Food, And A Penny, For Your Thoughts?
That's right - yet more on the global economic and food crises, folks:
How the Food and Financial Crises are Interconnected
The Global Meltdown
By Eric Toussaint
In 2007-2008, the biggest international economic and financial crisis since 1929 broke out. Were it not for the massive and concerted intervention of public authorities in coming to the rescue of thieving bankers, the present crisis would already have reached more ample proportions. Here too, the interdependency is striking. Between 31st December 2007 and the 18th October 2008, all the world's stock exchanges fell dramatically, by 30 to 40%, sometimes more, for the stock exchanges of the industrialized countries, 45% for Turkey, Argentina, Brazil and India, 60% for Russia and China[2]. The colossal build-up of private debts, which is entirely created from fictitious capital, has finally exploded in the industrialized countries starting with the United States, the most heavily indebted economy of the planet. Indeed, in 2008, the sum of public and private debt in the United States amounted to 50 000 billion dollars i.e. 350% of GDP. This economic and financial crisis, which has already spread to the entire planet, will affect the developing countries more and more, even those which still believe themselves safe. Capitalist globalisation has not delinked or disconnected economies. On the contrary, countries like China, Brazil, India or Russia have not been able to protect themselves from this crisis, and this is only the beginning.
The food crisis.
In 2007-2008, the standard of living of more than half of the world population dropped dramatically when the price of food soared. There were massive demonstrations in at least fifteen countries in the first half of 2008. Tens of millions of people more than before faced hunger, and hundreds of millions had to reduce their food consumption (and consequently, their access to other essential goods and services[3]).
All of this was the result of decisions made by a handful of companies in the agro-industry and the financial sector (the institutional investors who contribute to doping the prices of agricultural products) with the backup of the US administration and the European Commission[4]. In fact, the percentage of exports in the world production of food remains small. Only a small part of the rice, wheat or corn produced in the world is exported, while by far the greater amount is consumed in the country of production. However, the price on the export market determines the price on the local market. The export market price is fixed in the United States, mainly in three stock exchanges (Chicago, Minneapolis and Kansas City). Consequently, the price of rice, wheat or corn in Timbuctu, Mexico, Nairobi, and Islamabad is directly affected by the evolution of the prices of these cereals on the United States stock markets.
In 2008, under pressure and to avoid being overthrown by the rioting at the four corners of the earth, the authorities in the developing countries had to take measures to guarantee their citizens access to staple foods.
This state of affairs resulted from several decades of governments gradually withdrawing their support from local cereal producers – who are mainly small producers – and following the neoliberal requirements imposed by institutions such as the World Bank and the IMF as part of the Structural Adjustment Programmes and programmes to reduce poverty. In the name of the "fight against poverty" the institutions have convinced governments to carry out policies which have reproduced or even reinforced poverty. Furthermore, during the last few years, many governments have signed bilateral treaties (especially free trade treaties) which made the situation worse. The WTO Doha round of trade negotiations also had dire consequences.
What Happened?
(Keep reading ...)
The Global Meltdown
By Eric Toussaint
In 2007-2008, the biggest international economic and financial crisis since 1929 broke out. Were it not for the massive and concerted intervention of public authorities in coming to the rescue of thieving bankers, the present crisis would already have reached more ample proportions. Here too, the interdependency is striking. Between 31st December 2007 and the 18th October 2008, all the world's stock exchanges fell dramatically, by 30 to 40%, sometimes more, for the stock exchanges of the industrialized countries, 45% for Turkey, Argentina, Brazil and India, 60% for Russia and China[2]. The colossal build-up of private debts, which is entirely created from fictitious capital, has finally exploded in the industrialized countries starting with the United States, the most heavily indebted economy of the planet. Indeed, in 2008, the sum of public and private debt in the United States amounted to 50 000 billion dollars i.e. 350% of GDP. This economic and financial crisis, which has already spread to the entire planet, will affect the developing countries more and more, even those which still believe themselves safe. Capitalist globalisation has not delinked or disconnected economies. On the contrary, countries like China, Brazil, India or Russia have not been able to protect themselves from this crisis, and this is only the beginning.
The food crisis.
In 2007-2008, the standard of living of more than half of the world population dropped dramatically when the price of food soared. There were massive demonstrations in at least fifteen countries in the first half of 2008. Tens of millions of people more than before faced hunger, and hundreds of millions had to reduce their food consumption (and consequently, their access to other essential goods and services[3]).
All of this was the result of decisions made by a handful of companies in the agro-industry and the financial sector (the institutional investors who contribute to doping the prices of agricultural products) with the backup of the US administration and the European Commission[4]. In fact, the percentage of exports in the world production of food remains small. Only a small part of the rice, wheat or corn produced in the world is exported, while by far the greater amount is consumed in the country of production. However, the price on the export market determines the price on the local market. The export market price is fixed in the United States, mainly in three stock exchanges (Chicago, Minneapolis and Kansas City). Consequently, the price of rice, wheat or corn in Timbuctu, Mexico, Nairobi, and Islamabad is directly affected by the evolution of the prices of these cereals on the United States stock markets.
In 2008, under pressure and to avoid being overthrown by the rioting at the four corners of the earth, the authorities in the developing countries had to take measures to guarantee their citizens access to staple foods.
This state of affairs resulted from several decades of governments gradually withdrawing their support from local cereal producers – who are mainly small producers – and following the neoliberal requirements imposed by institutions such as the World Bank and the IMF as part of the Structural Adjustment Programmes and programmes to reduce poverty. In the name of the "fight against poverty" the institutions have convinced governments to carry out policies which have reproduced or even reinforced poverty. Furthermore, during the last few years, many governments have signed bilateral treaties (especially free trade treaties) which made the situation worse. The WTO Doha round of trade negotiations also had dire consequences.
What Happened?
(Keep reading ...)
Another excellent read Mentarch.
ReplyDeleteThere is another dimension to the global financial crisis that is rarely addressed by the corporate media: tax policies. Here is the link to an excellent article from the New Internationalist that I was reading this morning:
Tax justice and the global fiddle
by David Ransom
http://www.newint.org/features/2008/10/01/tax-justice/
Thanks for the head's up (and the link), BY!
ReplyDelete