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
Thirty years ago today, the Voyager 1 spaceprobe had completed its ncounters with the outer planets and was careening out of our solar system. The time came to shut off the probes’ cameras to preserve power and memory for the other onboard scientific instruments. But before engineers flipped the switch, one last photo opportunity was […]
While scientists have studied Moon rocks for 50 years, researchers have for the first time conducted deep analysis on a single grain of lunar dust, atom by atom. Using a common materials science technique called atom probe tomography that’s not widely used by geologists, the Chicago Field Museum’s Jennika Greer and colleagues probed the grain […]
This is so amazing. Watch what happens when a blacksmithing anvil is lowered into a large vat of pure liquid mercury. Update: One of our readers posted the link to the original video in the comments. I have replaced the animated GIF. Thanks, Crispy75. [H/t Alberto Gaitán via Bryce Lynch] Image: Screengrab from GIF
Whether you love cooking at home or you swore this was going to be the year you curbed your DoorDash addiction, you know you can’t get the job done well without the proper tools on hand. For all your recipe and meal prep needs, this 3-piece Sukasu Osami Chef’s Knife set will do you right […]
It may not rank up there with climate change or personal debt, but confess…isn’t it the worst when you’re trying to put a food container in the fridge, but can’t find the right lid to fit? Hey, not everything has to be a global crisis to be irritating to the core. But still…it’s even more […]
Assembling a truly autonomous smart home is getting closer and closer to reality every day. But for every new smart bulb, thermostat, home security system and appliance we set loose within our walls, there are still probably a half dozen “dumb” items we’d still love to replace. But whether they’re too costly or too big […]