FOOD CRISIS AND ORGANIZED PANIC BY FOOD CARTELS & OLIGARCHY

FOOD CRISIS AND ORGANIZED PANIC BY FOOD CARTELS & OLIGARCHY

Erle Frayne D. Argonza

We’re having a production-related problem with rice today in the Philippines today, which looks more like an echo problem of a larger global phenomenon of food crisis. Riots have already been experienced in at least 33 countries, and we may expect the frequency to rise in the months ahead.

To single out production factors, and especially to pinpoint flawed land-use patterns as the cause of the crisis, tends to blur the real cause behind much of our peace and development problems in the world today. This crisis is one of the anarchic results of orchestrations done by financial speculators over a stretch of three (3) decades, followed through recently by food cartels’ machinations to heighten up their looting of the public’s resources via the food market.

Let us recall that as early as the 1980s, the move towards liberalizing the food markets and integrate this sector into the evolving ‘virtual economy’—by unleashing speculative practices on agricultural products via instrument of ‘commodities markets’—already crept into our national boundaries. Gradually did the pattern get integrated into a global mesh of transactions involving not only food but a long list of articles of trade and services being transacted via the secondary markets or hedge funds.

The objective, as far as this observer now sees it, is to emerge a few gigantic cartels globally that some day dominate a global oligopoly. Probably as little as five (5) such colossal mega-corporations will be well prepositioned to control global food, thus enabling their control not only of the gene stocks (intellectual properties) but of prices most of all.

This scenario is now happening in steel. As soon as we hit the 900+ tones per annum or TPA production of global steel in the 1990s, plans were already afoot to eventually cartelize steel via mergers of giant steel firms, with the participation of fund managers in the process and ownership structures. The merger of Mittal and Alcelor, which resulted to the gigantic firm that now produces over 100 tpa, had now clearly substantiated this long forecast move to cartelize steel. In the near future, just about 3-5 such giants, each one producing 150+ tpa, will be left to control the global market of steel.

Didn’t you notice the sudden fluctuations in the prices of metals globally beginning in the middle of this decade yet? Often than not, based on our experience of the depression-era Weimar Republic, this phenomenon of hyper-inflationary swings in base and precious metal prices are preceding events prior to a global depression. This time around, the panic created by the corresponding process would be the sweetening of the steel merger option (with fund manager participation or rather manipulation) and, voila! Steel cartels are up! Hail the Cartels to the highest heavens!

The pattern is getting to be noxiously obvious that even a mere high school student of economics and history could easily see them. This same pattern is now creeping thru the food sector, even as it has also been taking down aluminum, nickel, copper, gold, banking, retail, realty, and lots of more sectors, with steel being the prototype experiment.

For the sharp observers out there, do make your tallies now as to which of the present food giants would emerge the victors. I will not be surprised if one day, my country’s own biggest F&B group, the San Miguel Corporation, will be gobbled up, via a merger with a larger corporate fish, and melt out into existence except in mere concept and memory of a once mighty firm.

Start making your tallies now. Meantime, let’s also start tallying the riots and casualties due to famine and food-related problems, and see where the casualty level will reach before the 3-5 cartels will become sacrosanct global food market controllers. It surely takes so much blood spillage to advance the interests of the Global Oligarchy, this is what we can get from the picture.

[Writ 28 April 2008, Quezon City, MetroManila]

ASEAN’S 160 MILLION MIDDLE CLASS ENSURES BULLISH PROSPERITY

ASEAN’S 160 MILLION MIDDLE CLASS ENSURES BULLISH PROSPERITY

Erle Frayne D. Argonza

Good day to you fellow global citizens!

ASEAN’s planned economic integration next year is getting too near for comfort. Excitement from diverse quarters concerning the unification in ASEAN and across the globe is growing, so let me share a note on the subject by focusing on its middle class.

Association of Southeast Asian Nations or ASEAN comprises a total population approaching 670 million as of end of 2013. Of that total, approximately 160 million belong to the Middle Income classification. Since the middle income families comprise the consumer base of a developing country, it is normally extendable to an entire region such as ASEAN to evaluate whether that region possesses the demand base for a truly prosperous and economically powerful region.

Middle Income classification for developing countries or DCs is pegged at U.S. $6,000-$30,000 annual family income. Earning beyond the $30,000 annual income in a DC is considered a fortune, qualifying the family thus for a ‘wealthy family’ status. While this middle income bracket is lower than those in the OECD countries, it is crucial for testing the future waters and catapulting a region to an economic power.

The approximate middle income composition of each member country of ASEAN is as follows:

Country                      Middle Income Persons (In Millions)

Singapore                                  5

Thailand                                     35

Malaysia                                    20

Philippines                                  20

Indonesia                                   60

Brunei                                       0.7

Vietnam                                     12

Myanmar/Burma                         5

Kampuchea                                1

Laos                                          0.5

TOTAL:                                      159.2 Million      

That total of 159.2 million is just rough, conservative estimate, based on my stock knowledge of previous reports about the region from the Asian Development Bank, UNDP, and thinktanks. Let’s round off the figure to 160 million for simplification.

The totality can actually easily move to 165 million with updated data on the subject. The 160 million alone suffices ASEAN’s middle class to be numerically at par with the USA’s middle class that stood at 160 million when the last presidential electoral campaign raged there.

The big challenges for the ASEAN and its member nations are (1) to increase the per capita or per family income of the middle income persons, and (2) to increase the number of middle income persons and/or families across the coming years, until at least half of the region’s population turns Middle Class. 

160 million is indeed large enough already as an aggregation of all the 10-member nations’ prosperous middle income earners. However, that is merely 1 out of every 4 ASEANian persons. Which means there are still vast numbers of families and persons down the income pyramid, hundreds of millions in the D & E classes in particular.

The good news is that ASEAN comprises of 1 Dragon Economy (Singapore), 1 Tiger Economy (Malaysia), and 4 Emerging Markets (Indonesia, Philippines, Thailand, Vietnam). Such dynamic economies more than offset the laggards in the region, namely Myanmar, Laos, and Kampuchea. Brunei is a special class that belongs to the wealthy Petro-dollar economies, with almost its entire people sufficiently provided for by the ruling dynasty.

Meeting the target of the Millenium Development Goal or MDG for poverty alleviation is indubitably the most urgent thing to accomplish. The neighboring countries can compare notes and share experiences on how to redistribute wealth equitably in vast quantities to the poor, a departure from the ‘trickle down’ approach that breeds more paradoxes of mass poverty amidst prospering economies.  

I will not hazard a recommendation such as adoption of Philippine’s Cash Transfer Program in the region. Such a strategy worked well in Brazil which now has over 50% of its families above the middle income threshold, but whether it will indeed work for the ASEAN poor is another thing.

Meantime, what is less risky a forecast is that the 160 million middle class will be a sustained base for consumption in the region. Sustained consumption at this juncture equates to Big Opportunity for any market interest group or person to surf the ‘economic sea’ here.

Direct Foreign Investments from all over the globe can surely be poured now in even colossal amounts with lesser risk and surefire gains. The ASEAN’s high levels of foreign exchange, banking & finance resources, and big middle class altogether comprise a formidable fortress that can easily hedge against volatilities in the North & West that cause capital flight from short-term capital, which should all the more magnetize investors from elsewhere.

[Manila, 20 January 2014]

FOOD WARS ARE COMING, PREPARE!

FOOD WARS ARE COMING, PREPARE!

Erle Frayne D. Argonza

Food wars are coming, prepare for the contingencies! This is now a visible possibility, so all those enthused development stakeholders and peace-builders better insert an extra agendum on their ‘key result areas’.

Given the so many sources of conflict that are natural resources related, the latest ones being the ‘water wars’, it is no longer a remote possibility that food wars will erupt in some ‘hot soup spots’ in the world. Such hot spots are not those ones the world knows today (e.g. Iraq, Iran, Afghanistan, Korean Peninsula, Taiwan-China strait) that can be potential starting points for great wars. But somehow, the areas and the food wars coming can ‘cross-cut’ the issues involving conflicts in the hot spots we know.

The scenario would be as follows:

· A convergence of volatilities in the global market would, at one conjuncture, lead to simultaneous price increases in food, oil/energy, metals, utilities. Hoarding then takes place at alarmingly uncontrollable levels. Shockingly, the old ‘policy tools’ to control prices and hoarding won’t work.

· Massive urban riots and upheavals in the affected rural areas take place. New militia groups will rise almost overnight, challenging both national armies and established warlord and rebel groups where these are found.

· Noticing that their own food, energy, base metal stocks are near or pass the critical points, affected states will then turn blind eye to the militias. Tying up with underworld for arms and information, the militias would then conduct quick eco-scan of neighboring countries that are relatively porous for food ransack operations. Key areas would be mapped out as professionally as possible.

· Noticing their own relative porosity, the panic response of affected food supplier states would be to plug their borders as quickly as they can before hothead militias come. They may do panic last-level talks with the state leaders of neighboring countries, who in turn will simply claim that they do not control warlord/militia groups at all. They may send token protection groups at the border.

· Anticipating such moves, the militias, forming cross-country alliances, will mount a coordinated surprise attack. Invasive entries will be done from around 5-6 country origins, using both dawn and dusk attacks. Simultaneous attacks via air, sea, land, rivers & lakes will be mounted on all fronts.

· Effectively unable to prevent the coordinated invasion, the national army/police of the affected state will watch in horror as the rapid moving invaders coalesce with internal players (‘dog of wars’ supplied by local mafia or related groups) to open and ransack warehouses.

· The invaders will then retreat back to their base origins as quick as they’ve entered the porous state. Hot pursuit is simply nil, save for a few sporadic gunfights with retreating forces.

· The affected state will then demand for indemnification or equivalent payment from the militias’ respective states, none of which may come at all. Given the already burgeoning subsidies by states to shore up domestic supplies and prevent further civil unrest due to the crisis, the states will simply have no resource for indemnification. To print more money for indemnification would be to risk hyper-inflation on top of an already inflationary environment.

· With hardly any sincere face-saving moves by the militias’ states, the affected state may then be provoked into a ‘call to arms’ and do some punitive attacks on some quick neighbors. It can also unleash the firepower of rebel groups from the ransacking countries that are based in its territory, arm these groups and make them lead punitive attacks.

· Unless cooler heads prevail in the region, a regional conflagration could ensue, hence widening the latitudes of the conflict. The original ‘hot soup’ for the stomach then turns to a ‘hot caldron’ of total war. Multilateral efforts may fail for a time, as the conflicts happen in at least three (3) world regions.

Partners in development and peace, this scenario can no longer be ignored today. Let us all prepare for the eventuality. If it can be stopped by cutting off the bud before it blooms, whatever that may take, then let’s better do it as soon as we can. Time is now against us, I believe, as events are moving so fast they happen as soon as we forecast them, like the formation of the food cartels.

If there would still be time to constitute strategic studies teams that can eco-scan the planet and identify possible ‘hot soup spots’, this would be a welcome move. Failing to recognize the evolving contingency, let’s not get shocked at all when the paramilitary ‘dogs of war’ will be at the gates of the bereaved states. They deserve some ‘hot soup’ after all, we may surmise.

[Writ 04 May 2008, Quezon City, MetroManila]

EMERGING MARKETS: GLOBAL GROWTH DRIVERS, FIREWALL ECONOMIES

EMERGING MARKETS: GLOBAL GROWTH DRIVERS, FIREWALL ECONOMIES

Erle Frayne D. Argonza

Global economic growth has shown a sputtering pattern over the last couples of years. The EU-USA-Japan 1^st World corridor has particularly been the lackluster topguns, mired as they are in vicious cycles of recession, near zero growth, and ‘virtual economy’ strategies that only deepened their entrapment in the cul de sac they’re in.

Salving the global economic health since the opening yet of the new millennium are the Emerging Markets. Learning the lessons from the 1^st World’s mistakes, the Emerging Markets instituted regulatory measures and related strategies that enabled them to build ‘firewall’ economies.

A ‘firewall’ economy is sealed from the global economic turmoils emanating from the 1^st World countries. Remaining unaffected as such, they are able to sustain growth patterns that are impeccable manifestations of their trajectories of ‘virtuous circle’ of growth & development. Growing in unison, though at variance in total aggregate growth, they altogether keep the global economy afloat, thus saving many workers in the developing world from the devastating blows of market conflagrations which the 1^st World countries are tragically situated.

Emerging Markets are largely 2^nd World or Middle Income economies, a fact that many blind simpletons in their own backyards and the 1^st World fail to see nor understand. Once an economy breaches the U.S. $1,000 per capita, it qualifies as 2^nd World economy. Another criterion is the population composition: over half are in services and industries. Industrialization is, of course, rapid.

Emerging Markets are unique in that (a) each one of them has large populations and (b) very significantly large percentage of Middle Income earners among their people (i.e. family earning $6,000-$30,000). Large populations fulfill their labor needs at all times, and the total aggregate values of goods produced by such large populations make total national income consistently large, assuming sustained significant-to-high-level growth.

Top qualifiers that are recognized as ‘lead countries’ of the Emerging Markets are the BRIC:

• Brazil
• Russia
• India
• China

Following closely behind the BRIC are the Next 11, namely:

• Bangladesh
• Egypt
• Indonesia
• Iran
• Mexico
• Nigeria
• Pakistan
• Philippines
• South Korea
• Turkey
• Vietnam

South Korea is the only odd one out, as it’s economy is already 1^st World or ‘overdeveloped’ in stage. It is one of the Dragon Economies of East Asia that includes, to recall, Hong Kong, Taiwan, and Singapore. It’s close ties to the Developing Countries or DCs, from which it came from, remains though, as exhibited by trade and cultural interactions with the DCs.

Other DCs that are smaller in populations, though nonetheless part of the developing world and contributors to global growth, are the Malaysia, Thailand, Singapore, South Africa, Argentina, and Chile. Malaysia, Thailand, and Singapore are engaged members of ASEAN that will unify into a common market next year, which will make the entire region a gigantic growth corridor that is indubitably among the world’s topguns.

To sum up the broad strategies of the Emerging Markets + Tiger & Dragon Economies that enabled ‘firewall’ against global turbulence, these are:

• Putting breaks on predatory finance via monetary and capital controls.
• Consistent, persistent, yet resilient reliance on the ‘physical economy’ as basis for wealth production—agriculture, manufacturing, infrastructure, transport & communications, science & technology—that are their domestic economic drivers.
• Shoring up their Foreign Exchange Reserves at levels sufficient to effect elasticity against global turmoils and buy several months worth of imports.

Needless to say, the Emerging Markets will be graduating to 1^st World economy status one by one across the coming decades. By 2030, their collective wealth put together will more than surpass the combined wealth of the EU-USA-Japan. Enabled to aid other developing countries move up the ladder of success, they are exemplars of ‘inclusive growth’ that hopefully will eradicate poverty across the globe well before 2050.

Contrast that to the ‘exclusive growth’ of the North 1^st World (EU-USA-Japan) powers that industrialized and enriched themselves at the expense of the developing countries or DCs that the former encumbered via investments, trade, and aid. The Northern powers in particular have histories of destroying nations and populations via two (2) world wars and many more conflicts, or using coercive instruments disguised as “soft power” or maintaining “peace”.

As the Emerging Markets have been showing the way, new models of development are now available for the poorer DCs which the West/North just can’t destroy any longer via IMF austerity programs (IMF is a stooge institution of predatory financiers). Rest assured there will be wider breathing spaces for comfort & prosperity in the long run by the working peoples of both Emerging Markets (& DC allies) and those of the 1^st World as well who seems to have been excluded from prosperity by their own greedy politicians and elites.

[Manila, 08 January 2014]

POWER SHIFT FROM WEST TO EAST NOW COMPLETE

POWER SHIFT FROM WEST TO EAST NOW COMPLETE

Erle Frayne D. Argonza

Gracious Day to you fellow global citizens!

“Young Man, Go East!” was John Naisbitt’s challenging call unto the youth of the west who are eager to search for opportunities in life. In the late 90s yet, he released his social forecast book Megatrends Asia, which sums up macro- trends happening in Asia that all point out to the compass of economic and cultural growth of the 21^st millennium: East will be center of global development.

Futurologists or social forecasters from the West, beginning with Oswald Spengler and Arnold Toynbee a century ago, forewarned the West of the eventual decline in the future. Toynbee used a cyclical wave model to show that a civilization or ‘high culture’ lasts only for 2,000 years, after which it will decline rapidly.

Indo-European ‘high cultures’ were nearing the end of that 2000-year cycle in the early 1900s, which prompted futurologists to write daring forecasts of what’s in store for the West in general. Though accordingly the West will sustain the momentum towards high levels of technological development, the overall civilizational maturity has been reached as was nearing the terminal end phase.

The American sociologist Daniel Bell followed up on the social forecasts in his brilliant discourses on the Post-Industrial society. Writing in the 1950s yet, upon seeing some Asian economies jettison their amazing industrial growth, predicted that the end of the Western prominence, both techno-economically and culturally, is already at hand. He daringly registered that the year 2013 will be the precise year of the civilizational shift.

It took yet younger social forecasters, notably Alvin Toffler and John Naisbitt, to follow up on the emerging global developments and observe the amazing rise of Asian ‘dragons’ and ‘tigers’. By the 1990s, both thinkers held the convergent opinion that Asia will be the trend-setter techno-economically and culturally in the forthcoming 21^st century.

  

To complete the picture of global rise to prominence of Asia, Immanuel Wallerstein, then president of the American Sociological Society, explained in the late 1990s that civilization was actually moving towards the East by the 16^th century yet. Tragically, the Western powers intervened to undercut that process, colonized the East via imperious methods of encumbrances, and ended what could have been a gargantuan awesome experience of East-led global development.

As Western imperialism, colonialism, and hegemonism considerably declined by the latter part of the 20^th century, so was the momentum of techno-economic, political, and cultural development propelled in the East.  By the latter years of the 1990s, there was no more doubting the predictions made by social forecasters that indeed the compass of civilization will soon move to the East.

Upon the catastrophic entrapment of the economies of Europe, USA, and Japan in short recessions that congealed into a Great Recession in 2007, the momentum was finally lost on the West. Japan was only partly saved due to its Asian location and trade positioning strategies, though its economy was flat since 1994 yet. By early 2008, Western global observers released their consensual evaluation that Asia already overtook the West in cutting edge technologies by the end of 2007.

By global observers I mean those coming from international magazines, thinktanks, and academe. The economic analysts of the Time Magazine, Far Eastern Economic Review, The Guardian, and Newsweek, for instance, came up with that very upbeat observation, as Asia was growing while the West was stagnating technologically and crashing down economically.

It’s now 2014 and many developments that boggle the mind did happen since 2007. As far as wealth production from the ‘physical economy’ is concerned, Asia is leading and showing the way towards keeping the global economy afloat. The West, on the other hand, is mired in ‘bubble economy’ or ‘virtual economy’ cul de sac, which promises only short-cycle growths that can burst again in the near future.

The power shift is now complete, though the shift doesn’t mean that the East will supplant the West in global importance. The Eastern mind thinks in terms of inclusive development, in contradistinction from the Western mind that is binary/dichotomous, zero-sum in practice, and pursues development at the expense of the small nations of East and South.

Western peoples better accustom themselves to the emerging reality and cease to be bellicose and hostile towards the Eastern peoples whom they pejoratively condescended upon for centuries as “monkeys” or “halfway between man and ape.” Civilization’s root word is ‘civility’, and that means if some nations become prosperous, so must all nations be some day, all marching together in a global ethos of goodwill and cooperation rather than destroying the weaker ones.

[Manila, 01 January, 2014]