....as if we needed another one. This time it is food....
WHAT HAS the food crisis got to do with Northern Rock? Quite a lot, actually. The rocketing price of wheat, soya beans, sugar, coffee etc is all part of the credit crisis which has caused panic in financial markets and encouraged investors to take their money out of risky mortgage bonds and shaky equities and put it into commodities as "stores of value". Put another way, the Western banks are exporting their debts to the third world.
The phenomenal increases in food prices are only in part a consequence of climate change and population. Most of the recent rises have been the result of speculation and the collapse in the value of the dollar. This is being tacitly encouraged by the central banks, such as the US Federal Reserve, who are trying to ignite another asset bubble to replace the real estate and dotcom bubbles which have burst in spectacular fashion. It's the third bubble and it's hitting the third world hard.
Desperate for quick returns, trillions of dollars are being taken out of private equity and financial derivatives and ploughed into food and raw materials. The financial websites call it the "commodities super-cycle". It ranges from precious metals at one end, to corn, cocoa and cattle at the other - speculators are even placing their bets on water prices.
The collapse in the price of the dollar means that most international commodities are more expensive for poor people. The dollar's decline is a result of the low interest rate policy of the Federal Reserve. When rates are set below the rate of inflation, investors have to keep moving their massive funds from sector to sector in search of higher returns
What took the feds so long?
WASHINGTON — Federal agencies have opened a criminal inquiry into Countrywide Financial for suspected securities fraud as part of the continuing fallout over the mortgage crisis, government officials with knowledge of the case said on Saturday.
The Justice Department and the Federal Bureau of Investigation are looking at whether officials at Countrywide, the nation’s largest mortgage lender, misrepresented its financial condition and the soundness of its loans in security filings, the officials said.
The investigation — first reported on Saturday in The Wall Street Journal — is at an early stage, said the officials, who spoke on the condition of anonymity because they were not authorized to discuss ongoing criminal matters. It is unclear whether anyone will ultimately be charged with a crime.
Richard Kolko, a spokesman for the F.B.I., declined on Saturday to confirm whether the agency had started an investigation of Countrywide related to its securities filings. A Countrywide spokeswoman, Susan Martin, said, “We are not aware of any such investigation.”
Outsourcing gone mad....
It seems that you can speculate on just about everything - even graves. Recently, China has been afflicted by get-rich-quick graveyard scams. Firms offered investors the opportunity to buy up lots of graves in the hope that prices would increase.
However, the grave yard bubble may be about to burst. The authorities have decided to clamp down on the cemetery speculators. Nevertheless, the grim reaper remains unperturbed. He marches on as he always did....
(BBC News) Inch for inch in China, it often costs more to be buried in a piece of land, than it does to actually live on it. So, inevitably, China has its own get-rich-quick-with-a-grave scheme.
Wang Peng is among those who have lost their life savings The idea is this - you buy up loads of empty plots, their value increases, and then you sell them off at a profit. Companies have released promotional videos promising investors a quick return on their money.
One video shows a beautiful cemetery, lined with temples. All you have to do - the company promises - is buy some empty graves, wait a while, sell them off. And make a safe and easy profit. A solid-looking deputy mayor sitting behind an equally solid looking desk is shown in one video - reassuring ordinary people that buying up stacks of graves is a good idea. But for many investors it has all gone wrong.
At his apartment in Beijing, Wang Peng searches for the certificates he has locked in a cupboard - he does not want his four-year-old granddaughter to find them and scribble on them. The certificates show that he bought 24 empty plots in a cemetery called Spiritual Spring.
These pieces of paper are all that Mr Wang has to show for his family's entire life savings - more than £10,000. But the company has never delivered. And the certificates are worthless.
"I will never forgive them," he says, "because they cheated me badly". "They made me lose all my life-savings. I am having such a difficult time right now. Why should I forgive them? "They should return our money. You can't treat us ordinary people this way."
Here is a much-underpublicised story. Radi al-Radhi, head of the Iraqi anti-corruption committee said, “The estimated value of the wasted sum because of administrative and financial corruption is eight billion dollars,"
Radhi blamed the constitution for some of the funds lost; saying one of the clauses in the Iraqi law blocked the launching of legal action against government employees. "Article 136 B stipulates that no civil servant should be sent for trial before the consent of his minister," the statement quoted Radhi as saying. The article was obstructing investigations into the "lost money". So the wonderful Iraqi constitution has a clause to protect rotton and corrupt government officials.
Radhi also said that his panel was investigating around 180 employees of the oil ministry in the southern port city of Basra following reports of corruption.
If only that $8 billion were available to bail out the sub-prime lenders.
Hey! You've won a ride back to the top
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