Weak dollar and poor stock market outlook is driving big money into commodities - thus the rapid

[JohnWxy]

rise in all commodities prices - energy, materials and food.


http://www.marketoracle.co.uk/Article4486.html


There is no shortage of food; it's just the prices that are making food unaffordable. Bernanke's "weak dollar" policy has ignited a wave of speculation in commodities which is pushing prices into the stratosphere. The UN is calling the global food crisis it a "silent tsunami", but its more like a flood; the world is awash in increasingly worthless dollars that are making food and raw materials more expensive.

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Here's Otto Spengler's summary in his recent article in Asia Times, "Rice, Death and the Dollar":

"The global food crisis is a monetary phenomenon, an unintended consequence of America's attempt to inflate its way out of a market failure. There are long-term reasons for food prices to rise, but the unprecedented spike in grain prices during the past year stems from the weakness of the American dollar. Washington's economic misery now threatens to become a geopolitical catastrophe....The link between the declining parity of the US unit and the rising price of commodities, including oil as well as rice and other wares, is indisputable."

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Also, not mentioned here, is the outlook for equities (common stocks) started to deteriorate hedge fund managers started pulling out of stocks and where do you go when you want out of common stocks - yo buy commodities - energy, materials and futures contracts for grains. When hedge fund managers act they move trillions of dollars. ONce they start the prices in commodities up and the stock market continues to deteriorate others start piling on.

the prices for grain are being driven by the futures markets and the weak dollar. We have surpluses of corn and wheat yet the prices have blasted upward. Thsi is happening because big money is moving out of stocks and into commodities.


http://forests.org/shared/reader/welcome.aspx?linkid=97657">The Role of Speculators in the Global Food Crisis

"Vast amounts of money are flooding the world's commodities markets, driving up prices of staple foods like wheat and rice. Biofuels and droughts can't fully explain the recent food crisis -- hedge funds and small investors bear some responsibility for global hunger."


"In search of new investments, Anderson sends dozens of his employees to visit agricultural regions around the world. Back in New York, at his company's headquarters on the 27th floor of an office building high above Park Avenue, they bet on agricultural markets from Peru to Vietnam.

But in the towers above Manhattan's urban canyons, it's easy to lose touch with the ground. Hedge fund manager John Paulson was recently celebrated for achieving a record annual profit of $3.7 billion (€2.3 billion). Those who work in this environment have only one rule: Don't disappoint profit-hungry investors.


"I'm constantly wired," Anderson used to say, back when he talked to journalists. His nickname in the industry is the "Commodities King," and his Ospraie hedge fund is the world's largest. These days, though, Anderson avoids the media. He's even kept his face out of the media by buying up rights to all photos of himself on the market. His spokesman is now paid, mainly, to say nothing.

A Broken Market?

There are plenty of questions to ask Anderson, though -- in particular about the role of international investors in the current spike in the price of staple food. Not only is there talk that investors have profited from desperate hunger in Honduras, the Philippines and Bangladesh; critics also wonder if commodity speculators are making the crisis worse. '

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[On the Road]

1. This is So Much More Damaging Than Most Speculation

The good news is that bubbles are temporary, and there will be just as many losses as in previous bubbles.

I do look forward to prices peaking and coming down.