The Food Bubble (2010)
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The Food Bubble (2010)
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Re: The Food Bubble (2010)
#2Wow. I had no idea this happened. I'm surprised this story has not had more attention.
Re: The Food Bubble (2010)
#3Wow. I had no idea this happened. I'm surprised this story has not had more attention.
At the time some said that the upstream cause of the Arab Spring was increased food prices.
http://www.pbs.org/newshour/updates/world/july-dec11/food_09...
More controversially, some blamed this on the Fed's inflationary QE2 policy (printing money), as food prices went up across the world in real terms. In the US this was an inconvenience, but abroad it was something else.
http://www.telegraph.co.uk/finance/economics/8492078/How-the...
Re: The Food Bubble (2010)
#4Something seems wrong with this story. I understand how speculation can push the price up but if the price goes too far above the true value for too long there has to be a drop - the bubble needs to burst at some point. Has there been a drop in price since this article came out? Have farmers adjusted to grow unusual amounts of wheat? Are there parties to the events who have been shielded (bailed out) from any downturns?
Re: The Food Bubble (2010)
#5The article totally glossed over how the long orders were "rolled over" from one trading period to the next. This seems like a critical detail. What happens when all the orders come due and you're holding a bunch of long orders?
Also, wasn't this on HN a while ago? Or did I see it somewhere else?
Re: The Food Bubble (2010)
#6Something seems wrong with this story. I understand how speculation can push the price up but if the price goes too far above the true value for too long there has to be a drop - the bubble needs to burst at some point. Has there been a drop in price since this article came out? Have farmers adjusted to grow unusual amounts of wheat? Are there parties to the events who have been shielded (bailed out) from any downtur…
The key seems to be the way in which the accumulated long positions were periodically rolled over, but the article doesn't seem to explain how this was done.
Re: The Food Bubble (2010)
#7Something seems wrong with this story. I understand how speculation can push the price up but if the price goes too far above the true value for too long there has to be a drop - the bubble needs to burst at some point. Has there been a drop in price since this article came out? Have farmers adjusted to grow unusual amounts of wheat? Are there parties to the events who have been shielded (bailed out) from any downtur…
According to the article, the bubble did indeed burst:
> Then, like all speculative bubbles, the food bubble popped. By late 2008, the price of Minneapolis hard red spring had toppled back to normal levels, and trading volume quickly followed. Of course, the prices world consumers pay for food have not come down so fast, as manufacturers and retailers continue to make up for their own heavy losses.
Re: The Food Bubble (2010)
#8Wow. I had no idea this happened. I'm surprised this story has not had more attention.
I used to work at Goldman's. This story doesn't surprise me at all. This is what all good bankers do. I think the story hasn't gotten attention because it is not a story. It is just how things work.
Re: The Food Bubble (2010)
#9We need to get rid of our highly distortionary tax policy. We incentivize "saving" over 'spending" by taxing capital gains at a lower rate, but we've got too much saving now and all that money is looking for places to go.
Re: The Food Bubble (2010)
#10Something seems wrong with this story. I understand how speculation can push the price up but if the price goes too far above the true value for too long there has to be a drop - the bubble needs to burst at some point. Has there been a drop in price since this article came out? Have farmers adjusted to grow unusual amounts of wheat? Are there parties to the events who have been shielded (bailed out) from any downtur…
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