10 June 2008

Gambling while others starve

Whatever explanation you've heard for why food prices are rising it probably isn't the real one. Now that the housing market is staggering to a standstill it appears that those who have been using to making easy money from speculating in a fundamental human need for shelter have now moved on to playing the same sordid game with our even more basic need for food.

Testimony recently given to the US Senate Homeland Security Committee came from a former Wall Street investor who decided to blow the whistle. Here is a brief extract:

You have asked the question 'Are Institutional Investors contributing to food and energy price inflation?' And my unequivocal answer is 'Yes'. In this testimony I will explain that Institutional Investors are one of, if not the primary, factors affecting commodities prices today. Clearly, there are many factors that contribute to price determination in the commodities markets; I am here to expose a fast-growing yet virtually unnoticed factor, and one that presents a problem that can be expediently corrected through legislative policy action.

The news of famine in Ethiopia, again, more than 20 years after Bob Geldof blasphemed to no purpose on national TV is, again, being blamed on bad governance or the weather. The usual distractions offered us to avoid the obvious conclusion that 'It's the exploitative, capitalist, post-coloniast, globalised economy - stupid!'.

And what about the row over crop-based biofuels? Competition for land is a significant and growing concern for anybody interested in green economics. But can we be sure that what is being knowingly explained in terms of the competition within free markets isn't actually a commodity price bubble being manipulated by those who will profit from it?

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