"This year is the year of corn," said AgResource President Dan BasseOne. A glance at the current commodity tables suggest where the vulture capitalists (having bled all they can from the housing market) are hoping for their next big bubble. The price of corn was still soaring even as the global financial meltdown had developing countries again tightening their belts. This is no coincidence. One of the main factors in accelerating commodity and food costs is financial speculation.
Before the reign of Bush II food prices had been steadily falling due to increased efficiency (the supposed benefit of GM crops and the neoliberals' "New World Order") But since 2001, food prices have been rising across the globe. A ton of wheat that cost $167 two years ago now fetches $481!
Like the over-pumped housing market that caused us all to go disastrously into chronic debt our masters on Wall Street with their insider banks and hedge funds are throwing their ill-gotten loot at the commodity markets, betting on their next easy buck. An analyst cited by the Wall Street Journal estimates that “investors have poured roughly $175 billion to $200 billion into commodity-linked index funds.” And now that they've beguiled us into handing them our pensions and 401k's the slobbering bulls are flocking to grain investments as both farm acreage and crop output shrink relative to the world's expanding population and our "environmental realists" push for more and more biofuels.
As Raj Patel, author of Stuffed and Starved, says quite succinctly, "It's a crime against humanity that this kind of financial speculation is allowed to continue."
One can draw a straight line from the soaring cost of corn to the exploding drug war threatening to tear apart Mexico. Whether the monetary theorists believe it or not the poor also need to eat but in the last year alone the price of tortillas has increased by almost 14%. (A jump the head of Mexico’s central bank called “unjustifiable” in a country where inflation runs about 4 percent.)
“This is direct evidence of the way globalization is affecting all walks of life in Mexico and all over the world,” explains David Barkin, economics professor at the Autonomous Metropolitan University in Mexico City.
Now the government’s antitrust watchdog is investigating allegations companies were manipulating corn prices, and making Enron style deals to deliberately keep the corn off market.
Mindless greed: Gain on one hand-- lose on the other
The Archer Daniels Midland Corporation (ADM) has been the most prominent recipient of corporate welfare in recent U.S. history. ADM and its chairman Dwayne Andreas have lavished Democrats and republicans alike with millions of dollars. In return it has reaped billion-dollar windfalls from we the taxpayers and consumers. Thanks to federal protection of the domestic sugar industry, ethanol subsidies, subsidized grain exports, and various other programs, ADM has cost our economy billions since 1980. Just around the time that Coca-Cola switched its formula from using sugar to corn-syrup. A decade later Americans saw the results in spike in incidents of diabetes and obesity-- that on top of paying even higher prices and higher taxes for an inferior product.
At least 43 percent of ADM's annual profits are from products heavily subsidized by our government. For every $1 of profits earned by ADM's corn sweetener operation we pay $10, and every $1 of profits earned by its ethanol operation costs us $30.
So while the speculators howl that regulating markets amounts to "profit-killing socialism" the ADM chairman is refreshingly forthright. As he told a reporter for Mother Jones, "There isn't one grain of anything in the world that is sold in a free market. Not one! The only place you see a free market is in the speeches of politicians. People who are not in the Midwest do not understand that this is a socialist country."
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