It’s been quite a week of can-kicking in Europe!
The trillion dollar bandaid Eurobosses announced this week has helped and continue a stock market rally the likes we haven’t seen in the S and P since 1974. So there we are – back to that reliving the 1970s feeling I keep writing about. The 1970s were all about high commodity – including high wheat – prices combined (and likely causing) stagnant economic growth and stock markets going through a more than decade long series of rallies and selloffs. Anyone recognize that pattern here?
Read Also
Worrisome drop in grain prices
Prices had been softening for most of the previous month, but heading into the Labour Day long weekend, the price drops were startling.
So, as I wrote about the other day, this week was another chance for the Eurozone financial supremos to come up with more weak patches for their badly leaking currency, and for the markets to believe these were permanent fixes and that “recovery” could continue. If the markets believe in the Eurozone fix, then this recent iteration of the long commodity bull market can continue for weeks or months longer. So farmers can reasonably hope that crop and meat prices can stay high for days, weeks or months longer – as long as confidence (delusion?) remains that all these problems in Europe, America and possibly China are going to be grown out of.
Ahhhh . . . The Chinese. Yes, as we all know, everything in the world economy for the past ten years has been about China. They’re buying our canola and every other commodity. They’re selling us all the cheap stuff at Wal Mart and most other stores. They religiously manipulate their currency to keep themselves getting more manufacturing jobs – and taking ours. And they are playing a role in the Euro crisis. Reports on Bloomberg TV this morning say China is dumping about $100 billion into the Euro slop-pot – and in exchange expects Europe to not say anything more about China’s currency manipulation. So China gets to manipulate its currency to undermine the advanced western economies – and then buys their silence with the money it made from the manipulation? A very sad situation.
However, for people like us in Western Canada and in farming who live and breathe crops, meats, oil, coal and other commodities, the cynical jockeying between the manufacturing powers doesn’t practically matter. As long as they’re buying our commodities, we can be oddly free of the economic torment afflicting them. (Although the three westernmost provinces do pay transfer payments to help our beleaguered manufacturing provinces, which means Ontario, Quebec and Manitoba.)
So, gotta make hay while the sun shines, and I hope farmers out there have been getting good crops and cashing in on this era of high prices because everyone deserves their moment in the sun, and this is that moment for farmers.
