Monday, November 22, 2010

Commodity Prices & Government Assurances

In last Thursday's Wall Street Journal, Agriculture Secretary Tom Vilsack was reported to have said,

"I'm not sure that commodity prices necessarily translate directly and proportionately into food costs. They go up and down all the time."

If you Google Vilsack's bio, you'll see he has zero experience as a commodities trader, farmer or economist. His profession should not surprise you, since he's a professional politician. He graduated from law school, and plied that trade.

So how can Tom be so sure commodities just go "up and down all the time?"

Later in the Journal article, General Mills is cited as ending consumer promotions for cereals which have kept a lid on prices.

Nowhere in Vilsack's reported comments was there an acknowledgement that global demands for agricultural commodities are booming as other nations become richer and exhibit higher growth rates than the US.

With the article's title "Vilsack: Food Costs Won't Surge," and subtitle, "USDA Chief Says Consumers Won't Fell Jump in Futures," you get a sick feeling in your stomach, don't you? And not- yet- from hunger?

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