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One outcome of the G-20 meeting (as I wrote yesterday)
was an agreement to earmark as much as $1 trillion for developing
countries, where the economic crisis is having a life-threatening
impact. This figure is in line with what the United Nations estimates is needed to "buffer the blows of the global downturn on the most vulnerable."
One outcome of the G-20 meeting (as I wrote yesterday)
was an agreement to earmark as much as $1 trillion for developing
countries, where the economic crisis is having a life-threatening
impact. This figure is in line with what the United Nations estimates is needed to "buffer the blows of the global downturn on the most vulnerable."
In fact, $1 trillion is the least the rich countries owe to the
poor, considering the chaos and suffering our own economic policies and
practices have brought upon them. In part, the additional hardships now
being experienced by the developing nations result from the
recession trickling down in a way that wealth never seems to do. But
there's more to the story than this.
Some of the heightened suffering in the
developing world can be traced back to the Clinton and Bush
administrations, when a series of legislative and regulatory changes
paved the way for rampant speculation on the commodities market. What
happened next is explained in a report by
the Minneapolis-based Institute for Agriculture and Trade Policy
(IATP), the most comprehensive source of information on this subject.
Wall Street went to work and bundled
together groups of commodities futures-everything from oil to copper to
basic staples like corn, wheat, rice, and soybeans-into commodity index
funds, similar to what you find in the mutual fund business. The
subsequent explosion of buying and selling by a handful of Wall Street
firms (led by Goldman Sachs and AIG) ran the prices of different
commodities up and down with little relation to any actual market or to
the so-called laws of supply and demand. (James Galbraith describes the
process in detail here.)
In the five years leading up to the
recession, commodity index speculation increased by 1900 percent. In
this way, Wall Street not only pushed the price of oil through the
roof, but directly caused skyrocketing food prices and food shortages
around the world. In short, the IATP report concludes:
U.S. government deregulatory steps opened the door for
large financial services speculators to make huge "bets" that
destabilized the structure of agriculture commodity markets. According
to the United Nations, global food prices rose an estimated 85 percent
between April 2007 and April 2008. Prices rose for wheat (60 percent),
corn (30 percent) and soybeans (40 percent) beyond what could be
explained by supply, demand and other fundamental factors, according to
the report.
For people in the poorest countries, these changes sometimes meant
the difference between subsistence and starvation: In 2007, according
to the UN Food and Agricultural Organization (FAO), an "estimated 75
million people were added to the 850 million already defined as
under-nourished and food insecure."
In view of all this, the United States and the other wealthy nations
that dominate the world economy owe the developing world more than a
bailout (which would in any case amount to a fraction of what we're
giving to the very financial institutions that added to world hunger
for the sake of profits). We also owe them a reformed global financial
system that will prevent such travesties from happening again.
But it doesn't look like those reforms will be happening any time
soon. Bills to regulate commodities exchanges have been floated in both
houses of Congress, but according to the IATP,
they are progressing slowly and leave a lot to be desired. President
Obama's nominee to the Commodity Futures Trading Commission, Gary
Gensler, is a former Goldman Sachs executive who, while working in
Clinton's Treasury Department, backed the very deregulatory moves that
allowed commodity speculation to run wild in the first place (as exposed in Mother Jones last year). Senator Bernie Sanders is seeking to block Gensler's nomination for this reason.
And on the international level, as IATP pointed out in
the runup to the G-20, regulation of commodities exchanges was a
subject conspicuously absent from the meeting's agenda-despite its
potential life-and-death impact on food and energy security worldwide.
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One outcome of the G-20 meeting (as I wrote yesterday)
was an agreement to earmark as much as $1 trillion for developing
countries, where the economic crisis is having a life-threatening
impact. This figure is in line with what the United Nations estimates is needed to "buffer the blows of the global downturn on the most vulnerable."
In fact, $1 trillion is the least the rich countries owe to the
poor, considering the chaos and suffering our own economic policies and
practices have brought upon them. In part, the additional hardships now
being experienced by the developing nations result from the
recession trickling down in a way that wealth never seems to do. But
there's more to the story than this.
Some of the heightened suffering in the
developing world can be traced back to the Clinton and Bush
administrations, when a series of legislative and regulatory changes
paved the way for rampant speculation on the commodities market. What
happened next is explained in a report by
the Minneapolis-based Institute for Agriculture and Trade Policy
(IATP), the most comprehensive source of information on this subject.
Wall Street went to work and bundled
together groups of commodities futures-everything from oil to copper to
basic staples like corn, wheat, rice, and soybeans-into commodity index
funds, similar to what you find in the mutual fund business. The
subsequent explosion of buying and selling by a handful of Wall Street
firms (led by Goldman Sachs and AIG) ran the prices of different
commodities up and down with little relation to any actual market or to
the so-called laws of supply and demand. (James Galbraith describes the
process in detail here.)
In the five years leading up to the
recession, commodity index speculation increased by 1900 percent. In
this way, Wall Street not only pushed the price of oil through the
roof, but directly caused skyrocketing food prices and food shortages
around the world. In short, the IATP report concludes:
U.S. government deregulatory steps opened the door for
large financial services speculators to make huge "bets" that
destabilized the structure of agriculture commodity markets. According
to the United Nations, global food prices rose an estimated 85 percent
between April 2007 and April 2008. Prices rose for wheat (60 percent),
corn (30 percent) and soybeans (40 percent) beyond what could be
explained by supply, demand and other fundamental factors, according to
the report.
For people in the poorest countries, these changes sometimes meant
the difference between subsistence and starvation: In 2007, according
to the UN Food and Agricultural Organization (FAO), an "estimated 75
million people were added to the 850 million already defined as
under-nourished and food insecure."
In view of all this, the United States and the other wealthy nations
that dominate the world economy owe the developing world more than a
bailout (which would in any case amount to a fraction of what we're
giving to the very financial institutions that added to world hunger
for the sake of profits). We also owe them a reformed global financial
system that will prevent such travesties from happening again.
But it doesn't look like those reforms will be happening any time
soon. Bills to regulate commodities exchanges have been floated in both
houses of Congress, but according to the IATP,
they are progressing slowly and leave a lot to be desired. President
Obama's nominee to the Commodity Futures Trading Commission, Gary
Gensler, is a former Goldman Sachs executive who, while working in
Clinton's Treasury Department, backed the very deregulatory moves that
allowed commodity speculation to run wild in the first place (as exposed in Mother Jones last year). Senator Bernie Sanders is seeking to block Gensler's nomination for this reason.
And on the international level, as IATP pointed out in
the runup to the G-20, regulation of commodities exchanges was a
subject conspicuously absent from the meeting's agenda-despite its
potential life-and-death impact on food and energy security worldwide.
One outcome of the G-20 meeting (as I wrote yesterday)
was an agreement to earmark as much as $1 trillion for developing
countries, where the economic crisis is having a life-threatening
impact. This figure is in line with what the United Nations estimates is needed to "buffer the blows of the global downturn on the most vulnerable."
In fact, $1 trillion is the least the rich countries owe to the
poor, considering the chaos and suffering our own economic policies and
practices have brought upon them. In part, the additional hardships now
being experienced by the developing nations result from the
recession trickling down in a way that wealth never seems to do. But
there's more to the story than this.
Some of the heightened suffering in the
developing world can be traced back to the Clinton and Bush
administrations, when a series of legislative and regulatory changes
paved the way for rampant speculation on the commodities market. What
happened next is explained in a report by
the Minneapolis-based Institute for Agriculture and Trade Policy
(IATP), the most comprehensive source of information on this subject.
Wall Street went to work and bundled
together groups of commodities futures-everything from oil to copper to
basic staples like corn, wheat, rice, and soybeans-into commodity index
funds, similar to what you find in the mutual fund business. The
subsequent explosion of buying and selling by a handful of Wall Street
firms (led by Goldman Sachs and AIG) ran the prices of different
commodities up and down with little relation to any actual market or to
the so-called laws of supply and demand. (James Galbraith describes the
process in detail here.)
In the five years leading up to the
recession, commodity index speculation increased by 1900 percent. In
this way, Wall Street not only pushed the price of oil through the
roof, but directly caused skyrocketing food prices and food shortages
around the world. In short, the IATP report concludes:
U.S. government deregulatory steps opened the door for
large financial services speculators to make huge "bets" that
destabilized the structure of agriculture commodity markets. According
to the United Nations, global food prices rose an estimated 85 percent
between April 2007 and April 2008. Prices rose for wheat (60 percent),
corn (30 percent) and soybeans (40 percent) beyond what could be
explained by supply, demand and other fundamental factors, according to
the report.
For people in the poorest countries, these changes sometimes meant
the difference between subsistence and starvation: In 2007, according
to the UN Food and Agricultural Organization (FAO), an "estimated 75
million people were added to the 850 million already defined as
under-nourished and food insecure."
In view of all this, the United States and the other wealthy nations
that dominate the world economy owe the developing world more than a
bailout (which would in any case amount to a fraction of what we're
giving to the very financial institutions that added to world hunger
for the sake of profits). We also owe them a reformed global financial
system that will prevent such travesties from happening again.
But it doesn't look like those reforms will be happening any time
soon. Bills to regulate commodities exchanges have been floated in both
houses of Congress, but according to the IATP,
they are progressing slowly and leave a lot to be desired. President
Obama's nominee to the Commodity Futures Trading Commission, Gary
Gensler, is a former Goldman Sachs executive who, while working in
Clinton's Treasury Department, backed the very deregulatory moves that
allowed commodity speculation to run wild in the first place (as exposed in Mother Jones last year). Senator Bernie Sanders is seeking to block Gensler's nomination for this reason.
And on the international level, as IATP pointed out in
the runup to the G-20, regulation of commodities exchanges was a
subject conspicuously absent from the meeting's agenda-despite its
potential life-and-death impact on food and energy security worldwide.