While supposedly over 1000 farm organizations (doesn't that strike you as more than plenty?) celebrate the new farm bill, Congress seems to be in party-pooping mood. As I posted yesterday, blaming index funds has burst into high fashion just in time for scapegoat season.
"This unbridled growth raises justifiable concerns that speculative demand - divorced from market realities - is driving food and energy price inflation, and causing a lot of human suffering," said Sen. Joseph Lieberman, I-Conn., chairman of the Homeland Security and Governmental Affairs committee that held the hearing.Frankly, my dear, I don't give a hoot about how to precisely apportion the blame [credit?] for the commodity boom.
With oil approaching $130 a barrel and a global food crisis looming, the panel heard testimony from experts about how speculative investment by institutional investors and hedge funds may be contributing to food and energy price inflation. [More]
But I don't want to be in the line of fire when this baby blows, either.
So here is the test for readers at home: If you really, really think that demand alone is driving grain prices, buy the developing swoon as others bail out. If you think we've been bouncing along in a bubble, sell yesterday.
But there would be some bizarre irony in a bloated farm bill passing one day, and landing a crippling blow to grain trading the next. To be fair, I think specs will find a way around any lame legislative barrier, but things could get really silly for a while.
Color me credulous, but I think the possibility of a mediocre crop grows with every day I put on a sweatshirt. You are not going to keep prices down with that kind of problem, no matter how tall you can't be to enter the pits.