The Grains market went ballistic today. The USDA slashed end of year inventory (the food supply's margin of error) to the lowest level in 16 years (in the end, my bet is it will the lowest level, EVER).
To you doomers:
No, this does not mean food shortages (at least not right away, and not here in the U.S. I would not want to be living in a Pakistan, Sudan, or Egypt...). It does mean that the 2011 crop has ZERO margin for error. If the U.S. experiences some kind of extreme weather phenomenon in the Corn producing regions next year... there will STILL not be a food shortage (well, unless we have weather on par with 1936... then we would be in some deep doodoo). There WILL BE a gasoline shortage, though. The U.S. consumes over 42% of its corn crop to produce ethanol - so the slack would have to come from there... and, given that ethanol provides roughly 10% of the U.S. consumption of gasoline BY VOLUME... something would have to give... but I do need to noodle this some more...
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The Fed and U.S. Treasury seem hell bent on bringing the US$ to its knees. I am not sure what they have in mind and what they hope the outcome is... but it is a fascinating time to be alive... and at this moment they are "in for a penny, in for a pound"... today's unemployment number was horrific, and the data upcoming for at least a couple of quarters are going to be ugly - so the equity market bid up prices in anticipation of QE2. The market must have missed class the day they covered the "Broken Window Fallacy" in Eco 101.
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Bank of America halted foreclosure sales in all 50 states today. The other big banks are not far behind. What a windfall for the irresponsible! And what a disaster for the modest, frugal, rational folks that kept their debt levels in order. Politicians are tripping all over each other trying to enact some kind of moratorium... be careful what you ask for, you might just get it. Any foreclosure moratorium would drop the housing market and economy to its knees... and they might not be able to get the whole debt slave thing going again, or at least for quite some time.
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