Letting Loose the Animal Spirit of Greed

Caught up in a SPIRIT of monetary war. A world monetary war, invisible in the world of media, up until now. The animal spirits of war include greed and the fight for survival on a very personal level. With concern over rising consumer prices.

Volatility. The distortions in the economy. In every economy. When all politics was local. Based upon the peripheral bond spreads, there was a forced restructuring announced today in Ireland. The peripheral bond spreads of Ireland and Germany, triggered by a currency collapse in Western Europe, will have the same effect on wages as the real estate bubble had on banks.

The conflict was between deflating economies in Western Europe and inflating economies in China and India. The Chinese central bank has “decided to fight forcefully” against the Fed’s easing, said Qu Hongbin to a reporter with the Bloomberg News Service. The co-head of Asian economic research at HSBC Holdings Plc in Hong Kong said reserve ratios may increase by at least another 2 percentage points over the next 12 months which would drain about $53 billion (350 billion yuan) now from the financial system, with anticipated moves over the months which QE2 is in affect to drain an additional $260 billion.

Ah, the steps to counter inflows of speculative money. Caught up in a spirit of globalization to move the dollar down, the need was based, according to the Congressional Budget Office, upon the cost of the unfunded $190 million a day war effort. With a running trade deficit in the United States, inflation has been 1.1 percent, compared with 2.7 percent when the year began. Although it had been written that the Fed’s QE2 move would indeed bring down the dollar, it was not happening at the start of this week, since the QE2 announcement.

Since the peg to the dollar was scrapped in June 2010, the yuan is up less than 3 percent. Interest rates along with cash reserves control credit growth. Caught up in the spirit of a monetary war, Chinese central bank has “decided to fight forcefully” against the Fed’s easing, in the ongoing monetary war, fought with every bit the intensity as the war effort in Afghanistan. For the fifth time this year, the government of China has ordered banks to step up liquidity management, by setting aside larger reserves.

Recent signs that the Chinese economy is maintaining momentum included the October 2010 trade surplus of $27 billion, seemingly which gave policy makers a confidence to keep tightening. China’s restraints on the yuan add to the build-up of cash, soon to become the world’s second largest economy. The International Monetary Fund has projected this economy would grow ten percent next year.

The UBS Bloomberg Constant Maturity Commodity Index surged more than 18 percent since August 27, 2010. Rising demand for oil and soybeans in China, as well as a drought in Russia has increased grain demand are combining to push prices higher for consumable commodities. As nations watch and try to control monetary policy.

Caught up in a SPIRIT of globalization to move toward “more market-determined exchange rate systems” and make efforts on “reducing excessive imbalances,” the story of 2011 was going to be about hunger. While Obama and his gang worried about health care, there seemed a sense of irony that the real story was going to be about hunger. The objective signs were beginning to appear.

Canada, a major exporter of wheat, expects the lowest wheat yields since 2002 because crops were destroyed by heavy rains or left unplanted. In Russia, weather conditions ravaged Russia’s grain plantations and a severe drought scorched one-fifth of Russia’s wheat farms, forcing the world’s number three producer to ban cereal exports. Wheat prices there hit a two-year high in August. Prices soared 42 per cent in July, in what analysts described as the highest monthly increase in at least 51 years. And in October, there was the quiet announcement of the lower than expected grain harvest in the United States.

The engine for the hyper-inflation with all the QE2 money was expected to be headed to China, as investors jump in, and animal spirits roar. U.S. companies are hoarding almost $1 trillion of cash. The Federal Reserve has more than $800 billion and will have $900 billion more, come June 2011. With all the profits of a successful QE2 to be turned over to the US Treasury. Greed turns heads, and prices go stratospheric. And so the price of gold.

And the Fed cannot continue its aggressive monetary policies forever, as seen in quantitative easing. Is the reduction of inflation the first sign of deflation HERE? Because inflation has been diminishing between March and October in the United States. Signs of deflation were the real concern for leaders of the major economies intent on their own immediate interests, of re-election. With money going into commodities like soybeans and corn, which have real value and people need to eat. Now!

Objective signs. Like the drought in Russia; the lower than expected harvest in the United States which has increased grain demand, combining to push prices higher for consumable commodities. Wheat, soybeans, corn are all up.

When prices go stratospheric, animal spirits roar. Was the concern about which countries would be able to afford food in the near future? When there were speculators hedging over futures contracts with their Blackberries, with a drought in Russia limiting grain supply, in a world with increased grain demand. Wheat, soybeans, corn are all up on the heals of QE2, along with human hunger. Because governments were always ruthless, acting on behalf of its people.

Like that old E.F. Hutton commercial, greed turns heads. In the allegedly gender-neutral western world with so much volatility. The animal spirits of women, of men, caught up in a spirit of what had been invisible hunger. Demanding some kind of transparency, so that greed might be controlled. The distortions in the economy are seen like on the isobars of weather maps, in the peripheral bond spreads, of Portugal, Greece, Spain, Italy, and Ireland — or just in the price of gold. The strong winds of monetary policy of other nations versus QE2. The changing pressures of the monetary barometer. The distortions, like an old playground game, seen in addressing what to do with the results of our fertility, and the fertility of the land.

Old stories about hunger, about fertility of the land. Stories about drought and famine, families and fertility fighting for survival on a very personal level. From generation to generation, “Mostly they are the same lives. The same stories, over and over,” wrote David Remnick, the editor of The New Yorker. Remnick had chronicled as a reporter for the Washington Post what had happened in Russia during the collapse of the Soviet Empire, along with the collapse of its currency. Real life stories where some folks left, and others stayed behind. It was always the hunger which sent people in one way or another in search. With ruthless governments demanding documents of people, concerning where they were born and how long they intended to stay. If they survived.


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2 comments so far

  1. Jibran Karachik on

    your blog is perfect,
    i like this paperless recusal.

    Karachi guest house

    Endorsed by the attorney-general

  2. paperlessworld on

    The Arab Spring began on December 10, 2010. It was how always bubbles end.

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