Insight: The next crisis will be over food- Financial Times

[Ichingcarpenter]

I used to think that the fastest way to become worried about markets was to stare into the bowels of a monoline. No longer. A few days ago, I happened to hear Goldman Sachs discuss the state of the global financial system with European clients.

And what struck me most forcefully from this analysis – aside from the usual, horrific litany of bank woes – was just how much trouble is quietly brewing in corners of the commodities world.

Never mind that oil prices are high; that problem is already well known and gallons of ink have been spilt debating that, along with the pressures in metals and mineral spheres.

Instead, what is really catching the attention of Goldman Sachs now is the outlook for agricultural prices. Or as Jeff Currie, head of commodities research at the US bank, says with disarming cheer: “We think we could go into crisis mode in many commodities sectors in the next 12 to 18 months . . . and I would argue that agriculture is key here.”>>>>snip


However, Goldman Sachs thinks this is just part of a much bigger problem of capital and resource misallocation. After all, Mr Currie argues, if the world today was a rational economic place, then regions such as the Gulf which are food-constrained ought to be investing heavily in agriculture. And since the US is the world’s biggest agricultural supplier, this implies that the Saudi Arabians, say, should be snapping up farms in Wisconsin – as America secures oil in the most efficient manner by sending teams of Texans to Riyadh.

But in practice numerous investment controls prevent Saudi Arabians from buying Wisconsin farms and Americans owning Saudi oil wells. And these controls are not being dismantled now. On the contrary, mutual mistrust is now rising. Hence the fact that Gulf leaders are currently considering desalinating sea water to plant wheat in the desert – while the US and Europe are trying to turn corn into fuel.

http://www.ft.com/cms/s/5a9b3c72-db2e-11dc-9fdd-0000779fd2ac.html

[LaurenG]

1. If things get that bad we are ALL in huge trouble

I guess having a green thumb could come in quite handy.

[dkf]

2. We are using our grains for energy. What a waste.

[Karenina]

3. Whoever launched that hare-brained scheme

needs to go the way of the "New Coke" inventor. :eyes:

[dantyrant]

5. Henry Kissinger once said:

"The problem is not that there is not enough oil; the problem is that there are too many people."

Why don't we call this what it is? Genocide -- the starving of the poor of the world. This is the predictable outcome of our corn ethanol policies.

[Ichingcarpenter]

4. Goldman Sachs

Henry M. Paulson, Jr., then Chair & CEO of Goldman Sachs, was a Bush Pioneer having raised at least $100,000 for Bush in the 2004 presidential election. In 2006, Paulson was appointed by Bush to be Secretary of the Department of the Treasury. <1>

Goldman Sachs gave $478,250 to federal candidates in the 05/06 election period through its political action committee - 35% to Democrats and 65% to Republicans. <2>

http://www.sourcewatch.org/index.php?title=Goldman_Sachs