The road to hell

15 05 2008

by: Matthew von Abo

The world is speeding down dual carriage traffic-less freeways of uncertainty with severe and unrelenting twists and turns that punish the populace which cling to its surface. The world economy is slowing down to stagnation as the world credit crunch suffocates the banking and property sector. Global inflation is climbing at an unrelenting pace and the desperate search is on as an energy crisis looms. The castigate for the poor and ultimately all who live and breathe on this good earth will then be affected ultimately by potentially one of the greatest humanitarian predicaments imaginable: the dramatic upward swing in global food prices. According to the World Bank, the research analysts at Bloomberg and the World Food Program, global staple food prices have soared in recent history. For example rice which is considered one of the world’s staple food products and which fill the stomachs of over 3 billion people on a daily basis. It has increased by 74% between March 2007 and March 2008. But this pales in comparison to the tremendous increase in the price of wheat, which has increased as much as 130% in the one year. This crazed increase thereby helps drive the poverty cycle as poorer families will spend more than 80% of their income on food to sustain life. The global food crisis has been in latency over the last ten years and has presented itself as a fiendish spectre in present day. It is made up of multiple causes but all are integrally interrelated and reliant on one another. Firstly it starts at the rise of fuel prices. In the past 4 years oil has jumped from an average of $25 a barrel to a present day price of $124.13 (15 May 2008- Bloomberg) a barrel. The mechanisms of food production within modern society are completely dependant on energy provided by oil products; this starts from fertilizers to ploughing to sowing to reaping to packaging to transport and many more activities. The next is an unprecedented rise of the emerging economies of China, India and Brazil. These countries have received near exponential growth in the past few years which have soaked up energy resources and inevitably food. With this sudden growth, consumption habits have changed as the population of these respective countries have climbed the class ladder. According to the Food and Agricultural Organisation the meat consumption in China has increased 20 Kilograms from 1980 to 50 Kilograms per capita in 2007. It requires a massive amount of resources for meat production, e.g. as much as 13 000 litres of water are needed to produce one kilogram of beef. The next cause is that related to the previous two; global climate change. Climatic instability has destroyed crops and has plunged regions of the world into weather extremes which are only expected to intensify, thereby forcing yet another surge in food prices. Ultimately, the fourth cause which is considered the saviour of the planet as a viable green energy source; Bio-fuels. Bio-fuel is now a preferred crop over food production in the developed world, as the global energy crisis’s shadow only intensifies. Rising oil prices and fears over climate change have seen a massive rise in the use of maize to make bio-fuels thereby pushing up food prices even further. According to the World Bank, more than 40% of maize grown in the United States is now used for fuel. A United Nations envoy called “bio-fuels a crime against humanity”. In essence food that can be used to alleviate the supply/demand issue is rather used to jump-start the ailing world economy and soothe the guilt over climate change. These four contributing factors, which can be likened to the four horsemen of the apocalypse, are dragging the world into unfamiliar territory. No longer is it just the sole concern of the nation state; it is now a global issue. An issue which can very quickly grow out of control.

food costsfood protestfood

Déjà vu? How history repeats itself.

10 04 2008

By Fatz

I can still quite clearly remember my history lessons in school (that’s probably because it wasn’t that long ago) where we studied The Great Depression in the U.S and its effects on the rest of the world. I even remember a cartoon representation in a textbook showing a German man using money to make himself a fire because it was completely worthless to him.

Being a history student at heart (perhaps even more so than I am a journalism student) I know we often see history as being about ‘them’, and never us. We see it as the study of the people of the past, their suffering, their wars, their actions- and not often do we think about our suffering, our wars, our actions.

I was doing my daily news check up on the net the other day and came across an article about… wait for it… impending doom! (If you’re a regular reader of my blog posts you would have by now discovered my love for melodramatics).

By impending doom, I’m referring to the expected ‘mild recession’ of the American economy with America’s mortgage crisis spiralling into “the largest financial shock since the Great Depression”. There is mounting pessimism about the ability of the rest of the world to escape unscathed. The IMF expects world economic growth to slow to 3.7% over the next two years- and this is their optimistic estimate. Apparently (forgive me, I’m not much of a numbers girl) if this figure drops to below 3% there’s a 1 in 4 chance of a global economic recession (just to give you better perspective on this, you also have a 1 in 4 chance of being a victim of online virus and other internet threats.)

How this will affect our rate of growth of exports is quite obvious- The rate of growth of imports into wealthy nations is expected to drop sharply, leading to a cut in the rate of growth of exports by developing countries (ie. us).

What are the implications of this financial mumbo jumbo? Who will suffer? Certainly not Eskom’s directors (I’m still reeling from the shock of their bonuses). The working class, your average Joe, his wife and his three kids. Those are the people who will have to deal with inflated food costs and with the Credit Act (despite its perhaps honourable intentions) making it increasingly difficult for people to get home loans, Joe’s also gotta worry about putting a roof over their heads.

Here’s what happened in my brain when I was reading the article: I imagined us burning our paper money to make fires, then I thought about the Zimbabwean dollar which could already be used for this purpose, then I thought about cheese (I was hungry), realised that the price of dairy products have sky rocketed, and then I remembered the bread cost saga and a whole chain of neurons (or whatever they are) went firing off in my brain! Is it just déjà vu or have we seen this all before? In a different era, under different circumstances, in a history textbook I used in school?? Ok, so maybe we’re not facing an economic recession comparable to that of The Great Depression, but what is repeated is that it’s the same class of individuals who will bear the brunt of it. Economic inequalities have haunted our past and still are a reality today.

But what do we do? How do we protect Joe and his family? Not an easily answered question. I’m siding with the director of the International Labour Organisation (ILO) who says that what we need is to “find a better balance between the democratic voice of society, the productive dynamic of the market and the regulatory function of the state”. Whatever that means.

So it’s confirmed then, history does indeed repeat itself. You would assume that the logical conclusion is to learn from our fellow homo sapiens mistakes. HA! If only we were logical. This week was the 5 year anniversary of the day the late Saddam Hussein’s statue was toppled by U.S forces in Baghdad. An event which will feature in the history books my children will one day study from. And maybe they (if they get their mothers brain) will consider the same things I am: about the past, about our actions and about cheese (sorry, I’m still hungry).

the great depressionburning moneysaddam statuecheese