Burning the Food Supply
by ilene - October 30th, 2010 8:20 pm
Burning the Food Supply
Courtesy of Joshua M Brown, The Reformed Broker
Farmer Brown here…if no one else is going to tell this story, then I might as well.
We do some stupid stuff here in America – playing ultimate frisbee on skis, deep-frying Oreos, calling in to vote for televised dance show contestants…I could go on and on.
But of all the stupid things we do, one of the most dangerous is this ethanol nonsense, in which we gleefully burn up our corn supplies. For very little in the way of environmental impact I might add.
First, look at the December 2010 corn contract, then I’ll give you some insane stats on the demands of ethanol:
You wouldn’t believe it, but according to the most recent estimate from the USDA, corn use for ethanol for the 2010-2011 corn crop will be 37 percent of the projected total harvest. More than a third of our corn supply will be refined for energy use. We’re talking about 4.7 billion bushels of the corn that would normally go to animals as fodder and to our own diets.
And while yields and production are up, corn races to ever higher prices. There’s a good reason for that – industry experts say that we now need to produce 13 billion bushels each year just to keep prices restrained.
The stats above are mind-blowing and to me they represent the bull case for agriculture stocks and commodities in general.
They also represent a society that has become oblivious to the danger right in front of its face. I believe that resource competition between the developed and emerging nations is a given for the coming decade. While many believe this competition will center around oil, I’d be more concerned about the global demand for more and better food.
One of the most important determinants of animal protein prices is the corn fodder that supports production. And we’re mixing this critical element of the food supply into our gas tanks.
One might ask "but if it comes down to it, we can adjust in time, right?"
And the retort might be "if we’ve learned anything from the economic earthquakes of the recent past, it’s that we almost never adjust until it’s too late."
Stupid, stupid, stupid.
h/t David D
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DiggConcentrated Wealth and the Purchase of Political Power: Democracy’s Death Spiral
by ilene - October 30th, 2010 8:08 pm
Courtesy of Charles Hugh Smith, Of Two Minds
Concentrated Wealth and the Purchase of Political Power: Democracy’s Death Spiral
Democracy’s Death Spiral is a positive feedback loop between ever-greater concentrations of wealth and the ever-higher costs of retaining political power.
Positive feedback loops lead to "death spirals" in which destructive forces reinforce each other until the dynamic implodes. One example is an "arms race" in which ever more costly and complex weapons systems must be matched lest one nation in the race fall behind.
Since the number of weapons and their cost are essentially unlimited, then the race continues until one contestant is bankrupted.
Though many would claim it is a simplification, this dynamic was at the root of the Soviet Union’s collapse: as the U.S. embarked on a massive expansion of its military and technological power, the Soviet Union exhausted its much smaller resources attempting to keep up.
Though statistics from the Soviet era are not entirely reliable, various scholars have estimated that fully 40% of the Soviet GDP was being expended on its military and military-industrial complex.
The U.S. was spending between 4% and 6% of its GDP on direct military expenditures, even during the height of the Reagan buildup. If you include the Security State (CIA, NSA, et al.), the Veterans Administration and other military-related programs (DARPA, etc.) then the cost was still far less than 10% of GDP.
The greater freedom to exchange information between government-funded research labs, private firms and government-funded universities enabled the U.S. to outdistance the Soviets technologically. Once again a positive feedback loop can be discerned in the way that increased spending on military-related R&D in the U.S. led to increasingly networked nodes of technological advancement which led to greater advances and more spending to develop those technologies.
The U.S. emerged victorious as the sole superpower, but a more closely matched rivalry might have ended with the collapse of both competitors: a Death Spiral of the sort Jared Diamond describes on Easter Island in his book Collapse: How Societies Choose to Fail or Succeed.
In the U.S., the ever-greater concentrations of wealth gathered by an ascendant Financial Power Elite has entered a positive feedback loop with the costs of gaining or retaining political power. The costs of winning an election have skyrocketed to the point that fundraising is the key function of any politico who is not independently extremely wealthy.
This quantum leap…
This Will Be A Ghoulish Week: Weekly Stock Market and ETF Outlook
by ilene - October 30th, 2010 7:29 pm
Courtesy of John Nyaradi
As everyone knows, Sunday evening is Halloween and your neighborhood, like mine, will likely be filled with ghosts, goblins and ghouls as we celebrate this timeless holiday. Halloween is thought to have originated from the ancient Celtic festival of Samhain, or summer’s end, and marks the end of the lighter half of the year and entry into the darker half. It’s a holiday to honor family ancestors and put on costumes and masks to fight off evil spirits and sidestep harm and danger.
But beyond Halloween, All Saints Day is Monday, November 1st, a largely Catholic Holiday celebrating those who have been beatified, and Tuesday, November 2nd is the Day of the Dead, a Latin American holiday celebrating the departed. Tuesday is also All Souls Day, a Western Christian celebration of the departed.
There is some delicious irony in the timing of these holidays celebrating the dead and the warding off of evil spirits with this week’s upcoming action on the economic and political fronts.
For Tuesday, the Day of the Dead, is the day of the mid-term elections when the Democrats try to resurrect themselves from the dead and the Republicans attempt to permanently stick a political stake in the hearts of the President and his allies.
Also on the Day of the Dead, Dr. Bernanke and his colleagues begin their two day meeting which is a desperate attempt to save an economy that’s clearly near death and to ward off the evil spirits of recession and deflation that stubbornly refuse to stop haunting Wall Street, the American economy and the Federal Reserve.
This week is clearly the most important week of the year on the economic and political fronts with a blizzard of important reports, the election and the Federal Reserve’s widely watched announcement regarding “QE2”. Very likely by Friday we will be living in a vastly altered political and economic landscape shaped by the outcome of this potentially ghoulish week.
Looking At My Screens
On a technical basis, the equity markets are set for a serious decline.
Chart courtesy of www.stockcharts.com
Looking at the chart of the Wilshire Total Market Index above it’s easy to see why this market is set up for a significant decline from a technical standpoint. The red boxes outline the three previous significant tops this year and their subsequent declines. In each case you…
China – The Mother of All Grey Swans
by ilene - October 30th, 2010 7:19 pm
Courtesy of Vitaliy Katsenelson
I had the pleasure of presenting my thesis on China and Japan at the Casey Research Summit in San Diego in early October. Here is a link to my updated presentation on China and Japan (Japan starts on slide 40).
Be Careful What You Wish For
by ilene - October 30th, 2010 6:58 pm
Be Careful What You Wish For
Courtesy of John Mauldin, Thoughts from the Frontline
People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them..
- Jean Monnet, father of the European Union
This week we turn our attention to the elections and their aftermath. Long-time readers know I am a Republican, but I offer some sobering advice to my friends on my side of the aisle: Be careful what you wish for. It’s one thing to get a few votes. It’s quite another to live up to promises that simply can’t be kept. We will start our analysis by looking at the GDP numbers that came out today, and we will end by pointing out that there will be no easy choices. And then we can turn our attention where it should be, to the World Series here in Texas.
But first, let me congratulate Jon Sundt and his team at Altegris Investments, who last week announced they had been bought by Genworth Financial, a Fortune 300 company, for a rather tidy sum. It is a tribute to their hard work and the quality of their team that Genworth not only bought them but required management to stay on with no changes in direction or purpose, simply adding distribution and financial backing. In a real sense, they bought the people and not the company.
And that is the same reason I am proud to have been their partner for over seven years. We have a common sense of purpose in helping investors find quality alternative investments in this turbulent world. And let me say that every one of my partners around the world have that same purpose and quality team. If you are known by the quality of people with whom you associate, then I am not in a bad league at all. You can learn more by going to www.accreditedinvestor.ws and signing up. That is for accredited investors (net worth $1.5 million or more) in the US, Canada, Europe, and Latin America. If you are not an accredited investor and in the US, you can see about alternatives available for you athttp://cmgfunds.net/public/mauldin_questionnaire.asp. (In this regard, I am president and a registered representative of Millennium Wave Securities, LLC,…
Redbox Enters The Netflix Dojo, Dips Fists in Glue and Broken Glass
by ilene - October 30th, 2010 6:53 pm
Redbox Enters The Netflix Dojo, Dips Fists in Glue and Broken Glass
Courtesy of Joshua M Brown, The Reformed Broker
Another year, another Netflix ($NFLX) killer – this time, the venerable vending machine powerhouse Redbox.
Eric Savitz at Barron’s Tech Trader Daily is blogging that in 2011, the parent company of Redbox, Coinstar ($CSTR), will have streaming movies on the web operational…
…the company is confident that “physical DVDs and Redbox kiosks will remain relevant for a very long time to come.” But he added that consumers have told the company they want a broader selection than the kiosks provide. “So, while we are confident in the future of DVDs, we believe an expanded offering via digital could be a natural evolution to augment our core business,” he said.
Many incredibly tough competitors have challenged Netflix (aka the hottest stock in the universe) to the blaring fanfare of trumpets and beating drums. Each of these competitors has been sent sauntering away with its tail between its legs.
Redbox is looking at potential partnerships to get their service launched, so maybe this would be Amazon’s ($AMZN) chance to get in the game. Maybe the reorganizing Blockbuster gets in Redbox’s good graces for a team-up. Possibly a consortium of studios wants in, a la Hulu. We shall see.
Source:
Coinstar’s Redbox Plans 2011 Launch for Web-based Streaming (Tech Trader Daily)
Read Also:
The Netflix and the Blockbuster by Lewis Carroll (TRB)
Is The Fed TRYING To Force A Surge In Commodity Prices And Input Costs? Diapason Explains Why Hyperinflation Is Blackhawk Ben’s End Goal
by Zero Hedge - October 30th, 2010 6:29 pm
Courtesy of Tyler Durden
A Fed paper released in September, which we luckily missed as otherwise it would have led to the collective death through uncontrollable foaming in the mouth of the entire Zero Hedge staff, was “Oil Shocks and the Zero Bound on Nominal Interest Rates“, in which author Martin Bodenstein (an econ Ph.D.) argues that oil price shocks (i.e., surges in the price of oil such as the one we are about to experience courtesy of a fresh trillion in liquidity about to be unleashed by the Fed) are… wait for it… beneficial to GDP and stimulative to the interest-rate sensitive parts of the economy. To wit: “In fact, if the increase in oil prices is gradual, the persistent rise in inflation can cause a GDP expansion.“. Yes you read that right. The Fed is stealthily floating the idea that a surge in oil prices will be for the greater good. In essence, the Fed is telegraphing that while it acknowledges that oil is about to jump to over $100, it won’t be as bad as those with a functioning brain dare to claim. And, as we show below, it will actually be a very good thing! While we would probably get a massive lethal subdural hemorrhage if told to argue a view so blatantly and stupefyingly demented, insane and, simply said, wrong, as that espoused by Bodenstein, we are glad that Sean Corrigan of Diapason has gone the extra mile to not only expose the Fed charlatans for their voodoo gimmickry in this narrow topic, and brings up an even more critical idea, which is that the Fed “actually welcomes the current surge in the prices of many of the staples of everyday life; that it actually exults in the drain being exerted on family budgets; that it revels in the squeeze on profit margins being suffered by already-struggling small businesses, because it imagines this will serve to lower the reckoning of the ethereal construct of a generalized, future real interest rate and that this alone will serve to shower riches upon all who are presently suffering, in comparison for the present woes.”
That nobody has reached this conclusion before is explainable – it is something only the brain of an illogical, demented, perverted genocidal madman’s brain can come up with. Which is why we are now convinced the Fed is hoping for…
Halliburton and the Upcoming Election Courtesy of Robert Reich
by ilene - October 30th, 2010 6:10 pm
Halliburton and the Upcoming Election
Courtesy of Robert Reich
Next Tuesday Americans will be deciding whether to hand over even more of our government to corporations that have been plundering America – such as Goldman Sachs, JP Morgan Chase, Citibank, Wellpoint insurance, Massey Energy, and Halliburton, the giant oil services company.
Not every large corporation is irresponsible, of course, but plunderers that get away with it gain a competitive advantage over the more responsible, and thereby lead a race to the bottom.
Case in point: The staff of the presidential commission investigating the BP oil spill has just revealed that Halliburton executives knew the cement it was using to seal BP’s Deepwater Horizon oil well was likely to be unstable but didn’t tell BP or act on the information.
In a letter to the commission’s seven members, the staff found that the failure of the cement was a key factor in the blowout that caused millions of barrels of crude oil to escape into the Gulf of Mexico. (Not the sole factor, of course; most of the blame for the disaster, says the staff, still rests with BP and Transocean, the company BP hired to drill the well.)
Halliburton has not sat out this election. Last May, as Congress began investigating its role in the disaster, its political action committee made 14 contributions — 13 to Republicans and one to a Democrat. Many were involved in the investigation; others had responsibility for overseeing oil drilling in the Gulf. It was the biggest donation month for Halliburton’s PAC since September 2008.
Halliburton, in case you’ve forgotten, is not exactly a model citizen. It has evaded U.S. taxes and export bans through foreign subsidiaries; admitted to bribing foreign officials (a subsidiary paid $2.4 million to a Nigerian government official in exchange for favorable tax treatment); conceded in an internal memo (leaked to the Wall Street Journal) its cost controls for government contracts in Iraq were “antiquated” and its procurement “disorganized; was found by Pentagon auditors to have overcharged estimated at $27.4 million for meals served to American troops at five military bases in Iraq and Kuwait (in one camp billing for an average 42,000 meals a day but serving only 14,000).
The list of Halliburton’s crimes goes on and on. And yet, somehow, Halliburton goes on piling up profits. How? Because of its deep connections to Washington.
Dick Cheney hadn’t had any…
5 Dangers To Global Crops That Could Dramatically Reduce The World Food Supply
by ilene - October 30th, 2010 5:43 pm
5 Dangers To Global Crops That Could Dramatically Reduce The World Food Supply
Courtesy of Michael Snyder at Economic Collapse
The world food situation is starting to get very, very tight. Unprecedented heat and wildfires this summer in Russia and horrific flooding in Pakistan and China have been some of the primary reasons for the rapidly rising food prices we are now seeing around the globe. In places such as Australia and the African nation of Guinea-Bissau, the big problem for crops has been locusts. In a world that already does not grow enough food for everyone (thanks to the greed of the elite), any disruption in food production can cause a major, major problem.
Tonight, thousands of people around the world will starve to death. So what happens if things get even worse? Many agricultural scientists are now warning that global food production is facing dangers that are absolutely unprecedented. Crop diseases such as UG99 wheat rust and the "unintended effects" of genetic modification pose challenges that previous generations simply did not have to face. The outbreak of a real, live global famine looks increasingly possible with each passing year. So are you and your family prepared if a global famine does strike?
Already, there are huge warning signs on the horizon. Just check out what agricultural commodities have been doing. They have been absolutely soaring.
A recent article on the Forbes website noted a few of the agricultural commodities that have skyrocketed during this year….
Here’s what’s happened to some key farm commodities so far in 2010…
•Corn: Up 63%
•Wheat: Up 84%
•Soybeans: Up 24%
•Sugar: Up 55%
Are you ready to pay 84 percent more for a loaf of bread?
You better get ready – these raw material prices will filter down to U.S. consumers eventually.
So what is going to happen if the world food situation gets even tighter?…
Only $4.2 Billion To Buy This Election?
by ilene - October 30th, 2010 5:34 pm
Only $4.2 Billion To Buy This Election?
Courtesy of Robert Reich
This, from the Washington Post’s conservative pundit George Will:
Total spending by parties, campaigns and issue-advocacy groups concerning every office from county clerks to U.S. senators may reach a record $4.2 billion in this two-year cycle. That is about what Americans spend in one year on yogurt, but less than they spend on candy in two Halloween seasons. Proctor & Gamble spent $8.6 billion on advertising in its last fiscal year.
Those who are determined to reduce the quantity of political speech to what they consider the proper amount are the sort of people who know exactly how much water should come through our shower heads — no more than 2.5 gallons per minute, as stipulated by a 1992 law. Is it, however, worrisome that Americans spend on political advocacy — determining who should make and administer the laws — much less than they spend on potato chips, $7.1 billion a year?
In a word, Mr. Will, yes.
The number of dollars spent isn’t the issue; it’s the lopsidedness of where the dollars come from. Even if the total were only $1000, democracy would be endangered if $980 came from large corporations and wealthy individuals. The trend is clear and worrisome: The great bulk of campaign money is coming from a narrower and narrower circle of moneyed interests.
Anyone who doubts the corrupting effect has not been paying attention. Our elected representatives have been acutely sensitive to the needs of Wall Street bankers, hedge-fund managers, and the executives of big pharma, big oil, and the largest health insurance companies. This is not because these individuals and interests are particularly worthy or specially deserving. It is because they are effectively bribing elected officials with their donations. Such donations are not made out of charitable impulse. They are calculated investments no less carefully considered than investments in particular shares of stock. They are shares in our democracy.
Why $4.2 billion and not ten times that amount? Because the high-rolling political investors don’t need to spend a dollar more in order to exert overwhelming influence.
This figure, by the way, leaves out the tens of billions of dollars dedicated to lobbying, lawyering, and public relations — all of which deliver specific legislative outcomes the campaign money fuels. The economy of Washington, D.C. depends on this gigantic flow of funds (supporting…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
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