28 Feb 2011

Caught between a rock and a hard place

People around the world - when they are forced to spend close to 50 percent of their income on food - will be out soon demanding governments do either one of 2 things: A.) Raise household incomes, or B.) Lower the cost-of-living.

Unfortunately, it is not that simple... And either one of those options could at best provide extremely short term relief - and in fact, could seriously exacerbate the problem!

Here's why...

If a government increases liquidity through free money or higher incomes, it risks devaluing the currency, and FURTHER increasing inflation!

And if the government attempts to control or regulate commodity prices, it may simply vanish from shop shelves! Take what I call 'The cola drought' for instance... Many young people get a good proportion of their daily calories (unhealthy as it) from energy-dense soft drinks. The companies tried to increase prices, and there may have been a counter attempt by the authorities to cap the retail price. The cola giants simply passed on the difference to the retailer. The consequence? A seven-fold increase that makes it unviable for retailers to stock most soft drinks... Try finding a Mountain Dew at your neighbourhood store today!

The problem is systemic: The current banking / finance / monetary system is "creating" exponentially increasing amounts of money out of thin air (fractional reserve banking)... And simultaneously trying to squeeze exponentially increasing profits from it (profit on capital investment)!


27 Feb 2011

I repeat. It is not over in Egypt and Tunisia.

The military is exercising "control" in Tunis. And in Cairo.

I am not gloating... I am simply reiterating a warning!

The "democratic uprising" tag is a media spin; and the media distraction will continue with "democratic uprisings" in other countries. The core issue is still the same: HUNGER.

The surprisingly consistent downward spiral of society in these two nations holds lessons for us all. It could just save your life... And your family's.

19 Feb 2011

How an economic crisis becomes a food crisis

Investment strategist, Marc Faber tells it like it is... On CNBC. (I think the mainstream news media is finally taking off the rosy lens!)

Now with an 'austerity' budget in the US now, will we see people there get a little restive?

But seriously, the "public activism" taking place around the globe is largely directionless. Desperate populations are merely taking on the most visible symbols of an unsustainable system. It is here that the mainstream news media urgently needs to dig up real facts, educate people about the real issues, and host real experts people who can point out real solutions. Stop with the spin - people are beginning to see through it.

And they'll need to do this quickly. Because things could get very ugly very fast.

17 Feb 2011

Why are the Rothschilds growing veggies in India?

The following is from an interview given by Lynn Forester de Rothschild on portfolio.com, on 5 October 2007.

The article begins with her meeting Sir Evelyn Rothschild at the 1998 Bilderberg conference — the matchmaker being Henry Kissinger! Well, the setting and the cast of characters puts what comes next in a different context.

She is the Chief Executive of E.L. Rothschild, which manages her and Evelyn Rothschild's investments in India - including an innocuous-looking startup, FieldFresh, which grows and exports Indian fruits and vegetables to markets in Europe and Asia. She also said that she has her eyes set on a retail venture aimed at the Indian middle class. (The latter venture is not revealed - except that it is seems to be in the Luxury Goods sector.)

This is what Lynn said about why the Rothschilds chose investing in Indian agriculture over investing in China... "[...] China has 60 percent of the arable land of India, but it's 40 percent more productive because of technology. [...] India is the largest producer of fruits, No. 1 in the world, No. 2 in vegetables, and has only 1 percent of the export market. Seems logical enough... even vaguely, like noblesse oblige.

About FieldFresh, she said: "[...] it was opened by the prime minister [Manmohan Singh]. [...] The Indian prime minister is really, to me, one of the spectacular people of the world, and I've seen him speak many times, and he always reads his speech. That day, he put down his speech and he recited a poem, an English poem that he had learned as a young boy about how the land will give to the people and will change lives — a beautiful poem. And then he talked about being so poor that he couldn't afford shoes — his parents were farmers - and how his dream for India is that 600 million people could be lifted out of poverty. And we're talking about lifting them from 50 cents a day to $2 a day.

Notice the completely mis-matched views? The Rothschilds are looking at exploiting both, the cheap labour of the lower class, and the increasing income of the middle class. While the venerable Indian PM, a veteran economist himself, apparently thinks it's a benevolent enterprise that will help alleviate poverty. Yes, she did say wages would go up to $2 - which is borderline poverty - provided the price of food does not inflate!

The Rothschilds eventually sold part of their stake in FieldFresh to Del Monte, and (Airtel's) Bharti Enterprise came on board. For their trouble the Rothschilds made 85% returns on their $50 million investment. Well, they are the Rothschilds; profiting is an ingrained trait.

Now we have Airtel's Mittals and the Del Monte showing up as Bharti Del Monte India Private Limited. And there is no mention of a Board of Directors or the Rothschilds on the company website.

But the Bloomberg-Businessweek website has it.

The Bharti angle is also interesting, Lynn Rothschild has several strong prior and current connections to the telecom industry. Apparently, she used to buy up frequencies (cellphone spectrum!) in major cities, which she later sold for a premium. In fact, she claims her earlier company had 100 megahertz of bandwidth each, in 15 countries. That was in 2000. Even now, LNG Holding S.A, of which Lynn Rothschild is Co-Chairman, is listed by Bloomberg-Businessweek under "Diversified Telecommunications Service".

Thankfully, India's food security is not entirely in the hands of the Rothschild clan. A whole line-up of Indian billionaires too got on the agri-business bandwagon around the same year - including many of Corporate India's lumineries, from the Mittals and Ambani, to ITC and more.

There are a couple of things that bother me though... First is how the telecom spectrum scam in India that happened in 2008 sounds quite similar to the spectrum-hoarding that Lynn Rothschild carried out in 2000. Perhaps it's a coincidence. Then, there is also the fact that in this 2005 rediff.com article, it seemes that many of the businessmen saw the same great potential in India's agri-sector at about the same time - and are largely following the same decentralised hub-and-spoke business model as well... and I though at least one of them even seemed to repeat something very similar to what Lynn Rothschild says in her 2007 interview.

I wonder if a rotten apple can actually spoil a whole bunch... Nah! I'm just being paranoid.

16 Feb 2011

Why it is not over in Egypt and Tunisia

I don't believe the uprisings in either of those coutries were triggered by political motives. Callous leaderships were factors, but hardly the only ones.

The "democratic uprising" tag is largely a media spin! The core issue remains unaddressed: IT IS HUNGER.

I don't want to be right about this... But I believe these two nations have just BEGUN their downward spiral. And their experiences hold potential life-saving lessons for those of us who haven't had to deal with a similar situation... Yet.


The media will increasingly be saturated with "democratic uprisings" in other countries - but don't allow them to distract you from following closely what is happening in Egypt and Tunisia.

Sorry, if I've ruined your day... And I too hope I am completely wrong about this.

14 Feb 2011

Lemmings in pinstripes... or why bankers love complexity

There is something to be said about the predatory financial system of the world today: For one thing, it isn't creative.

For example... Wall Street Journal reporter Scott Patterson revealed how a new breed of mathematicians and computer geniuses called "The Quants" with their complex algorithms became the blue-eyed boys of stock market trading - until they caused the 2007 meltdown.

UPDATE: I almost forgot Long-Term Term Capital Management (LTCM) run by TWO Nobel Laureates, who used "complex mathematical models" till - surprise! - they went belly-up losing billions in 1998!

Logically, the severity of the crises would dictate that the financial markets stay away from such opaque and complex equations...

But mis-incetivisation has meant that the financial system is willing to forego logic in the name of 'profit'! So now we have up to 70% of stock trading in the US and a whopping 77% of stock trading in the UK being transacted by ultra-complex alogrithms run on supercomputers in what is called High Frequency Trading (HFT)!

HFT represents stock worth tens of trillions of dollars, transacted in milli-seconds! The Quants are obviously still leading the financial lemmings.

Now there's an even bigger, and potentially more catastrophic example of denial and groupthink, in the making...

Last week, on 10 February to be precise, the International Monetary Fund (IMF) issued a report on a possible replacement for the dollar as the world's reserve currency. They say that alternative, Special Drawing Rights (SDRs), "could help stabilize the global financial system".

So what is the SDR? Well, it is essentially a basket of currencies - US Dollar, Japanese Yen, British Pound and European Pound - bundled together. According to Wikipedia, "the SDR could be considered a form of debt security".

Hmmm... The only problem is that all these currencies are essentially created out of thin air by the Central Banks - and are currently in huge over-supply. Think of all the trillions in company / sector / national bailouts, and Quantitative Easing I & II. In fact, it is this (over-supply and consequent devaluation of money) that is really fuelling inflation around the world.

But that is NOT the issue!

Where else did we heard about "bundled debt" of questionable value in the recent past?

One Gazillion Brownie Points, if you said, "Subprime Crisis".

This NOT rocket science - or financial wizardry. It is simplicity itelf... Just like the subprime crisis, a financial instrument of questionable - and at best notional - value (SDR) is being endorsed (rated AAA) by an agency (IMF) that is tasked with maintaining stability.

(Though I digress, I must urge you to please make time and watch 'Money as Debt' on YouTube.) You know what they say about being "forewarned"...

UPDATE: Here're some snippets about the foreign exchange (forex) market... London handles around 34% of world's currency trade, where Barclays Capital, Royal Bank of Scotland and HSBC are the main players. Deutsche Bank, in Germany, accounts for about 22% - making it the largest single player. JP Morgan and Citibank, in the U.S, account for around 12%.

Average value of currency traded daily was 500 billion USD in 1988. Today it is about 4 trillion USD, daily! If it is indeed an eight-fold increase in supply, what do you suppose the effect is on the value of those currencies?

The bear facts...

Sorry for the bad pun. Here's a good video to make up...

Surprised? Well, not when you consider the number of ex-Goldman Sachs employees in the US administration. And that's over a year ago. Now add to that, the nearly 1,500 ex-US government employees lobbying for Wall Street firms.

Wondering who held the most strings?


UPDATE: According to a blog post in early Dec 2010 by Bernard Sanders, Independent Senator from Vermont: "What have we learned so far from the disclosure of more than 21,000 transactions (by the Fed)? We have learned that the $700 billion Wall Street bailout signed into law by President George W. Bush turned out to be pocket change compared to the trillions and trillions of dollars in near-zero interest loans and other financial arrangements the Federal Reserve doled out to every major financial institution in this country. Among those are Goldman Sachs, which received nearly $600 billion; Morgan Stanley, which received nearly $2 trillion; Citigroup, which received $1.8 trillion; Bear Stearns, which received nearly $1 trillion, and Merrill Lynch, which received some $1.5 trillion in short term loans from the Fed.

We also learned that the Fed's multi-trillion bailout was not limited to Wall Street and big banks, but that some of the largest corporations in this country also received a very substantial bailout. Among those are General Electric, McDonald's, Caterpillar, Harley Davidson, Toyota and Verizon.

Perhaps most surprising is the huge sum that went to bail out foreign private banks and corporations including two European megabanks - Deutsche Bank and Credit Suisse - which were the largest beneficiaries of the Fed's purchase of mortgage-backed securities.

Deutsche Bank, a German lender, sold the Fed more than $290 billion worth of mortgage securities. Credit Suisse, a Swiss bank, sold the Fed more than $287 billion in mortgage bonds."

Between them, Citigroup, Goldman Sachs, JP Morgan and Credit Suisse employed 171 lobbyists to take care of their interests in 2009 & 2010 (see table above)... Obviously, it was money well-spent.

The world is hungry for change

All news media, both mainstream and alternate, seem to be focusing on the recent restive populations across Europe, North Africa and the Middle East through a political lens. "People want change," they say.

Yes, there is evidence that people somehow decided 'enough is enough'... But - why is it happening right across the world? Why now? What is it that really made people rise up after more than a quarter century of inertia? And it is obvious that it is ONLY the large numbers of people which prevented a harsh crackdown... So why were so many people desperate enough to risk their lives?


On 22 January businessinsider.com posted "The 25 Countries Whose Governments Could Get Crushed By Food Price Inflation".

The circumstances may be vastly diverse, but twenty days later, by 11 February, two of the governments were down!

But exactly WHY is there hunger on the streets of nations across the world? According to the Financial Times website, "tight supplies, changing weather patterns and rising demand in emerging economies have all contributed to rising concerns about food security."

They are probably right too. But the venerable FT missed out possibly the single biggest contributor: FINANCIAL SPECULATION

This video explains how it is done...

stopgamblingonhunger.com has a list of 53 highly credible sources highlighting or acknowledging the fact that financial speculators played a large and significant role in the price hike of 2008.

They'd pumped in billions upon billions of dollars to inflate an unnatural speculative bubble in 2008.

(Click to enlarge)

According to Bart Chilton, one of the five voting members on the US Commodity Futures Trading Commission (CFTC): "$200 billion of speculative money came into the market; institutional holdings, hedge funds, pension funds. We got extraordinary high prices. But there are now more speculative positions than in 2008 – we now have the highest speculative positions in history."

With few watching, hardly anyone caring, and no one capable of stopping them - the financiers are rolling out the next global tsunami.

Tighten you belts, ladies and gentlemen, we may be in for a rough ride. (And no, I didn't mean 'fasten your seatbelts'.)

UPDATE: "The Spark That Lit Egypt", is an excellent analysis of the complex web of factors that led to that uprising. The spark apparently was the cost of food shooting up from 40 to 48 percent of total income for an average Egyptian.

13 Feb 2011

Why Indians shouldn't be happy about India catching up to the US

Listen to a sitting US Senator...

Listen to a sitting US Congressman...

Now read this...

US frustrated over pace of opening up of Indian economy
By PTI, Feb 10 2011, WASHINGTON

The US was "extraordinarily" frustrated with the slow pace of opening up of Indian economy, despite the issue being raised at the highest level, a top Obama Administration has said.

"As you know, (the US) President (Barack) Obama led in exports and a mission to India as part of his Southeast Asia trip last year and I will be honest, we have been extraordinarily frustrated at the slow pace of opening that market," US Trade Representative Ron Kirk said at a Congressional hearing.

Kirk was responding to a question from Congressman Joseph Crowley, Co-Chair of the Congressional Caucus on India and Indian Affairs, who wanted to know the progress made in the increasing Foreign Direct Investment cap in India's insurance sector.

"I have been interested in for a very long time is the investment caps in the Indian insurance industry. Right now American companies can only own up to 26 per cent of the value of an insurance company within India. Even though we've been working to increase that number to 49 per cent," Crowley said.

"What is the status of that issue and what more can be done to ensure that our service companies can export their services to India on a more level playing field?" he said.

Kirk, who has a very good personal relationship with Commerce Minister Anand Sharma, said the United States has a number of engagements with India.

"I lead a trade sort of policy forum in which we have raised these issues of them opening up their economy for more.

"This would be a case that when we can finish our mid-review we are also looking to perhaps get India to sign a bilateral investment treaty which would remove those caps not only in insurance but liberalise their markets across the board," Kirk said.

There's great opportunity for Americans in the retail, in the agriculture and in the manufacturing sectors, he said, adding "some of this US was trying to address if we can get, frankly, the right balance in the Doha round.

"The rest of it we're going to continue to see if we can't find the right buttons to push in our bilateral engagements."

Maybe it's time we Indians stopped naively assuming that a ficticious economic growth rate somehow guarantees a better living standard. Maybe we need to pause and think... DO WE REALLY KNOW WHAT WE'RE GETTING INTO?

7 Feb 2011

Welcome to The Invisible Farm

On the subject of farming (perhaps, you need to watch the video first)... Have you ever considered how the 'Landed Gentry' got the land? Then go read about The Enclosure Movement.

George Orwell described it thus: "Stop to consider how the so-called owners of the land got hold of it. They simply seized it by force, afterwards hiring lawyers to provide them with title-deeds. In the case of the enclosure of the common lands, which was going on from about 1600 to 1850, the land-grabbers did not even have the excuse of being foreign conquerors; they were quite frankly taking the heritage of their own countrymen, upon no sort of pretext except that they had the power to do so."

But that was waaaay back in the 17th and 18th Century, right? Wrong.

After more than 1 million properties were foreclosed in 2010, "for the first time in history, banks own a greater share of residential housing net worth in the United States than all American households put together!"

But that is waaaay out on the other side of the world, right? Wrong again. And I'll post the reasons why... very soon.

Let's get back to the words at the very end of the video (see it already), "To see the farm, is to leave it."

I sincerely, sincerely, hope that's all it takes.

UPDATE: Apparently, property repossession is not the only way Corporate Scanvengers feed off the left-over dignity of people suffering an economic crisis caused by Corporate Predators.