Economic seismographs picked up ominous
tremors in the world economy, as a January 4, 2008
Bloomberg news item read, "European inflation
stayed at the highest in more than six years in
December as food and energy costs soared ... The
inflation rate in the euro area was 3.1%," even as
the European Central Bank, "last month raised its
2008 inflation forecast to about 2.5% from 2%".
It's worse than previously thought, and
anticipated to get worse than this! Yow!
Without the slightest indication of scorn,
laughter, bemusement or outright sneering
disparagement of any kind despite being richly
deserved, Bloomberg went on, "Inflation in the
euro region may
remain
above the 2% ceiling for a ninth year in 2008,
even as economic growth slows, according to ECB
staff forecasts." Hahaha!
Inflation - in
prices, that is - above the ceiling for nine years
in a row? Nine years? Hahaha! And growing worse!
How incompetent can the ECB be?
These ECB
weenies have been a total failure for nine
consecutive years in controlling inflation, but
let my little cost center office merely break
even, instead of showing a profit, and suddenly
there are sneering corporate auditors all over the
place, and my boss is licking her lips and saying,
"We're taking you down, Mogambo!"
But ECB
incompetence in controlling inflation is all the
rage, and in fact, Junior Mogambo Ranger (JMR)
Eric C went to Bavaria and Austria for the
holidays, and reports that "the Germanic folk are
very, very upset about THEIR high inflation",
probably as a result of the fact that "Things cost
as much in euros as they did in Deutschmarks in
the year 2000. That's 10% inflation every year for
seven years!"
And inflation in consumer
prices is everywhere. For example,
FinancialPost.com had a story titled "Forget Oil,
The New Global Crisis Is Food", and then there was
Chris Powell of GATA (Gold Anti-Trust Action)
writing that "Thursday's edition of the New York
Sun decided to try valuing Manhattan residential
real estate in terms of gold and found values to
be falling sharply", as you would expect from the
Sun's story, "Gold Value of Apartments Sinks".
Mr Powell said, "Of course GoldMoney's
James Turk, editor of the Freemarket Gold &
Money Report and consultant to GATA, long has been
valuing oil in gold terms to show that oil's
rising price is largely a matter of the
depreciating dollar. Maybe now some others in the
news media are catching on to the monetary
debasement game."
But it was the subhead
of the FinancialPost.com story that grabbed me by
the heart and almost killed me as it said, "BMO
strategist Donald Coxe warns credit crunch and
soaring oil prices will pale in comparison to
looming catastrophe."
If you are like me,
then you know two things from your years and years
of experience of dealing with Earthlings. One,
these people are idiots in groups, and they are
all out to get you. Two, you know that
"catastrophe" is a Bad, Bad Thing (BBT).
And if you did NOT know that people are
idiots in groups and/or that "catastrophe" is a
BBT, then hold on to your seats, because you are
about to get the education of your life because,
"The impact of tighter food supply is already
evident in raw food prices, which have risen 22%
in the past year." Yikes! 22%!
The Astute
Mogambo Scholar (AMS) who can detect the slightest
whiff of panic in any random factoid, instantly
notes that I was right; you should have a
bullet-proof bunker in your backyard and as much
raw firepower as you can carry, because people get
angry about food prices that will gradually reduce
them to starvation, which is the subject of
Chapter 10 in the Big Mogambo Book Of Economic
Stuff (BMBOES), which bears the title "The
Lesson To Be Learned From The French Revolution
And Several More Since Then".
For those of
you who are disinclined to read the entire chapter
in the BMOES because you are either too distracted
by the inclusion of so much gratuitous, raunchy
pornography - which has apparently been included
for no particular reason other than because I
wanted to and because I could deduct it as a
business expense - or you are too repulsed by such
a filthy piece of trash that you feel soiled even
touching the book, let me tell you in a nutshell
the gist of it; people get really, really angry
when they start going hungry, and then everything
really starts going downhill, and then prices
start spiking as the currency starts losing so
much purchasing power as the government starts
creating so much money to try and buy its way out
of the problems it has caused, and then, after a
while, relatives lose their minds from the hunger
and come over here to my house thinking that, you
know, surely a guy with as much gold as I am
rumored to have must be rich as hell, and surely I
can spare at least enough money to keep them from
literally starving in the cold, rainy streets for
one more day, and then I can see them in the
crosshairs of the bunker's periscope, gathering
and standing out there with the wife and kids, all
whining and begging for the same thing! Suckers!
Suckers who bought food and clothing when they
should have been buying gold!
Well, there
is nothing in the Financial Times story about this
kind of illegal, mob assault on the Mogambo Bunker
Of Doom (MBOD), which only serves as proof of a
cover-up at the highest levels, but you get the
same sort of hysterical panic as the story goes
on, "Wheat prices alone have risen 92% in the past
year, and yesterday closed at US$9.45 a bushel on
the Chicago Board of Trade." Yikes! 92%!
"At the center of the imminent food
catastrophe," they say, "is corn - the main staple
of the ethanol industry. The price of corn has
risen about 44% over the past 15 months." Hahaha!
The "benefits" of the ethanol boondoggle are sure
going to be hard to measure! Better get Alan
Greenspan and Michael Boskin working on a way to
disguise this, too!
But covering it up may
be harder than anyone realizes, as "Mr Coxe warned
US corn exports were in danger of seizing up in
about three years if the country continues to
subsidize ethanol production."
And how is
this possible? Easy! He says, "Biofuels are
expected to eat up about a third of America's
grain harvest in 2007." A third! An entire third
of the grain output of the American farm system
will disappear from the world's food supply? On
top of the terrifying increases in prices we are
already seeing? Yow! We are totally, totally,
totally freaking screwed!
And, coincidence
or not, it is all made much, much worse when he
said, "The amount of US grain currently stored for
following seasons was the lowest on record,
relative to consumption."
And you thought
I was kidding about higher food prices? Hahaha!
The joke's on you!
Richard
Daughty is general partner and COO for Smith
Consultant Group, serving the financial and
medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise
to heap disrespect on those who desperately
deserve it.
Republished with permission
from The Daily Reckoning.
Copyright 2008, The Daily
Reckoning.
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
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