Global Economic News
Fertilizer Hyperinflation Fuels Food Crisis
April 20 (EIRNS)A major factor in the food crisis, but one little talked about, is the spike of fertilizer prices in the last year. By January 2008, aggregate fertilizer prices had jumped 200% for the world, according to the International Center for Soil Fertility and Agricultural Development (IFDC).
Not only are grain supplies at critically low levels, while grain prices are moving out of reach. But farmers in the developing world cannot even plant more to ease the situation, according to the World Food Program (WFP), because they can't afford fertilizer. The WFP has noted a paradoxical recent drop in crop planting in Africa, even while crop prices increase.
The IFDC attributes the spike in fertilizer prices to Western nations planting fertilizer-hungry corn for biofuels production. Further, the main input for nitrogen-based fertilizers is natural gas, which is not only expensive, but is increasingly being used to fill the infrastructure gap in electrical generation in countries from South Africa to the United States.
These competitions between energy and food productionnatural gas as a feedstock for fertilizer vs. electricity; corn as a feedstock for cars vs. humans and animals, are pushing the world to the brink of faminejust the scenario that the British-owned Al Gore and the green free traders relish.
Canada Pays Farmers To Cull Pigs, Claiming a 'Meat Glut'
April 21 (EIRNS)On April 14, amidst reports of the world food shortage, the government of Canada began its new "Cull Breeding Swine Program," claiming that farmers are facing low prices for their hogs, because there are too many being produced. The swine cull will pay farmers C$225 per head to kill off their breeding stock, and commit to an "empty barn" for three years. Using "markets" logic, the C$50 million program is aiming to shrink the Canadian adult breeding sow numbers by 10%, which then is supposed to drive up the price of pork. This kind of WTO-think is a ruse, covering for the breakdown in the food chain.
The reality is that family-scale farmers in both the U.S. and Canada are losing US$50 a head because of underpayment by the cartel processors, relative to the high feed costsmostly cornas well as fuel, and other costs, to produce the livestock. Meantime, the factory farms run by the transnationals, such as Smithfieldproducing over 20% of all U.S. hogscontinue.
There are reports that desperate farmers in Manitoba are gassing piglets to death, because they can't afford to feed and sell them. "It really goes against everything that a producer stands for," said Karl Kynock, chairman of the Manitoba Pork Council. "His mind-set for his whole life has been to raise food to supply people around the world ... and to care for animals in the best way possible."
This kind of destruction of food capacity was introduced as a standard part of the recommended farm policies of the 1980s-90s in the U.S.A., Canada, the EU, and elsewhere, under the excuse of "bringing markets into balance." The EU implemented quotas for milk and other goods, taxing farmers if they "overproduced." The U.S. implemented a sweeping dairy herd "buy-out," to drive out family-size dairy operations.
Bank of England a 'Giant Pawnbroker'
April 23 (EIRNS)The Bank of England is acting "just like a giant pawnbroker" for the banks, with its £50 billion scheme to deal with the frozen banking system, the Guardian's economics editor Larry Elliott said April 22. Under BoE governor Mervyn King's plan, commercial banks are being allowed to "trade in" their untradable mortgage-backed securities for government gilts (bonds) at a discount, and for a handling fee.
The banks will be taking a substantial "haircut" in the process, Elliott said, because the discount will be 20-30%. "So you see it is just like a giant pawnbroker," Elliott said in a Guardian interview. "You take your dodgy stuff to the pawnbroker, and he gives you something less than its market value," for some funds.
King came up with this scheme after the Bear Stearns debacle, Elliott said. It is a "pretty drastic" operation, with no precedent, but the "banking system is so fragile" and so loaded with "toxic waste" that it will be undertaken.
Italy's ENEL Ready To Build Nuclear Reactors
April 22 (EIRNS)CEO Fulvio Conti declared that ENEL, the Italian electricity producer, is ready to have operational nuclear plants in Italy in seven years. Conti plans three years for planning the projects and choice of sites, and 3-4 years for construction. A minimum of 4-5 plants, for a total of 5 GW, is necessary for the investment to be profitable, Conti told the daily Corriere della Sera.
The new Italian parliament, without the Green Party, makes the nuclear choice possible. ENEL already produces nuclear energy in Spain, Slovakia, and Romania, and is part of the French EPR project. Another potential investor is Edison, Italy's second electricity provider, which could enter into a consortium with ENEL.
Panic Spreading: Failing German Bank DHB 'Rescued'
April 23 (EIRNS)German private bank Düsseldorfer Hypobank (DHB), one of the 50 largest banks in Germany, went belly-up yesterday and was saved from failure only by the intervention of the private German Banking Security Fund, which took DHB over and will now try to find a buyer. DHB, a mid-sized bank with some $42 billion in assets, dealt mainly in Pfandbrief covered bonds, which until recently were considered safe. DHB joins IKB and Sachsen LB on the list of recent German bank rescues, but the problems run much deeper than have been revealed so far, and go much higher up the banking food-chain.