Saturday, June 28, 2008

Observations from a Bangkok bar

An email and a story to my daughter in the U.S.

Hi My Dear,

I really enjoyed awakening to your long email this morning. It is about 7 am here in Bangkok and yesterday I spent the whole afternoon and much of the evening in a bar. Sounds rather unwholesome, I know, but I was catching up with a friend who used to work in Singapore and has been in China for the last three years. When he went to China we didn’t see each other very much, but we occasionally exchanged emails or phone calls. He is a senior VP of engineering and works for a large U.S. company. He was visiting his company’s facility in a town about two hours from Bangkok.

If you don’t mind this little side story I’ll go ahead and explain:

For a start, I was really pissed off at this guy. Originally our plan was to get together for dinner Friday night. He told me he planned an early get away from work and would drive to Bangkok to arrive in the early evening. Well, Friday evening arrived and I sent him an SMS to ask what time he would be into town. He wrote back simply “9pm” which was about four hours past the time he originally told me. So I wrote back simply “OK, just sms me when you get here”. To which he wrote back that he was going to be in a conference call with the company’s people in the U.S.and that Saturday would be better. (Which obviously meant his last sms noting 9pm was out of the question to begin with. Long story short, he wasn’t going to make it to town because a quick calculation told me that it was only 6 am in Minnesota when he wrote that. I was pissed off because he hadn’t been candid with me and because he hadn't let me know sooner that we wouldn’t be able to meet up that evening. In fact, I was so pissed off I mentioned in an email to Veronica what a “dick” the guy was. In any case, I simply replied to him to just let me know by sms if he made it to town and I would try to catch up with him.

So Saturday rolls in and about 1 pm I get an sms from him that he is in a bar down the street from our apartment here in BK. I was just finishing up some work so I wrote back that I would join him when I could. I got there about an hour later and there he sat, in a crowded and noisy bar, on the edge facing the street on a hot muggy Saturday afternoon, drinking beer and watching that special circus parade of Bangkok people in a bar area on a weekend. I can tell you that it is not a bad sport. The array of people that go by is as rich as it can get, almost better then people watching in an airport. It includes all of tourists, the beggars, and the street hawkers selling everything from woven baskets, handmade brooms, tourist trinkets and novelties, to locally sewn cheap clothes, and roasted insects sold as the local delicacy (which you have already experienced in Phuket). The street hawkers are pursuing the tourists and local trade that crowd the streets. By “local trade” I refer to the hookers that are everywhere. These include the sometimes garish, but often gorgeous kathoeys (transgenders). In many of the bars there are more members of the local trade then there are potential customers in this off-season time.

Interestingly the tourists are no longer mostly westerners. There are many Chinese couples, whole families of middle easterners and Africans,and groups of Japanese girls escaping the drudgery of their lives at home. They seek out the trinket traders, food sellers, and cheap massage places with an ernest equal to the purveyors so that all come together in this big celebration of commerce that only an Asian city can display with such fervor.

This parade of humanity also includes the localized expatriates. Many of them are business types like me. But in Bangkok there are also crowds of men who have settled here, often they are pensioners, attracted to the cheap living, the girls, the anonymity, or the worn out idea that this all somehow equates to adventure. Some of them are alcoholics who are living out there days in a shabby (but visually rich) existence. They often walk around hand-in-hand with their miia naawys (literally means wife/minor or lesser), who simultaneously assume the roles of care giver, lover, maid, confessor, and companion. They are seemingly happy to do so, as it is often a step up in their situation. I think these expats console themselves with the notion that they have true lovers and friends (many of whom are transient and/or on the hustle) and a life. They gather in bars to feed their habits and greet each other in boisterous ways that seem more boyish then mature. When I observe them I often wonder what they have left behind.

My curiosity about people draws me to watch this parade, but I affect a detachment out of an irrational fear that I could somehow become one of them. I am also mindful that to anyone else who might be watching, I would be regarded as just part of the parade, so I make no judgements about what I am observing. I easily fit in to the scene, wearing an old beat up cowboy hat, khakis, and sandals, nursing a beer at midday, and looking as derelict as the next derelict.

My friend is plopped in the middle of all this awaiting my arrival. He is something of an egotistical, artificially rough talking (favorite word starts with F) guy, and affects the mannerisms of a cowboy (he used to rodeo according to him) or a biker (he used to ride Harley’s according to him), or a bar bouncer (he used to be a weight lifting body builder – a fact I can attest to because I have worked out with him some years ago when we both were into using the gym. He is, himself, a colorful and interesting character. For all his bravado, he is perhaps the most brilliant engineer I have ever known. I sometimes think that his outward manner is an affectation he uses to hide his intelligence, which he is embarrassed by. Long ago I cracked this crusty exterior and while he can still be socially challenging, he talks plain and straight when we chat. The truth is, each and every time we get together I learn much from him. He literally thinks with extreme clarity and logic and in ways that the writing of Stephen Hawkings or Carl Sagan comes to mind. He is younger then I and seeks advice from me often. I am flattered by this partially because of his brilliance, partially because he doesn’t listen to advise from very many people, and partially because he would not hold me in this regard if it were not for the fact that a mutual friend, one that we both respected and admired, had introduced us and he was advised by him to listen to me. The two of them are among a small handful of minds I have met that think in ways that transcend common logic.

His queries in this regard are usually about office politics, the market for his products, organizational issues (he has a huge one - something that he doesn't feel all that comfortable with), or his personal relationships. He bounces technology &manufacturing ideas off of me that come in a blur of creativity. I frequently have to ask him to repeat himself but not because he spoke too fast for me to recognize his words, but because he spoke them too fast for me to string the logic of those words together. I need to stall to think them through. Sometimes the logic eludes me entirely, and I have to ask questions. In a display of one of his social handicaps, he is impatient with this, and shows it, but I ignore that. I knew long ago that he thinks faster then most of the people on this planet and I feel no shame at all in asking for him to explain more.

So I spent the afternoon listening to him and occasionally responding to his questions. I nursed beer slowly, which means that in this hot climate you end up drinking warm beer by default. The parade kept rolling by, offering occasional diversion, from heady subjects. He brought up the subject of whether there was anything meaningful in helping a big company make more money. (My view was that there was meaning in it as long as you got your share of the money and that money gave you an opportunity to do what you wanted to do.) We talked about his new relationship with a Chinese lady, something I recognized as new in his life because he had been a confirmed bachelor and serial girl chaser for as long as I had known him before. Sure enough, the girls in the bar seemed to hold less importance to him then in times past. I recognized his comments about his new relationship and his concerns about finding meaning in life as evidence of his maturing and a growing sense of urgency that affect all men of reasonable sensibilities. This is the trouble with great minds who think beyond the borders of their every day existence and yet are trapped in those boundaries by their earthly needs or a lack of confidence. The afternoon progressed into evening with a thunderstorm demarcating the two periods of the day. It was great entertainment to watch the circus parade scramble for cover. I watched a man on the street who was baking rice cakes on a charcoal fire dutifully holding an umbrella over his works while he got soaked. After the rain there was a brief period of cool air that was as welcome as any air I had ever felt. It was transient however and within what seemed like minutes, the hot afternoon had become a steamy night. I, having long ago switched to bottled water, realized that the beer finally caught up with my friend and he brought up an idea of food. That was a very welcome idea to me, not only because I was hungry, but I was ready to make a move, any of that bar stool.

We ate “dinner” at a burger stand nearby. The whole shop consisted of a rolling cart on which had been mounted a propane fired flat grill and an iced compartment built in below. The fat lady proprietor of the operation flipped burgers in rapid fire succession. After making our way through the line of and collecting our burgers, we stood on the crowded sidewalk and wolfed them down. At that moment I wouldn’t have traded that burger for the best steak in town. It was a miracle explosion of flavor. All the while I ate it I hoped it wouldn’t give me a case of food poisoning.

We parted company there, eating, saying goodbye, then going separate ways. I returned to our apartment and washed away the days grit in a long hot shower. I started a movie on television and fell asleep in my chair within minutes.

Wednesday, June 18, 2008

America's tarnished icons are coming back to haunt us - Plus: Damned if he didn't do it again while I was writing this

As you know I have stated my belief that the two primary drivers of higher oil & gas prices are growing demand and the fact that oil is traded globally in US dollars. As the dollar falls against other currencies and it's global spending power wanes, we are obviously going to pay more, not just for gasoline, but for plastic lawn chairs at Wal-Mart, milk, and your whole market basket. You also know that I point a finger at the fed for printing money like there is no tomorrow as a primary reason for the inflation upon us. Of course, I have more then one finger, and though one or two of them are frequently occupied in a "salute" towards the Bush gang, there are enough left for pointing to some obvious other reasons for the inflationary forces in the world today. For example: growing demand, especially from emerging markets in China, SE Asia, Eastern Europe, and India. On this one we really have no moral ground to whine or complain. We have pounded the pulpit on the principals of free markets at every moment we got, and quite justifiably so in my opinion. So it is very much the time to start pounding on the pulpit of conservation as opposed to criticizing.

In a previous post I mention how Chinese drivers get a break in gasoline prices via government subsidies. While that isn't equitable, we should note too that China's spending power has been growing (7.5% vs. the USD over the last 12 months even as it is kept artificially low against the dollar). To add a little paradox to this whole unfolding drama, China drivers are emulating the U.S. consumer's "who cares" attitude about consumption.

"Apparently wealthy, hip Chinese urbanites want to own... Hummers. Beijing Auto rolled out its own version, called the Trojan. And SUV imports from traditional luxury carmakers BMW, Porsche, Lexus, and Cadillac hit record levels in 2007. Chinese demand for SUVs began to show serious momentum in 2003 – sales doubled to 200,000 that year. The industry has enjoyed double-digit growth every year since, with 370,000 of the behemoths sold in 2007. One of the iconic images of America for the last decade has been the big, glittery SUV. Now wealthy Chinese people want to live like Westerners. Demand for big cars fuels demand for oil – China's consumption grows about 8% per year. In addition, the government subsidizes gasoline, so prices are nearly 40% lower than here in the U.S. Of course, we hardly ever admit to our errors, especially our most egregious ones. Everybody wants to blame "greedy" oil companies for high gas prices... but the real reason is our TV shows. All that TV we exported for the past 10 years showed the world how we live and, more importantly, what we drive. So don't blame ExxonMobil for high oil prices, blame MTV."
- Stansberry Associates "S&A Digest", June 19th, 2008

Bush and the 9th inning "swing away":
I wonder how many more last reprehensible acts of greed, in lieu of leadership, Bush plans to commit like this one? The Big Pander to Big Oil

The president, seeking to put political pressure on the Democratic-run congress in an election year plagued by soaring gasoline prices, called Wednesday for lifting federal bans on offshore oil drilling and other measures to boost oil production.
I assume Bush is leaping on this one because 1) he has a curriculum vitae of succesfully exploiting fear...why not again? -- and -- 2) it plays well at home which is where he is headed.

I should stipulate that it is scary. If you want to gain an understanding of how scary it is you should read about "Peak Oil". The Association for the Study of Peak Oil and Gas (ASPO) predicted in their January 2008 newsletter that the peak in all oil (including non-conventional sources), would occur in 2010. Meanwhile, world demand for oil is projected to increase 37% over 2006 levels by 2030, according to the US-based Energy Information Administration's (EIA) annual report. But the administration's latest adventure is appalling.

Fear. I can dig it. Fear makes me do lots of things. To date however, those things have been self preserving, not suicidal or criminal.

That same report quoted above states that steps to reduce consumption and increase adoption of sustainable alternatives would take ten years. Elsewhere I've read credible opinions stating that it will take twenty years. China consumerism nothwithstanding, we are already seeing some hopeful signs of reduced demand.

I think that if I were president I would be leading the charge in that effort, or at least cheer-leading it. I would, for example, be working closely with lawmakers to up the ante on developing alternatives. I would also be moving to secure existing reserves within the Northern hemisphere and especially work with our neighbors to the North to assure access to the oil rich deposits there. we are doing that already by the way. Our relationships with Canada have never been more sound. I would also be commissioning a better understanding of the carbon account associated with that oil (the main reserves there are in oil sands with a larger cost of recovery, especially the cost in emissions. Greenhouse gas (GHG) emissions during production are 3-4 times the amount produced in a conventional oilfield. This is comparably true of America's own shale bound oil reserves in Colorado. However, estimates are such that we might be able to manage recovery at rates, and with methods that are less costly to the environment then originally thought. it bears close watching, but certainly by someone other then this adminstration. Just for an example, the amount of water required to produce a barrel of oil from the oil sands in Canada has been halved from 5 barrels to 2.4. Most of the tar/oil sands developments have been based on steam assisted recovery processes rather then mining. (That results in a footprint that is the same is a conventional oil field operation.) In addition, investment in carbon capture and sequestrian storage (CCS) technology has been dramatically stepped up and is based on proven technology which is not new.As much as 90% of greenhouse gases can be recovered in this way.

We do not need to unleash off-shore drilling. Eighty percent of off-shore reserves are already accessible to the oil drillers. This is absolutely nothing more then a ninth inning "swing away" to grab as much access for cronies as is possible before the fat lady sings. (God bless her).

I guess one good thing out of this is that we all had the chance to see how quickly McCain jumped on this idea. Any thinking person now understands where his heart (and sense of pocketbook) lies relative to our natural resources. Not that we didn't have plenty of clues before.

We are simply and imperatively driven to rush development of alternative fuels and reduced consumption. Please, go tell your representatives to tell Bush and his cronies to forget about it. No late night raids on the fridge.

Late bulletin: This just in: Deals With Iraq Are Set to Bring Oil Giants Back
The whole world will hold the U.S. in scorn for this travesty as well as so many more. I cannot recognize my country anymore, so profound are the changes in our spirits and our mores. From direct anecdotes I can tell you that the world laughed at us for making such a big deal out of Clinton's sexual peccadiloes and are absolutely stunned by our cavalier attitude towards Bush.

Saturday, June 14, 2008

Follow up to "The Party Is Over" and Turkey Soup

Since writing "the party is over" I cannot help but see story after story that is related to my primary thesis that we must reduce our consumption. Here are a few of the stories:

China clearly overtakes U.S. as leading emitter of climate-warming gases
Herald Tribune -China has now clearly overtaken the United States as the world's leading emitter of climate-warming gases, a new study has found. The increasing emissions from China - up 8 percent in the past year - accounted for two-thirds of the growth in global greenhouse gas emissions in 2007, the study found.The report, released Friday by the Netherlands Environmental Assessment Agency, is an annual study. Last year, for the first time, the researchers found that China had edged ahead of the United States as the world's leading emitter.... for complete story click here

Floods could reduce corn supplies, raise prices
AP - Floods that have inundated the Midwest could reduce world corn supplies and drive food prices higher at a time when Americans are already stretching their grocery budgets and people in poor countries have rioted over rising food costs. The U.S. government will report later this month on how many acres of corn were lost to floodwaters. But farmers and agriculture experts already say the toll appears grim, with thousands of acres probably destroyed in the region that grows most of the world's corn....for complete story click here

Corn is just one of the commodities that has risen alarmingly. Just look at the chart below. Now it looks like it will be impacted further by the inclement weather in the midewest, itself just one more example of weather extremes as the globe reacts to the greemhouse gases mentioned above.Corn soared 11% this week as a result of the Midwest flooding.

G8 concerned over oil, food prices, calls for analysis
Osaka, Japan - Rising oil and commodity prices were threatening global economy growth, the finance ministers of the Group of Eight (G8) said Saturday but delayed concrete measures until further analysis of factors contributing to the price hikes.
'Elevated commodity prices, especially of oil and food, pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and may increase global inflationary pressure,' the G8 finance ministers said after concluding their meeting in Osaka, Japan. Foreign exchange issues and interest rates were however not discussed during the two-day talks, Japanese Finance Minster Fukushiro Nukaga said.'We did not talk about it,' he said, but added the topic was raised during bilateral meetings... for the complete story click here

Turkey Soup
On a personal note: Still thinking in terms of frugality I pulled out the Christmas turkey carcass and made 2 gallons of turkey stock that is out of this world delicious. Freezing most of it in zip lock bags, I saved enough to make perfect turkey soup for our meal tonight. It was good enough for seconds, which both Veronica and I did. We have enough stock to make a couple of more batches. My secret for the stock? Never boil...only simmer. Add generous helpings of herbs provencale, whole garlic gloves, a dollop of whole peppercorns, and a pinch of old ginger along with carrots, onions, and celery. Be sure to remove the bones after an hour of simmering to take of the met that is still clinging there. (We don't use it in the soup. Local taste doesn't care for dry meat, so I harvested the bits to mix up with sweet pickle and mayonaisse for turkey salad sandwiches.) After removing the meat from the bones I break them before they go back into the pot for three more hours of simmmering. I then strain the stock through a sieve and toss out the now thoroughly leeched vegetables and bare bones. Cooling the stock is important for one more cleaning step of skimming excess fat from the surface after cooling. Today we put carrots, celery, onions, rice, and chicken in the stock for a great soup this evening.

Wednesday, June 11, 2008

The party is over

Probably all of us watched, fascinated, as the primary debates rolled out over the last year. It almost seems superfluous now with the two candidates all but selected and ratified by their respective party conventions. Now we are anticipating the greater debates between the two candidates. However, another debate has been accelerating that revolves around issue that has a more direct and far reaching impact on all of us. I refer to the debate over whether oil and other commodity prices in general, have risen so dramatically because of rising demand or has it been a result of investment speculation. The answer and possible solutions take on a sense of urgency that is as great an imperative as our generation has ever faced. To the extent that there are two sides of this debate, they both present equally compelling arguments. In the end, the answer is the proverbial "yes". It is due to both. But that is the simplest of answers.

Historically and as recently as the 1980s there were commodity speculation rules that tended to inhibit the potential for volatility. Then, as post cold war expansion began, deregulation, that great tool of free market aficionados began in earnest. Deregulation reached full tilt in the nineties. Companies grew, payrolls grew, emerging markets grew, and new waves of middle class consumers grew at enormous rates. Trade and development economists preached the wonders of open markets, unfettered production, and industrialization. The World Bank and International Monetary Fund conditioned loan policies on the elimination of government intervention in markets. Global commodity agreements, price supports, and other mechanisms which helped keep global supplies and prices stable were dismantled. The World Trade Organization's Agreement on Agriculture, together with multi-lateral and bilateral agreements including the North American Free Trade Agreement (NAFTA), slashed agricultural tariffs in the developing world, and opened up markets for a growing global agribusiness industry.

In many countries today, the price of gasoline and other petroleum products are controlled, and subsidies are provided, designed to cushion consumers and businesses from rapid swings in the market price. One can well imagine the importance of these subsidies in rapidly emerging markets such as are here in SE Asia and China. In China today drivers pay roughly half what the American consumer pays for gasoline.

However, as oil reached a recent pinnacle of $140 per barrel many of these subsidies have fallen under the sheer weight of it all. In addition, while some regulation on trading still exists in the United States, traders easily move across borders to unregulated markets to keep the bubble aloft, or so some would have us think. Those who believe that market speculation and even manipulation are the causal root for the painful price we are seeing at the pumps point to the growing gap between the wealthy and the not so wealthy. They argue, convincingly, that the speculation, now doing so much damage at America’s gas pumps, comes mostly out of hedge funds, those uber-funds open only to the deepest pocketed investors. Hedge funds, for the most part, are free to invest in anything they like. This special status largely frees them from any federal financial oversight and regulation. To be sure, some $260 billion is invested in commodity funds today, 20 times the level of 2003. But a recent Economist article shows that there is far more to this story.

"Surely all that hot money has supercharged the demand for oil? But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of “paper barrels”, but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding."

Big-Business-Conspiracy theorists have also singled out the oil companies, charging them with withholding supplies, in hopes of selling at a better price later. They point to the lack of increased output without acknowledging that the world's refineries are in similar shape to America's highways, bridges, and other key infrastructure. We missed our chance for investment in greater output from refineries during and immediately after the effects of the 1970 oil embargo. In that regard the oil companies have been remiss. Another factor is that notably, when prices are high, the more efficient Western firms are kicked out of countries newly asserting their sovereign rights. The result is often less efficient production as has been true in Russia and Venezuela for example.

But issues surrounding increased oil production and refinery output are not just limited to precipitous behavior on the part of sovereigns. Once oil prices went beyond $70.00 per barrel, the recovery of it from deep deposits embedded in sands and shale has kicked in. Notable, the Athabasca oil sands in Canada offer huge reserves. The problem is that in order to recover these deposits, vast quantities of steam must be injected deep in the earth to percolate the oil up. The resulting sludge then requires several more steps of processing before shipping to refineries. Separating petroleum from sand burns so much natural gas that the enterprise is becoming the largest source of greenhouse gas emissions growth in Canada. The oil sands lie within a major intact ecosystem, the boreal forest covering almost a third of Canada's land mass. The carbon footprint of operations such as described is enormous. More greenhouse gases, more impact on global warming, more cycles of floods and drought, more negative impact on food grain production. All this so we can drive an SUV?

Demand seems to be the one area where we, as individuals can have the greatest impact. Here in Malaysia, subsidies ended last weekend and the price of gasoline rose 40% overnight. Not surprisingly there has been a marked and noticeable decrease in traffic. One would hope that something similar will occur, or is occurring in the U.S. as prices rise to as much as $4.00 per gallon. While we may expect subsidies to begin to topple all over the world, we should be mindful that roughly half the world's population enjoys fuel consumption at subsidized prices today. Remove the pain of consumption and guess what... In this regard I expect that subsidies are the next shoe to fall on the already hard hit consumer, but no pain, no gain as they say.

Much has been written about the rising demand coming from emerging markets such as China. To be sure, China today is second behind the United States in consumption, but it is a far second. Following is a list of the top ten oil consumer countries in the world today:
#1 United States: 20,730,000 bbl/day
#2 China: 6,534,000 bbl/day
#3 Japan: 5,578,000 bbl/day
#4 Germany: 2,650,000 bbl/day
#5 Russia: 2,500,000 bbl/day
#6 India: 2,450,000 bbl/day
#7 Canada: 2,294,000 bbl/day
#8 Korea, South: 2,149,000 bbl/day
#9 Brazil: 2,100,000 bbl/day
#10 France: 1,970,000 bbl/day

China consumes a third of the amount of oil that is consumed in the states. Nevertheless, those subsidies in China largely favor the wealthiest citizens who drive cars. In America, we are thrust into the "free market" white water, allowed to sink or swim on our own. Fair? Probably not. still, we are faced with a bill demanding piper that cannot be avoided.

As onerous as it is for Americans to bear $4-a-gallon gasoline, the earliest results are somewhat encouraging. Mass transit use is way up and oil demand is falling per the most recent figures. For the first time since 1979, the number of miles driven has dropped. And General Motors is weighing an end to production of the granddaddy of guzzlers, the Hummer, as buyers flee such vehicles. But we have far to go before we can celebrate the decline of the Hummer, no matter how iconic it is. The truth is we are already faced with a crisis of starvation and irreversible damage to the ecology of our planet.

There is another vital factor in the rise of oil prices. Oil is traded globally in dollar denominations. The dollar, as everyone knows, has fallen dramatically in value, the result of a misguided Fed policy to pump more liquidity into markets to keep the dream going as well as profligate spending on everything from large flat panel TVs to Bush's war machine. Remember, since the beginning of the new millennium, we've witnessed one bubble after another. First we watched the Internet/Tech implosion that dramatically removed billions in hyper inflated equity from markets all over the world. Next, as we have painfully seen, credit markets and housing became the darling of investors, and the air pumps cranked away 24/7. People took second and third re-fi loans at ridiculously easy start terms. Houses in hot markets saw valuations rise 2 and 3 fold. The world partied on. That is until the popping noises began. If you stop to listen, you'll still hear them. The mortgage crisis, has evolved into a full blown credit crisis, rattling the foundations of the world's largest financial institutions. Just yesterday a headline suggested that we still have billions of write downs to go before the dust will settle on this one.

Something that must be mentioned about higher commodity prices. Deregulation, a primary enabler of globalization, has not just been prevalent in the oil trade. In all sectors, cross border economic controls have been lifted. The result has been another gorging feast and all commodities have been the subject of the next wave of bubble blowing. Who benefits? Not you and I, as we face higher and higher costs with shriveling dollars. Everything from metals to cattle feed, to basic starches such as rice and wheat, are rising much faster then the average consumer can absorb.

The problem with booms is they're inevitably followed by busts. What we're seeing right now -- skyrocketing food prices and growing hunger -- are still the effects of the boom. If the weather turns bad, as it has in the Midwest and in Africa, in fact...everywhere (think global warming) commodity prices could still double over the next...who knows how long. But with the stability of the food and agriculture system left up to the whims of mother nature's next crop yield, or how Cargill, ADM and the venture capitalists spin the roulette wheel, the bust is well in the making.
While farmers in the U.S. may have seen the price for a bushel of corn go from $2 to $6 in the last couple of years, their inputs, everything from seeds to fertilizer to diesel for tractors, have also multiplied, significantly deflating any increase in income. The difference between a short windfall and long term profit shift is being able to pass on price increases to consumers, something only the big guys have the market power to do. Cargill's third-quarter profits have increased over 86%. General Mills' are up 61%, and Monsanto's are up 45%.

If the rural farm economy tanks, we'll see farm foreclosures, another banking crisis, and global hunger that will make the sub-prime mortgage effects look like a drop in the bucket. Keep in mind, when a housing bubble inflates till it pops, people lose their homes. But when a food bubble grows, people starve. At the recent U.N. food summit in Rome, the statistics were given that 850 million people are already short of food and rapidly rising prices could push up to 130 million more into the hunger trap.

In my mind there is only one answer to the dilemma before us. We are squarely in a time when we all need to cinch our belts a notch or more. It has never been more vital. Regardless of how 'wealthy" you feel, reducing your personal carbon footprint, your personal consumption of natural resources has never been more of an imperative. It is also time for us to be more generous in our giving. And if you feel that a big car, and the latest in consumer gadgets, and consumption of champagne is important to your sense of self esteem, better quickly learn to get over it. We should be reminded that within six months after the attack on Pearl Harbor, Detroit had been retooled to the production of war machines. Three years later we had routed, along with our vital allies, both the German and Japanese war machines. Such resolve and self sacrifice should be easily directed to non military spending. Is it time to plant "victory" gardens as Americans did during WWII? Maybe so, but be careful of salmonella laced tomatoes and spinach. If it isn't one thing, its another.