"The Growing International Commodity Crises"
President Barack Obama’s State of the Union address was full of optimism and conviction about the future. That optimism will be greatly needed in the months and years ahead, as the global problems left unaddressed by our political system continue to build. Unfortunately, the president failed to discuss those threats, not even mentioning global warming once.
Even with the meltdown of the global economy in 2008 due to unregulated banking, the financial industry has remained largely untouched. Even with the devastation of New Orleans, Nashville, Pakistan, Russia, Australia, and points all over the world by climate disasters, with repeated oil and coal disasters, the fossil fuel industry has remained ascendant. Professor Michael Klare, writing at the Tom Dispatch, warns that “2011 could be the year of living dangerously“:
It’s not surprising then that food and energy experts are beginning to warn that 2011 could be the year of living dangerously — and so could 2012, 2013, and on into the future. Add to the soaring cost of the grains that keep so many impoverished people alive a comparable rise in oil prices — again nearing levels not seen since the peak months of 2008 — and you can already hear the first rumblings about the tenuous economic recovery being in danger of imminent collapse. Think of those rising energy prices as adding further fuel to global discontent.
Klare describes in stark detail how the destablization of our climate system is striking repeated blows to food production around the globe, driving prices:
Analysts attribute the rise in grain prices to growing demand in both developed and developing nations, along with a number of cataclysmic weather-related events and speculation by investors. An extreme drought and fierce fires last summer destroyed a large percentage of the wheat crop in Russia and Ukraine, while heavy flooding in India and the inundation of 20% of Pakistan damaged significant parts of the grain output of those countries. At the same time, unusually hot and dry weather suppressed production in a number of other key farming areas.
What makes the picture look so worrisome today are indications that the severity and frequency of extreme weather events appear to be on the rise. In the past few weeks alone, several such events point the way to serious supply problems ahead. Most significant has been the unprecedented rainfall and flooding in Australia that put an area more than twice the size of California largely underwater, significantly disrupting wheat cultivation there. Australia is one of the world’s leading wheat producers. Unusually dry conditions in the American Midwest and Argentina have also hinted at future problems in grain and corn output. It’s still too early to predict the size of this year’s grain and corn harvests, but many analysts are warning of a shortfall in supplies, along with sky-high prices.
Furthermore, as financial analysts of various stripes are warning, investors are flooding into commodities in the “inflation trade.” Efforts to even begin to expose the operations of these trillion-dollar financial flows are still at least a year away. “The Commodity Futures Trading Commission may not complete limits on commodity speculation until the first quarter of next year, according to a filing on the agency’s website,” Bloomberg reports.
The coming year is likely to bring extreme threats to the American economic recovery, in the form of whipsawing gas prices, food prices, and climate disasters, due to free markets grown cancerous. Winning this future will take more than optimism.