The global economy death trap

Today’s Financial Times goes large on the global wheat crisis sparked by the Russian fires, warning of dire consequences for global commodity markets as a result of Prime Minister Vladimir Putin’s decision to ban wheat exports. The FT doesn’t anticipate another food crisis à la 2007-2008, but that isn’t necessarily good news: The global economic ...

Today's Financial Times goes large on the global wheat crisis sparked by the Russian fires, warning of dire consequences for global commodity markets as a result of Prime Minister Vladimir Putin's decision to ban wheat exports.

Today’s Financial Times goes large on the global wheat crisis sparked by the Russian fires, warning of dire consequences for global commodity markets as a result of Prime Minister Vladimir Putin’s decision to ban wheat exports.

The FT doesn’t anticipate another food crisis à la 2007-2008, but that isn’t necessarily good news:

The global economic crisis, ironically, reduces the likelihood of a food crisis as it reduces global demand for food commodities, particularly feeding grains used to fatten up livestock. A recovery in economic growth would fuel demand for meat and grains and raise oil prices, making a food crisis more likely."

But that’s not all! For now, oil prices seem to be headed downward as the U.S. economy weakens. But if they rise again, the United States may be hit with another recession. As oil-industry analyst Steven Kopits warned in January:

"[T]his nascent resurgence holds the seeds of its own destruction. As oil prices rally, economic performance and employment could remain subpar, and a new recession might even be in the offing. The investment bank Goldman Sachs has forecast oil to hit $90 per barrel in 2010. That would mean the United States would be spending 4.5 percent of its GDP on oil, putting the kind of burden on its economy that has historically triggered recessions. According to an analysis prepared by my consulting firm, the U.S. economy has slipped into recession whenever crude oil consumption has exceeded 4 percent of GDP."

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