Here’s how this rain affects consumers and investors: The states of Iowa and Illinois are the world capitals of corn production. Over 27 million acres there are devoted to growing corn. They anchor production for the world’s top corn-exporting nation. All that rain keeps farmers out of the field and damages the crop. Corn soared 11% this week as a result.

The most active corn contract has increased 86% in the past year. Corn is the chief feedstock for cattle, pigs, and chicken. It’s a primary ingredient in soda pop and cereals. To learn just how pervasive corn is in your life, we recommend reading the excellent book, The Omnivore’s Dilemma. Read it and
get ready to pay out the nose for food…

Brian Hunt

Source: Soon You’ll Pay Even More for Food

But apparently, “a farmers strike has emptied the shelves of meat, cereals and milk.” More than 400 roads are blocked. Much of the discontent followed a disastrous speech by the president of the country, Cristina Fernandez de Kirchner, which is said to have alienated the farmers even further.

At the heart of the matter is a new tax – up to 49% – on soy exports. Argentina is a farming nation. And soy prices are so high, the farmers planted every available acre, hoping to score big on international grain markets. And now the government has stepped in to take half their money; no wonder they have their bombachos in a twist.

This just goes to illustrate our point: no situation is ever so beneficent that politicians won’t find a way to make a hash of it. The oil exporters are getting a once-in-a-lifetime windfall from high energy prices. What are they doing? Building empty skyscrapers and adding social welfare promises faster than the pumps can put out oil. They’ve managed to squander most of their profit margins and then some. Just look at Hugo Chavez. He had so much oil he was able to throw his weight around all over Latin America. But the dumbell has so mismanaged his own economy that the place is said to be falling apart.

And look to at the US of A. What a bonanza it was to have the world’s biggest military… its richest economy… and its only reserve currency. The rest of the world seemed to want to give Americans valuable goods and services, expecting nothing in return but pieces of green paper. It was like manna falling from heaven. How did Americans manage to turn that into the biggest financial trap in history – actually growing poorer during the greatest boom the world had ever seen?

And now Argentina… with the world’s richest farmland… the world’s flattest, best watered fields, and some of its best weather… has found a way to turn the highest grain prices in history into a financial crisis.

Bravo! Bravo to us all!

Bill Bonner
The Daily Reckoning Australia

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