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Speculation drives high food prices
Key Excerpts from Article on Website of The Guardian (One of the UK's leading newspapers)
Posted: January 31st, 2011
http://www.guardian.co.uk/global-development/2011/jan/23/foo...
Just under three years ago, people in the village of Gumbi in western Malawi went unexpectedly hungry. Not like Europeans do if they miss a meal or two, but that deep, gnawing hunger that prevents sleep and dulls the senses when there has been no food for weeks. Oddly, there had been no drought, the usual cause of malnutrition and hunger in southern Africa, and there was plenty of food in the markets. For no obvious reason the price of staple foods such as maize and rice nearly doubled in a few months. Unusually, too, there was no evidence that the local merchants were hoarding food. It was the same story in 100 other developing countries. There were food riots in more than 20 countries and governments had to ban food exports and subsidise staples heavily. A new theory is emerging among traders and economists. The same banks, hedge funds and financiers whose speculation on the global money markets caused the sub-prime mortgage crisis are ... taking advantage of the deregulation of global commodity markets [to make] billions from speculating on food and causing misery around the world. As food prices soar again to beyond 2008 levels, it becomes clear that everyone is now being affected. Food prices are now rising by up to 10% a year in Britain and Europe. What is more, says the UN, prices can be expected to rise at least 40% in the next decade.
Note: Remember that speculation is behind almost all of the economic bubbles and busts. The price of oil spiked a couple years ago almost purely because of speculators, while the oil companies raked in record profits. It looks like the speculators are now driving food prices as high as they can. For a treasure trove of reports from reliable sources investigating the many different strategies used by financial corporations to enrich themselves at the expense of common people, click here.
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