Africa

Cereal Wars…and Zombie Wars… Hey, how ’bout that Ben Bernanke… He’s a freedom fighter! Look what he’s done to North Africa! Seems like every time we pick up the paper another dictator is toppling over. Where does it lead, we wonder? What would a world be like without dictators? Without them, who will the CIA and the State Department give our money to?

“Cairo, US Blindsided by Revolt” was The Wall Street Journal’s headline on its analysis of what led up to the Egyptian crisis. “We were caught by surprise.” Israeli Finance Minister Yval Steinitz told the same newspaper in a separate interview. As I reflected on the demonstrations in Egypt and followed the news of the events that followed, it occurred to me there were two vital lessons for the American people that have been overlooked.

Dow plus 71 yesterday. Gold plus $15. Everything seems okay, doesn’t it? Good, then let’s look deeper…at the story behind the story… As we’ve been saying, elites look out for themselves. But why not? Everyone looks out for Numero Uno. No? Isn’t that what you’d expect?

Remember Ben Ali, the Tunisian President who was forced to flee his country this week as rising food prices drove people into the streets? Well, France’s Le Monde is reporting that he didn’t leave Tunis empty handed. According to Le Monde, Ben Ali and has family absconded with 1.5 tonnes of gold in their luggage (very strong luggage). That’s about €45 million in gold.

You can’t say it didn’t work. At least one of Mr. Bernanke’s aims was realized. He went into the bond market, and bought US debt, in order to lower long-term interest rates. That was a bust. Long rates went up, not down.

Inflation is on everyone’s lips these days…everyone in Asia, that is. Because Fed Chairman, Ben Bernanke is so busy pumping up the US money supply to battle a perceived deflationary threat here at home, he is putting pressure on overseas economies to print money at the same pace, in order to prevent their currencies from appreciating against the dollar and, thereby, become less “competitive.”

The Wall Street Journal carries an article entitled “The Great American Bond Bubble.” The authors worry that bonds have gotten themselves into a bubble similar to tech stocks in 1999. You’ll recall that back then investors were so sure new technology would pay off that they were prepared to pay astronomical prices for dizzy tech companies.

In 1972, Russia’s wheat crop failed. Russia had to dip into the global grain markets to meet demand. Before Washington knew the plight of its Cold War adversary, Russia bought up all of the surplus wheat in the US. Dubbed “The Great Grain Robbery,” Russia’s purchases sent grain prices soaring around the world.