Rising Food Prices

In recent days, corn and wheat prices have hit record levels, based on futures trading data.  This is due in large part to drought in the US and heavy rains in the Black Sea region of Russia, which has affected output.  Furthermore, while soy beans have not risen as much, it could do so given similar fundamentals.

As such, it would not be surprising if food prices start to rise in the coming months in Singapore, leading to more hardship for us.  Riots in the poorer parts of the world may also happen, like 2 years ago.  Food security will likely come into public focus once again.

In that regard, the latest government initiative is a plan to import more vegetables from Indonesia.  This would not be the first attempt by the Singapore government to diversify our sources of vegetable imports (away from China and Malaysia) by seeking the help of Indonesia.  Previous attempts have ended in rather spectacular failure, based on information from some of my contacts.  I wonder why MND is leading us down the same wrong path again, given the serious lack of reliability of suppliers from that country.

In my view, time and money would be far better spent investing in the hydroponics ideas of Professor Lee Sing Kong of NIE, who has a feasible plan to make Singapore self-sufficient in leafy vegetables.  As much as I am for free-market solutions, the problem is that when it comes to natural resources, countries are becoming increasingly nationalistic.  As such, free-market solutions are not the way to go in the foreseeable future.  Food security requires non-market solutions.  And surely, if it is obvious to me, it ought to be obvious to our very highly-paid, American-educated elite Administrative Service officers.

Global Slowdown

This week we hear quite a bit of news of global economic weakness. We have various central banks around the world cutting interest rates and taking other easing policy measures in the face of a rapidly weakening global environment.

China's GDP numbers came in weaken than expected while the US earnings season has been kicked off with more warnings of forward weakness.

Back at home, the Singapore economy shrank in the 2nd quarter at an annualized rate of 1.1%, although things appear not to be weak enough given the government's position that emergency measures are not needed as of now.

Despite this, though not unexpectedly, news of. Cut in COE quota has people all agitated about higher prices in the coming months. In fact, there appears to be signs of buyer capitulation, as reported in the news this evening on TV, wherein those who have been holding off buying new cars have decided to go ahead in fear of higher COR prices.

As I have maintained for a long time, that which is unsustainable will break eventually. Thus while the supply of COEs may be falling, I am expecting that demand would also be falling in view of the global economic situation. It is possible that we get a repeat of 2008 in late summer that will lead to a crisis of a more serious nature than the liquidity crisis back then.

Let's see what happens.