January » 2011 » TripleCrisis

Frenzy in Food Markets

So now we are back in another phase of sharply rising global food prices, which is wreaking further devastation on populations in developing countries that have already been ravaged for several years of rising prices and falling employment chances. The food price index of the FAO in December 2010 surpassed its previous peak of June 2008, the month that is still thought of as the extreme peak of the world food crisis.

Some of the biggest increases have come in the prices of sugar and edible oils. The US import price of sugar doubled over the second half of 2010. Traded prices of edible oils like soya bean oil and palm oil increased by an average of 50 per cent over the same period. But even staple prices have shown sharp increases, with the biggest increase in wheat prices, which went up by 95 per cent between June and December 2010. Rice prices have been relatively stable in global trade over the past year in comparison, but in fact the FAO reports that domestic rice prices in major rice producing and consuming countries, especially in Asia, continued to increase and are now at their highest ever levels.

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Latin America’s China Challenge

Kevin P. Gallagher

China Petrochemical Corporation bought Occidental Petroleum’s Argentina operations, capping close to $15 US billion of Chinese foreign investment in Latin America for 2010. In addition to this new source of foreign investment, China has become a new export market for Latin America. Well over $50 billion of Latin American products, chiefly iron and copper ores, soya, and crude oil, will reach China this year as well.

China’s unprecedented and impressive growth has been a great boon to Latin America in the short-term. It is up to Latin American nations to translate these short-term gains into longer-run economic development.

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The Case for Controlling Capital Outflows

Stephany Griffith-Jones

Emerging countries, and even some low-income ones, are being flooded by short-term capital flows which they do not need; much of this money originates via the carry trade from the second wave of US quantitative easing (QE2). The intent of the US Federal Reserve is to expand the supply of credit in the US, so as to support the recovery and to lower long-term interest rates in the US.

So the impact of the carry trade is negative both for the US (as it undermines the aims of QE2) and for developing countries, which see their exchange rates become overvalued and their asset prices increase excessively.

The response of developing countries has been varied, but increasingly many of them are beginning to impose capital controls, both of the traditional kind, but also more innovative ones, that is those which deal with the new ways in which capital enters developing countries, in particular via derivatives. Indeed, many of these derivatives were initially invented to avoid precisely regulations on capital inflows or other types of financial activity.

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The Fundamentals of the Fed

Jane D’Arista, occasional guest blogger for Triple Crisis, was recently interviewed by the Real News Network on the development of the banking sector’s influence on the Federal Reserve and her opinions on Fed reform. This video is re-posted from the Political Economy Research Institute, a Triple Crisis partner. We periodically cross-post items of interest.

Jane D’Arista is a research associate and co-coordinator of the SAFER Project at the Political Economy Research Institute (PERI), University of Massachusetts at Amherst.

Full Disclosure in Economics— the Role of the Economic Associations

George DeMartino, Guest Blogger

Last Thursday the Executive Committee of the American Economic Association (AEA) ratified a proposal of AEA President Robert Hall to establish a committee “to consider the Association’s existing disclosure and other ethical standards and potential extensions to those standards.” To non-economists that may not sound like much, but it represents a substantial break with a century-long practice of avoiding the issue. When the American Association of University Professors (AAUP) and others voiced concern about conflicts of interest in economics and the need for disclosure during the 1920s and 1930s, the AEA largely ignored the matter.

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From Washington Consensus to Brussels Consensus

Diana Tussie

In my August entry I noted a trend to decentralizing global finance moving away from the High Command in the form of new forms of financial cooperation amongst countries of the global South, especially spreading in South America and Asia.

But Stephany Griffith Jones´s November entry prior to the meeting of the G20 in Seoul has made me rethink. She notes with concern the worrying trend toward the consolidation of a paradigm of fiscal retrenchment in Europe. She is naturally right (as usual) in drawing attention to pervasive fiscal retrenchment in deficit countries and even surplus countries. While Germany eschews expansionary policies, Greece, Portugal, Spain and Ireland have been pressed by financial markets and the European Commission mainly under German influence into draconian fiscal adjustment.

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US should exercise green power

Kevin P. Gallagher

Kevin Gallagher published the following opinion article in the Guardian on the Obama administration’s decision to file a WTO suit against China for its “trade distorting” green technology policies. He argues that the US should instead focus on making its own domestic investments in green energy.

US should exercise green power

To kick off 2011, the Obama administration has had the audacity to file suit at the World Trade Organisation (WTO) against China’s policies to build green technologies.

This action is deeply flawed. The US should not try to beat China down, but should pursue its own green jobs policy and reform the WTO, so the rules allow countries to combat climate change.

The United States and China are the world’s largest emitters of the greenhouse gases. Together and separately, each nation should be doing all it can to develop clean technologies to mitigate and adapt to climate change.

That is not how the Obama administration has seen it. Repeatedly, at United Nations climate negotiations, the US has said that it will do little to combat climate change unless China does. Moreover, the US has stated it will not provide any financial assistance to China to help reduce emissions. With no US support, China was left to its own devices.

Read the full article at the Guardian.

US should exercise green power

Kevin P. Gallagher

US should exercise green power

To kick off 2011, the Obama administration has had the audacity to file suit at the World Trade Organisation (WTO) against China’s policies to build green technologies.

This action is deeply flawed. The US should not try to beat China down, but should pursue its own green jobs policy and reform the WTO, so the rules allow countries to combat climate change.

Read the full article at the Guardian.

Business and Human Rights: Searching for transformation

Lyuba Zarsky

I don’t regularly co-mingle with international human rights lawyers but I do regularly investigate the local sustainability impacts of foreign investment, including in the ethically and environmentally challenged extractives industry. Thus it was that in early December, I found myself at a conference in The Hague organized by the World Legal Forum. Tagged “Business and Community in Dialogue: Connecting Corporate Responsibility and Global Governance,” the conference aimed to promote the emerging UN Framework for business and human rights. The main draw was Harvard Professor John Ruggie, the UN Secretary-General’s Special Representative for Business and Human Rights and the primary mover and shaker in articulating and now operationalizing the Framework.

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Subsidizing Inequality: Wise interviewed about U.S. agricultural dumping

Triple Crisis blogger Timothy A. Wise was interviewed by the Real News Network about his work on the costs of U.S. dumping to Mexican farmers, which he summarized in a previous blog post. His monograph and policy brief are part of the report, “Subsidizing Inequality: Mexican Corn Policy Since NAFTA,” which will be presented January 18 in Washington at the Woodrow Wilson International Center for Scholars. Wise will participate in the panel presentation of the report, which will be webcast live at 3 pm.