Noodles, Egypt and Secession

February 16, 2011

Over the last two weeks or so, we’ve all been afflicted with nonstop nonsense from the nattering nabobs of the news cycle (thanks Spiro Agnew). Don’t these people ever read anything other than the teleprompter or their speechwriter’s work?

Here are just a few of the glittering gems of the gabfest (don’t stop me…I’m on a roll).

• The Egyptian people want democracy
• President Mubarak resigned
• The Muslim Brotherhood is an impending danger
• Iran is behind it all
• VP Suleiman is now in the caretaker role
• The Obama Administration stood idly by, taking no sides

Reality Check:

• The Egyptian people want liberty, not democracy. But they aren’t going to get either unless the Constitution gets rewritten. And the Egyptian military makes far too much money to relinquish power. So how will the military keep the populace from never-ending demonstrations? How will they make the upcoming “elections” appear to be the will of the people?
• President Mubarak got his hat handed to him by the military and Washington. Notice that you didn’t see Mubarak resign in person?
• The Muslim Brotherhood is a Sunni organization. Iran is run by the Shi’ites. Sunnis want caliphate law. Shi’ites want sharia law. Many Sunnis and Shi’ites hate each other, and many hate Washington. Anyone remember that Saddam’s Iraq (Sunni) fought a 7-year war with Iran (Shi’ites)? Anyone remember that the last Egyptian president, Anwar el-Sadat was assassinated in office? An Army officer named Islambouli was the assassin. There’s a street named for him in Teheran. The MB is only a threat to those who want to continue to stir the Middle East pot.
• As I said, Iran is Shi’ite. Morons in DC and on news shows keep saying that Iran wants to spread Islamic fundamentalism into Egypt. The MB has a grassroots foothold in Egypt with those under age 30 and those folks would rather fight than switch.
• Omar Suleiman was the CIA’s “extraordinary rendition” specialist and Torturer-in-Chief. He was installed as VP with DC’s blessing. Now he’s the guy keeping all the balls in the air while the Egyptian military figures out which General they want to be the next President…naturally with the CIA and the White House’s blessing. So much for popular uprisings.
• Just because the White House looked clueless, don’t kid yourself that they were not eyeball deep in this coup d’etat. Yet another of our fave dictators that DC discards when their usefulness comes into question. I hope this lesson is not lost on the other dictators in DC’s stable of despots.

Now, how about that article title?

Noodles and Egypt

What is the main ingredient in noodles? Answer: wheat. China has 1.2 billion people that eat a lot of noodles. Bread is the staple of nearly every Egyptian meal. That takes a lot of wheat to feed over 80 million people.

Egypt has not been able to grow enough food to feed its own population for decades. Washington “loans” a couple billion to Egypt each year, which they turn around and buy wheat and armaments from us. But there have been massive droughts in Russia, China and Argentina this year, and the worldwide wheat harvest has been drastically diminished. Wheat prices have skyrocketed worldwide, and are still going up because supplies are low. So Egypt must compete with China for very limited inventories of expensive wheat. China has plenty of money to buy what wheat there is. Egypt’s economy is in shambles. If wheat is not available for Egypt, many people will starve to death.

So, no matter what is happening these days in Egypt, noodles in China directly affect the very lives of millions of Egyptians. There is not enough time, nor are there enough resources in Egypt to prevent massive starvation. Even foreign aid won’t work, because US foreign aid will take the form of dollars that are already moving toward hyperinflation.

And Secession?

When secession finally happens, feeding the population of the new nation will be the first challenge. The best way for the new nation to assure that the shelves in the markets will be fully stocked is to protect wealth and personal property. And that means choosing a monetary system based solely on precious metals. Hard money will be a magnet to suppliers, farmers and merchants who are weary of governments inflating currencies and stealing their wealth.

Don’t let noodles in China or any other government-created crisis derail a perfectly good secession. Nothing will ever feel as good as liberty.

Secession is the Hope For Mankind. Who will be first?

DumpDC. Six Letters That Can Change History.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

Egypt: Preview of America in 2015

February 6, 2011

courtesy National Inflation Association

The rioting and looting currently taking place in Egypt is primarily a result of massive food inflation and shows what all major cities in the United States will likely look like come year 2015 due to the Federal Reserve’s zero percent interest rates and quantitative easing to infinity. On December 16th, 2009, NIA named Time Magazine’s 2009 ‘Person of the Year’ Ben Bernanke our ‘Villain of the Year’, saying he created “unprecedented amounts of inflation in unprecedented ways” and “When it costs $20 for a gallon of milk in a few years, Americans will have nobody to thank more than Bernanke.”

What started out a few weeks ago as protests in Algeria with citizens chanting “Bring Us Sugar!” and five citizens being killed, quickly spread to civil unrest in Tunisia which saw 14 more civilian deaths, and has now spread to riots in Egypt where 300 Egyptian citizens have been killed. Food inflation in Egypt has reached 20% and citizens in the nation already spend about 40% of their monthly expenditures on food. Americans for decades have been blessed with cheap food, spending only 13% of their expenditures on food, but this is about to change.

NIA was the first to predict the recent explosion in agricultural commodity prices in our October 30th, 2009, article entitled, “U.S. Inflation to Appear Next in Food and Agriculture”, which said we have a “perfect storm for an explosion in agriculture prices”. A couple of months later in ‘NIA’s Top 10 Predictions for 2010’ we predicted “Major Food Shortages” and said, “Inventories of agricultural products are the lowest they have been in decades yet the prices of many agricultural commodities are down 70% to 80% from their all time highs adjusted for real inflation”. Over the past year, agricultural commodities as a whole have outperformed almost every other type of asset, with silver being one of only a few other assets keeping pace with agriculture. (On December 11th, 2009, NIA declared silver the best investment for the next decade at $17.40 per ounce and it has so far risen 64% to its current price of $28.39 per ounce).

The world is at the beginning stages of an all out inflationary panic. Wheat, which NIA previously called on ‘NIAnswers’ its favorite investment besides gold and silver, is now up to a new 30-month high of $8.63 per bushel and has doubled in price since June of last year. Algeria bought 800,000 tonnes of wheat this past week, bringing their total purchases for the month of January up to 1.8 million tonnes, which was quadruple expectations. Saudi Arabia is also beginning to stockpile their inventories of wheat. Rice futures have gained 8% during the past few days with Bangladesh and Indonesia placing extraordinary large orders. Indonesia’s latest rice order was quadruple its normal allotment and Bangladesh plans to double rice purchases this year. Meanwhile, the U.S., which is the world’s third largest exporter of rice, is expected to cut production by 25% in 2011.

NIA considers rice to be one of the world’s most undervalued agricultural commodities at its current price of $15.96 per 100 pounds and forecasts a move back to its 2008 high of $24 per 100 pounds as soon as the end of 2011. NIA believes cotton, at its current price of $1.80 per pound, may have gotten a bit ahead of itself in the short-term. In NIA’s first ever article about agriculture on February 17th, 2009, we said that cotton’s “upside potential is astronomical” at its then price of $0.44 per pound. NIA pointed to increasing sales to textile companies in China and the fact that cotton was down 70% from its all time high as reasons to be very bullish on cotton at $0.44 per pound. Early NIA members could have made 309% on cotton, but today we see much bigger potential in rice. The recent spike in cotton reminds us of the 2008 spike in oil. Although we believe cotton will ultimately rise above $3 per pound later this decade, we could possibly see a dip to below $1.40 per pound first.

Many people in the mainstream media have been criticizing NIA’s recent food inflation report, claiming that agricultural commodity prices have very little to do with prices of food in the supermarket. CNBC’s Steve Liesman, in particular, claims that “rising commodity prices won’t cause inflation”. Liesman has it backwards. NIA has never claimed that rising commodity prices cause inflation. Soaring budget deficits that the U.S. government can’t possibly pay for through taxation causes inflation when the Fed is forced to monetize the debt by printing money.

Rising commodity prices are only a symptom of inflation. The reason NIA was so bullish on agricultural commodities going back two years ago when we produced our first documentary ‘Hyperinflation Nation’, is because while gold is the best gauge of inflation and is often the best tool for predicting future money printing, agriculture is where the majority of the monetary inflation ends up going after the Fed’s newly printed money trickles down to the middle-class and poor. With gold prices already surging two years ago when we produced ‘Hyperinflation Nation’, NIA said in the documentary “food prices have the potential to surge most during hyperinflation”.

One thing NIA is almost 100% sure of is that come year 2015, middle-class Americans will be spending at least 30% to 40% of their income on food, similar to Egyptians today. As NIA warned in its latest documentary ‘End of Liberty’, if you don’t have enough money to accumulate physical gold and silver, it is important to begin establishing your own food storage, and store enough food to feed you and your family for at least six months during hyperinflation. Many store shelves in Egypt are now empty after recent panic buying, with shortages of nearly all major staple items throughout the country.

The U.S. Treasury is getting ready to sell $72 billion in new long-term bonds next week, as the U.S. rapidly approaches its $14.29 trillion debt limit. The debt limit is now expected to be reached by April 5th and Treasury Secretary Geithner warned the U.S. will see “catastrophic damage” if it isn’t raised. With the Federal Reserve now surpassing China and Japan as the largest holder of U.S. treasuries, the real “catastrophic damage” ahead will be hyperinflation as a result of the U.S. government doing absolutely nothing to dramatically reduce spending. It is an absolute joke that Obama during his State of the Union address announced $400 billion in spending cuts over the next 10 years, but then the very next day, the Congressional Budget Office increased its 2011 budget deficit projection by $400 billion to $1.48 trillion.

Not raising the debt limit would be a good thing, as it would force Washington to live within its means. Sure, the stock market would collapse and the U.S. economy would enter into its next Great Depression, but at least it would save the U.S. dollar from losing all of its purchasing power. In fact, the standard of living for middle class Americans might actually improve if the government allowed the free market to put our economy into a depression, because goods and services would get cheaper.

The U.S. economy has become a drug addict that is dependent on cheap and easy money from the Federal Reserve. While Wall Street bankers took home a record $135 billion in total compensation in 2010, up 5.7% from $128 billion in 2009, this money was stolen from middle-class and poor Americans through inflation. The more monetary inflation (heroin) the Federal Reserve creates in order to satisfy the (in the words of Gerald Celente) “money junkies” on Wall Street, the more middle-class and poor Americans become dependent on unemployment checks and food stamps just to survive. Millions of American students are graduating college with hundreds of thousands of dollars in debt but no jobs. Luckily for them (but not holders of U.S. dollars), NIA is hearing reports from both unemployed and underemployed college graduates with student loans that the government is reducing their required monthly payments by sometimes 90% or more based on their current incomes.

China and Japan recently saw their credit ratings downgraded, while the U.S. credit rating remains at “AAA”. NIA believes it would make far more sense for the world’s largest debtor nation to be downgraded instead of the world’s two largest creditor nations. The Federal Reserve’s second round of quantitative easing has yet to even reach the halfway point and the Fed already holds about $1.11 trillion in U.S. treasuries. By the time QE2 is over at the end of June, the Fed will own $1.6 trillion in U.S. treasuries, about what China and Japan own combined. Shockingly, Kansas City Fed President Thomas Hoenig is already dropping hints about QE3. According to Hoenig, the Fed may consider extending treasury purchases beyond June 30th, 2010, (the scheduled completion date for QE2) if U.S. economic data looks disappointing.

With the Fed taking over as the largest holder of U.S. treasuries, China is beginning to rapidly move away from the U.S. dollar and into gold. In just the first 10 months of 2010, China imported 209 metric tons of gold compared to 45 metric tons in all of 2009, a stunning five-fold increase. While the western world is downplaying the threat of inflation as much as possible, Asian countries understand that hyperinflation is the most devastating thing that can possibly happen to any economy. The demand for gold in Asia right now is the most intense it has ever been, as they look to tackle rising inflation before it becomes hyperinflation.

The Chinese are so smart that families are now giving each other gold bullion as gifts instead of traditional red envelopes filled with cash. China is now on track to soon surpass India as the world’s largest consumer of gold. The China Securities Regulatory Commission recently gave Beijing-based Lion Fund Management Co. approval to create a fund that will invest into foreign gold ETFs.

U.S. stock mutual funds saw $6.7 billion in net inflows during the past two weeks, the most in any two week period since May of 2009. The rioting, looting, and civil unrest in Egypt is now making the U.S. look like the safe haven of the world, even though it should be considered the riskiest place to invest. From the Dow’s low in August until now, about $38 billion was actually removed from U.S. stock mutual funds, despite the stock market rising 20%. The Dow Jones has been rising from September until now solely due to the Federal Reserve printing around $350 billion out of thin air. When central banks print money, stock markets often act as a relief valve due to there being too much inflation going into the hands of financial institutions.

The U.S. M2 money supply surged by $46.6 billion during the week ending January 17th to a record $8.8623 trillion, following a rise during the previous week of $7.6 billion. The rise in the M2 money supply over the past two weeks of $54.2 billion equals an annualized increase of 16%. The M2 multiplier now stands at 4.218 compared to a long-term average of 10. When QE2 is complete, the Fed’s monetary base will likely stand at $2.59 trillion. A return to the long-term average M2 multiplier of 10 means we are due to see a 192% increase in the M2 money supply and that is not even including a possible QE3 and QE4.

The U.S. economic ponzi scheme could unravel very quickly in the years ahead, with the velocity of money increasing much faster than anybody expects. As more Americans learn about NIA and become educated to the truth about the U.S. economy and inflation, a complete loss of confidence in the U.S. dollar could occur very suddenly. It is important for all Americans to prepare as if hyperinflation will be here tomorrow. At least in Egypt, their currency still has purchasing power and their citizens are trying to implement a regime change before it is too late. By 2015 in America, it will already be too late and the civil unrest here has the potential to be many times worse.

It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: National Inflation Association

In Corrupt Global Food System, Farmland Is the New Gold

January 18, 2011

By Stephen Leahy

(Editor’s Note: A newly seceded state in America will not have the agricultural subsidies that now entirely distort the American farming industry. That includes the corn subsidies paid by Washington to prop up the ethanol fuel industry, which cannot support itself in the free market. Here is yet another outstanding reason to secede from the United States.)

UXBRIDGE, Canada, Jan 13, 2011 (IPS) – Famine-hollowed farmers watch trucks loaded with grain grown on their ancestral lands heading for the nearest port, destined to fill richer bellies in foreign lands. This scene has become all too common since the 2008 food crisis.

Food prices are even higher now in many countries, sparking another cycle of hunger riots in the Middle East and South Asia last weekend. While bad weather gets the blame for rising prices, the instant price hikes of recent times are largely due to market speculation in a corrupt global food system.

The 2008 food crisis awoke much of the world’s investment community to the profitable reality that hungry people will do almost anything, even sell their own children, in order to eat. And with the global financial crisis, food and farmland became the “new gold” for some of the biggest investors, experts agree.

In 2010, wheat futures rose 47 percent, U.S. corn was up more than 50 percent, and soybeans rose 34 percent.

On Wednesday, U.S.-based Cargill, the world’s largest agricultural commodities trader, announced a tripling of profits. The firm generated $1.49 billion dollars in three months between September and November 2010.

Meanwhile, U.S. Treasury Bills pay a return of less than one percent.

“We have set up a global food system that supports speculation. And with [such] markets, we can’t get speculators out of the food business,” said Lester Brown, an agricultural policy expert and founder of the Washington- based Earth Policy Institute.

“Farmland is better gold than gold for speculators,” Brown told IPS.

Growing concern over access to food is also creating a new geopolitics around food security, with many countries buying up farmland and banning the export of food, he said.

“World leaders have utterly failed to address the simple fact that while there is enough food, a billion people, living in every country in the world, simply can’t afford to buy it,” said Anuradha Mittal of the Oakland Institute, a U.S.-based policy think tank on social, economic and environmental issues.

“Why were a billion [people] hungry with a record wheat harvest in 2008?” Mittal told IPS. “And how is it there are one billion people who are overweight, with 300 million of those considered medically obese?”

“The global food system is designed to generate profits not feed people, and nothing has changed since 2008,” she said. “There has been no focus on how to achieve food security or on regulating the food trade,” Mittal noted.

Instead, the World Bank, World Trade Organisation and other multilateral organisations are pushing for more production and more trade liberalisation, she said. That approach is exactly how Africa became unable to feed itself after being previously food secure.

“Africans have become share-croppers, exporting coffee, cotton, flowers and now food while going hungry,” Mittal said.

Under the guise of investing in agriculture, huge amounts of money are being offered to debt-ridden countries in exchange for long-term leases to their foodlands. “Our research shows that the most fertile lands are being secured. There are huge issues around governance and corruption in this land grabbing,” said Mittal.

More than 100 billion dollars has been invested in buying farmland since 2008, mainly in Africa by foreign companies and foreign-state owned industries, according to GRAIN, a small international non-profit organisation that works to support small farmers.

This massive investment hasn’t yet translated into more food availability, says Lester Brown. Often times, buying land is just the first step. Major investments are also needed in farming infrastructure like roads, vehicles, storage capacity, mechanical services for equipment, irrigation and so on.

“I haven’t seen a big increase in grain production anywhere. Right now it looks like a lot of land speculation,” he said.

Brown has long documented the fact that yields of rice, wheat and other grains have not been increasing in many countries while demand has escalated. China, he notes, now imports 70 percent of its soy and is expected to begin to use its plentiful cash reserves to buy large quantities of wheat and corn in the near future.

And with the U.S. converting 30 percent of its corn crop into ethanol to ‘feed’ its cars and trucks, food supplies will be tight for some years, he predicts.

With the decline in traditional equity stocks along with collapse of housing and commercial real estate markets, billions of investment dollars are being mobilised to buy farmland and food commodities. It’s not just Wall Street looking for big returns, it’s also private and public pension funds in Europe and North America as well, said Devlin Kuyek of GRAIN.

Investors from Saudi Arabia have leased large tracts in land in Ethiopia, Senegal, Mali and other African countries amounting to several hundred thousand hectares. “How can African countries hope to have food security by signing long-term leases to foreign interests?” Kuyek told IPS.

When South Korea’s Daewoo Logistics tried to buy 1.3 million hectares, or one-third, of Madagascar’s farmland in 2008, violent protests erupted and the government was toppled. South Korea still has at least a million hectares in long-term leases elsewhere and China 2.1 million ha, mainly in Southeast Asia.

Some of the leases are for 99 years at a one dollar a hectare, but local people “are not eligible for the deals being promoted in countries where millions of people remain dependent on food aid”, said Howard Buffett, a U.S. farmer and philanthropist whose father is Warren Buffett, the well- known billionaire investor.

Howard Buffet reports being offered land deals where African governments promise to provide 70 percent of the financing, all utilities, and a 98-year lease requiring no payments for four years.

The last thing Africa needs are policies that “enable foreign investors to grow and export food for their own people to the detriment of the local population” writes Buffet in the introduction to the 2010 Oakland Institute report, “(Mis)investment in Agriculture”.

Buffet’s foundation has a research farm in South Africa and says investments are needed, but in terms of seeds, inputs, improved extension services, education on conservation techniques and generally assisting local farmers. Investing in land grabs will simply fuel conflict over land and water, he concluded.

Shockingly, about 70 percent of the billion hungry people in the world are farmers, herders and other food producers who could feed themselves if they had access to land, markets and a little bit of credit, said GRAIN’s Kuyek.

“That well-understood reality has been ignored for years,” he said. “These land grabs are just wrong: morally and socially wrong.”

Copyright © 2011 IPS-Inter Press Service. All rights reserved.

Riots Spread As Global Food Shortage Worsens

January 17, 2011

Riots Spread As Global Food Shortage Worsens

By Gwynne Dyer

(Editor’s Note: A state that secedes won’t have all the federal farm subsidies that the USA has through Washington’s manipulation and regulation. An unregulated farming industry will produce abundant food. Food shortages comes from governments interfering in the free market.)

If all the food in the world were shared out evenly, there would be enough to go around. That has been true for centuries now – if food was scarce, the problem was that it wasn’t in the right place.

But there was no global shortage. However, that will not be true much longer.

The food riots began in Algeria more than a week ago, and they are going to spread. During the last global food shortage, in 2008, there was serious rioting in Mexico, Indonesia and Egypt. We may expect to see that again, only more widespread.

Most people in these countries live in a cash economy and a large proportion live in cities. They buy their food, they don’t grow it. That makes them vulnerable, because they have to eat almost as much as people in rich countries do but their incomes are much lower.

The poor, urban multitudes in these countries (including China and India) spend up to half of their entire income on food, compared with only about 10 per cent in rich countries.

When food prices soar, these people quickly find that they simply lack the money to go on feeding themselves and their children properly – and food prices now are at an all-time high.

“We are entering a danger territory,” said Abdolreza Abbassian, chief economist at the Food and Agriculture Organisation. The price of a basket of cereals, oils, dairy, meat and sugar that reflects global consumption patterns has risen steadily for six months, and has just broken through the previous record, set during the last food panic in June 2008.

“There is still room for prices to go up much higher,” Abbassian said, “if, for example, the dry conditions in Argentina become a drought, and if we start having problems with winter kill in the Northern Hemisphere for the wheat crops.”

After the loss of at least a third of the Russian and Ukrainian grain crop in last summer’s heat wave and the devastating floods in Australia and Pakistan, there’s no margin for error left. It was Russia and India banning grain exports in order to keep domestic prices down that set the food prices on the international market soaring.

Most countries cannot insulate themselves from this global price rise because they depend on imports for a lot of domestic consumption.

But that means that a lot of their population cannot buy enough food for their families, so they go hungry. Then they get angry, and the riots start. Is this food emergency a result of global warming? Maybe, but all these droughts, heat waves and floods could also just be a run of really bad luck. What is nearly certain is that the warming will continue, and that in the future there could be many more weather disasters because of climate change.

Global food prices are already spiking whenever there are a few local crop failures, because the supply barely meets demand even now. As the emerging economies grow, Chinese, Indian and Indonesian citizens eat more meat, which places a great strain on grain supplies. Moreover, the world population is now passing through 7 billion, on its way to 9 billion by 2050. We will need a lot more food.

Some short-term fixes are possible. If the United States Government ended the subsidies for growing maize (corn) for “bio-fuels”, it would return about a quarter of US crop land to food production.

If people ate a little less meat, if more African land was brought into production, if more food was eaten and less was thrown away, then maybe we could buy ourselves another 15 or 20 years before demand really outstripped supply.

On the other hand, about a third of all the irrigated land in the world depends on pumping groundwater up from aquifers that are depleting rapidly. When the flow of irrigation water stops, the yield of that highly productive land will drop hugely. Desertification is spreading in many regions and a large amount of good agricultural land is simply being paved over each year. We have a serious problem here.

The shortages will grow and the price of food will rise inexorably over the years. The riots will return.

In some places the rioting will turn into revolution. In others, the rioters will become refugees and push up against the borders of countries that don’t want to let them in.

Or maybe we can get the warming under control before it does too much damage.

Gwynne Dyer is an independent journalist based in London. Find her work HERE.

Copyright 2011, APN Holdings NZ Limited