A new study on the link between financial speculation in commodity markets and food-price spikes shows that the model can be used to predict future food-price spikes, strengthening the case that financial speculators (fleeing the collapse of the housing market) art the root cause of the violent food-price swings that have been blamed for global starvation, riots and political instability.
The new paper -- M. Lagi, Yavni Bar-Yam, K.Z. Bertrand, Yaneer Bar-Yam, UPDATE February 2012 — The Food Crises: Predictive validation of a quantitative model of food prices including speculators and ethanol conversion -- was produced under the auspices of the New England Complex Systems Institute.
In the new study, predictions made by the researchers’ original model are compared to actual food prices between March 2011 and January 2012. Placed on a graph, the lines match closely, and do so despite spanning a major change in price trends at the last bubble’s peak.
“If you have a straight line, extend it and say, ‘Aren’t we predictive,’ it doesn’t give that much confidence,” said Bar-Yam. “If it changes direction, that’s a much more severe test of what’s happening.”
Both the European Union and United States are now considering whether and how to limit commodity speculation. In the U.S., such limits are required by the Dodd-Frank Act, but have been fiercely resisted by the financial industry.
It’s expected that the U.S. Commodity Futures Trading Commission will enact speculation limits by the end of 2012, though they might still be blocked in court. But even if the rules pass, they’re arguably weak, focusing on “position limits,” or caps on the maximum number of contracts a single speculator can hold. The rules won’t won’t prevent markets from being overwhelmed by speculation.
(But what's a little starvation and global upheaval when compared against the miracle of "enhanced liquidity"?)
Speculation Blamed for Global Food Price Weirdness
TIL: Sharks are attracted to the sound of death metal. Apparently, the “dense tones” of it mimics the “low frequencies of struggling fish.” (Damn.) In 2015, a Discovery Channel crew — hoping to attract a large great white named “Joan of Shark” — dropped a speaker underwater and played some. Independent: Desperate to feature the […]
The mystery of the glorious fireball emitted by microwaved grapes (featured in my novel Little Brother) has been resolved, thanks to a paper in the Proceedings of the National Academy of Sciences in which Trent University researchers Hamza Khattak and Aaron Slepkov explain how they destroyed a dozen microwaves before figuring out that the grapes […]
The rise in a belief that the Earth is flat is bizarre and somewhat frightening, a repudiation of one of the most basic elements of scientific consensus. Texas Tech University psych researcher Asheley R. Landrum attended a 2017 flat earth convention and interviewed 30 attendees to trace the origins of their belief in a flat […]
Looking to de-clutter your kitchen counter? Start with those multiple, tangled charging cables for your multiple, power-hungry devices. There’s a workhorse solution for all those power needs, and it’s just as just as well suited to travel as home use: The Scout Wireless 5000mAh Charger. Compact and sleek at nine ounces, it doesn’t look like […]
Use a single password for every website, and you’re compromising your security. Use a different one each time, and you’re bound to lose track of them. The solution? RoboForm Everywhere, a catch-all tool that will not only manage the passwords on every site you visit but generate better ones. As a simple password database, it’s […]
Just a reminder: Print isn’t dead. And now that printers are becoming as portable as cell phones, it might be around for quite some time. Enter the MEMOBIRD Mobile Thermal Printer, a mini-printer that is versatile, portable – and most importantly, never needs a refill on ink or toner. Measuring just a few inches around, […]