Food Bubbles & Starvation by Broker

I never got around to finishing what was intended to be a thoughtful commentary on this Harper’s article, but since John posted about this earlier, I’m going to give you all the link, at least. Frederick Kaufman, “The Food Bubble: How Wall Street starved millions and got away with it”:

Agriculture, rooted as it is in the rhythms of reaping and sowing, had not traditionally engaged the attention of Wall Street bankers, whose riches did not come from the sale of real things like wheat or bread but from the manipulation of ethereal concepts like risk and collateralized debt. But in 1991 nearly everything else that could be recast as a financial abstraction had already been considered. Food was pretty much all that was left. And so with accustomed care and precision, Goldman’s analysts went about transforming food into a concept. They selected eighteen commodifiable ingredients and contrived a financial elixir that included cattle, coffee, cocoa, corn, hogs, and a variety or two of wheat. They weighted the investment value of each element, blended and commingled the parts into sums, then reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation, to be known thenceforward as the Goldman Sachs Commodity Index. Then they began to offer shares.
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As was usually the case, Goldman’s product flourished. The prices of cattle, coffee, cocoa, corn, and wheat began to rise, slowly at first, and then rapidly. And as more people sank money into Goldman’s food index, other bankers took note and created their own food indexes for their own clients. Investors were delighted to see the value of their venture increase, but the rising price of breakfast, lunch, and dinner did not align with the interests of those of us who eat. And so the commodity index funds began to cause problems.
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Wheat was a case in point. North America, the Saudi Arabia of cereal, sends nearly half its wheat production overseas, and an obscure syndicate known as the Minneapolis Grain Exchange remains the supreme price-setter for the continent’s most widely exported wheat, a high-protein variety called hard red spring. Other varieties of wheat make cake and cookies, but only hard red spring makes bread. Its price informs the cost of virtually every loaf on earth.
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Read more








Beck & the TPers Come Out of the Closet

Dave Weigel, at Slate, has the nuptial notice:

After FreedomWorks partnered with Glenn Beck, some tea party activists rejoiced while others said it gave them pause…
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No hard feelings! The last weekend of August, Americans for Prosperity, the other big tea party group which, unlike FreedomWorks, takes money from the Kochs, is hosting its final pre-election “Defending the American Dream Summit.” Among the goods you get by registering for the conference: “transportation to Glenn Beck’s Restoring Honor event.” Both of the major, well-heeled tea party organizations are going to help bring people to Beck’s big rally on the national mall, which sort of suggests that the conservative debate over whether Beck is acceptable is over.

(For those playing the home game, the generous donors mentioned would be these Kochs. Murdoch may get the media attention, but Charles & David Koch have been funding the nastiest, lowest, most deceptive Wingnut Welfare Wurlitzers for more than a generation.)








Something to Build On, Literally

Harold Meyerson is shrill:

Several recent polls have called the Democrats’ attention to what should have been obvious to them: That helping America regain its industrial preeminence is one government activity that wins support across the board. One recent survey by Democratic pollster Mark Mellman found 78 percent support for having a “national manufacturing strategy,” while 92 percent said they supported infrastructure improvements using only American-made materials. Another survey from Democratic pollster Stan Greenberg found 52 percent of respondents preferred government investment “in the future,” while just 42 percent favored the alternative course of large spending cuts.
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The appeal of bolstering manufacturing and upgrading infrastructure cuts across lines of race, gender and class. Even a demagogue like Rush Limbaugh would have trouble characterizing them, as he did health-care reform, as “reparations.” Just as important, the public is right. Every bit of economic news confirms its apprehensions that by off-shoring our manufacturing, we have not only eliminated millions of good-paying jobs but we have also rendered ourselves incapable of regaining our economic health. The two major economies that are booming amidst the global bust are China’s and Germany’s — that is, the two major economies most oriented to manufacturing. In the month since I first noted this in a column, China has surpassed Japan as the world’s second-largest economy, and German exports have continued to soar. If China and Germany’s growth rates for their second quarter are annualized, they come to 10 percent and 9 percent, respectively.
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When it comes to reviving American manufacturing, however, the Democrats have sounded an uncertain trumpet. The Mellman survey asked whether, on balance, the president and the two parties have bolstered manufacturing or not. While Obama’s ratings were modestly favorable, those of the Democrats were not (45 percent to 48 percent), and those of Republicans were worse (35 percent to 57 percent).
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Democrats have responded to these numbers by throwing together some modest pro-manufacturing legislation, but it’s all fairly small beer. A bolder and more effective proposal is that of Intel’s legendary former chief executive Andy Grove, which ran in Bloomberg BusinessWeek last month: Tax the products of off-shored labor, and put the proceeds in a fund that can be tapped by American businesses increasing their American hiring.
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Throughout his term, Obama has spoken eloquently — but only sporadically — about the need to shift from an economy that makes deals to an economy that makes things. Not only does he need to say that more often, and put some serious legislative substance behind it, but it should be the mantra for congressional Democrats who need all the help they can get in the election looming darkly before them.








You can lead a whore to culture

Last week, Fareed Zakaria — bless his anti-democracy Sinophilic soul — got a Cato flunkie to admit that 40% of Cato’s money his own research money came from the petroleum industry.

This week, there’s a list of how much the various Think Tank ministers of propaganda make. Ed Feulner of Heritage makes almost a million a year.

What amuses me most about the think tanks is the strange intellectual respect they are accorded, as if having written a book or earned a PhD made people immune to the lure of lying for money. I say if you drag a 200K salary through a library, you never know what you’ll find.








Another Downside to Globalization

From the NYTimes, “Antibiotic-Resistant Bacteria Moving From South Asia to U.S.“:

A dangerous new mutation that makes some bacteria resistant to almost all antibiotics has become increasingly common in India and Pakistan and is being found in patients in Britain and the United States who got medical care in those countries, according to new studies.
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Experts in antibiotic resistance called the gene mutation, named NDM-1, “worrying” and “ominous,” and they said they feared it would spread globally.
[…]
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Bacteria with the NDM-1 gene are resistant even to the antibiotics called carbapenems, used as a last resort when common antibiotics have failed. The mutation has been found in E. coli and in Klebsiella pneumoniae, a frequent culprit in respiratory and urinary infections…
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In June, the Centers for Disease Control and Prevention noted the first three cases of NDM-1 resistance in this country and advised doctors to watch for it in patients who had received medical care in South Asia. The initials stand for New Delhi metallo-beta-lactamase.
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“Medical tourism” to India for many surgeries — cosmetic, dental and even organ transplants — is becoming more common as experienced surgeons and first-class hospitals offer care at a fraction of Western prices. Tourists and people visiting family are also sometimes hospitalized. The Lancet researchers found dozens of samples of bacteria with the NDM-1 resistance gene in two Indian cities they surveyed, which they said “suggests a serious problem.”
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Also worrying was that the gene was found on plasmids — bits of mobile DNA that can jump easily from one bacteria strain to another. And it is found in gram-negative bacteria, for which not many new antibiotics are being developed. (MRSA, by contrast, is a gram-positive bacteria, and there are more drug candidates in the works.)