Food riots and the Schiff scenario

[jk]

food riots and the "schiff scenario"

3 billion people depend on rice as the mainstay of their diet. what are the social/political implications of an exploding rice price? contributors to the price increases are diversion of foodstuffs to energy production, increased meat consumption in increasingly wealthy e.m. countries [where 10 units of vegetable food is converted into 1 unit of animal product], and recently export bans by countries hoarding their domestic agricultural outputs to placate their domestic population.

FT.com: Rising food prices could spread social unrest across Africa after triggering riots in Niger, Senegal, Cameroon and Burkina Faso, African ministers and senior agriculture diplomats have warned. Kanayo Nwanze, the vice-president of the United Nations’ International Fund for Agriculture, told a conference in Ethiopia that food riots could become a common feature, particularly after the price of rice has doubled in three months. “The social unrest we have seen in places such as Burkina Faso, Senegal or Cameroon may become common in other places in Africa,” Mr Nwanze said.

Instead the policy response is “measures against hoarders”, and small rate increases. Hoarding is the last line of defense of largely helpless Gente against the insane Godfather Protection Racket symbiosis their governments have with the US in the aforementioned scheme. Now it seems that not only will Gente go hungry, but will have police and military rifling through, and no doubt stealing their stuff.

April 4 (Bloomberg) – India’s inflation accelerated to the fastest pace in more than three years, underscoring a threat from rising food prices that prompted the government to announce a crackdown on hoarding. Trade Minister Kamal Nath said today the government will prevent profiteering from rising prices of essential commodities, joining nations worldwide in trying to keep food affordable. Prime Minister Manmohan Singh’s government wants to curb inflation to fend off criticism by opposition parties and prevent public unrest before general elections. “We will not hesitate to take the strongest possible measures, including using some of the legal provisions that we have, against hoarding,'’ Nath said in Singapore. `The central bank will have no option but to raise rates'’ later this month, said Tushar Poddar, an economist at Goldman Sachs Group Inc. in Mumbai. “We also expect the central bank to encourage the rupee to gain to curtail prices.'’.

[emphasis added-jk] http://wallstreetexaminer.com/blogs/...1537#more-1537

reading this last line reminded me of the "schiff scenario."
see http://www.itulip.com/forums/showthread.php?t=436
and http://www.itulip.com/forums/showthread.php?p=2955

schiff postulated a u.s. recession, with the em's decoupling and allowing their currencies to rise. the u.s. recession would reduce global commodity demand, while the rise in e.m. currencies would increase e.m. buying power. the bolded statement above re: the rupee is the first piece of evidence i've seen for this particular mechanism.

[Mega]

Re: food riots and the schiff scenario

Peter is a Time Lord whom has seen what is to be and returned to warn us....sort of like that Bloke in the Termator 1.

My God lots of you guys are going to have to eat hummble pie very soon.

" There only one Peter Schiff, one Peter Schiff...there's only one Peter Schiff".

Mega

[Mega]

Re: food riots and the schiff scenario

http://www.youtube.com/watch?v=TPG-t...eature=related

Mega

[Guest]

Re: food riots and the schiff scenario

This topic was referenced in another thread. My question to this community is, if this vision of the future were true, isn't it also obvious that many tens of thousands of people in subsistence areas of the world will starve? Does that make it past the rhetorical comment level of significance in this community?

A classic response to this question in this particular website would be "This is a finance website. Please take your overbearing concerns about humanitarian implications elsewhere because such issues are merely distracting us from our critical investigations". :confused:

Fair enough - but in ten years, if we see these outliers of food hardship coalesce and grow into reports of massive resurgent malnutrition and starvation worldwide, this little community's petulant objections that the topic was inappropriate to a "finance website" will portray most of us as "moral pygmies". Meanwhile, if we all fancy ourselves to be "hard-headed and courageous investigators of the truth", then for logical consistency if no other reason, get used to the "moral pygmy" name tag, because in this approaching world anyone who regards these issues as "someone else's problems" will effectively have shrunk in moral stature.

What's the point? In a world where calamity begins to seep in, "Joe Average" begins to shrink in stature, in direct proportion to the extent he cannot face up to the growing problems in his environment. And this particular "Joe Average" will be probably a fair description of all of us. At very least, we'll need to slough off our conceits about what "realists" we are. A REAL "realist" would be taking careful note of our changing global environment. as people in the poorest parts of the world begin to starve.

PRIOR REFERENCE HERE (Mercifully talking only about the investment implications):

http://www.itulip.com/forums/showthr...32702#poststop


(Stephen Leeb) is calling for a world where the natural resources component of every last service and essential trinket we require to live with, will massively rise in price, continually, until our standard of living bears little resemblance to that which we enjoy today. No bubble - just lots of trouble.


Dr. Stephen Leeb on Commodities (excerpt)

In the early ‘70s, we were drenched in what seemed an endless supply of vital commodities. Oil was $1.65 a barrel. Silver was $1.39 per ounce. Copper was just $48 per ton.

But back then there was only a mere 1.1 billion players on the industrial stage. Our energy needs were a mere fraction of what they are today. Industry was generating just a few trillion dollars for its 1.1 billion customers.

Today, is a very different picture… one, few foresaw back then…

No one imagined that in little more than a generation, a population explosion, the collapse of communism and the rise of the Internet would change everything. No one imagined that these events would help the vast developing world leapfrog into the modern age, that capitalism would spread and dominate so far, so wide and so quickly…but that it would also bring great pains to the global economy…

Now we have 6 billion players all vying for the same relatively fixed supply of commodities. And within a single generation we’ll have another two billion. While we’ve begun to develop alternatives to these dirty industrial addictions, we should’ve started decades ago. But we never did. Why bother, when the Earth was awash with resources?

And now global industry is about to plunge headlong into its last great natural resource binge.

The Industrial Age’s Grand Finale

In the next 15 years, we will gobble up more of the Earth’s last remaining natural resources, than we did in any period in the past. This great natural resource binge will turn Wall Street on its head. Rising commodity prices will start to bear down on every aspect of our lives…from the costs of our tomatoes to the price we pay to heat and cool our homes…from the value of our blue chips to the income we receive on our CDs$2,700 gold. $9 gas. Plummeting indices. Soaring inflation. And plenty of bear markets.

But also expect a commodity bull market, the likes of which we have never before seen. It will dwarf every other that has ever come before it. Last century we had three commodity bull markets. They were from 1906-23, 1933-53 and 1968 82. Each one was bigger, and wreaked more havoc, than the one that came before it. This final one promises to outdo them all.

By the end of it, many things will be different.

Most paper assets will be shredded. Millions of American retirees will find themselves on the breadline. Vital commodities like oil, gas, uranium, tungsten, cobalt, molybdenum will be greatly depleted. But almost all commodities whether abundant or not, will no longer be cheap. In fact, their costs will become so prohibitive, that it will finally force industry to seriously develop new alternatives, like renewable fuels, and new industrial materials made from bio and nano-materials. But until that time comes, commodities will rule the day.

[raja]

Re: food riots and the schiff scenario

Peter is a Time Lord whom has seen what is to be and returned to warn us....sort of like that Bloke in the Termator 1.

My God lots of you guys are going to have to eat hummble pie very soon.

" There only one Peter Schiff, one Peter Schiff...there's only one Peter Schiff".

Mega

Is that the same Peter Schiff who predicted Black Monday a couple of weeks ago . . . to whom I foolishly listened and lost (temporarily) a bunch of money shorting the market right before it went up 600 points? :mad:

[raja]

Re: food riots and the schiff scenario

But also expect a commodity bull market, the likes of which we have never before seen. It will dwarf every other that has ever come before it.

In the long term, I think you are right.
But I feel we're in for a recession/depression in which the demand for commodities will plummet . . . along with the price. That's when I plan to buy, but not before then, even thought it's mighty tempting as I watch prices rise.

What do you think of that timeline?

[Guest]

Re: food riots and the schiff scenario

What do you think of that timeline?

Raja - I think you'll have a very, very tough job of it finding a clearly convincing entry point. "Entry points" will be shrouded in permanent ambiguity.

Our single greatest enemy to investing in these very long term trends is that we cannot escape our "ant's eye view"of the price action. We recoil in horror from 20% drawdowns, and our minds cannot reach out and firmly grasp the massive scale of the entire trend to come. So investing in this trend has been, and will continue to be to the greatest extent a "mind game". The trend is a long one - but then I'm one of the "it really is different this time" school of thought (Rajiv is also), and many others here seem to adhere (to my mind unreasonably) to the notion that "it can't ever be different this time".

For me, moving from 6 billion to 8 billion people in the next 25 years is the clincher (this is Stephen Leeb's datum). Anyone who cannot understand how that makes it "different this time" is stone blind in my opinion.

[Guest]

Re: food riots and the schiff scenario

Yes, that would be the same Peter Schiff. Unless you are convinced you have a raging trader in you, it's much more conservative to never short the markets - Let patience, and waiting for good times to go long be sufficient.

Patience = safety. The most conservative "short" is to be out of the market in cash.

The timing services I follow were calling for the start of a potentially six month long bull market leg two weeks ago. If Peter Schiff was advising his clients to go short a week or two ago, right smack at the tail end of this recent long decline, then he's talking right through his hat. Another reason why my brokerage account there is empty at this time.

Every time I read him mentioning his posh rental in New Haven or wherever it is he's parked, and the hundreds of millions his firm now has under management I grind my teeth. Mega may think he's the coolest thing since sliced bread but I find him strictly average by now. There are many dozens of market watchers who know the ins and outs of our present environment even better than Schiff - Gary Dorsch and Ty Andros, and Jim Puplava all have a perfectly good handle on it as well, and are a lot less flamboyant than this guy.

[Spartacus]

Re: food riots and the schiff scenario

(weekend reply, read at your own peril)

No, the one you listened to was the evil twin. See, there was a transporter accident, and Sciff was split into 2 people, a nasty one and a nice one ....

Same thing happened to Gary North. Actually, in Gary's case, he split into 2 evil ones.

Is that the same Peter Schiff who predicted Black Monday a couple of weeks ago . . . to whom I foolishly listened and lost (temporarily) a bunch of money shorting the market right before it went up 600 points? :mad:

[Guest]

Re: food riots and the schiff scenario

Raja -

Ty Andros runs circles around Peter Schiff - and he's just one example, although he's a very very astute advisor. Ty Andros "tells this market like it is". All those people on telling you the base metals are "about to collapse" as we enter a "recessionary environment"? Don't listen to them.

Observe rather how we will embark on another upleg in the CRB in a 3-4 months, and how we all will start feeling really keen to buy into it "because it's going up" about two thirds of the way through the up-move. If you read Ty Andros he will be encouraging you to buy these sectors instead precisely when you feel least inclined to do so - when fears and chatter about the "inevitable approaching recession" are rising in frequency - just like now (or soon, upcoming).

The people who insist this "must occur" (waiting for the "collapse" of the CRB due to "fundamentals") won't reconsider their basic premises as to why this must be so, even when the markets won't obey what they consider to be their most rational expectations. Ty Andros "gets it".

___________

Andros writes:

(Full post here: http://www.safehaven.com/article-9869.htm )


Now let's look at the Commodity Research Bureau (CRB) basket of commodities drawn on a weekly chart going back to mid August of 2007:



This could easily fall back to the BOX (as Dennis Gartman terms it) which would represent the Fibonacci 50 to 62% retracement of the move since last August. The deeper it extends in retracements of PRICE and TIME, the stronger the ensuing resumption of the long-term trends in the underlying commodity components can be expected. Now let's look at three of the little Indians or subcomponents of the CRB since last August, those being Crude Oil, Gold and economic barometer Dr. Copper:



These charts are drawn off the July and August lows and are the PICTURE of health! Oil probably has further to go and Gold could stop RIGHT here. Can they fall further? Yes. They will probably find support soon as the 20-week exponential moving average would indicate. These two markets are as hooked up as they have been throughout time, a barrel of oil costs the same thing in gold today as it did in the depression. Now let's look at Dr. Copper which, by the way, has only 2 DAYS of stockpiles in the warehouses:



As anyone following the metals markets KNOWS, the patterns are clear, they consolidate generally in triangles, we can see one in gold in 2006 and for shorter periods since that time, ditto silver, and NOW copper is signaling a mega break higher, just as silver recently did when it broke from its 2-year base (See The 2008 Outlook in the Tedbits archives at www.TraderView.com). See how it broke out of the pattern and went back and TESTED the breakout, confirming the price action!!!

This is not the picture of a faltering GLOBAL economy! Notice the reverse head and shoulders emerging which will confirm the pennant? Can you say INVEST in industrials and natural resource stocks? Demand in the emerging world is alive and well, building cars, airports, factories and burgeoning middle classes through AUSTRIAN economics, and growing incrementally on a daily basis. This is a mega pattern POINTING to an objective of $5.47 cents a pound. Whoops, can you say the next leg of the BULL MARKET in copper is commencing?

In last week's Barons they declared the commodity Bull Market dead saying it was a bubble. The reporter who writes the commodities section trots out a "commitments of traders" specialist (try trading markets based upon this information and you will get killed), he points to the commercials being short; of course their short, they are HEDGING their production and LOCKING in their prices for their products, whatever those products may be (corn, wheat, rice, industrial metals, energy products, interest rates, currency exchange rates, etc.).

That "Commitments of Traders" is not an opinion on the future direction of price; it is a way of making their businesses stable and locking in margins and prices: nothing else. This is why futures exchanges were created. This is what commercials do in futures markets: They hedge their exposure against the speculators which provide them liquidity (how can the commodities expert at Barons not know this or challenge this OPINION? Because he is a JOURNALIST not a market specialist and the big banks and brokers that advertise in Barons desperately wish inflation and the commodities bull to disappear as they sell PAPER! Can you say in the tank for the advertisers?).

He absolutely does not have a handle on emerging markets and the implications of 3 billion people's standard of living on the rise. Do you understand what a teacup of oil or corn use multiplied by 3 billion translates to in increased demand? It's ENORMOUS. He does not explain why; if this is a bubble where are the SURPLUSES of the aforementioned commodities.

The only thing that his analysis would indicate is yes, there is a bubble and surplus of FIAT CURRENCIES which are IOU's in disguise. As long as we see these articles in the main stream financial press we know the party has just begun as the public is fooled into staying on the SIDELINE, they will miss the bull market and they will buy them when they are at new highs every time. Clyde Harrison says: "before this bull market is over there will be a bounty on caribou, drilling of oil wells in front of Barbara Streisand's home and a coal mine in Al Gore's yard". At that point you will know it's OVER, but not before!

AND ON BONDS (ONCE AGAIN CERTIFICATES OF GUARANTEED CONFISCATION!)

Now let's look at the treasury market; A 10-year Note yields 3.59%, 5-year Note yields 2.64%, a 90- day T Bill 1.3%, and 30-day Bills pay about .5 of 1 percent. The public which has bid these instruments in a "flight to safety" has once again failed to achieve their goals. They look for return of principle, whoops looks like lots of principle risk from here. Take a look at QUARTERLY charts of the US 10 and 5-year notes:




Can you say "about to be crushed in terms of capital losses when they revert to the exponential moving averages?" Prices have been this high and rates this low ONLY one other time in over 50 years and that was the 2nd quarter 2003, there is only one way this market has to run and that is? DOWN. How about purchasing power? Let's use the rule of 72 to figure out what type of purchasing power losses these holders are about to face. 72 divided by inflation of (I will be kind) 9 percent. In the case of the 10-year note it will lose half its value over the next 8 years, and in terms of the 5-year a 31% loss of purchasing power will be seen between now and redemption time. (Look at The 2008 outlook in the Tedbits Archives at www.TraderView.com and see what I predicted at that time about these markets, good job Bob).

Anyone who is in at those highs we see is in severe jeopardy of CAPITAL losses ON TOP of purchasing power losses. SAFE and risk free? I beg to differ, not when MZM (money with zero maturity) is expanding at 30 percent and reconstructed M3 is running at over 17% growth rate. Those 2.5 standard deviation moves on quarterly charts suggest a BANG that could be heard around the world when they revert to the mean!

[jk]

Re: food riots and the schiff scenario

Raja - I think you'll have a very, very tough job of it finding a clearly convincing entry point. "Entry points" will be shrouded in permanent ambiguity.

Our single greatest enemy to investing in these very long term trends is that we cannot escape our "ant's eye view"of the price action. We recoil in horror from 20% drawdowns, and our minds cannot reach out and firmly grasp the massive scale of the entire trend to come. So investing in this trend has been, and will continue to be to the greatest extent a "mind game". The trend is a long one - but then I'm one of the "it really is different this time" school of thought (Rajiv is also), and many others here seem to adhere (to my mind unreasonably) to the notion that "it can't ever be different this time".

For me, moving from 6 billion to 8 billion people in the next 25 years is the clincher (this is Stephen Leeb's datum). Anyone who cannot understand how that makes it "different this time" is stone blind in my opinion.

i agree strongly with this post of yours, lukester. i also agree that [more] people will starve- russ winter, who found the clips i posted, writes about "mad max economics" taking over around the world. not a pretty prospect.


edit: re the ant's eye view- mark faber's fabulous and enviable once-a-decade investor goes on vacation for 10 years between decisions- and doesn't bother worrying about the relatively minor ups and downs in the interim.

[FRED]

Re: food riots and the schiff scenario

Our approach, as everyone here knows, is to a make a call based on a broad thesis and check to see if the thesis is still valid. Occasionally when our readers, but never iTulip, get nervous we issue a reminder. Since our 2001 gold call we've issued the March 5, 2008 when gold was trading at $985 Gold Update: The small trade within the big trade to remind readers that large, up to 20% corrections, can occur within the bull market. The response to this post among our readers ranged from trading it (we know that some readers decided to sell at least a portion of their positions on this analysis) to what we always do when we see no evidence that our thesis is no longer valid: nothing.

Our comments on the price correction two weeks later that had Gary North and others panicking and calling for the end of the gold market bull are here, here and here.

Doing nothing, as we remind readers such as in Avoiding Boredom in Secular Markets Coverage, is on one hand boring yet on the other hand frees you up to spend your time on other things, and it is the only way to do this:

(This image dragged and dropped into the forums from our charts page here.)

We like Peter Schiff. Our only warning to readers is that he sells a fund as do many commentators whose commentary should be considered Sales and Marketing, and the more dramatic the commentary the better.

For readers who feel compelled to make small trades within the big trades we are more partial to commentators such as Macro Man who offers consistent and level-headed opinions on the markets.

For readers who need a constant stream of patter to maintain their confidence during the five to ten years it takes an iTulip Macro Thesis to completely play out, for deeper and more original analysis we recommend Ty Andros, Doug Noland, and Henry Liu. Our editorial is forward geared; we tend in the present to be talking now about developments 18 to 24 months out.

[Spartacus]

Re: food riots and the schiff scenario

For readers who need a constant stream of patter to maintain their confidence during the five to ten years it takes an iTulip Macro Thesis to completely play out, for deeper and more original analysis we recommend ....

Gee, I wonder WHO you could be talking about ... a few, me among them ...

Thanks for that, FRED, but I'm not nervous about Gold corrections at all, not when I'm more overweight Silver than Gold, and Silver corrects 2 to 3 times worse (speaking in terms of multiples, not d0llars). The corrections don't bother me (much) - I do like analyzing the new arguments as they come.

Occasionally when our readers, but never iTulip, get nervous we issue a reminder. Since our 2001 gold call we've issued the March 5, 2008 when gold was trading at $985

Having lived through the dip in silver when it fell from $8 to $5.8 (and Gold corrected 6% at the same time) ...
having lived through the Silver dip low- sixteens to $11 (and Gold corrected 8% that time) ...
(numbers pulled out of a poor memory) ...

And my SILVER MINERS when Ag gets flushed 30%? F'GEDABOUDIT !!!!!!!

a 10% gold correction is nothing to me.

I am, however, plugging various incoming data (including others' panic-stricken ramblings) into my understanding and trying to make sense of it all.

[Jim Nickerson]

Re: food riots and the schiff scenario

For readers who feel compelled to make small trades within the big trades we are more partial to commentators such as Macro Man who offers consistent and level-headed opinions on the markets.

Surely it strikes me that Macro Man has a lot of technical analytical language and reliance for iTulip to be recommending it. But perhaps I am seeing it incorrectly.:confused:

[Guest]

Re: food riots and the schiff scenario

JK -

It's pretty amazing isn't it? We try to cling to an expectation of "normalcy" as a quality that's equivalent to "sobriety" in our expectations of the near future (next 30 years) - but the more we begin to peer into it, the more overwhelmingly probable it becomes that there will be many different aspects to it that won't be "normal" at all - not just man-made problems looming, but global geological problems (inadequate resources for the approaching 7-8 billion population load).

This event alone promises us a world our own parents would have looked at incredulously. Massive global change - in a single generation. Can we ride some investment trends within it, while we are learning to shift our diets to 65% reconstituted soy products, where corn fed prime beef is a delicacy? Absolutely. Maybe we North Americans can keep consuming corn fed prime beef, but an expanding sub-set of the rest of the world won't, if only for the impending insufficiency of fresh water. Scary world of want coming. Nanotech won't do more than put a bandaid on the approaching materials shortages ( how about hustling up some "nanotech fresh water"? :p ), at least for a bridging generation. And then there are the ethics of the whole question of "die-off" to consider. Is it real? Or is it imaginary because "mankind must alway evolve forwards"?

And one other factor also emerges clearly - the Ayn Randian ethic of "enlightened self interest" becomes a rather ugly thing to behold in a world where perhaps a billion sentient humans just like oneself are slowly withering away due to insufficient food and water for all 8 billion of us. We can indulge that increasingly archaic viewpoint, but that does not guarantee we'll remain particularly "pretty to look at" in the process. :rolleyes: