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Forget Food Riots In Africa, Simon Black Says The Canary In The Inflationary Coal Mine Is In Southeast Asia

Tyler Durden's picture




 

While the bulk of 2011 food protests have focused around countries that are, to put it bluntly, in the periphery of the desert, and thus mostly irrelevant from a food supply perspective (their domestic issues are of no matter to America: after all they have no oil) the recent focus on surging prices has been largely geographically isolated for the time being. That said, in today's piece, "Sovereign Man" Simon Black takes a look at a far more critical country smack in the middle of Asia's breadbasket, Laos, which he believes may rapidly become the canary in the Southeast Asian coalmine, whose troubles could promptly spread to China and the rest of the continent, and from there, to the rest of the world. We would add that unless the central bank approach of pedal to the liquidity metal is reversed promptly in the next few months, which it certainly will not, he will most certainly be proven correct. And just as the deterioration of events in Africa, where the rapidity of protests took even us by surprise, despite first predicting food riots just one day ahead of their actual eruption, should anger spill over in Asia, the time until everything hits a boiling point will make even the recent revolution in Tunisia appear to have transpired at a snail's pace.

The Canary In The Inflationary Coal Mine Is In Southeast Asia, from Sovereign Man

Laos is a small, landlocked economy in Southeast Asia that's often overlooked in favor of its neighbors: Thailand, China, and even Cambodia. But there are a few important factors that set Laos apart and lead me to believe that, when it comes to inflation, the country is the canary in the coal mine.

First, Laos is one of the most sparsely populated countries in Asia; with just 6.3 million people, its numbers pale in comparison to regional neighbors such as Burma (50 million), Thailand (67 million) and Bangladesh (162 million).

The other thing that's important about Laos is that the country is home to some of the most fertile soil in the world: more than 20% of its land mass is ripe for agricultural use. This is an astounding number, and it's no wonder that agriculture makes up the preponderance of the Laotian economy.

Put another way, Laos, with its vast resources and small population, might loosely be considered an agricultural version of Kuwait. But Laos is nowhere near as wealthy, since oil is much pricier than rice, soy, and fish.

Given its resources, it certainly seems ironic that the prices of staple foods in Laos, including rice, have soared in recent months, and that the Laotian government is now under intense pressure to "do something" about it.

You expect this sort of thing to happen in Algeria, where the population is 35 million, where only 2% of the land is cultivated, and where agriculture makes up but a tiny percentage of the economy... but in Laos? This is akin to finding Kuwaitis unable to afford filling up their cars due to high gas prices. It's unthinkable.

Thing is, it's not that there are food shortages in Laos; this isn't an issue where supply has failed to keep up with demand (thus resulting in rising prices). The price hikes are simply another indicator of monetary inflation causing severe price inflation, particularly in the developing world.

How does this happen? The trillions of new currency units being compulsively manufactured by central bankers are finding their way to developing countries. This surge heats up local markets, causing prices to rise.

This effect is compounded when developing markets fight to keep their currencies artificially depressed against the dollar. When the price of milk goes up by a dollar in the developed world, people grumble about it, but they can afford it. In Laos, where the minimum wage is about $65/month, an extra few dollars for groceries is unfathomable.

The government in Laos will most likely raise the minimum wage. The figure that's being discussed is about a 40% increase from today's level, which itself is nearly double the minimum wage in 2009.

Rising wages like this are a common ingredient in hyperinflation, spawning a vicious cycle of higher prices, which then beget higher wages, which then beget higher prices, and so on. Wage hikes are always playing catch-up with rising prices, and the end result is a reduced standard of living. No amount of monetary wizardry can prevent this.

I saw a similar case when I was in Sri Lanka a few months ago: the government there keeps the rupee fixed to the US dollar at an artificially low rate in order to support exporters... yet the weak rupee has hit the locals hard, causing soaring prices of 30% or more for staple foods such as rice and coconuts.

When I was in Zimbabwe recently, the locals told me similar stories about their days of hyperinflation: everyone was constantly getting a "raise" to keep up with inflation, but prices were adjusting so rapidly, their living conditions would constantly deteriorate.

Needless to say, banks do just fine in this situation. All the freshly printed money circulates through the banking system, generating greater volume and higher profits. It's no coincidence that Laos' largest commercial bank (BCEL) is expecting its net income to surge 27% this year, and I'll be curious to see what happens to the Laotian stock market (which just had its inaugural session last week).

Bottom line: if this sort of thing can happen in Laos, where there's about 2.5 acres of lush, fertile, arable land for every man, woman, and child in the country, it can happen anywhere... and I'll be watching this situation very closely to see if any civil unrest develops as a result.

Regardless, inflation is here.  And the more you see politicians and central bankers denying it, the more you should be preparing for what may come. More to follow.

 

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Tue, 01/18/2011 - 15:04 | 884634 TruthInSunshine
TruthInSunshine's picture

Hey, Simon Black: Bug off, wanker!

Bernanke told Scott Pelley that there is no inflation and that he's 100% confident that if there's ever inflation again, he can defeat it in 15 minutes!!!

So SCREW YOU, and the inflation-imaginary horse you rode in on, Simon Black!

 

Ben Bernanke: Inflation Levels Too low

 

 

Jon Stewart attempts to figure out if Ben Bernanke is printing money
Tue, 01/18/2011 - 15:27 | 884718 goldfish1
goldfish1's picture
BREAKING NEWS: http://www.guardian.co.uk/world/2011/jan/18/tunisia-dissident-blogger-minister

 

Tunisian dissident blogger takes job as minister

Slim Amamou and his fellow bloggers circulated news and videos in the name of protesting against the repressive regime

 

Only last week, the dissident blogger Slim Amamou was handcuffed to a chair in the notorious interrogation rooms of Tunisia's interior ministry being psychologically tormented by the dictator's henchmen and led to believe that the screams he could hear from neighbouring rooms was his family members being tortured...

...Amamou is the CEO of a web development company and calls himself a "partisan of the neutrality of the net". A member of the Pirate party, inspired by the Swedish movement, he has been active on the underground blogger's circuit for many years. In a brutally repressive dictatorship, with the world's most advanced internet censorship technology, rivalling that of China or north Korea, Amamou and his fellow bloggers circulated news and videos in the name of protesting against the repressive regime.

Tue, 01/18/2011 - 16:37 | 884945 More Critical T...
More Critical Thinking Wanted's picture

 

This effect is compounded when developing markets fight to keep their currencies artificially depressed against the dollar.

Btw., that the Fed is weakening the dollar is one of those zombie right-wing lies.

Here's the strength of the dollar, for the last 20 years:

http://research.stlouisfed.org/fred2/graph/fredgraph.png?&chart_type=lin...

 

Check the 1992-2000 portion where under the Clinton administration the US's economic health improved gradually and the US government produced the first surplus quarter in over 20 years after 3 deficit-ballooning republican administrations: the dollar strengthened by more than 30%.

Check the 2000-2008 portion where the Bush tax bonanza for the rich and two wars to protect the business interests of rich corporate donors happened: the dollar weakened by more than 30%.

Check the 2008-2009 portion where the financial crisis hit and everyone fled to the dollar: the dollar strengthened by 15%.

Check the 2009-2010 portion where the Fed was supposedly printing so many dollars that it weakened the dollar beyond measure and drove inflation everywhere else in the world: oh, it did not actually happen, the effect barely shows up in the graph ...

Trivia: how does a paleomonetarist screw in a light-bulb?

Answer: he does not believe that light-bulbs need screwing in, so he first redefines the laws of physics to include an auto-screwing equation, and failing to see the light-bulb screwing itself in he claims that there's a massive global anti-monetarist conspiracy.

Trivia: how does a paleomonetarist handle economic crises?

Answer: he does not believe that crises need government handling, so he first redefines the laws of economics to include an auto-balancing equation (a constant monetary base), and failing to see the expected results he claims that there's a massive global anti-monetarist conspiracy.

 

Tue, 01/18/2011 - 19:27 | 885615 DutchZeroPrinter
DutchZeroPrinter's picture

You should try to compare the dollar against gold, or another commodity for that matter. After that rewrite your post please.

Tue, 01/18/2011 - 20:06 | 885721 More Critical T...
More Critical Thinking Wanted's picture

 

Commodity prices are generally not very useful for long-term comparisons as their prices fluctuate heavily due to speculation, wars, weather, etc.

That's why the dollar strength index like the DXY was created, and that's why ZH articles use that metric very often when talking about the strength of the dollar. That's why the (IMO even more accurate) Trade Weighted Exchange Index was created as well, used in the graph I linked to.

(If you do not understand what I'm talking about then please read back older ZH articles, most of them are pretty good and they will help you getting started about the DXY.)

 

Wed, 01/19/2011 - 00:37 | 886390 TruthInSunshine
TruthInSunshine's picture

To those who may have not realized it, I was mocking Ben Bernanke; not Simon Black.

Bernanke couldn't be more ridiculous in his policy or his public statements, if he tried.

He is a lunatic, who appears hellbent on imploding the global economy, and creating the mother of all market/asset distortions everywhere.

My avatar is free to borrow.

Sat, 01/22/2011 - 11:12 | 895648 More Critical T...
More Critical Thinking Wanted's picture

 

Well, you are like the typical intellectually challenged right-wing commenter: you assert all sorts of scary sounding fantasies with no factual basis nor any rational explanation whatsoever.

It's either that you dont want others to follow your line of thought, or maybe you have no rational line of thought - it's just poorly thought out rambings and random emotions.

I can do that too: Elvis Presley, as we all know it, is the source of all evil. There, now you know the truth. Feel free to borrow my avatar too.

 

Sun, 01/23/2011 - 14:38 | 897284 BigJim
BigJim's picture

No, the reason commodities aren't generally useful for 'long term comparisons' between currencies isn't because their prices fluctuate heavily due to speculation, wars, weather, etc. It's because commodities are bought in the global marketplace, so as their prices change, their prices in all currencies will change in tandem.

However, when arrempting to gauge the long-term buying power of a currency, commodities are perfect, because they underpin the price of everything.

There's no point attempting to 'prove' that the dollar's 'value' has risen by 15% if it buys 20% less of a basket of commodities. That just means other currencies have lost even more buying power.

Wed, 01/19/2011 - 00:05 | 886308 sushi
sushi's picture

Tunisian dissident blogger takes job as minister

 

Tyler: No matter what they end up offering you please do not go over to the dark side.

Cheers!

Tue, 01/18/2011 - 15:56 | 884829 ElvisDog
ElvisDog's picture

The reason printing money never works is exactly what was described in this article - there will always be a premium built into commodity prices to anticipate future inflation of the money supply. That is the reason that the wage increases never seem to keep up with the cost of living.

Tue, 01/18/2011 - 17:18 | 885131 Oracle of Kypseli
Oracle of Kypseli's picture

The S.E. Asian staple food is also a world wide commodity.

No escape. If the locals can export it for more money, then the locals will pay the same unless the government subsidizes it.

Wed, 01/19/2011 - 00:38 | 886346 TruthInSunshine
TruthInSunshine's picture

+

Tue, 01/18/2011 - 15:02 | 884636 Rahm
Rahm's picture

Buy the fuckin' biryani!

Tue, 01/18/2011 - 15:02 | 884646 Salinger
Salinger's picture

Laos is a poor, landlocked country with an inadequate infrastructure and a largely unskilled work force. The country's per capita income in 2010 will be $986 (est.). Agriculture, mostly subsistence rice farming, dominates the economy, employing an estimated 75% of the population and producing 29% of GDP. Domestic savings are low, forcing Laos to rely heavily on foreign assistance and concessional loans as investment sources for economic development. In 2010, donor-funded programs accounted for approximately 8.5% of GDP and 90% of the government’s capital budget. In 2010, the country's foreign debt was estimated at $5.8 billion.

 

http://www.state.gov/r/pa/ei/bgn/2770.htm

Tue, 01/18/2011 - 15:04 | 884657 Sudden Debt
Sudden Debt's picture

And yet, I've never seen more Hummers and big ass trucks all not older then a year over there in Laos.

Even not in America.

 

Tue, 01/18/2011 - 15:07 | 884663 Cheesy Bastard
Cheesy Bastard's picture

Yeah, I heard somewhere that hummers are pretty cheap in Laos. :)

Tue, 01/18/2011 - 15:39 | 884758 Hulk
Hulk's picture

Yes, but nothing worse than laosy hummers....

Tue, 01/18/2011 - 15:44 | 884784 Cheesy Bastard
Cheesy Bastard's picture

LOL. Holy crap that is funny.  And true; You can beat an egg and you can beat your dog, but you can't beat a good hummer.

Tue, 01/18/2011 - 15:47 | 884793 Richard Weed
Tue, 01/18/2011 - 15:51 | 884814 Cheesy Bastard
Cheesy Bastard's picture

LOL.  Music by "The Hu"?

Tue, 01/18/2011 - 15:05 | 884659 Sean7k
Sean7k's picture

Debt is probably IMF hitman generated for projects that are unnecessary and infrastructure that pays huge bribes and special concessions.

Tue, 01/18/2011 - 15:40 | 884761 goldmiddelfinger
goldmiddelfinger's picture

Pierre is that you?

Tue, 01/18/2011 - 15:02 | 884648 Cheesy Bastard
Cheesy Bastard's picture

No, it's not cost push or anything like that.  It must be a new organization called "OFEC" fixing the price and causing food shocks around the world...

Tue, 01/18/2011 - 15:03 | 884649 Sean7k
Sean7k's picture

I would suggest Simon check and see if all those agricultural commodities are being bought by other food starved countries with FX leaving a flood of currency and a limited commodity supply for the people in Laos. Just saying...

Tue, 01/18/2011 - 17:32 | 885184 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Consider this tidbit:

http://tarpley.net/2011/01/16/tunisian-wikileaks-putsch/

Washington DC, January 16, 2011 – The US intelligence community is now in a manic fit of gloating over this weekend’s successful overthrow of the Tunisian government of President Ben Ali. The State Department and the CIA, through media organs loyal to them, are mercilessly hyping the Tunisian putsch of the last few days as the prototype of a new second generation of color revolutions, postmodern coups, and US-inspired people power destabilizations. At Foggy Bottom and Langley, feverish plans are being made for a veritable Mediterranean tsunami designed to topple most existing governments in the Arab world, and well beyond. The imperialist planners now imagine that they can expect to overthrow or weaken the governments of Libya, Egypt, Syria, Jordan, Algeria, Yemen, and perhaps others, while the CIA’s ongoing efforts to remove Italian Prime Minister Berlusconi (because of his friendship with Putin and support for the Southstream pipeline) make this not just an Arab, but rather a pan-Mediterranean, orgy of destabilization.

Wed, 01/19/2011 - 19:52 | 888789 BigJim
BigJim's picture

Why would the US want to topple Mubarak in Egypt? He does exactly what they want him to do.

Tue, 01/18/2011 - 15:03 | 884651 Sudden Debt
Sudden Debt's picture

2 years ago I was in Laos for 4 weeks.

ONE BIG DISNEY LAND!

I kid you not. Whiskey by the buckey for 5 dollars and crazy rides all over the country from Thailand to Cambodja.

A must do :)

Tue, 01/18/2011 - 16:53 | 885041 velobabe
velobabe's picture

well, i want to move to Laos. what language do they speak? it sounds beautiful. i bet they are Buddha based philosophy. i leaving. will you meet me?

where there's about 2.5 acres of lush, fertile, arable land for every man, woman, and child.

Tue, 01/18/2011 - 15:03 | 884655 MGA_1
MGA_1's picture

Well, I thought the game could continue until we saw inflation and here it is !!

Tue, 01/18/2011 - 15:38 | 884755 DeweyLeon
DeweyLeon's picture

Inflation?!

Who's going to break this to Mish?

Tue, 01/18/2011 - 16:26 | 884934 Popo
Popo's picture

Sigh. Semantics.

Price inflation != expansion of the money supply

Tue, 01/18/2011 - 15:04 | 884656 goldmiddelfinger
goldmiddelfinger's picture

Guess it's the Laotians monetizing gold to buy food which is cause of recent weakness in the metal?

Tue, 01/18/2011 - 15:12 | 884671 tmosley
tmosley's picture

4% off the all time high set two weeks ago is "weakness"?

Seriously, you're an idiot.

Tue, 01/18/2011 - 15:36 | 884750 goldmiddelfinger
goldmiddelfinger's picture

Well you're a cretin

Wed, 01/19/2011 - 00:57 | 886422 ColonelCooper
ColonelCooper's picture

You forget Mosley, we're bleeding so badly from the asskicking we've just taken that we can't see.  You know, like the forest for the trees. Or the paddy for the rice.

Tue, 01/18/2011 - 15:07 | 884662 Pants McPants
Pants McPants's picture

Unbelievable.  The cycle just repeats itself every so often - higher prices create a need for wage increases.  Sheesh.

This just in: it rained today because I carried my umbrella to work.

What morons.

Tue, 01/18/2011 - 15:10 | 884666 Kaiser Sousa
Kaiser Sousa's picture

repost must c...

we all know what needs to be done...

we all know who is behind all that is occurring...

no amount of pleading or typical protest or appeals will ever be heard by these sociopaths...

as i said b4, i regret that a grenade was not tosssed....

http://www.youtube.com/watch?v=GFWzDFjBKUw&feature=player_embedded

 

Tue, 01/18/2011 - 15:15 | 884685 chopper read
chopper read's picture

its true.

Tue, 01/18/2011 - 15:09 | 884668 Hondo
Hondo's picture

Foreign governments need to do the right thing to save their own economies and people.  Forget about currency competitiveness with the USA......the USA and their populations are toast....if they do the right thing they will have a continuous flow of savings, resources and immigrants flood their shores bringing productivity with them.

Tue, 01/18/2011 - 15:22 | 884700 AnAnonymous
AnAnonymous's picture

if they do the right thing

 

All these countries are entangled in a network of debt. They were processed by IMF (aka the US) style of economical plan.

They are already in austerity mode and must export in order to pay for their debt (cash crop and all)

They have no other option on the table. If they rebel, the US army will move ASAP to quell any threat to the US ponzi scheme. This warrants that the USD always buys something real and tangible.

If the US can emit so much credits, that is because all these countries have to export their goods in order to gather USD to pay back on their debts.

The US will extract to the last cent from this type of countries.

For them, it is over.

Tue, 01/18/2011 - 15:11 | 884673 bronzie
bronzie's picture

"Rising wages like this are a common ingredient in hyperinflation, spawning a vicious cycle of higher prices, which then beget higher wages, which then beget higher prices, and so on. Wage hikes are always playing catch-up with rising prices, and the end result is a reduced standard of living."

this got so bad in the Weimar hyper-inflation that the workers demanded, and got, daily payment of their wages - when paid, they or their relatives would desparately try to spend the day's pay on tangible goods because they knew that everything would cost more tomorrow

read "When Money Dies" by Adam Fergusson - pretty dry reading but fascinating insight into Germany's bought with central bankers running the printing presses 24/7

Tue, 01/18/2011 - 15:13 | 884678 The Limerick King
The Limerick King's picture

In Laos the farming was great

Until "Benny the Kid" screamed "inflate"

So their crops were bid higher

By a shrewd foreign Buyer

And their deaths will be chalked-up to fate.

Tue, 01/18/2011 - 15:16 | 884689 chopper read
chopper read's picture

very clever and talented.

Tue, 01/18/2011 - 15:23 | 884711 The Limerick King
The Limerick King's picture

Much appreciated............................just like the crops!

Tue, 01/18/2011 - 15:25 | 884715 topcallingtroll
topcallingtroll's picture

Wrong. The laotians are parasitizing off of us with their peg. They can end food inflation instantly by depegging and playing fair.

Tue, 01/18/2011 - 15:34 | 884737 The Profit Prophet
The Profit Prophet's picture

You mean depeg so that corrupt bastards can bid-up their currency....that's a great plan!

Tue, 01/18/2011 - 15:42 | 884773 topcallingtroll
topcallingtroll's picture

A whole bunch of third world corrupt bastards have been bidding up our currency to our detriment. We have to fight back. The loser in a mercantilist war is the free economy that plays fair and doesnt peg. Once they have our entire industrial base then they end the peg and play a standard oil trick straightfrom rockefellersplaybook. Once you are a monopoly then drive prices above market level.

Tue, 01/18/2011 - 15:52 | 884820 The Profit Prophet
The Profit Prophet's picture

Laos couldn't afford to buy the stale piss from Goldman's toilets to fertilize their crops, and you think they deserve to die???!!!  You're a complete scumbag and a moron! 

Tue, 01/18/2011 - 15:50 | 884808 Eternal Student
Eternal Student's picture

+1.

Tue, 01/18/2011 - 15:15 | 884684 chopper read
chopper read's picture

.

Tue, 01/18/2011 - 15:17 | 884691 Cleanclog
Cleanclog's picture

Food prices rising in India too, despite much agricultural activity.  

This is just getting underway.  The Bernanke will not be able to contain it unless he unleashes a disease to wipe a lot of people out.  

Tue, 01/18/2011 - 15:51 | 884813 goldfish1
goldfish1's picture

China is the country that produces the most food and India comes in second.

Tue, 01/18/2011 - 16:00 | 884856 goldfish1
goldfish1's picture

US:

http://faostat.fao.org/site/339/default.aspx

 

2008

Sort by: Quantity 

 

Rank Commodity

1 Blueberries

1 Strawberries

1 Grapefruit (inc. pomelos)

1 Maize, green

1 Soybeans

1 Indigenous Cattle Meat

1 Maize

1 Almonds, with shell

1 Nuts, nes

1 String beans

1 Cranberries

1 Cow milk, whole, fresh

1 Indigenous Turkey Meat

1 Indigenous Chicken Meat

2 Tomatoes

2 Lettuce and chicory

2 Apples

2 Carrots and turnips

2 Walnuts, with shell

2 Game meat

2 Indigenous Pigmeat

2 Hops

2 Pistachios

2 Safflower seed

2 Spinach

2 Mushrooms and truffles

2 Oranges

2 Pears

2 Cherries

2 Hen eggs, in shell

3 Peas, green

3 Onions, dry

3 Plums and sloes

3 Grapes

3 Sorghum

3 Hazelnuts, with shell

3 Peas, dry

3 Sugar beet

3 Wheat

3 Peaches and nectarines

3 Cotton lint

4 Raspberries

4 Lentils

4 Groundnuts, with shell

4 Potatoes

4 Pumpkins, squash and gourds

4 Tobacco, unmanufactured

4 Indigenous Duck Meat

4 Indigenous Horse Meat

5 Watermelons

 

Tue, 01/18/2011 - 16:24 | 884927 hedgeless_horseman
hedgeless_horseman's picture

In China, everywhere you look, there are farmers in the highway medians.

Tue, 01/18/2011 - 16:57 | 885052 velobabe
velobabe's picture

4 Groundnuts, with shell, only 1 shell?

Wed, 01/19/2011 - 00:10 | 886324 goldfish1
goldfish1's picture

World Rank = 4 for Groundnuts with shell

Tue, 01/18/2011 - 16:32 | 884956 baserunr
baserunr's picture

And you thought that his helicopters could only drop cash.......

Tue, 01/18/2011 - 18:37 | 885474 Green Leader
Green Leader's picture

"The Bernanke will not be able to contain it unless he unleashes a disease to wipe a lot of people out."

Global depopulation agenda.

Tue, 01/18/2011 - 15:26 | 884696 grunk
grunk's picture

And all this inflation get passed on to the end user, China. I wonder if Hu Jintao will take this up with Obama?

Food inflation as a foreign policy tool/weapon. Evil geniuses are the Ben Bernank and Hillary.

Tue, 01/18/2011 - 15:35 | 884742 topcallingtroll
topcallingtroll's picture

This is the war against the peg...hu knows already....he also knows not to bother to bring it up with obama because obama will ask for depegging in exchange.

Tue, 01/18/2011 - 15:42 | 884772 grunk
grunk's picture

Sorry I junked you by accident. My apologies.

You're exactly right. This whole food inflation thing is an attempt to bring Hu to the table to negotiate currency and to open markets. Hu knows this and I'm guessing Obama and his people know this. 

China is not an island. It needs to import food. It can go on shopping sprees all over the globe. But as long as the dollar is the reserve currency, China's Asian, African, and South American customers are going to feel the pinch. A couple a trillion in reserves can get eaten up by inflation pretty quickly.

It's a global game of chicken. 

Tue, 01/18/2011 - 15:45 | 884786 topcallingtroll
topcallingtroll's picture

We dont have any choice. Choke them with dollars until the rice riotsoccur, or allow them and their unfair peg to take our entire industrial base.

Tue, 01/18/2011 - 16:17 | 884905 SilverRhino
SilverRhino's picture

>> I wonder if Hu Jintao will take this up with Obama?

 

I expect China to get very belligerent this year.

Tue, 01/18/2011 - 15:20 | 884701 topcallingtroll
topcallingtroll's picture

Die all you mercantilist peggers. End your pegs and play fair or we will choke you with even more dollars. We spend 14 percent of income on food and are quite wasteful since this includes restaurant meals. There will be revolution in these peggers before we even notice food price inflation. China are you listening? Rice riots or end the peg. Its your choice.

Tue, 01/18/2011 - 17:36 | 885204 ToddGak
ToddGak's picture

It's not just China that wants the peg.  U.S. corporations benefit from the peg, because it keeps Chinese manufactured goods cheap (that's good for Walmart, Target et al).  Since corporations own the government, don't look for a de-peg anytime soon.

Tue, 01/18/2011 - 15:22 | 884704 Humpty Pundit
Humpty Pundit's picture

This could be the dead parrot in the coal mine!

Tue, 01/18/2011 - 15:28 | 884712 Caviar Emptor
Caviar Emptor's picture

Dude that canary from the coal mine done died and gone to birdie heaven!

You don't need to go looking in Southeast Asia with UK inflation on the boil already: A near record November-to-December rise in fuel and food  prices, and the expectation that CPI will hit 4% this year. Bonds sold off and Sterling jumped, all just as the new increased VAT tax is about to kick in (adding another 1.4% to CPI inflation according to the Bank of England's projections. So much for austerity! 

 

There won't be a place to run or hide from the coming wave of global inflation. And there are a lot more geopolitically incendiary regions these days where, I believe, we're going to see fireworks. You guys were always thinking that hyperinflation would be country-specific (like in Germany in 1923). But guess what? SurPriiise! This time it's going to be globally born and bred as those supertankers-full of dollars stashed here there and everywhere around the planet come home to roost before they lose all their value. Hey, when in doubt, do what Dictators do and make suer to hang on to your gold!! 1.5 Tons 'disappear' with Ben Ali's wife!

Tue, 01/18/2011 - 19:42 | 885542 Green Leader
Green Leader's picture

You have correctly identified the upcoming situation.

It's scary.

Combine it with crops destruction via chemtrails/geoengineering and it becomes very scary.

Tue, 01/18/2011 - 15:28 | 884721 topcallingtroll
topcallingtroll's picture

All these countries experiencing food inflation could stop the inflation instantly by ending their unfair official and de facto pegs. Otherwise i dont care if all you motherfuckers die. Currrency pegs have been sapping the life out of the united states and prevent external account adjustments necessary for a healthy world economy.

Tue, 01/18/2011 - 15:38 | 884753 AnAnonymous
AnAnonymous's picture

All these countries experiencing food inflation could stop the inflation instantly by ending their unfair official and de facto pegs.

 

They cant. Their peg is engineered by the US. Those countries must export to pay back on their debt.

This obligation warrants the US emission of credits: as these countries export, that assures the USD always buys something, protecting US from inflation.

As normal, the US emitting more credits mean a steady flow in exports by all these countries. The US is squeezing them out of their resources to maintain USD value.

Those countries can not go against the US will.

Tue, 01/18/2011 - 15:48 | 884798 topcallingtroll
topcallingtroll's picture

But we have to run a chronic current account deficit to acvomplish this. This free gift from the world is not worth the loss of our industrial base. Couldnt they pay us back a lot easier with a stronger laotian currency?

Tue, 01/18/2011 - 16:32 | 884955 AnAnonymous
AnAnonymous's picture

The US wants them to export so that their exports come to back the newly emitted credits.

So no.

Industrial base? Laos is a farming country. Get on the page.

Tue, 01/18/2011 - 15:32 | 884730 topcallingtroll
topcallingtroll's picture

St vincent has a special place in hell for currency peggers but first they must experience hell on earth. Die you motherfuckers, or at least end your pegs. I'll be your best friend, please?

Tue, 01/18/2011 - 15:34 | 884733 Greater Fool
Greater Fool's picture

Like physical bombs, alas dollar bombs may also inflict collateral damage.

Tue, 01/18/2011 - 15:35 | 884743 Gully Foyle
Gully Foyle's picture

http://latimesblogs.latimes.com/babylonbeyond/2011/01/middle-east-activi...

...

When Saudi Arabia announced on Saturday it had granted Ben Ali and his family asylum in a heavily guarded palace in the seaside city of Jedda, there was an immediate backlash from religious Saudis who objected to granting protection to a man who oversaw the torture and imprisonment of thousands of Islamists in Tunisia.

Queen Rania of Jordan became the butt of many ominious jokes over the weekend when she tweeted that she was "watching developments in Tunisia and praying for stability and calm for its people." She was met with a barrage of Twitter taunts, including "lol Jordan is next!" and "start palace hunting in Jedda."

Libyan leader Muammar Ghaddafi, who is seen as a source of sad comedy even in the best of times, invited the wrath of the masses when he was quoted telling the official Libyan press that Tunisians had acted rashly by driving Ben Ali out of power.

The only powerful political body in the region to offer support to the Tunisian activists was the militant Lebanese Shiite group Hezbollah, which issued a statement on Saturday (Arabic link) announcing its "pride" in the Tunisian people and calling on Arab leaders to learn a lesson from the Tunisian example.

But some commentators accused the group of hypocrisy, noting its conspicuous silence when similar popular protests erupted in Iran following the disputed 2009 presidential elections. Iran is Hezbollah's main patron.

The Iranians, for their part, seemed unmoved by the events in Tunisia. In a speech before Parliament on Sunday, Parliamentary Speaker Ali Larijani warned Tunisia to be vigilant against the United States, which he accused of seeking to use the recent upheaval to reassert its power in Tunisia.

“The behavior of USA and some other countries is ridiculous," he said. "They were the supporters of despotism in Tunisia until yesterday and now turn out to be the sympathizers toward the nation of Tunisia."

Similar sentiments were echoed by others across the region who were not impressed with the United States and France for belatedly jumping on the Free Tunisia bandwagon.

"France and the United States only supported--and by support I mean they paid lip service to the Tunisian uprising when they realized that Ben Ali's presidency was over," said 34-year-old Zeina, who attended the rally in Beirut. "For 24 days [of protests] no one gave any comment."

 

And some are so scared

 

http://en.news.maktoob.com/20090000548696/Kuwaiti_ruler_grants_4_bn_free...

Kuwaiti ruler grants $4 bn, free food to citizens

KUWAIT CITY - Kuwait's Emir Sheikh Sabah al-Ahmad al-Sabah on Monday ordered the distribution of $4 billion and free food for 14 months to citizens as the oil-rich emirate prepares to mark national occasions.

Each of the 1.12 million native citizens will get 1,000 dinars ($3,572) in cash as well as free essential food items until March 31, 2012, the KUNA news agency cited state minister for cabinet affairs Rudhan al-Rudhan as saying.

The Gulf state, whose financial assets top $300 billion, will next month mark the 50th anniversary of independence, 20th anniversary of liberation from Iraqi occupation and the fifth anniversary of the emir's ascendance to power.

The announcement was made following an overnight meeting of the cabinet. The 2.4 million foreign residents of Kuwait are excluded from the grant and the free food.

Inflation in Kuwait soared to 5.9 percent in November, the highest in 20 months on the back of high food prices which rose by 12.3 percent.

The fifth largest OPEC producer has posted budget surpluses in each of the past 11 fiscal years, totalling more than $140 billion, and is also headed for another healthy surplus this year thanks to rising oil price.

Tue, 01/18/2011 - 16:36 | 884973 SilverRhino
SilverRhino's picture

The Emir of Kuwait is no fool.

And My God, I cannot fucking believe I agree with Hezbollah for once.   Crap. 

Tue, 01/18/2011 - 16:40 | 884994 Race Car Driver
Race Car Driver's picture

The 2.4 million foreign residents of Kuwait are excluded from the grant and the free food.

The foreigners outnumber natives +2:1 - could make for a helluva riot.

 

Wed, 01/19/2011 - 00:33 | 886379 sushi
sushi's picture

Since the government will be in the market buying up all available food for its "Free Food" distribution imagine what that will do to the price and availabilty of foodstuffs.

1.2 million overstuffed Kuwaiti couch potatos against 2.1 lean, semi-starved foreign residents. Should be quite the cage match. Will it be televised?

Tue, 01/18/2011 - 15:35 | 884747 uno
uno's picture

meanwhile in the US:

http://www.bloomberg.com/news/2011-01-18/rich-americans-raise-consumer-s...

 

Sales are up at Tiffany & Co. and Coach Inc., buoyed by demand for $6,000 diamond pendants and $1,200 leather handbags as a stock-market surge pads the wallets of the wealthy. At the other end of the economic spectrum, Wal-Mart Stores Inc., the world’s largest discount retailer, reports “everyday Americans” are living paycheck to paycheck as they await an improvement in job prospects.

 

Maserati, a Fiat SpA brand, said in December that its GranTurismo Convertible has sold out in the U.S., resulting in waiting lists. The luxury car starts at $136,000, according to Edmunds.com, a website that tracks car sales.

Tue, 01/18/2011 - 15:35 | 884748 buzzsaw99
buzzsaw99's picture

Russia banned wheat exports. They saw this coming. The Wall Street crowd will keep buying even if they have to feed it all to the hogs.

Tue, 01/18/2011 - 15:37 | 884752 Segestan
Segestan's picture

So is this another one of those Nice third world countries Mr Black says Patriots should move to??

 

Tue, 01/18/2011 - 15:41 | 884766 AnAnonymous
AnAnonymous's picture

US citizens should never forget that when they leave the US, they turn elegible targets for the US foreign policies.

Gang rule: never leave the gang. It is bad for your health.

Tue, 01/18/2011 - 15:58 | 884841 Eternal Student
Eternal Student's picture

Being on foreign soil does not suddenly make you a target. You can certainly be a target while on American soil. In fact, the military is holding an exercise this year, specific to US cities, just to practice.

Tue, 01/18/2011 - 16:34 | 884963 AnAnonymous
AnAnonymous's picture

Everybody in Laos is caught in this food spiralling up madness. US citizens alike.

Dont be a fool. Stay at home.

Tue, 01/18/2011 - 15:41 | 884765 alter ego
alter ego's picture

In this global economy, the only way to settle this, is to deleverage.

 

All the debt that has been created in the last years must go away. Countries, companies and people must default all debt created based on cheap energy and easy money. You can only clean the system in this way, however to do that, you have to open a can of worms and "scare the hell out of" a lot of people who wants and think that control the world.

 

In addition, finite energy is hitting us hard.

 No human ingenuity or new technologies can run fast enough to be a sustitute of fossil fuels, at least in the short term, and believe me the problems we are facing are just right here right now.

 

 

How do Oil Shocks create recessions?

" In Many ways, the most fundamental linkage between Oil shocks and economic recession is that Oil shocks always cause huge spikes in inflation and those spikes in inflation are accompanied by huge spikes in interest rates that eventually snuff off growth"

 

"Every Central Banker knows, even misleads Central Bankers as Alan Greenspan or Ben Bernanke will tell you that your borrowing rate is a mirror image of your inflation rate".

 

                                                Jeff Rubin

 

Tue, 01/18/2011 - 15:47 | 884791 TheDavidRicardo
TheDavidRicardo's picture

This crap has gone on for over 100,000 years;

Prag notice that Gnort want meat from animal.  Prag hunt for 3 day in shit swamp for animal.  Gnort offer tree branch in exchange.  Prag tell Gnort to fuck-off!  Gnort change law, makes tree branch exchange rate same as animal, get animal and eat animal.  Prag gets worthless tree branch.

Prag and Gnort go hungry in winter and die.

 

 

Tue, 01/18/2011 - 15:51 | 884812 buzzsaw99
buzzsaw99's picture

Prag hits Gnort with tree branch. Prag eats Gnort.

Tue, 01/18/2011 - 16:35 | 884965 andybev01
andybev01's picture

+1 (and my worst nightmare)

Tue, 01/18/2011 - 16:48 | 884970 hedgeless_horseman
hedgeless_horseman's picture

Prag gets worthless tree branch.

Worthless?  Prag turn tree branch into paper, and print portraits of dead people on it.  Call it Federal Reserve Note, and collect interest from Gnort and Gnort's offspring for generations.  Prag buy winery, endow university and law school, back politicians, and race yachts. 

Gnort's offspring learn from TV and People Magazine to view Notes as assets, instead of liabilities.  Gnort's offspring happy to shovel mastodon shit and pay interest to Prag's offspring in perpetuity.

Tue, 01/18/2011 - 15:55 | 884825 whatz that smell
whatz that smell's picture

what the world needs now is more farmers and cannibals.... oh yeah... and love sweet love.

oh yeah... and grammar nazis.

Tue, 01/18/2011 - 16:05 | 884869 Caviar Emptor
Caviar Emptor's picture

cannibals or cannabis? I hear the Canadian anthem will shortly be changed to Oh, Cannabis! ;-)

Tue, 01/18/2011 - 16:09 | 884883 EvlTheCat
EvlTheCat's picture

Not that I want to make Global Climate Change a debate.  Why is it that so many people dove head first in support to try and stem the use of green house gasses in an effort to "save our planet", but no matter how many credible examples of failed monetary, and economic policy are piled up on the pyre no one wants to "save the planet" anymore?  It's the most ludicrous case of hear no evil, see no evil, speak no evil I have ever had the misfortune to witness.   

It seems to me that the whole economic debate hinges on sustainability, one of the keystone arguments which "eco-warriors" cling to defending the need to fight GCC.  Why does economic sustainability not appeal to the same zealous crowd? 

Why does the MSM keep ignoring the need to report on economic sustainability and to investigate the malfeasance of the entire bureaucratic system?  It amazes me every day that so many people have little or no direction in their lives unless someone tells them how they should think.  Most depressing is this has become commonplace in developing stories for the news media.

I guess it may be as easy as believing that everyone is owned by someone, but then why do people even choose to be journalists?  Face recognition, the hopes to become an anchor for a major network,  entertainer?

What I find even more tiresome today, is you have to spend hours upon hours combing, reading, investigating, cross referencing, conversing just to piece a semblance of the truth together.  What about living, creating and progressing?

It feels like everyone is stuck in the quagmire of politics today.  Is this a new feeling?  I am sure it is not, but it sure seems illogical to have to babysit grown men and women whose sense of moral and intellectual superiority is only dwarfed by their egos.

Tue, 01/18/2011 - 16:30 | 884948 TheDavidRicardo
TheDavidRicardo's picture

Because the MSM is directing the bureaucratic population (THEY).  Like the snake that eats its tail (ouroboros, I think.)

Or,

If THEY took the time investiagte (educatation), THEY, would find out that THEY are a parasite of the system and THEY would have to terminate themselves for the better of the system.

 

Or,

THEY, can just show up for work on Monday, make good money with little stress or effort and retire when they are 55.

Tue, 01/18/2011 - 17:07 | 885086 EvlTheCat
EvlTheCat's picture

D - All of the Above

Tue, 01/18/2011 - 16:39 | 884984 kaiserhoff
kaiserhoff's picture

Not buying this, at least not yet.

Food supply is extremely price elastic (small increase in price increases production dramatically).  If food stamps start to get bumped 50% per month, we might have a problem.  Ag is too corporate.  More small scale and local farms would solve many problems.  We should move back to the future.

Perceived food inflation is mostly a function of energy cost, one more thing Washington has screwed up.  Right now 22% of US diesel production is exported to Europe and Latin America.  Lots of one time adjustments and back-ground noise in energy, but no clear direction.

Tue, 01/18/2011 - 17:01 | 885069 Stuck on Zero
Stuck on Zero's picture

The chickens will come home to roost.  While we have enjoyed our Asian products and low priced food the Asians have stockpiled dollars.  The dollars will come back to the United States and there are so many of them that they will outbid middle-class Americans for food.  As your Toyatas rust away you will be sitting with empty stomachs wishing things were different.  

Tue, 01/18/2011 - 17:11 | 885107 BennyBoy
BennyBoy's picture

There is no inflation.

There is no inflation.

There is no inflation.

There is no inflation.

There is no inflation.

There is no inflation.

There is no inflation.

There is no inflation.

There is no inflation.

There is no inflation.

There is no inflation....

 

Tue, 01/18/2011 - 18:45 | 885495 ronin12
ronin12's picture

+1

Tue, 01/18/2011 - 19:13 | 885582 johny2
johny2's picture

All it takes is Bernanke halting the QE2...Which would make stock markets drop 10-20%, and treasuries and dollar rise. It would even make PM rally correct, giving a chance to JPM to cover their shorts. Inflation would fall back and become deflation. Real Estate market would drop more and unemployment would rise. Bernanke than can start QE3, starting a new rally in equity markets and so on....

It would buy some time.

I like silver, but there are no rules in this game, and definitely no fair play.

 

Tue, 01/18/2011 - 20:54 | 885859 Itsalie
Itsalie's picture

Right on, that is the "long term plan" of uncle sam:

1. first unleash the bernank chopper to flood the world with toilet paper;

2. when the 3rd world has had enough of food riots, sell them weapons of mass destruction (no, not from Iraq, that was a fabrication remember? preamble to the current plan) or send in our own soldiers (aka unemployed illiterates), to terminate the protesting masses.

3. Impose an autocracy, a puppet like Saddam or Ben Ali,

4. open up their financial sectors to let JP Morgue run their central banks, have them borrow uncle sam's toilet paper, then trigger a financial crisis (Europe, now we know why they need a dollar swap line, they bought too much toxic MBS with money borrowed from Wall Street ha!);

5. then have nike and apple set up more sweat shops there to produce cheaper iPhones so lazy bastards at home who stopped paying their mortagages can afford even cheaper ipads.Nike and Apple stocks soar, a bubble at home is formed and burst!

6. Bail out JP Morgue with more money used to buy out other "non-compliant" banks like Bear or Lehman

7. Jump to step 1.

It's the same plan since the marshall plan, just the world haven't gone through a complete cycle to understand they were being jerked around by uncle sam.

Tue, 01/18/2011 - 22:27 | 886084 laosuwan
laosuwan's picture

the reason food prices in Laos have risen in the past few years is because of upstream damning of rivers by china which has forced formerly self sufficient farming families to compete for commercially available food, and the massive buying up of farm land by the chinese in the north of Laos for industrial projects and investment. this has nothing to do with bernake or inflation.

Tue, 01/18/2011 - 22:49 | 886139 Buck Johnson
Buck Johnson's picture

You are correct, I read that in some articles from that region about China buying up alot of Laos land.

Tue, 01/18/2011 - 23:28 | 886220 Zeej
Zeej's picture

Great article

 

Wed, 01/19/2011 - 01:20 | 886464 Tsukato
Tsukato's picture

Simon Black may be right about Laos, but I'm not so sure. I stayed there for 2 weeks back in July ( wonderful country by the way). Indeed, a lot of people were getting rich there, as an earli8er poster mentioned. I noticed that food prices were higher than China, and asked some of the well off locals I met. They said the only reason prices were higher, is that Laoyian tastes were changing, and everyone has this strange obsession with all things Thai, and they were starting to use Thai ingredients in everything, and thus, had to import everything. They said if Laotians would eat their native foods, prices would be cheap. Maybe, maybe not. 2 weeks isn't enough time to figure out anything really... unless of course you're Simon Black-Suuupppeeerrr GENIUS!

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