Why The Price Of Food Is So High

Discussion in 'Politics, Religion, Social Issues' started by skunk, May 9, 2011.

  1. skunk macrumors G4

    skunk

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    #1
    An interesting perspective on rocketing food prices. Long but worth a read:

    http://www.foreignpolicy.com/articles/2011/04/27/how_goldman_sachs_created_the_food_crisis?page=full
     
  2. barkomatic macrumors 68040

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    #2
    This is depressing. Yet another example of how unrestrained capitalism can actually damage markets and make life miserable--especially for the poor.

    Considering the weight problem that many citizens in Western countries struggle with, more expensive food might not be so horrible for them. It's those in more developing nations that will feel the brunt of this. The instability in those nations will eventually percolate to the rest of the world.
     
  3. likemyorbs macrumors 68000

    likemyorbs

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  4. rdowns macrumors Penryn

    rdowns

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    #4
    And here I thought the prices were higher due to speculators driving up the price of oil.
     
  5. skunk thread starter macrumors G4

    skunk

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  6. Rodimus Prime macrumors G4

    Rodimus Prime

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    #6
    what is sad is how little can be done about it. The US open Pandora's box and now it can never be undone since they would just change which market they do all of it in. It would be nice to force them to take delivery of 30% of anything they speculated on. That is enough to force them to have storage of it. It needs the regulatation back in it.
    Sad that every time we do deregulation cost goes up not down. The greed is screwing us all over.
     
  7. skunk thread starter macrumors G4

    skunk

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    #7
    If de-regulation caused all these problems, it would seem obvious that re-regulation would mitigate them.
     
  8. edifyingGerbil macrumors regular

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    #8
    Regulation of prices didn't help the USSR, China, North Korea, Cuba et all.

    Or did you mean a global regulation rather than a regulation implemented by individual countries?
     
  9. skunk thread starter macrumors G4

    skunk

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    #9
    Was the US regulatory regime really that similar to the systems in those states before deregulation?
     
  10. Sydde macrumors 68020

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    #10
    Not regulation of prices, regulation of the market itself. For example, there was this famous act passed in the 1930s called Glass-Steagall that prohibited banks and investment houses from being a single, unified entity: some have suggested that its repeal in the late 90s led directly to the mortgage crisis a few years back. It has been possible in the past to regulate, restrict or punitively tax specific market activity, though with the death-grip that corporate interests currently have on the US government, this seems less likely of an option.
     
  11. Rodimus Prime macrumors G4

    Rodimus Prime

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    #11
    problem is they will just move to another market. Bring it back regulation in the US market they will just move over to the London or Asia market.

    Now to give you an idea on an item that is against the law to trade commondiy is Onions. It price one hit spike up at 500 bucks but drops to pennies as well over night. It prices goes up and down very quickly because you can not future trade it by law.

    now many farmers have contracts in place with buyer but it is not traded in future as those said contracts are people who are OMG taking delivery.
     
  12. Sydde macrumors 68020

    Sydde

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    #12
    But it is unAmerican to force people to actually do stuff to make money :eek:
     
  13. Rodimus Prime macrumors G4

    Rodimus Prime

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    #13
    yep. Onions were used as an example of how the market with out future trading can get insane with these spike up to 500 bucks per bushel and then drop down to under a buck but at the same time they pointed out that many farmers and buyers solved the issue by making their own contracts between each other. The future market just can not take over it.

    Sorry I do not have a link to the article it was a few years ago that I read it. Onions were made illegal to future trade on a long time ago and the law was never repealed.
     
  14. Sydde macrumors 68020

    Sydde

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    #14
    Interesting stuff to read about

    Wikipedia is your friend (this is highly condensed)

    Every article on an economic issues proves again that the subject is elusive and slippery: anyone who tells you they understand it fully and has the ideal solution for our problems is either an idiot or is shilling for some financial interest that stands to gain from whatever concept is being offered.
     
  15. Rodimus Prime macrumors G4

    Rodimus Prime

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    #15
    And to sum that up it shows you what happens when future traders take over a market they can really do a lot of damage.
    If used correctly future trading is great for preventing the very quick price changes but the over all average cost never changes. Problem is the future traders are driving up the price and not really even bothering with the smoothing it out.

    Way to much damage is being done. Maybe it should be big investment company should not be allowed to invest in commodity period.
    Biggest thing it proves is commodity trading can do way to much damage on the greed of a few.
     
  16. IntelliUser macrumors 6502

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    Why does it matter?
  17. MattSepeta macrumors 65816

    MattSepeta

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    #17
    LOL

    Anyways, I thought the high food prices were because george bush doesnt want poor black people to eat?

    Er, wait... I thought high food prices were from Obama being a commie

    :p

    Seriously though- It bothers me that people make big bucks playing with other peoples money essentially. Oh well, more power to them I guess.
     
  18. Sydde macrumors 68020

    Sydde

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    #18
    Why? That kind of seems like the wrong attitude. "More power to them" is apparently one of the things that got the US and world into this recession in the first place.
     
  19. Desertrat macrumors newbie

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    #19
    It's not "unrestrained capitalism". It's the usual marriage of powerful government and giant corporate interests. Nothing new in at least a half-century that I know of. The difference now is in degree, not kind.

    That "marriage" was written about in a good bit of science fiction. Heinlein, Kornbluth, Van Vogt...

    However, even without GoldmanSucks, the weakening dollar and the rising cost of fuel will continue to exacerbate the increases in food costs. Drouths and floods don't help, and the dumb-buttedness of our government for this gasahol thing is another big negative for the consumer--but wonderful for ADM.

    That several million bucks that GoldmanSucks spent on Obama's campaign is really paying off quite profitably, looks like.
     
  20. skunk thread starter macrumors G4

    skunk

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    #20
    This is not about speculators getting rich, this is about artificially ratcheting up the price of basic foods in a world where a billion people do not have basic food security.
     
  21. skunk thread starter macrumors G4

    skunk

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    #21
    No, if you read the article, you will see that the major problem is the ratchet effect of this speculation tool. It changes the normal, more or less beneficial moderation of natural peaks and troughs into a system where the price always rises. Meanwhile, the number of people who can afford to eat diminishes.
     
  22. iBlue macrumors Core

    iBlue

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    #22
    How completely frustrating. I think the Commodities Futures Trading Commission has a lot to answer for in deciding to deregulate that.
     
  23. SactoGuy18 macrumors 68020

    SactoGuy18

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    #23
    That article proves that Goldman Sachs has been HUGELY responsible for causing some major economic crises over the years.

    Remember the 1929 stock market crash? Goldman Sachs' heavy involvement in margin trading contributed heavily to that fiasco. How about the Eurozone's big problems with Greece? It was Goldman Sachs' creative use of credit default swaps that got Greece into the Eurozone for all the wrong reasons. The fall of Lehman Brothers? Because Goldman Sachs wouldn't support Lehman Brothers, that company collapsed and caused the stock market crash back in September 2008. And that's only the tip of the iceberg when it came to that company's financial shenanigans.

    One wonders very openly why Wikileaks or any enterprising journalist hasn't exposed the very problems Goldman Sachs has caused in its history....
     
  24. OutThere macrumors 603

    OutThere

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    #24
    I think we're really threatened as a society by the deepening abstraction of value-bearing financial 'products' from the risks and realities of the things they represent, and the way in which we continue to allow 'investment' banks to speculate in dangerous and damaging ways that do not benefit the system.
     
  25. mscriv macrumors 601

    mscriv

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    #25
    Interesting article Skunk, thanks for posting it. I can't say I understand all the in's and out's of the futures market, but it's sad that we allowed the system to change in a way that has artifically raised prices. And, it gets worse when you think about how much food waste continues to occur in this world, especially in the States.
     

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