min-myinnersoul

There is economic cataclysm going on in Iran. What guns and rhetoric have failed to do might be achieved by grubby old economics - the downfall of the nut cases who have been ruling Iran for sometime. The Iranian rial has plunged into free fall. It declined by 25% in one week in October against the US dollar. Since the beginning of 2011 it has fallen by 70+%. It was some 10,000 rial to the US $ in 2011. Its now around 30,000 rials to the US $. The rial is now virtually worthless. Inflation by official estimates is some 25%, in reality more like 70%. There is economic chaos. Why is this important ? You only have to look towards  the street protests that have sprung up in Iran to see how this is affecting everybody in Iran - the rich, the poor, and yes, even the mullahs. But, wait a minute. Iran is oil rich, right ? It should be rolling around in wealth. And yet, the country  is in deep crisis and the population is suffering.  Why ? If ever there was an example of how a rot...

Onions in India. Cabbage & pork in South Korea. Chilli Peppers in Indonesia. Frighteningly, wheat globally. Riots have already started in Algeria , and is sure to spread. Food price inflation is hitting the world again. Millions of children will echo Oliver Twist's begging in those immortal words which are the title of this post. Are we going to see a repeat of 2008 ? This blogger is no expert on food economics. But the issue of food prices is close to his heart and he has posted on the awfulness of food price inflation here before. All inflation is bad, but food price inflation is especially awful. For it ceases to be an economic problem of supply and demand and becomes an issue of survival for half the world's population. It sparks a humanitarian crisis. And it will inevitably lead to unrest and riots. The world cannot afford inflation in the price of food. Certainly not the high double digit inflation that it is seeing. The issue is a complex one. World food supply and ...

Inflation, of any sort, is bad. Some stability in prices, is necessary for orderly economic activity and for growth. Countries which have experienced hyper inflation recall it with absolute horror. But the most awful form of inflation is when there is huge inflation in food prices. In non food products, one can curtail demand if prices rise. But what do you do with food ? After all, you have to eat. In the last few months, food prices in India have gone through the roof. If you are living in India, you are experiencing it first hand. If you are abroad, you would have surely heard about it. The official food price inflation figure is 20%. In many key food items, the inflation has been much higher than that. The first hint came in pulses, a vegetarian Indian’s main source of protein. A kilo of arhar dhal (pulses) has apparently touched the unbelievable level of Rs 100/kg. Then came vegetables. Onions at Rs 35/kg, potatoes at Rs 40/kg, and so on. Sugar is now at Rs 50/kg. Name a food ite...

Oil on the boil again, screams the headlines in India’s Economic Times. Or as our wonderful little friend Chotu might say, Obil Boil . I am certain that his words were prescient and not just a child’s lisp of mama’s olive oil. Crude oil prices have touched $80 a barrel. The US dollar has continued to weaken and since oil prices are globally stated in US dollars, they are bound to rise further. I argued that the world must get ready for expensive energy for the foreseeable future here , but governments have lost a golden opportunity, when oil prices were low consequent to the recession, to prepare their citizens for the coming times when oil prices will be in 3 digits. This has profound implications for the whole world. Firstly inflation will inexorably rise. The risk of inflation in the near term is the highest, with two huge factors contributing to it – the price of oil and the stimulus money that governments have spent. When oil prices rose last time to the peak of $147 , we had rio...

The price of crude oil has climbed steadily to $70 a barrel. Its of course, way off, from the peak of $147 it touched in July ’08. But its been climbing steadily over the last couple of months. Two major events await us in the near future. The first is inflation. Its already a big risk because of the massive amounts of money governments, the world over, have been pumping in to ward off the recession. When oil prices shoot again, everything is going to be affected. Inflation will hit the poor most – the price of food will rise. Many governments will be tempted to subsidise the price of oil and public finances will become a further mess than they are, in most countries. Inflation is going to be a killer ; unfortunately there’s not much that we can do. Governments should have been acting through last year. When the price of crude oil fell to just above $30, they should have been creating a fund to cushion the inevitable rise that was to come. Nobody did this. Governments who control th...