| Francois Trahan on the Death of Economics Posted: 23 Sep 2011 09:42 PM PDT Good Consuelo Mack interview with top strategist Francois Trahan. Some unusual & practical perspectives on how the economic world is twisted in circles. 
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| Today in Safety Warnings Posted: 23 Sep 2011 08:34 PM PDT Maybe my favorite warning ever: 
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| A New Look at Food Crises & Prices Posted: 23 Sep 2011 12:22 PM PDT New paper on recent food price changes. It isn’t/wasn’t just supply & demand. The Food Crises: A quantitative model of food prices including speculators and ethanol conversion Recent increases in basic food prices are severely impacting vulnerable populations worldwide. Proposed causes such as shortages of grain due to adverse weather, increasing meat consumption in China and India, conversion of corn to ethanol in the US, and investor speculation on commodity markets lead to widely differing implications for policy. A lack of clarity about which factors are responsible reinforces policy inaction. Here, for the first time, we construct a dynamic model that quantitatively agrees with food prices. The results show that the dominant causes of price increases are investor speculation and ethanol conversion. Models that just treat supply and demand are not consistent with the actual price dynamics. The two sharp peaks in 2007/2008 and 2010/2011 are specifically due to investor speculation, while an underlying upward trend is due to increasing demand from ethanol conversion. The model includes investor trend following as well as shifting between commodities, equities and bonds to take advantage of increased expected returns. Claims that speculators cannot influence grain prices are shown to be invalid by direct analysis of price setting practices of granaries. Both causes of price increase, speculative investment and ethanol conversion, are promoted by recent regulatory changes—deregulation of the commodity markets, and policies promoting the conversion of corn to ethanol. Rapid action is needed to reduce the impacts of the price increases on global hunger.
via [1109.4859] The Food Crises: A quantitative model of food prices including speculators and ethanol conversion. 
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| Today in Energy History: The Age of Ghawar Began Posted: 23 Sep 2011 12:19 PM PDT Today in 1933: The Age of Ghawar oil began. On September 23, 1933, a party of American geologists lands at the Persian Gulf port of Jubail in Saudi Arabia and begins its journey into the desert. That July, with the discovery of a massive oil field at Ghawar, Saudi King Abdel Aziz had granted the Standard Oil Company of California a concession to “explore and search for and drill and extract and manufacture and transport” petroleum and “kindred bituminous matter” in the country’s vast Eastern Province; in turn, Standard Oil immediately dispatched the team of scientists to locate the most profitable spot for the company to begin its drilling.
via Standard Oil geologists arrive in Saudi Arabia — History.com This Day in History — 9/23/1933. 
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