent against that of China. If China blinks first, the Fed wins; if the US does, and food riots break out in D.C. before Beijing, it is game over.
On this view, Ben Bernanke will be vindicated that QE2 was indeed necessary. But perhaps he also has other fish to fry. We showed previously that, without any shadow of doubt, Ben Bernanke believes that printing money to devalue the currency works to avoid deflation (he openly said so in his Nov 2002 speech deflation: Making Sure It doesn't Happen Here).
One consequence of the Fed trashing the dollar is that commodity prices have been surging. And, strange as it may seem, this might be seen as good news in the US as it might help circumvent the problem of China refusing to revalue the yuan against the US dollar. For the surge in China's inflation rate to 4.4% in October was primarily driven by rapid food price inflation and its high weighting in its CPI (see chart below). This rapid inflation, if it feeds through to wages, will force a more rapid rise in the yuan real exchange rate, despite the nominal exchange rate remaining essentially fixed.
China is rightly concerned by this. It remembers the events of 1989 when runaway 28% inflation contributed to the unrest in that year and threatened the regime's grip on power. Hence you are seeing the Chinese authorities respond aggressively to this inflation threat, not only tightening monetary policy more rapidly (which seems pretty pointless to us) but about to introduce food price controls and crack down on those old scapegoats, "the speculators".
But the threat of social unrest goes wider than China. The UN's Food and Agriculture Organization (FAO) estimates that the majority of the world's undernourished people live in developing countries. Two-thirds live in just seven countries (Bangladesh, China, the Democratic Republic of the Congo, Ethiopia, India, Indonesia and Pakistan) and over 40% live in China and India alone - link. Asia stands out as particularly vulnerable to rising food prices because that is where the overwhelming majority of the hungry reside (see right-hand chart above).
In conclusion, Edwards confirms that in his relentless quest to get his way, the Chairman has now, in addition to going all in on the US financial system, has also added a gamble with the prevailing social order.
Finally I leave you with a thought from Dylan from his brilliant work on the unfolding structural rise in grain prices. “Hunger eats civilization” says Marjane Saatrapi, author of the beautiful book Persepolis. Food inflation has a dark history. It has been said that the 70s food crisis contributed to the Iranian revolution. We know the Russian Revolution started with starving workers protesting high bread prices. The Parisian riots of 1789 following the devastated crop of 1788 snowballed into the French Revolution and the revolutionary fervour which swept Europe in 1848 followed a sequence of bad harvests”. No wonder the Chinese authorities have leapt into action. The Fed may have opened a can of very toxic worms. What price for emerging markets in this brave, but very hungry new world?
The bottom line is that even if Ben is successful and China relents first, either by unpegging or hiking rates, the US Fed may have already doomed the developing markets to a slow grind onto the great revolutionary reset. And all of this of course assumes that Americans will continue, as they have been for decades, acting as the docile sheep the Fed expects them to: a fair assumption, but recall that it is precisely the outcomes that are taken for granted and that don't occur that lead to the biggest shocks to the system. Can America finally surprise the Fed?
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The Chinese won't "blink" because they don't need to.
They have dough, we don't! They are commies, we...ham..not sure yet!
They "own" U(s) in debt terms! Benjie might follow JFKs fate and get shot for
being a corrupt moron! Of course, JFK got hit for a totally different reason!
>>"The Chinese won't "blink" because they don't need to."<<
They won't blink because of some supposed "Mutually Assured Destruction" clause they understand. To bad, because they are suicidal.
Bernanke is suicidal.
And China is the world's leading manufacturer of rope.
Charlie didn't get much USO. He was dug in too deep or moving too fast. His idea of great R&R was cold rice and a little rat meat.
Won't the Chinese authorities just unchain a few of their billions of foreign currency reserves and subsidise food in China?
That would be a sign that China has lost this game of chicken.
By dumping foreign currency reserves on the market to pay for food, the Hot Money will leave China pronto. Revolution would be the next logical step... revolution or a cultural clamp-down. Neither would be good for marketing Chinese goods abroad.
Another Tiananmen Square type incident and multi-national corporations would have to bail on China. (You know, the fascist marketing argument). Large numbers of newly unemployed Chinese will not look too kindly on their soon-to-be-departed leaders.
Banks and multinatinals ultimately supported the crackdown on tiananmen square. Bush I was quiet. That's my view. It was good business for them and most of Bush's friends who had cushy deals with the gov. Now, banks want to financialize China. Forget manufacturing profits. The big guns are in the house.
Basically, the Central banks have decided on hyperinflation, regardless of the pain it causes to the majority of the population, I mean, "the little people".
The US will blame China and China will blame the US, and Europe will blame the US, etc. But they have decided to share their fate A LONG time ago, when these countries' oligarchies decided INTERdependence was the way to a sustainable long-term peace and prosperity! Well, now we know the counter argument, prosper together, hyperinflate together.
Check out our latest PsychoNews Update 11/18 Edition
It has been another crazy week, which of course is the "new normal". The stock market has been twitching up and down, commodities and currencies have been all over the map. Ireland's government came out and stated unequivocally that they don't need to be bailed out. The markets crashed, the Euro fell, and the dollar rallied. Suddenly nobody knew what was going to happen (except a few central bankers, maybe)....
http://psychonews.site90.net
I am a man who has dreams, revelation dreams, that is.
A few months ago I had a series of seven dreams. In one of them, gasoline was $500 USD a gallon. Hyperinflation is coming.
And the other six dreams? Pray tell, what did they reveal?
This whole thing is really very simple. China is doing it to foment the fervor necessary to motivate its people for its upcoming land invasion of Pakistan, and its assimilation of all of Pakistan's farmland.
"Some angry Chinese consumers are blaming the United States' monetary policies for inflation in China. The finger pointing follows the Chinese government's decision to impose price controls on food, introduce subsidies for the needy and increase fuel supplies."
voanews.com/english/news/asia/Chinese-Blame-US-as-Food-Inflation-Bites-108918299.html
Let the deluge begin!
duplicate post...
<repeat post>
love that line from Apocolypse Now. love it!
Apocalypse Now !
Hysterical rubbish.
they don't have shit.
Well, ok, they do have such massive pollution that the entire nation is more akin to a toxic waste dump than a country.
We exported inflation and toxic waste...why the fuck people think the air and water are so clean here? LA doesn't even have that massive smog problem anymore.
Love & marriage, love & marriage, go together like a horse & carriage ...
As a Calif native, I can remember when people actually worked in this state. There's an apocryphal story dating from the 80s that a small dog was killed by a Sunday paper thrown by the paper-boy.
The reason? The flipping thing weighed around 5 lbs - it was thicker than a major phone book. And the reason for this? About 50% of the paper were classified ads for employment.
But now we have clean air, with 1/2 the population mowing lawns and the other half watching TV or hanging out at the beach.
If you continue to extrapolate this theme it trends toward having lots of Chinese living here in our nice clean country.
Most of the people I meet, would allow their new Chinese master live in the house while they relocate to the tool shed out back... As long as the bread and circus (Beer and NFL) came with them... Throw in Americans not having to work and I bet they ELECT the frigging Chinese in 2012.
Somehow I don't think the Chinese feel that much benevolence for round eye. But we would make nice pets for someone.
Uncle Ben had his boot on Wen Jiabao throat all weekend at the G-20 ....
China borrowed RMB to fund the purchase of our debt almost 3 trillion renminbi debt created at very,very low rates. The rate increase that China is now implementing to fight inflation does not help the banking cartel. The inflation we are now exporting is destroying the PBoC balance sheet because she cant have the renminbi climb she becomes insolvent. That dollar peg thingy .... Suppressed Renminbi is coming back to haunt the faux masters.
The input cost for the manufacturing complex is also forcing more subsidy/waste/Non performing loans to pile up.
Round eye is just fine and calling the shots ...
Ben comes on t.v. next week says "danger" we need Q.E. 3 stat. 2 Trillion to save the home owners from forclosure/deflation/euro crisis. The inflation would march across the ocean and it would be game over for China, food riots, banking crisis, utter chaos
globalism is great that way eh?? they can always eat their rare earths
lets face it, there's just too many damn people that want an easy life
Greetings, Mr. Smailes. Opinionated as usual, I see. ;)
It has long been my contention that the...the...oh, okay, The Powers That Be have orchestrated all of these financial wheelings and dealings in an effort to bring down the Chinese without firing a shot. Billions of dead people does not look good on your permanent record.
It was all orchestrated; the bad mortgages, the wrapping them in a nice package, dispersing them to the world, protecting themselves from culpability in the Congress, Hammerin' Hank...all that stuff was orchestrated by very, very bright men all in an effort to bring down the dreaded Chi-Comms. Not for "Liberty," or some such nonsense but because the wanted access to their markets.
The pollution, the low-wage jobs, the unbelievable (and I ain't talking about working in a "sweatshop" for ten hours without air-conditioning, either...if you haven't seen these photos, you must have a look... http://www.chinahush.com/2009/10/21/amazing-pictures-pollution-in-china/ ) working conditions...all of that is just lagniappe. Oh, plus, they get to bitch-slap Putin on the way, too.
These men are devious, evil geniuses akin to Dexter in his laboratory terrorising his sister Dee-Dee. But it was always Dee-Dee, the ultimate dumb blonde who, in the end, knew far more than her maniacal brother about real life and love and being a good neighbor.
The truth be told, I feel very badly for the Chinese people and the mess their leaders have found themselves in, swindled by the oldest bankster con-game in the book.
I also have contended for years that if the Chinese were so smart, how come they never invented a fork?
:?
Remember the opening line of Romance of the 3 Kingdoms; The empire, long divided must unite, long united must divide.
We see the latter condition in 4 zones
1) the eurozone is possibly fragmenting. Unity is fine if everyone produces at the same rate, as soon as they aren't, the weak will be abandoned by the strong. or the weak will abandon the strong first, understanding that the ties of support will be too tight, and the pain of withdrawal is the lesser , and therefore more desirable pain.
2) the usa central/federal apparatus is failing. default is inevitable, and the race to secede will soon begin. Creditor states have no option but to secede, or fail with the rest.
3) the chinese central planning allowed unmitigated pollution from importing toxic manufacturing; it won't be repaired until china is broken into smaller states. [the tendency of central planning is to ascribe value to some areas over others, so you end up with clean modern show-cities [albeit empty] and toxic waste dumps to compensate. much like the russian joke "a gymnasium, and across the street, a changing room"
4) russia is herding its people into 20 metropolitan areas because it isn't cost-effective to develop the more distant and sparsely populated areas.
Anyway, my point is that the evil genii are not just out to finish china. the endgame is now clear; emasculate all unions and large federations and powerful nation states ==> regional and city states emerge, which in all likelihood will resemble population-limited and easily managable units.
The US, China and Russia stand in the way of world government. Break them all, and you can implement the soft version of total control.
"The US, China and Russia stand in the way of world government. Break them all, and you can implement the soft version of total control."
And Babylon can then become the financial center.
China borrowed $3 trillion RMB from... itself?
Sorry, RMB funded liabilities....
Take the most obvious example, the PBoC itself. The central bank officially has about $2.5 trillion in reserves. This by the way almost certainly understates its true position but let’s ignore that for a moment. The PBoC has funded this position with an equivalent amount of RMB liabilities, which makes it very vulnerable to changes in the value of the currency.
Rate addiction
In fact there were strong rumors last year that the PBoC was technically insolvent as a consequence of the 20% increase in the value of the RMB against the dollar during the 2005-08 period of currency appreciation. Weirdly enough, although the numbers are huge, it has proven difficult to convince anyone that the PBoC is not the richest institution in the world, and that it is actually very vulnerable to big losses (although I notice that Sovereign Trends’ Terrence Keeley, in an OpEd in the Financial Times Tuesday, seems also to have done the numbers).
The problem for the PBoC occurs not just because of the currency mismatch but also because it needs repressed funding costs to keep it profitable. How much do the PBoC foreign currency assets earn? I would guess probably between 3% and 4%, maybe less. The RMB funding cost, on the other hand, is roughly between 1.5% and 2.5%. This leaves the PBoC with a net positive carry of between 1% and 2%.
http://mpettis.com/2010/07/the-pboc-can%E2%80%99t-easily-raise-interest-...
The chinese are as communist as the USA capitalist.
The global food commodities correlate strongly with oil prices, which of course are strongly influenced by the forex price of the dollar. Dollar weakness presaged the last commodity bubble, which was followed by dollar strength and commodity/equity collapse.
Basically the cycle is repeating itself, except in hyperdrive.
Whether the Chinese blink or nor is irrelevant. This is the same two sided game played over and over. They are all on the same team. It is not us versus them. It is peasants versus elites.
They love to keep us entertained, but the result is a heapin' helpin' of tyranny for China, The US and Europe. This is nothing more than a soap opera in finance. The partners change, they die, they come back to life and we are on the edge of our seats making bets- the fix is in- we lose.
In this duel, though, it must be said that the US can do without the plastic thingies made in China for a while, even the i-Pad won't incite rioting, but China cannot possibly get by without importing a large and increasing quantity of food. However, I think this scheme is probably beyond Bernanke's conceptual abilities.
In this duel, though, it must be said that the US can do without the plastic thingies made in China for a while, even the i-Pad won't incite rioting, but China cannot possibly get by without importing a large and increasing quantity of food. However, I think this scheme is probably beyond Bernanke's conceptual abilities.
who gave bernanke the right to play chicken on our behalf
fire him
I believe it was the local synagogue.
You mean like in what's that jewish fest called, Purim I think, when the Rabii swings a chicken over his head ??
Theocracy,Bitchez.
AIPAC.. and the ADL protects their right to give it to him. :)
Bush, then Obama... two sides of the same oligarch coin.
Well, I don't necessarily agree with all of Al's points but he is correct regarding massive food price escalation in 2011. Its going to be a very mean year. In the US, if you earn less than $36500, its going to get brutal. Btw, that's $100/day.
When you consider that the average income in the developing world is about $1/day, one can only imagine the pain, suffering and death that HellyBenny is going to inflict worldwide.
TF, the saving grace for many Asian economies, is that they are still largely agrarian, so it'll mean a lot of reverse migration (back to villages), back to old style farming (no more monsanto), rusting tractors, but food in the belly for a little while longer than the west.
It is the western world, with it's factory farming (heavy diesel dependence), terminator seeds and really screwed land (topsoil destruction, over chemicalized, basically raped) and a shortage of water (at least int he US, the large river systems are in a load of hurt).
The shock is going to be greater in the west.
We are used to belt tightening and rationing as a matter of course.
ORI
http://aadivaahan.wordpress.com
Much of the water used for irrigation for the farms is polluted. They can not use this water any longer many years of industrial waste being pumped into the rivers. The farming industry is in decline ....
China has been planning to bring hundreds of thousands of farmers off the farms. They built cities for all the new people coming online. The quest for GDP print of 9% every quarter forced many local government officials to build/spend like mad.
Bubble.
All true. India on the other hand has a monsoon dependent farming cycle and a lot of subsistence farming. Indian rivers (major river, the Ganges, known here as the Ganga) is totally polluted. As are many other major rivers.
But the subsitence farming mind-set will take the poor farther.
What I find fascinating is that the people most likely to come out unscathed are the tribal folk, still living far from .civ and highly self reliant.
ORI
http://aadivaahan.wordpress.com
I came across something a few weeks back that said India would out pace China in GDP over the next 5-10 years.
Infosys Technologies Ltd
ICICI
Tata
Can you add to this list ? Any Baidu's coming down stream ?
Spalding,
I'm of an eschatological bent, so I see a very bleak future for Indian industry. The consumer boom has been fueled by a huge injection of dollar and yen credit, through the banks, to unsuspecting Indians (never had it so easy to get a loan, used to be a torturous procedure even 5-7 years ago).
Very unbalanced and highly capital-in-efficient economy.
Unfortunately, the Tata's Birla's, Mahindra's and of course Reliance Industries will continue to rule and prosper under givermint largesse, contracts etc.
They are all into everything. Swallowing any small fish and terrible for innovation.
I think it is food oriented industries that will shine in the next 2-3 years. And defence contractors. Many of the largest Indian companies by market-cap are givernment shops taken public under "Dis-investment" schemes. All good buys because they are firmly on the givermint teat.
Hope that helps. dispels!
By the way, Infosys and ICICI are really shaky. Infosys because it is a predominantly outsourcing company, too dependent on USD and Euro. ICICI is a basket case that had to take out full page adverts and massive TV spots to avert a run last year.
ORI
http://aadivaahan.wordpress.com
Thank you.
This sounds interesting ... Like Mama' Bell or Vale in Brazil thanks.
Mittal Steel and Industries, duh.
"But the subsitence farming mind-set will take the poor farther."
More propertly stated:
"But the sustainable farming mind-set will take the poor farther."
Food, shelter and water. Do people really think that those who practice sustainable living are fools? They didn't go for all the nonsense of all that glitters, in which case in the end they will be above others... (others are likely to be below, as in deceased, buried in their graves).
Seer, I actually meant subsistence farming, small family, tiny plot, vegs, just enough to survive, maybe trade a little for grains etc.
But your points are all well taken. Sustainable everything is native to the natives, so to speak. Good for them.
ORI
http://aadivaahan.wordpress.com
time for me to put those rain gutter storage tanks in... and do some serious seeding this spring..luckily the northeast isn't short on rain the last few years
If you want proof, I believe it is worth posting again, the pics of the "irrigation" water...
http://www.chinahush.com/2009/10/21/amazing-pictures-pollution-in-china/
_____________
I got these photos from a link the other night on ZeroHedge. I passed through without noticing the handle of the person who brought this to our attention.
If it is you, thanks much for the link. :D
I original posted that 2 months ago. Here is more ....
The interview with the photographer/china hush....
http://www.chinahush.com/2009/11/11/interview-with-lu-guang-the-photogra...
And more water pollution info ~
About one third of the industrial waste water and more than 90 percent of household sewage in China is released into rivers and lakes without being treated. Nearly 80 percent of China's cities (278 of them) have no sewage treatment facilities and few have plans to build any and underground water supplies in 90 percent of the cites are contaminated.
Water shortages and water pollution in China are such a problem that the World Bank warns of “catastrophic consequences for future generations.” Half of China’s population lacks safe drinking water. Nearly two thirds of China’s rural population—more than 500 million people—use water contaminated by human and industrial waste.
By one estimate one sixth of China’s population is threatened by seriously polluted water. One study found that eight of 10 Chinese coastal cities discharge excessive amounts of sewage and pollutants into the sea, often near coastal resorts and sea farming areas. Most of China’s rural areas have no system in place to treat waste water.
Water pollution—caused primarily by industrial waste, chemical fertilizers and raw sewage— accounts for half of the $69 billion that the Chinese economy loses to pollution every year. About 11.7 million pounds of organic pollutants are emitted into Chinese waters very day, compared to 5.5 in the United States, 3.4 in Japan, 2.3 in Germany, 3.2 in India, and 0.6 in South Africa.
Water consumed by people in China contains dangerous levels of arsenic, fluorine and sulfates. An estimated 980 million of China’s 1.3 billion people drink water every day that is partly polluted. More than 600 million Chinese drink water contaminated with human or animal wastes and 20 million people drink well water contaminated with high levels of radiation. A large number of arsenic-tainted water have been discovered. China’s high rates of liver, stomach and esophageal cancer have been linked to water pollution.
In many cases factories fouling critical water sources are making goods consumed by people in the U.S. and Europe. Problems created by China’s water pollution are not just confined to China either. Water pollution and garbage produced in China floats down its rivers to the sea and is carried by prevailing winds and currents to Japan and South Korea.
Water pollution and shortages are a more serious problem in northern China than southern China. The percentage of water considered unfit for human consumption is 45 percent in northern China, compared to 10 percent in southern China. Some 80 percent of the rivers in the northern province of Shanxi have been rated “unfit for human contact.”
A poll conducted by the Pew Research Center before the 2008 Olympics found that 68 percent of the Chinese interviewed said they were concerned about water pollution.
Websites and Resources
Good Websites and Sources: PBS Audio Visual on China’s Water Problems pbs.org ; China Water Pollution Map by Ma Jun for the Beijing-based Institute of Public and Environmental Affairs. Zoom any city or click a river or lake and get the latest pollution readings. China Water Pollution Map, en.ipe.org.cn; 2010 Article on Water Pollution and Farmers circleofblue.org Greenpeace China article greenpeace.org/china ;Wikipedia article on China’s Water Crisis Wikipedia ; Articles on Water Pollution scipeeps.com Water Pollution Photos stephenvoss.com
http://factsanddetails.com/china.php?itemid=391&catid=10&subcatid=66
It is really, really unbelievably disgusting. If you don't believe, then follow these links. It will open your eyes about China.
It may be even considered a humanitarian agenda to rout out the governing body of China.
Then again, maybe that's what they want us to believe. ?:
Sorry for the spam but I truly feel I've got an important new post on my site. JSM has more info on the gross overstatement of bank assets. Very, very important stuff and I copied it into my latest. Thanks for your patience.
www.tfmetalsreport.blogspot.com
The prices of food and overall consumer products have surged in China this year. October consumer prices surged 4.4 year-on-year and food prices an astounding 10.1 percent. Year-on-year inflation of food prices was 8.0 percent in September, 7.5 percent in August, and 6.8 percent in July.
Xinhua also said in the first 10 days of November, the average wholesale prices for 18 types of vegatable in 36 cities spiked 62.4 percent year-on-year, according to government data.
Food accounts for about one third of consumer purchases in the Chinese government's CPI calculation.
Chinese officials blame the surging inflation on economic growth and excessive liquidity, including the inflows of "hot money" from foreign countries.
http://www.ibtimes.com/articles/83107/20101117/china-food-inflation-pric...
The price of food doesn't really matter all that much here in the USSA since nearly 40 million Americans get their food for free with food stamps.
Sadly, the poor are, as is typical, the outlet market for crap. Big Ag gets massive subsidies (so the rich elite can skim) to produce high volumes of shit food, like high fructose corn syrup.
It's really only a big feed chain, in which the system is set up to feed the most $$s to the big corporate types as they cram their worhtless crap down everyone's throats. Kind of like the latest sick care reforms.
First of all food stamps don't pay for a month's worth of food. Secondly, if the price of food goes up then the food stamps stretch even less.
You don´t mess with peoples food....people get very angry...especially when they are hungry....wars are started over this...
Bingo!
You see the evil that calls the game.
So are revolutions...
All the revolutions listed above needed to happen.
After watching this, even anarcho-pacifist yours truly feels like going on a ruthless and bloody rampage...
http://www.youtube.com/watch?v=WW3e26kNnmg
My, that is a very unstable hexagram, Peace.
Please. Don't hurt me.
A private banking cartel is trying to literally starve out a nation, possibly two (not to mention the 3rd world collateral damage), just so bondholders don't have to take a haircut. Evil, pure evil.
I can only pray Bernanke has a Lady Macbeth break down.
"possibly" two?
Tyler Durden: Please stop posting relevant (and damaging to my cause) information on the economy, the EU and the Fed, supported by actual (and factual) sources. I want to see only conjecture based on gov't propaganda with pom poms in hand, shouting "RAH RAH SHISHH BOOM BAH!" as the US Fed injects BILLIONS of worthless dollars into the perpetual ponzi market in order to keep their mandate of "wealth creation" (for the insiders of fraudulent Wall Street companies) alive, while simultaneously the cost of living for the now non-existent middle classes continues to rise exponentially for everyday items such as gas and food, while their homes can not even be sold for pennies on the dollar, while paying the banks interest on their underwater mortgages. In the meantime, let's celebrate the "Irish bailout" (aka The Great Perpetual Robbery of the European People) with pints of Guiness (on the tax payers tab of course) for bailing out Wall Street frauds and their corrupt Eurotrash counterparts. Yes, let's celebrate to the fact that the ECB will simply but very quietly "purchase" BILLIONS of EUROS of worthless Greek/Irish/Spanish/Portuguese/Italian debt to keep the rates below 250%. Let us celebrate the lies and deception and congratulate those who continue to cover-over all the bad news.
Thank you,
Hairy Wang, No Mas, Leo Kakalakas
CEO, CFO and PR Captains of The Perpetual Ponzi Inc, owned and operated by the US
PS- We will be "out of the office" on down days but will return when the price goes UP!
I did not junk you. To Leo's credit, he showed us charts of solars getting hammered. It may not mean much, but I respect that enough that the record needed to be set straight.
Leo's not a bad guy.
.. you mean blowtorched. Lol'
Wrong --- Leo is just as evil as the oligarchic kleptocrats for whom he is endlessly apologizing, and with whom he gladly collaborates in the massive theft and transfer of wealth from the average citizen and into the pockets of the elite.
Behold the middle name of people like Leo: Quisling.
My God. Now, Leo is evil? Harry Wanger is...well, a wanger? (Maybe! Ha!) But...
All Robo, Wanker and Leo have been saying is, "Yo, listen up! For the next several months your government is going to be engaged in an advanced exercise known as, 'Ramping the Equities.' I suggest you all get in and follow the program. You don't have to agree with it but that's just the way it is."
What is the matter with you people? Do you not take the time and listen to what someone has to say without twisting it into your own paradigm, or religion?
I don't trade equities, so I can be a fair referee. :)
So there. :(~
Clearly, you have not fully read the vile message of Leo's many smug pro-establishment harangues, in which he has not only opined what you have outlined above, but has pointedly supported virtually every pro-oligarchic wealth transfer from the broader economy and the average citizen into the hands of the favored elite as NECESSARY and for the GREATER GOOD, blessing them at almost every step, throwing in his lot and giving full moral support for the innumerable rapacious crimes being inflicted upon us peons for the benefit of Wall Street, the favored banks and their central planning cronies/masters.
Yes, I would call taking such a morally bankrupt, self-serving position as evil. Why are so many still unable or unwilling to call a spade a spade?
Far be it for me to speak for Leo or anyone else but from his postings, it is clear that he is more worried about the global pension fiasco that most people ever cared about.
How that is pro-oligarchy makes no sense to me. Self-serving? I hear Bill Gross as being a self-serving government sycophant and all the blah, blah, blah... His job is to make me tons of money. If not, his job is to preserve my capital. Thanks God Bill Gross is a "self-serving" tool of the establishment, as is Leo. Pimco Total Return. Loves it! :D
You play the cards you're dealt for the betterment of your clients, or, in the case of Wanger, yourself. Either way, they are playing the cards they're dealt in the best way they know how. I don't see how that is a bad thing.
There is a massive difference between grudgingly playing an unfairly dealt hand, and knowingly and willingly supporting and apologizing for those who continue to deal those hands unfairly. Leo falls into the latter camp.
"RAH RAH SHISHH BOOM BAH!"
I think that should have read:
"RAH RAH SHIT BOOM, BOOYAH"
He explains with high level of conviction that the US MIGHT slip into a recession.
Might? Really? Maybe he meant might slip into a depression.
I see a lot of brilliant looking analysis, but how can you be so wrong on the basics?
Someone call a spade a spade, please.
And food. Scary thought. A hungry populace is a governments worst nightmare since at that point, people feel they have nothing to lose. Easiest way to Anarchy.
Interesting to see when the food shock hits (which it will) and how the world reacts. We've done a terrible job so far (Africa is a prime, shameful example).
ORI
http://aadivaahan.wordpress.com
Africa is done on purpose. It is part of the master plan. Africa has untapped resources to plunder.
Everywhere is done on purpose.
This upcoming global food crisis is mostly geoengineered.
Prepare yourselves.
or Goldman Sachs engineered--
http://johannhari.com/2010/07/02/how-goldman-sachs-gambling-on-starving-...
Thanks for the link Flat.
No humanity begets the same. These profiteers need to be bludgeoned to near death and then buried.
+1
You're welcome Ripped.
Blugeoned and buried?
No. Too good for them.
Remember "Eat the Rich"?
Soylent Sachs
“The people in power will not disappear voluntarily, giving flowers to the cops just isn't going to work. This thinking is fostered by the establishment; they like nothing better than love and nonviolence. The only way I like to see cops given flowers is in a flower pot from a high window.” William S. Burroughs
I am aware of price manipulation (buying USA corn @ $3/bu when it costs farmers $5 to produce it, so they stopped farming), but this is a whole other league!
Now, trust me on the geoengineered crop failures. I have been a victim. It's real.
If you have not seen "The World According to Monsanto" I highly recommend it. It is really worth watching.
I know ripped and green leader above.
Which makes it even more shocking and tells such a story of where we have reached as people (hum-unkind).
ORI
Africa is where future Oceananic, East Pacific and Eurasian wars have been agreed to be fought.
Plus they have some very high quality oil in Nigera, some very high quality yellow cake in....
Correct.
That's Stage V. Quite a ways to go yet.
Buffett and Gates are over there now, pumping billions into an idea about eugenics. Some sort of "vaccines..."
Thanks, Uncle Warren. You're the best!
Yes vaccines delivered by the benevolent billionaires:
"We tested the batches multiple times on hundreds of subjects. There was no indication in any of the subjects tested that would point to mutation to a pathogen".
Sponsored in part by Coca-Cola:
"A spokesman from Coca Cola said that a terrorist plot has been uncovered after the fact, which is how the sterilization agent found its way into the shipments of product to Africa"
And with a convenient malevolent virus factory north of Vinnitsa, it is all the more simple to construct such plan because it is in the middle of nowhere, yet relatively close to everything.
Media blackout? Ha!
"Like sand through the hourglass, so are the Days of Our Lives..."
He uses the word might as Philadelphia Lawyer would to cover his ass.
Food? You ain't seen nothing yet...
I know. It feels like the D word is a mine-field for all these guys.
They dance around it, using some arcane definition of falling GDP for x quarters, when the rest of the time they scream that the numbers are rigged.
They speak from both sides of their mouths with forked tongues to boot.
Cowards, one and all.
ORI
http://aadivaahan.wordpress.com
The Three F's of population control:
FOOD
FUEL
FEAR
What is it that the PTB don't have covered.
The first two are interchangeable.
Been hanging 'round the Outback lately?
http://www.creativespirits.info/aboriginalculture/health/petrol-sniffing...
The law of unintended consequences in its full furious finery -- we will starve the Third World and reduce the standard of living of 80% of our own population to appease the government thugs.
What have we become?
I think we're not far from becoming the people whom even other developed nations will cheer seeing mushroom clouds forming over.
Let's face it: Pushing millions into starvation primarily to paper over banksters' crimes is plainly mass murder and crime against humanity.
Although I agree with the fundamental analysis presented, how can you argue with counterarguments like these:
-The Beatles on Itunes!!!!!!!!!!! Bankrupt GM got bailed...again!!!!!!!!
-Ireland is getting bailed!!!!!!! Which mean Portugal, Greece, Spain, Italy and Iceland will be bailed next!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
In summary:
You know my temperature's risin'
and the jukebox's blowin' a fuse
My hearts beatin' rhythm
and my soul keeps singing the blues
Roll over Beethoven
and tell Tchaikovsky the news
Great post - thx for sharing Tyler
so many words..
I DONT UNDERSTAND why everybody tries to explain position of FED in QE2 ???
inflation, china, deflation, as G Carlin used to say 'ITS ALL BULLSHIT FOLKS'
US gov deficit is 1.7 trln $ revenues flat y/y, outlays up +5%..
lets imagine BERNANke would have said 'all is clear no need for QE2'
in this case HOW US GOV WOULD FUNCTION ?? it spend 2 $ for each 1$ in taxes.. who would in right mind buy US debt in currency that actively being butched by ..???
seems all those so called economists playing mind games and dont bother just say simple true
US GOVERMENT IS BANKRUPT.. USA as nation is fucked.. people are ignorant and stupid .. politicians are JSUT PAID WHORES..
look at HR 3808.. it was only what 2 weeks since midterm elections and what a fucking surprise republicans voted to fuck amercians people.. I guess my fellow americans deserved it.. at least its what they who voted for...
alx
It is all bullshit, smoke, and mirrors. Now what?
Not to change the subject or anything but is anybody noticing the broken correlation between the stocks and the USD today? Gold are silver are behaving as expected by the indexes are not so far.
The article's split is pure rhetorics.
How could the US fold in the bidding game over food as bids on the world market are made in USD, which the US through the FED is far from being short of and that food stamps exist?
Once again, the only risk in the US pattern of things is that people at the very bottom of the global pyramid rebel efficiently. It wont happen.
The US through the FED can buy all the food existing in the world so no food riots possible in the US even if US citizens are to eating a lot.
The US probably hopes that the Chinese are going to speed up their programs to secure food production overseas, alienating local local populations in the doing and allowing more US military deployment, if possible, over the world.
"The US through the FED can buy all the food existing in the world so no food riots possible in the US even if US citizens are to eating a lot."
Just saying so doesn't make it so...
All that food that you're talking about is largely the product of cheap fossil fuel. The US is a net energy importer (read "overconsumer of energy"). When the USD gets turned to dust I hardly figure that the rest of the world is going to give the US the fuel in which to produce its food... (yes, I realize that the US exports a lot of food, but most of it is mono-crop crap that's going to eventually dry up anyway).
As if participating to the general scheme was out of pure volition. What about the US military network around the world?
What about a third world good humoured leader, coming out and claiming that FED policy is inflating food prices, making harder for his struggling nation to feed itself? Zip credibility, the guy will be laughed off. The fre press makes out of him an example of poor governance, Zimbabwe style.
They take up arms to fight the process? Labelled as terrorists with marines sent pronto to bring back the lacking discipline.
Third world leaders know the drill: it is not new to them.
The food price is inflated. They are offered generous loans, humanitarian loans against securized mineral assets by the West, which speeds up the wealth transfer to the West. Either this or the stick.
For regions having no longer assets to yield, well, the free press will give a night edition headline on food riots.
Extorting the weak works. Farming the poor works. Just ask the US.
"The US probably hopes that the Chinese are going to speed up their programs to secure food production overseas, alienating local local populations in the doing and allowing more US military deployment, if possible, over the world."
I agree...China has been buying/leasing agricultural land in Latin America.
If they do not have a US base already, then they will get one.
Oh, the old No rare earths for me, no ricee for you ploy.
This bunch in Washinton are nothing more than global terrorists.
What is it about dollarization, you can't understand, folks. There is no weapon with which to resist US dollar printing. The US has finally been pushed to crush other currencies in order to save the empire.
What we are witnessing here is the hostile takeover of every other economy on the planet -- this time without guns (at least, so far)
I watched the GM IPO pump on all cable stations this morning. Then I read zerohedge. One is fantancy world; one reality. If I could only decide which one was telling the truth.
I couldn't believe it, myself. Even had their own "GM" ticker rolling in the bottom right corner. It was all I could do not to laugh or to smash the television.
Crazy.
on Wed, 11/17/2010 - 21:54
#736677
Game over is right. China to spend their dollars like mad men. The ninja warriors are going for everything from gold to the kitchen sink. What they do not get will be left overs for those who did not realize the game until now. The game is over, folks.
The correlation between accusations from the US and a weaker dollar/CNYuan is thus; fascists wish for China to spend Chinese Reserve dollars. Walled Street wants all dollar reserves China has in the bank back on the market, in hopes the monie can be turned for a righteous profit.
Walled Street has dollars too, and so they will chase the big monie if it moves. The game of chicken is almost over now that margins are compromised on such important aspects like commodities. Once the levy breaks, the FIAT will try to swim and it will flood the system. Never mind the trillions all Sovereign creditor nations have, how many trillions does Walled Street have? The game of Chicken is over.
+1
Thank you.
And it may very well come to who suffers a food riot first. Or at least in America's case, if the Fast Food dollar menu becomes a five dollar menu.
'Twenty dollar, Twenty dollar, Twenty dollar foot loooong.......'
On a positive note, America's rampant obesity problems will become less so.
ummm, just one small correction Lennon.... Ninja are from Japan. :)
So what do I call the Chinese warrior?
The Chang Sings!
http://www.youtube.com/watch?v=VGLinT-Pdyo
"What's happening Timmah?" Said Ben Bernanke, who found himself in a dark alley in China. Not only had he never been in a dark alley before, he had never stepped foot out of his Blackhawk while on the mainland of the country.
"Chinese stand off. Don't make a sound!"
Best movie ever!
When some wild-eyed, eight-foot-tall maniac grabs your neck, taps the back of your favorite head up against the barroom wall, looks you crooked in the eye and asks you if you paid your dues, you just stare that big sucker right back in the eye, and you remember what ol' Jack Burton always says at a time like that: "Have you paid your dues, Jack? Yessir, the check is in the mail."
+1mm You were already pretty high up the list Shameful, but you just notched up a few more points.. LMAO!! "Which Lo Pan? The little basket case on wheels or the 10 foot tall road block?"
Barely paid bullet stoppers?
Master
"..going for everything...to the kitchen sink." Absolutely. Wish those China pooh-pooh-ers would add up everthing the Big C owns off the mainland. All the wizards worrying about currency & bond circle-jerks can't see China will simply own US and a lot more outright. "Paid cash for it"
GM IP-Oh No Mr. Bill....$35.01 and droppin'
Let's give a round of applause to those who guessed 24 hours on the poll.
It is still up 6%... will be 5-10 days IMHO
10 days and my pick is right and reinforces my advanced degree in guessing things.
I guessed 10 days too, but that 6% is 3% now.
there's no choice here...growth isn't paying the interest on today's debt because there is no growth. Therefore, the Bernank has to print the interest.
The mathematics of this aren't terrifically complex so long as you understand how our monetary system works.
You are SO right! When one looks at the natural fundamentals rather than getting mired down in a bunch of overanalysis it is quite simple!
China raising rates will put a prick in ANY inflation Ben has to offer, but it would sink both Economies. Inflation is the only game in Town now but offers little to the peasants in CH and the US. Who ever has the most angry peasants loses. (feudal peons).
Just think of all those GM cars the Chinese will buy..
Put another way, whomever can treat their peons the worst and survive (hint: China) will win.
European bond update:
Tighteners - Ireland, Greece
Wideners - Portugal, Spain
So far the tightening that has occurred is very weak compared to April/May given the belief that Ireland will be bailed out. Spain is about to reach a new overall high since the crisis began in April.
The clock is ticking on the Ireland bailout, and the market is starting to force their hand via Spain bonds. One more day of bond widening in Spain and Portugal tomorrow makes a Sunday night announcement on Ireland possible; however, continued stock market strength could buy Ireland more time.
Edwards was lone wolf last year saying RMB may be undervalued. He made a good call on trade deficits (which banks are quiet about today).
The ABA politicians and their private cartel clients are screaming for an appreciation in the RMB have taken HUGE positions for this trade, multiple ways. They have capital-in, in need of liberation! Do they mention that China may have loads of hidden bank debt that they are also monetizing? (some here argue this). No, "China is clean as a whistle with a strong PUBLICLY owned currency monopoly (and ready to liberate our huge private positions!)" - private bank cartel
Wait. Is private bank cartel patting the PUBLIC BANK currency on the back? Sounds like it to me. But, I didn't think public currency monopoly worked. They tell us it always dilutes the value (always) and only private banks can be trusted with it. Ha.
Chuck Schumer is the front man for this hundreds of billions arbitrage play. Beads of sweat appear when he talks about China and trade because he's from the great manufacturing state of Manhattan. They're dying to screw Americans across the board with higher prices which will go directly into the bank vaults of US banks, capital-in holding massive RMB positions. U.S. consumers will pay this tax directly to the private cartel. Sound good? All those "jobs" the say will rise out of the ashes of Detroit? In a BI-nation world perhaps. India? Vietnam? No, manufacturing back to the US, say the private cartel! (I don't recall the Bernank making this argument. The argument is co-opted by banks out of the Treasury buying policy. I think they're trying to scare China into making their trade. Schumer threatens a trade war every 6 months, but this is better.)
Only ten years ago... private cartel was screaming for DEvaluation.
The banks/corps were still taking their positions and BUYING up China then. Now, they're locked, loaded in China and sending a garrison of bankers to India, Vietnam, etc., as China enters phase two.
Two massive oppositional arbitrage plays in ten years. Their pimp economists told us both times, this is exactly what America needs! Both times, they were talking their book. Consumer effect in the U.S. was incidental yet argued for political effect.
http://news.bbc.co.uk/2/hi/business/262397.stml
It's a truly bizarre world when a cabal of geriatric economists sitting in DC can cause millions of people in other countries to starve by simply announcing a number every couple of months.
Bizarre, like oil derricks located in African villages with no electricity?
http://www.guardian.co.uk/katine/katine-chronicles-blog/2010/jan/18/uganda-oil-profits
http://www.youtube.com/watch?v=Kid-OfupoQo
Began long before Bernanke. Can't rule the world without breaking-up China.
It's an elite thing. A rentier viewpoint.
Starve the World to feed a Banker. I wonder how many people need to starve to feed just one Bankers Bonus. 100,000 people, 200,000?
Entire villages for can be fed for years here in India with that kind of money Water.
Many Hundreds of thousands. I'm not kidding.
ORI
http://aadivaahan.wordpress.com
Good question, let's see:
Average CEO bonue 2009: 11.3 millions
http://management.about.com/b/2009/02/12/ceo-bonuses-necessary-or-greed.htm
Average Chinese salary/year (onstant 2005 US$ at PPP): $4397
http://www.worldsalaries.org/china.shtml
11.3m/4391= 2569
It took 2569 Chinese for each CEO.
Wall Street Bonus Pool for 2009 was 20.3b.
http://www.osc.state.ny.us/press/releases/feb10/022310.htm
18.4b/4397= 4 616 784
It took 4.6 millions Chinese working for a year to equal WS bonuses in 2009.
All income doesn't go to food, so multiply these numbers by maybe 5? So let's say Shanghai worked for WS bonuses last year,and call it even.
4,616,784 / 1,354,370,754 == 0.34% of them.
They can take it (and have probably killed more through their own policies and pollution).
Irish Central Bank Governor Patrick Honohan
“It will be a large loan because the purpose of the amount to be advanced, or to be made available, is to show Ireland has sufficient firepower to deal with any concerns of the market. We’re talking about a substantial loan.”
------------------------------------
I'm thinking of a word, starts with a "B" ... any guesses?
Bollocks!
They are not going to wrap it like that. It is going to be a pan-European loan "blanket" of 200B Euros that will go towards shoring up Portgual, Spain and Italy, etc. (meaning Austria, the scariest place in Europe...).
The news, at first, will be quite bullish for the Euro. Be very careful if you are short. Once the idea settles in, the Euro tanks vis-a-vis the USD and the JPY.
GM just hit a new intra-day low, will the market start to weaken as a result?
Clearly the focus is China and their mercantilist ways. The world economy is out of balance and cannot be maintained as presently functioning. Someone has told Bennie that trade must be balanced, and this means China must allow its currency to float. We cannot have hundreds of billions in trade deficits with China while U6 is at 17%.
The (un)intended consequences of course are what we have here, the possibility of starving large numbers of people and creating a war. Not defending Bennie, but what is the correct response to the mercantilist? Not sure I know nor if there is an easy way out.
sschu
China is the result of US policy (infect them with "capitalism" in order to kill the "commies"). The only policy that has been existence is that of spreading viri: there is only one result (stupid elite/globalists didn't realize that they were killing the host [that their viri were feeding on]).
One has to wonder why the Chicoms bought shit securities when they could have bought Nebraska farmland.
Who is their brain trust?
They can buy all the farmland in America they want... but that means they'll have to play nice with America, or else risk having 'their' property expropriated. Don't believe me? Ask Iran.
China doesn't want their hands tied when it comes to Taiwan, or anything else. Which is why they won't invest state funds in American real property.