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Grains & Dollars

Published on: 19:28PM Oct 05, 2010

 Did anyone not notice the jump in grain prices today? Bank of Japan cut rates to zero percent. That's right, if you can borrow from BoJ, you may well get a 0% interest rate. Add to that the Federal Reserve is going to the whip again, using so-called quantitative easing, and what do you get? A dollar bill that is looking green not in the sense of a healthy corn stalk but in the sense of someone who just got off a really nasty roller-coaster ride.

Europe has problems. Ireland has soaring unemployment for the first time in two decades, and is raising taxes to bail out Irish banks. Spain bet very heavily that the real estate boom would never end. You would think that anyone over 30 would know better than to expect booms to go on forever, but Spanish politicians and banks, Irish Banks, American, English, Swiss and many other bankers evidently had short memories. I overstate. The truth is that the bankers were trying to use Reaganomics math to repeal the laws of mathematics. It didn't work for Reagan or Bush I or Bush II. Carter wanted to inflate out of the inflation, but back then we had a realist, Paul Volcker, at the helm in the Fed. Had Alan Greenspan been at the helm, we would all be begging for a living today.

In any case, Greece has defaulted, Spain is very near default, Portugal is in deep trouble, Ireland is in deep trouble, neither France nor England is doing well, leaving only the Germans to carry the economic load. The Euro *should* be worth about 75¢. Instead, thanks to the Wall Street Banks and the politicians they control, over the past three plus months, the Euro has risen nearly 15% against the dollar. 

Thank goodness Larry Summers is on his way out the door. Now if only we could get Geithner and Bernanke to leave...

Corn was up 4% today. The Dollar was down 1.1% against the Euro & hit all time lows against the Australian Dollar and the Swiss Franc. And, FWIW, gold made yet another all time high. This would all be good news for farm exports, if only we didn't need to export so much to China and Japan. The Chinese Yuan is pretty much pegged to the US dollar, and Japan... cut rates to zero, effectively devaluing against the dollar.

Did I mention? Cost of crude is up 9% in the past five days. You don't suppose that will affect your cost of inputs or overall costs of doing business, do you? In a later post I'll remind you of how the Wall Street Bankers use crude to transfer money from your pocket to their own. 

In case you haven't been provoked enough to say it, let me say it for you: "GRRRRRRRRRR!"